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Beyond Labor Arbitrage

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It is a little late for 2011 predictions. However, I believe you would still find the following prediction of interest:

I would be a little nervous these days if I were in the outsourcing business. My ability to recapture value through labor arbitrage is being eroded by the twin  ‘brothers’ – Social Networking and Kanban. A third ‘brother’ – Cloud Computing – enhances and accelerates the erosion.

The rationale for this prediction is quite straightforward. Forward-looking development managers utilize three trends to achieve impressive results in productivity, time-to-market and cost of software. They “acquire” talent on a per-task basis wherever it resides through marketplaces such as oDesk and uTest. They procure computing resources inexpensively, when they need them, through the good services of Amazon Web Services or similar providers. And, they effectively oversee the work stream(s) of dispersed programmers and testers through Kanban tools such as LeanKit Kanban. In addition, they employ collaboration tools like Sococo to compensate for the harsh realities of most offshore software projects wherein team interactions need to occur across the pond. By so doing, they are able to carry out expert sourcing on their own at a fraction of the cost a global outsourcing company would typically charge.

Click here for full details. IMHO what we are starting to witness is really transformative.

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Written by israelgat

February 6, 2011 at 7:25 pm

More on the Social Contract

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The posts A Social Contract for Agile and Additions to the Social Contract established the dire need to reconstitute the social contract at a time when software development and test jobs migrate off-shore in an unprecedented manner. As stated in the first of these two posts:

My sense in 2005 was that the social contract between employers and employees in the software industry was broken. Without a working social contract, the friction and antagonism can bring a system down. For example, in 1942 – the turning-point year of WWII – 833,000 days of coal mining were lost due to strikes in the British coal industry.

Colleague and friend Ryan Martens has just published an article on the subject in Dr. Dobb’s. Ryan examines the Agile Social Contact in the context of what it really takes to get Agile rolling. To quote him:

Can you see the simplicity of Agile Adoption when you apply appropriate commitment and structure? A truly effective Agile Social Contract that creates true trust and commitment requires clarity and discipline. With the transparency of a clearly communicated Agile Social Contract, you will establish a strong leadership mechanism that aligns all the stakeholders and teams within your Agile adoption. Of course Enterprise-scale agile adoptions take place in a larger context of the business and market. As Israel Gat stated in his personal Agile Social Contract, we cannot guarantee lifetime employment in this globally competitive world. But, by making a clear commitment to win-win agreements, we can change the conversation into a motivating one versus a de-motivating one. Don’t try to scale Agile without a real and personal commitment or without a clear rollout structure.

The fascinating thing to me is that Rally’s own social contract seems to have developed completely on its own. Best I know there had never been a conscious attempt to develop a social contract. Yet, the company is well-known for the strong affinity of its employees.

I will leave it Ryan to comment on this riddle…

Written by israelgat

October 27, 2009 at 3:26 pm

Using a Combat Metaphor to Apply Agile Principles to the Company

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The Cutter Edge has just published my article Using a Combat Metaphor to Apply Agile Principles to the Company. The metaphor draws from Britain’s struggle for survival during WWII:

The agile team goes through psychodynamics similar to those of the combat unit when it expects “casualties” in the form of forthcoming layoffs. A record-breaking Scrum implementation 12 months down the road is not too meaningful for an employee who suspects he or she might not be with the company in six months. Under such circumstances, you must satisfactorily answer the question on the minds of employees, “What is in this agile rollout for me?!” Agile team dynamics are likely to be jeopardized unless this question is answered.

What is needed under such circumstances is a reconstituted social contract between employers and employees. Without a working social contract, the friction and antagonism can bring down a system. For example, in 1942, the turning-point year of WWII, 833,000 person-days of coal mining were lost due to strikes in the UK coal industry. Even a world war in which the UK was fighting for its life could not compensate for a broken social contract.

They did not do software in 1942 – all they had were Alan Turing‘s code breaking Bombe machines. The core issue – broken social contract – applies however to software development, particularly these days. Scholars such as Correlli Barnett attribute much of the post war decline of Britain to the failure to reconstitute the social contract.


Written by israelgat

July 28, 2009 at 8:35 am

Is the Off-shoring Trend Turning Around?

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Met a fellow Agilist in the gym this morning. He works for a major financial institute that recently carried out a round of cost cutting in IT. They chose to lay off off-shore, protecting on-shore software engineering resources.

I recently learned of a few other software/IT companies who followed a similar layoffs strategy. Is the off-shoring trend in software/IT starting to turn around?

Written by israelgat

March 8, 2009 at 11:08 am

Posted in Off-shoring

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