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Start spreadin' the news: NY firm flexes onshore model

Excess capacity plus the popularity of outsourcing equal a nice new business for one firm and an onshore option for others.

The "big sucking sound" of manufacturing jobs headed south to Mexico may not have been as loud as Ross Perot warned, but there's definitely a noise coming from India.

A New York City software testing firm has developed an answer to that rush of offshore outsourcing. Real-Time Technology Solutions, Inc. announced earlier this month its Onshore Automated Testing service. The service provides low-cost software testing that is competitive with offshore firms but without the quality, communication and cultural concerns, said Bill Hayduk, director of professional services.

"We're not going to match offshore dollar for dollar but we felt we could get close enough," Hayduk said. "Right now, the most important thing for clients is competitive prices." In a report earlier this month, analyst firm Gartner Inc. advised that companies should consider more than cost when looking at their outsourcing options. Gartner also recommended looking closely at U.S.-based labor for IT work.

Hayduk said many of his company's Fortune 500 clients have been getting the message to cut costs from their C level management. Offshore outsourcing has been one of the most popular measures. Taking a proactive approach, RTTS elected to offer competitive pricing with its excess capacity.

"It's a heck of a lot better to have people working at a low rate than sitting around doing nothing," Hayduk said.

The onshore model still provides the capability to have a person on site, or RTTS can have its staff in New York analyze results and report defects over the Internet and ship code.

Hayduk said RTTS has found there is a fundamental difference of opinion within organizations about outsourcing. The C level executives see the low cost, and that's all they're concerned about.

"The process might be tight, but the work quality is horrible," Hayduk said about offshore providers. "When they ship code they don't know how to code it, but because they're charging $20 an hour, they're getting the work. On a project level and at the VP level they know this."

Organizations can be broken down into three groups when it comes to outsourcing, Hayduk said: those that just want the lowest price available, those that want to reduce costs but keep the work on site, and those who will pay a premium for high quality work. Additionally, there are some industries where offshore outsourcing isn't an option, such as federal government work; state government where it may be an option but a political problem; brokerage firms with sensitive data; and pharmaceuticals, which have complicated regulatory requirements. With the onshore model, RTTS is positioned to serve them all, Hayduk said.

RTTS has begun by offering this service to existing clients. Should the economy pick up, the use of excess capacity will continue to provide a competitive advantage while bringing in new clients, Hayduk said.

"Outsourcing is not going to walk away. We have the space, the labs, the equipment and the high speed connections. It's a great thing for us," Hayduk said.

"Companies are not going to go back to the boom of late 90s. It makes total sense."


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