Made In USA Making a Comeback?
23 Nov 2011
I’ve noticed recently that more and more of the sites I have visited, are proudly stating they are made in an American city. Hunch.com was the first I saw with a message in the footer stating “Made in NYC”. I followed the link and found hundreds startups in the NYC area that have all agreed to this commitment to use local talent and not outsource.
I later came across a blog saying the same about but made in Boston. Again, I followed the link and this time found numerous startups, blogs, and consultants all stating the same about Boston. It all reminded me of the 1980′s when Japanese automakers were pushing hard into the American market the US pushed back by labeling everything made here “made in the usa”.
Compare this to some research I was doing last night in which I was looking for web development companies that I could look to as a model for a successful and thriving consultancy, using all local talent. I thought if I focused on higher-end technologies such as RubyOnRails, this shouldn’t be that hard to find. I studied 10 separate companies and ultimately discovered that 8 of them were based in the US, and of those, 5 merely had the sales team and/or team leads based here, while the rest of the actual development team was in India, Russia, or South America.
This reminds me of a time 10 years ago when I was a Java developer working for an Inc 100 company. The recession had just hit and they were laying off senior developers in droves, while simultaneously retaining large numbers of consultants from a large outsource firm in India. I remember the conversation with my department manager when she shared the trick to getting more H1B visas too – you list a job for a very senior enterprise developer and offer to pay a fraction of the expected annual salary for that position. When no one agrees to take the job, you can show that as proof there aren’t enough Americans to take the job, and on that basis get the h1B visa to bring someone else out for the work.
That was nearly 10 years ago and I use to think of this as mainly a phenomenon among large multi-national corporations. I’ve since watched outsourcing become incredibly mainstream however, to the point that even independent marketing entrepreneurs with no technical background will hire their team directly in another country, via oDesk. I recently realized how pervasive it has become when I search for “magento developers in los angeles” on Google, and was returned a page full of ads from competing job boards, some of which offered Magento experts as low as $8.75 per hour, and still several others for $15-30 per hour.
It has indeed been an interesting time to be working in technology. Scary at times too. But while I’ve been seeing this trend toward outsourcing accelerate, I’ve also witnessed a split in the market. I see numerous developers now (in PHP in particular) not really charging a whole lot more than a top company in India would charge a large company for the same outsourced resource. And still others charging the same rates they did 10 years (and 30% inflation) ago. Yet at the same time, I see well-funded startups in SF and NYC insisting on hiring only local teams that can share a common physical bullpen, and paying outrageous amounts of money for it. I see Google and Facebook paying $100k retention bonuses to good programmers not to leave for the competition and sometimes even buying out “walking dead” companies for a million dollars at a time and shutting the technology after they buy it, presumably simply to ‘acquire’ the talent of the founders. How can such a World of such opposites exist concurrently in the same culture?
I believe a lot of the technology leaders that were the first to discover the wonder of outsourcing have also discovered that it isn’t as efficient or effective as initially thought. If you know what you’re doing and have a good team, it works. But there can be inefficiencies that creep in from all directions such as the need for extra management and documentation, and issues with communication and timezones, if you’re not careful. And when you’re rapidly developing new technology and trying to pivot regularly, as is the case of a well-funded startup, this can be a real challenge. But I think its more than just that.
Like every marketplace, pendulums swing when opportunity becomes excess, and I wonder if we’re at that point now with outsourcing? Perhaps in this time of challenging economic climate and with a quality stigma now attached to a lot of outsourced projects, and some major agencies refusing to work with vendors who outsource their production, you’ll begin to see a swing toward producing software locally again, or at least toward more hybrid models. Sure it costs more at a nominal level, but when you factor time costs, a more balanced approach that favors locals might actually be the best thing for some companies.
So perhaps the pendulum has started to swing back a bit for the first time since the beginning of the outsourcing movement. It will be interesting to watch just how far back it swings, and where we find balance as an industry.
Technologist living in Los Angeles, California.
