Ideas, good and bad

I stumbled across an interesting article via del.icio.us which discusses the issue of outsourcing in the software industry. It has a balanced tone, and makes excellent points: outsourcing development is very popular, akin to dot-coms in the nineties. Venture capitalists got it in their heads that, hey, if Nike can outsource shoe manufacturing and get product for peanuts, why not outsource programming too?

Fair enough, the article says, and if you don’t value innovation it’s a great idea. It’s only if you’re producing code for, oh, say, being competitive. The idea is that by outsourcing the coding, you are actually outsourcing the vast majority of your product’s design, which is the key element differentiating you from your competitors.

Then they call in the heavyweight, Michael Porter, to deliver the knockout punch:

“If all you’re trying to do is essentially the same thing as your rivals, then it’s unlikely that you’ll be very successful. It’s incredibly arrogant for a company to believe that it can deliver the same sort of product that its rivals do and actually do better for very long. That’s especially true today, when the flow of information and capital is incredibly fast. It’s extremely dangerous to bet on the incompetence of your competitors — and that’s what you’re doing when you’re competing on operational effectiveness.”

design != manufacturing; //or, software is not shoes.