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ComputerWorld
( 05/16/97 12:00:00 AM)



Offshore programming talent pool is costly, dwindling
Julia King



Companies looking to offshore programmers to defuse year 2000 time bombs and develop systems are in for a rude awakening. Worldwide, the pool of available programming talent is drying up. That means companies might not be able to find enough people to bring year 2000 projects in on time. And it means offshore programmers are demanding higher wages, which effectively wipe out any cost savings to U.S. firms.

For example, India, a prime source of inexpensive information systems talent, is experiencing its own skills crunch, which is driving up labor prices. Competition from thousands of European companies looking for Indian programmers to work on Euro-currency conversion projects is also contributing to the problem. Internet and intranet projects are also taking their toll on resources.

"Without question, the software demands upon my company are growing dramatically," said Jim Thomas, a Dallas-based vice president at Tata Consultancy Services, India's largest programming firm.

Meanwhile, demand is outstripping supply. Other potential sources of programming talent include Ireland, Israel and Russia, but their combined IS labor pool isn't nearly enough to meet current demand, let alone the 25% annual increase in demand in the U.S., said Howard Rubin, a consultant and chairman of the computer science department at Hunter College in New York.

Some observers predict that year 2000 and Euro-currency projects could fall behind in light of the worldwide crunch. IS labor expert Capers Jones, chairman of Software Productivity Research, Inc. in Burlington, Mass., said many European currency projects -- which should be completed in 1999 -- could be delayed as far out as 2005.

"There's a very big shortage all over the world, including India," said Raj Vattikuti, president of CBSI, Inc., a Farmington Hills, Mich.-based systems integrator that relies heavily on Indian programmers.

CBSI, for one, hopes to boost its pool of year 2000 workers by enrolling nonemployees and college graduates from other disciplines in its Cobol course. Indian students pay between $2,000 and $3,000 to take the 160-hour course, which will be offered in the U.S. beginning next month.

Experts at Stanford University's Computer Industry Project peg the current worldwide market for software services at $185 billion. And that is conservative, according to the researchers. India, by comparison, exports about $700 million in services.

"That's a drop in the bucket," said Shirley Tessler, a co-director of the Stanford research project. "There's only a finite number of people in India to do this work, and even if that quadrupled in size, it would still not be large enough to serve the worldwide market," she added.

The upshot is higher prices. "It's not like we're getting a discounted rate anymore," said Jim Fox, IS director at Union Pacific Corp, in Omaha.

"A few years back, they were quite a bit cheaper -- about 30% cheaper -- but that's not the case anymore,'' Fox said. Vattikuti said salaries for programmers in India are increasing and have shot up by an average of 20% to 30% over the past two years, primarily due to year 2000 demand.