January 10, 2005 12:50 PM PST

U.S. firm sweet on offshoring deals gone sour

A small U.S. software development company is growing fast in part by mopping up offshoring messes.

Chicago area-based Decision Design doubled its revenue last year to $5 million, with a chunk of the business stemming from clients unhappy with projects they sent overseas. Through a strategy that includes locating U.S. facilities outside of high-rent areas, Decision Design says that it is cost-competitive with offshore companies, offering workers familiar with U.S. business practices and culture.

The 20-person company on Monday announced new offices in Pleasanton, Calif., that should hold another 10 or more employees.

"The additional space should be adequate to meet our growth, much of which has been caused by the current offshoring backlash," Monty Davis, president of Decision Design, said in a statement. The company's Software Remediation for rescuing failing software development projects, as well as its Homeshoring Services for low-cost outsourcing alternatives to offshoring, he said, "have been booming."

The company is looking to hire software engineers and business analysts, said Melinda O'Neill, Decision Design's director of marketing.

The company's success could allay fears that a large amount of information technology work is headed offshore. The exact scope and effect of offshoring are unclear, though a federal study is in the works.

Critics claim that the practice eliminates well-paying jobs and threatens the nation's long-term technological leadership. Business leaders have defended shipping work abroad as ultimately good for the U.S. economy and its workers.

In any case, not all offshore deals are ideal. After receiving customer complaints, Dell stopped sending U.S. technical support calls for two of its corporate computer lines to a Bangalore, India, call center in 2003.

Decision Design knows first-hand about the potential pitfalls of shipping tasks to India. The company launched Indian operations in 2001 but closed them down two years later. "Our offshore experience wasn't what we anticipated," Davis said in a statement. "The quality of work was lower than required, which caused rework and actually created higher costs than if we had done the work here."

The botched experiment led the company to the notion of "homeshoring centers" in the United States that nonetheless offer low costs to customers. In part by locating offices on the fringe of Silicon Valley and Chicago, the company claims that it can deliver savings of 30 percent to 60 percent below typical onshore development costs.

Decision Design, whose clients include Lehman Brothers and JPMorgan Chase, was brought in several times last year when a customer's offshore project wasn't panning out properly, O'Neill said. Offshore operations face problems, including low quality and slow project completion times, she said.

The company isn't the only U.S. firm pitching itself as an alternative to offshoring. It's also not the only one to use the phrase "homeshoring." Research firm IDC recently used the term to describe call center workers handling calls from their homes.

O'Neill said Decision Design began using the phrase early last year.

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Duh.
..ship code half way around the world and expect people to understand your business operations? A T1 connection is no substitution for a firm handshake.
Posted by lewissalem (167 comments )
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