Software Development

Offshore software development: An interview with Farley Blackman, CEO, StrategIM

As staffing shortages hold up your software development, consider outsourcing abroad. But first read what Farley Blackman's experience in Asia and elsewhere has taught him about foreign markets.

Have IT staffing headaches made you think about outsourcing your software development? Large companies have long sent some types of IT work abroad, to countries like Ireland and India. A former CIO, Farley Blackman knows all about overseas outsourcing, since he was the guy in charge of offshore software development for General Electric, in what he calls “the largest offshore development effort in the world.” Before you explore overseas outsourcing, read what Blackman says about the current market.
Farley Blackman founded StrategIM in May 1999 to leverage his international experience at General Electric, where he oversaw large-scale software development. As GE’s director of offshore development, Blackman led projects in China, Hong Kong, India, and Mexico, with 3,500 staffers (programmers, managers, and project leaders) reporting to him. These efforts included maintenance, development, e-commerce, and ERP and led to more than $100 million in annual savings for GE.
TR: As we know, the Asia IT market is both exciting and unpredictable. What did you do when you were in China with GE?
Blackman: I was in charge of the GE systems for the greater China operations. At the time, we were relatively new in Asia, and I was tasked with making sure that we were rationalizing our systems, especially payroll-financial systems for the greater China region. I was responsible for everything having to do with the IT arena in China for GE.

TR: What do you see happening in the China market in the future?
Blackman: Obviously, there is the potential for great opportunity. Unfortunately, the language barriers and the political barriers are pretty tough. At StrategIM, as we go out and look for opportunities around the world where we want to put our software factories, we’re considering China, but it’s certainly not in the top three. I think the language barriers are probably the biggest right now.



People, technology and location challenges
TR: What do you see to be your biggest people challenge at StrategIM?
Blackman: Most companies today are really strained with getting good IT resources, and certainly that’s one of the reasons StrategIM was started. I have been fortunate enough as we formed the company that we’ve been able to attract fantastic people. Although it’s always a challenge, it’s been a successful operation thus far. I think the challenge in the future for us is to keep that momentum going, and, as you head into 40 and 50 and 400 and 500 people, to make sure we’re getting the same talent that we have today.

TR: What has been your biggest technology challenge?
Blackman: I think the biggest technology challenge is keeping up with technology. It’s changing so rapidly. There are always new programs out there. There are always new applications. We’re trying to support our customers. We’re trying to support a whole bunch of systems that we need to run our own internal operations. That’s really a challenge, and it will continue to be one.

TR: How about your multiple locations? Has that been a challenge for you?
Blackman: I don’t think it really has because I’ve been dealing with multiple locations throughout my career. I’m used to working in different time zones and different places. You can almost ask me what time it is in any country and, unfortunately, I know. So it’s not a big challenge. The challenge there is making sure that, as we bring up the staff and as we grow as a company, that everybody understands that we’re not a United-States-centered company. We’re a global company.

TR: Are there any industry regulations that affect this business?
Blackman: Depending on the customer, there can be regulations. For instance, one of our customers has some Department of Defense contracts. We obviously cannot do certain systems in India that would affect government here in the United States. So we would have to do some of the programming in the states.
TechRepublic offers a look at the state of the IT world in its series “IT World View”, with a focus on India , Ireland, Israel, Japan,Germany, Turkey , Argentina, Canada, South Africa. We also offer statistical information on the Internet in Latin America, Europe, and Asia.
TR: What are you doing for your customers?
Blackman: We really try to be application or technology independent. We want to make sure that we’re supporting our customers in a way that makes sense [in terms of] their business goals or their business needs. So we try to support them in any way we can. Because of our operations in India and our expansion plans into Latin America, Southeast Asia, and Eastern Europe, we have access to the world’s best IT resources. So I can actually go out and find almost anybody right now in any technology.

TR: When will you be doing that?
Blackman: I’m heading over to Ireland in about a month. The plans are to expand probably into two or three of those markets before year-end 2000. We’re going through a lot of due diligence on many different countries right now. Specific countries we’re looking at include Palestine with some support from Israel. We’re looking at Ireland. We’re looking at the Philippines. We’re looking at Costa Rica, and I have a lot of relationships in the Eastern-block countries, such as Hungary and Russia.

TR: What are you finding to be a good market?
Blackman: India’s the best. For comparison purposes, the US has about 30,000 graduates a year in IT. India has about 160,000. It’s a tremendous number of people. The education system is fantastic. We find that our programmers in India, quite often, will have multiple undergrad degrees, multiple master’s degrees, and some even have degrees from the London School of Economics. These are well-spoken, well-educated individuals with a lot of energy and a lot of talent. It’s a numbers game.

