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ICG Risk Blog - [ Supply chain paradigm shifts, part 2: SeaCode's floating Maquiladora ]

Supply chain paradigm shifts, part 2: SeaCode's floating Maquiladora

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Part 1, Chrysler's mooting importation to US of a new vehicle segment produced in China

SeaCode’s intent to anchor a 24/7 floating programming factory off the US coast

[I recommend readers first review The world is flat save for the depression that we occupy: Friedman on global opportunity and competition so that they share a baseline of understanding as to how dire the trend lines are for maintaining a critical mass of US technological laborers, and how increasingly attractive offshoring will become.]

Continuing our review of 'tweaked progressions of trends already in motion,' SeaCode's very near offshore seaborne platform solves a number of nettlesome problems:

  • H1B visa requirements avoided by anchoring the vessel outside US territorial jurisdiction
  • Lack of communication and poor program management that dogs so many offshoring projects is remedied by clients being a short water taxi ride away while the vessel is always within the client's 'day' window for telephone access
  • High performing programming staff as I wager that good programmers and engineers will vie for the 600 positions if the pay and working conditions remain as advertised
  • High output as teams will work in team "pods" of overlapping shifts, thereby shortening development time
  • Higher security and potentially better intellectual property (IP) control
  • Total costs to clients are commensurate with genuinely offshore project costs but a goodly portion of costs are envisioned to revert to US firms and coffers
  • Client staff trips to offshore destinations for project collaboration conferences are eliminated

SeaCode "sweet spot" clients are seen as:

  • "projects that are under significant time constraints and are driven by market forces that are beyond the company’s direct control"
  • industries that have "multi-generations in a year and they need to have that high level of collaboration."
  • enterprise-type projects that require advanced coding and project management skills
  • pieces of projects being run by other service providers

The early focus is on video games and cellphones. Such are the possibilities of the appropriate offshore vessel populated with "600 of the brightest software engineers… (both men and women) [run as] a 24-hour-a-day programming shop." This intermediate form of IT outsourcing rose from a merger of merchant marine and IT backgrounds where it was the norm to continuously pursue complex tasks on a shift basis. The relatively low cost platform is a used cruise ship with its passenger amenities intact:

[Workers] will each have private rooms with baths, meal service, laundry service, housekeeping and access to on-board leisure-time activities... Staff can make the three-mile voyage into town in their off hours by calling a water taxi [because programming staff will have to have US tourist visas as part of their employment contract]. Or they can spend time shopping in the on-board duty-free shop.

Non-US developers will "take-home money the same as if someone was working as an H1B inside this country [but will be] far higher than the country you’re from. You’re getting paid so well that Indian [workers] will be able to go home and pay cash for a house."

US nationals perform two roles:

  • land-based service group comprised of "high end individuals managing engagements and [acting as] the liaisons to our customers
  • Ship-based project management acting as "the bridge between the work that gets defined and designed on land and to make sure that it gets executed properly"

Despite carping about an "Indian slave ship" (here and here), US firms provided significant services: telecommunications, cellphone and internet access, infrastructure and facilities, food and provisions, and fuel which are purchased domestically rather than offshore. As a US firm, taxes and fees are paid to US and state agencies while profits are repatriated to US shareholders. Short of direct wages, all monies return to the US.

Using US infrastructure components aids (but does not guarantee) protection of IP [it is not enough to control data streams ashore] but it does address IP ownership as, "Under international law [the] first point of contact with land determines whose laws will apply."

As offshoring goes, the adverse effect is modest (and I can see clients feeling virtuous about selecting this over conventional offshoring). If you think this won't work, think of hospital ships in the commercial sector such as Project HOPE's U.S.S. Hope. Think of a floating Maquiladora and it becomes more digestible.

Outsourcing off Los Angeles?
By Linda L. Briggs
ADT Mag
4/18/2005

From Offshore to Ship-to-Shore
Dian Schaffhauser
SourcingMag.com
4/5/2005 11:18:00 PM

Gordon Housworth



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