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By Janet Rae-Dupree  |  Posted 04-01-2004 Print

Follow the Savings

Long Island University's Palvia characterizes globalization as "an irreversible phenomenon." Cheaper goods from China and cheaper services from India, he says, mean that in the end, U.S. consumers will save more money on the products and services they buy. According to Palvia, India will be exporting software worth $12 billion into the U.S. by the end of 2005. "All we can do is move forward rather than moving backward. We must remain globally competitive," he says. "There is no doubt that global outsourcing is here to stay."

Enacting new anti-offshoring policies wouldn't really help anyone, least of all U.S. workers fearful of losing their jobs, Palvia argues. "It's a similar situation to when manufacturing jobs, blue-collar jobs, were going overseas," he says. "I don't agree that we can go back to the old days of protectionism. If we do, other countries will do the same and we'll become isolated."

When First Index, a business-to-business marketplace for custom industrial manufacturing, decided to outsource its entire IT administration to EPAM Systems, which has development offices in Moscow and Minsk, Belarus, in the former Soviet Union, CEO Russ White knew he wouldn't have to place his critical systems in Eastern Europe. Instead, First Index consolidated the servers near the company's Whippany, N.J., headquarters. EPAM technicians maintain the company's software and services remotely over the Internet. "What would cost us $50,000 to $55,000 each month in the U.S. costs around $23,000 a month with EPAM," White says. "It's all about the money. I don't have the luxury of turning down those kinds of savings to maintain a handful of jobs in the U.S."

Janet Rae-Dupree, the technology editor for the Silicon Valley Business Journal, has covered technology and science in Silicon Valley for a number of publications, including BusinessWeek and the San Jose Mercury News.


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