TR: What would you tell CIOs about how to make the decision to outsource a project overseas?
Blackman: It’s tough. Obviously, outsourcing has been proven and it makes a lot of sense given all the open IT positions in the US now. The challenge is that when you start moving work overseas to places like India or even Ireland, you’re still dealing with cultural issues, you’re still dealing with the communications issues, and you’re still dealing with regulatory issues. The best way to do it, and the reason I started StrategIM, is that if you can find someone that has that experience, someone that has the contacts, and someone that has even more importantly the processes to make this work, then you’re better off going with that sort of a role. There’s not a lot of people in the world that do that.

Staff retention issues
TR: When you were at GE you did a lot of work on staff retention, is that right?
Blackman: My role, when I came back to the States, was to develop a training and development pathway for GE folks, from right out of college until they became officers of the company in IT. This was a global effort. I took it one step further to retain people. My goal was that the more time you spend with folks along their career path, the more touch-time that executives spend, the more energized an employee will be. With people like Greg Levinsky [CIO at GE Appliance Park] and the other CIOs, it was very successful. I have taken the same philosophy here at StrategIM. Although we’re a small company right now, we do have software folks overseas that come and go throughout our different projects. Everybody is kept up to speed on what’s going on at StrategIM. I go over to India and meet with different people, whether they are senior management or Java programmers. So we try to do the same things that I think were great at General Electric.

Blackman’s career path
TR: What was your career path before you went to GE?
Blackman: I have a finance undergrad degree, and an M.B.A. In the middle of my M.B.A. program, I was pulled into a telecommunications company down in Fort Lauderdale, FL, where I was the CIO. I ended up commuting from Florida to Burlington, VT, to finish my M.B.A., which I did on time. I spent two years [in Florida], and then I was recruited by GE.

TR: That was a fast road to CIO, wasn’t it?
Blackman: Yes. My career has kind of been interesting that way.

TR: What else did you do at General Electric?
Blackman: I started off as the IT manager for the corporate telecommunications operation. We ran a long distance phone company internal to GE. At that time, it was doing about two billion minutes of traffic a year, which is substantial. I then moved over to China and ran the systems for Greater China. I was then promoted to CIO for Asia Pacific, based out of Hong Kong. I was responsible for everything having to do with information technology from Japan to India, and China to Australia, inclusive. I moved back to the US and was responsible for the training and development for all of the IT staff globally for GE, reporting to CIO Gary Reiner. Gary asked me then to lead the offshore sourcing initiative for GE, which is the biggest of its kind in the world. Last year my operations saved GE $125 million, the single largest sourcing initiative at the company.

TR: What would you like your professional legacy to be when you sit back and look on your career?
Blackman: What’s really important to me is building a team of professionals that like working together. I think once you’re able to build a team of people and give them the authority and responsibility to do their own thing, great things happens. So I would hope that, as we grow StrategIM, we leave a legacy of a great company that has accomplished great things for our customers.
StrategIM’s headquarters is in Burlington, Vermont. The company has two software factories in India and is looking to expand into the Philippines, Costa Rica, the Middle East, and Europe. Blackman says, “We expect to grow very, very fast. We’ve got some numbers that we’re trying to achieve in 2000 and beyond that—exponential growth. As far as a head count, we’re looking to double, triple, quadruple our numbers almost on a quarterly basis for the next couple of years.”
Are you considering offshore outsourcing of software development?
If so, what countries are you considering? We’d love to hear your stories. Feel free to post them below. Also, send us a note if you have a CIO you’d like to see interviewed.
2 comments
DanRubin
DanRubin

I was in the IT industry for more than 10 years, and I enjoy programming. After using the software outsourcing service of a software company in HK, I shift my focus to the finance field. They are very good at understanding and anticipating problems. I immediately favored software development outsourcing. It offered everything we needed: it?s stable, well-regarded, actively maintained, and the product?s open architecture meant that support costs were likely to be more reasonable.

Tony Hopkinson
Tony Hopkinson

making a nice healthy provision for when your business needs diverge from the software's core capability, paying for on going refactoring to defer that final judgement, and preapring for when rewriting is the only option then? It always happens, and not having your own people to do it increases cost and risk. It's a pity you types don't think things through. How is this external vendor going to make a profit? If you think it's by providing the highest quality product at the lowest possible price, you need to get out more.

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