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At This Startup, "Outsource" Is a Dirty Word

Kevin G. Wallace has been working as an engineer and manager in technology for more than 20 years. Now vice-president of technology at startup Atomz Inc., which sells services that help companies build and manage Web sites, he provides an inside look at how tech's rising stars view the offshore-outsourcing debate (see BW, 3/22/04, "The Future of Work ").

While many startups are begin life with an offshore team, Atomz has opted to keep jobs here. Wallace believes the company can get better work done faster with a small team of about 50 people in the San Francisco Bay Area, where the company is based, than it could trying to manage far-flung teams around the world. Following are excerpts from a recent talk with BusinessWeek's Silicon Valley bureau chief Robert D. Hof:

Q: Do you think the types of jobs you've had are in more danger of going offshore now?

A: Maybe not my job, but some of the jobs when I was at Hewlett-Packard (HPQ) were prime candidates for offshoring. In fact, HP was a pioneer in using people from India on visas to come here. There were apartment complexes filled with them. This was usually for older products, such as operating systems in maintenance mode. I haven't seen offshoring nearly as much for new, cutting-edge software.

Q: Given the increasing expertise overseas, why hasn't Atomz opted to do some development offshore?

A: We depend on a very productive, highly nimble organization. We had 20 product updates last year. Most came as a result of feedback from customers -- usually in face-to-face meetings. That's hard to do when people aren't located close together.

I'll tell you a story. The John Kerry Web site was developed with our content-management system. When Kerry won Iowa, they had to turn around updates on their Web site fast. But they ran into a couple of problems, one with the software. We made changes in our software at 8 p.m. that night to allow them to do quick releases the next morning.

Q: And that couldn't be done with teams overseas?

A: It really gets down to collaboration. We can get all the people we need into one room. A lot of what we do is the user interface, and we like to have our engineers on the phone with customers so they know what customers want. If we had a team overseas, we'd probably end up with more headaches.

At least once or twice a week, I get a call from someone asking if I want to offshore some engineering. It's worse than the recruiters. I don't return the calls.

Q: What do you suggest engineers do to avoid seeing their jobs go offshore?

A: People skills are a must. There was a time when you could be a nerd in the corner, just writing code. Ultimately, we want our engineers to know our customers, live and breathe our customers. We also need engineers with a lot more flexibility to do new things.

Q: How worried are you about offshoring's potential impact on U.S. competitiveness?

A: At the end of the day, I'm not worried. In some ways, this is capitalism at its best. We have to be willing to compete. The future is still bright (for another perspective on the outsourcing debate, see BW Online, 3/12/04, "My Son, It's Time to Talk of Outsourcing...").

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