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Information Week, September 7, 1998

IT Looks Offshore

U.S. companies look for more help from foreign programmers
By Marianne Kolbasuk McGee

The shortage of IT talent and the U.S. government's freeze on issuing H-1B visas to foreign programmers has made the market for offshore programming more attractive to businesses.

"Even companies that aren't enamored with the idea of offshore programming are looking at it," says Stan Lepeak, an analyst at Meta Group Inc. Using offshore programmers costs less than hiring staffers or bringing in people with visas to work in the United States, he says.

Offshore programming is most commonly used by software development companies, which tend to do a better job of managing off-site projects than corporate IT shops do. However, IT consulting and services firms are becoming frequent customers of offshore programming services as well, says Lepeak.

While U.S. companies are seeking offshore help, foreign programming companies face local challenges, making them anxious to gain U.S. clients. Economic conditions in Russia, for example, are prompting some Russian programming companies to ramp up efforts to sign American customers.

"Russian companies just don't have money to pay for services," says Vladimir Kurbatov, deputy general director at ArgusSoft Inc., a Moscow programming services firm. ArgusSoft has opened a marketing office in Washington to attract American clients. Kurbatov expects ArgusSoft's business from U.S. companies to double this year, eventually exceeding revenue from Russia.

Ed Swanstrom, president and CEO of Agilis Corp., a Gaithersburg, Md., management-consulting firm, hired ArgusSoft to convert software tools from Objective C to Java. The Russian company saved Agilis $100,000, based on U.S. bids for the work, Swanstrom says.

To keep offshore programming projects from going awry, keep tight control over project management from the United States, Swanstrom says. "There needs to be a clear understanding of what is to be done and what is expected."
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