The MSM Covers Up The Crime

This is the sort of thing that the blog Outsourced America used to hammer on very effectively, and I'm going to take a shot at it myself.

This article by reporter Reid Kanaley appeared in The Philadelphia Inquirer today, and one of the things that gets me about it is that we never end up with an exact headcount of how many people Sashi Reddi employs in Philadelphia, much less a description of what the company's office, presumably downtown somewhere, looks like. It could be a collection of 386s on top of some milk crates in the basement next to the restrooms and a utility closet for all we know.

Also, please keep in mind a couple of things: 1) I like Kanaley's work and I don't mean to shoot at him in any way - whatever problems I have stem from the direction he was given on this by his editor, and 2) This isn't an anti-Indian rant; if someone comes here from any other country, does the best they can and does their part as a good neighbor, then he or she should be entitled to whatever they can earn. If you come here, settle somewhere, pay taxes, contribute to the economy, and do all that good stuff, then as far as I'm concerned, you're an American. The problem I have is when companies send good jobs requiring a sophisticated skill set of any kind someplace overseas to save money, because that job will be lost forever, meaning one less person in this country contributing to the economy and, ultimately, an expansion of our horrific trade deficit.

(Actually, please keep in mind a third thing, and that is that I may end up using a bad word or two here because it is necessary to do so.)

OK, now that that's out of the way...

When his dot-com went dot-bomb five years ago, entrepreneur Sashi Reddi survived the meltdown by regrouping to launch a high-tech service company.

He founded AppLabs Inc., based in Center City, which tests other people's software for bugs, vulnerability to malicious hackers, and ease of use. To his delight, it was a winner.

"From day one, we have had no trouble finding customers," Reddi said in an interview. "We were profitable from the first year."

Now with more than 900 employees - most of them in his native India - Reddi, 40, is about to take AppLabs public through a merger with a software-development firm, VisualSoft Technologies, whose shares trade on the Bombay Stock Exchange and the National Stock Exchange in New Delhi.

So basically, this new company will be based in India practically in its entirety with only a token presence here (probably status quo for them). I see.

He said the combined company would have annual revenue of $50 million to $60 million. The merger, set to close by the end of June, will also net AppLabs between $25 million and $30 million in cash that Reddi, who will become the chief executive officer, hopes to use for acquisitions.

I think it's worth noting the incredibly obvious fact that this column is aimed at potential investors in this proposed new company and, really, no one else. There is not the slightest indication whatsoever that Reddi is interested in employing additional workers in this country.

"We want to be the top testing company in the world, and we want to do that in the next 12 to 18 months," he said.

Software testing is a $13 billion world market, according to Gartner Inc., the Stamford, Conn., technology-research group. AppLabs competes against scores of domestic and foreign testing firms, including VeriTest, a division of Lionbridge Technologies Inc., of Waltham, Mass.; SQS Group, of Germany; and Tescom Software Systems Testing Ltd., of Israel.

AppLabs has tested software for about 400 companies, including SAP AG, InstallShield Software Corp., Broderbund Software Inc., American Airlines, and MSNBC.

I'm starting to wonder how much of this Kanaley lifted straight out of their annual report or marketing collateral.

The company's testers take a program, such as educational Reader Rabbit software, and check to see that all of its features work, that game narratives make sense, and even that it can be successfully uninstalled.

It will start to get more interesting shortly.

The company sends its most labor-intensive "cookie-cutter" work to its 850-employee testing center in Hyderabad, a city in south-central India, Reddi said.

Typical (but of course, whenever we hear some government suit or chamber of commerce shill trying to sell us the "benefits" of offshoring/outsourcing/whatever, it is to advance the unconscionable lie that it will keep "important" jobs here).

"For that type of work, we like to take advantage of the cost structure in India," he said.

Of course you do. I mean, you can't actually be bothered with trying to pay a competitive wage or provide a bare minimum of benefits to your employees, so you do what everybody else is doing, and that is send the job offshore to India or elsewhere in search of some imagined cost savings (of course, now wages have risen to the point in India where Indian jobs are now being offshored...tit for tat, I say). It would be so refreshing if one of these entrepreneurs like Reddi would actually come out and say this for a change.

More complicated testing is done in the United States, particularly at a company facility in Lindon, Utah, near Salt Lake City. The company has 65 workers in the United States, Reddi said.

Define "complicated testing" for me, OK? Maybe, in reality, it's the overflow from India, or possibly it could be work that's intensive due to internationalization or localization concerns, and Reddi doesn't want to send it overseas.

Reddi, who grew up in Hyderabad, holds a doctorate from the Wharton School at the University of Pennsylvania. He and his family live in Gladwyne half the year, and winter in India.

Is THAT the "local angle" that you're trying to play up? Why should I care?

Besides, it sounds to me like this guy is taking the education he got in this country and using it to his own benefit somewhere else. Why should I feel anything but derision towards him?

Outsource software testers are benefiting from test-aversion among U.S. information-technology companies, said Carey Schwaber, an industry analyst at Forrester Research in Cambridge, Mass.

Now that Forrester has shown up in this article - and you KNEW they would - it will start to get ugly.

Testing has tended to get little respect in the industry, and is therefore "something that a lot of American companies really do quite badly," Schwaber said. So, when executives demand outsourcing to cut costs, "testing just looks like an easy target."

Let me try to get this straight - it gets "little respect," which actually is true (I've worked side by side with software testers from all over the place for years, by the way). And whose fault is that? Is it the fault of the tester busting his or her hump, so to speak, meeting impossible deadlines to complete and execute their scripts and deal with the inevitable push back from software developers, among others? Also, is it their fault that they are perennially short staffed? I would definitely say that THAT is the reason why most American companies "do it badly."

Typical solution by American business - "Let's set these people up to fail by not supporting their function, so we can look like geniuses when we send it offshore for less money where they work longer hours too." What bullshit!

As a result, outsourced testing is "a really quickly booming market," and companies that do it are growing at annual rates of 50 percent to 300 percent, Schwaber said. "The niche players like AppLabs, for a while, were the only players in the market. They were really the pioneers."

A Forrester report says India is "becoming the main destination for offshore testing work," and that financial-services firms such as Citigroup Inc., Deutsche Bank AG, Morgan Stanley, and Standard Chartered Bank use Indian firms to test their software.

Of course, whenever Forrester is mentioned in a story like this, the company's profit motive behind sending jobs out of this country for good is never pointed out.

In January, AppLabs won a contract to test downloadable software - so-called adware and trackware, along with instant-messaging programs, Web browser toolbars, and the like - on behalf of TRUSTe, a nonprofit San Francisco group that certifies the privacy claims of Web sites.

"We had to go out and find an independent, credible testing partner," TRUSTe spokeswoman Carolyn Hodge said. "They were able to show us that they would be impartial in the testing of software."

There are PLENTY of "independent, credible" and - I'm sure, also - unemployed software testers in this country (notice how sending jobs to India has gone from a "profitable" venture to one that finds "credible" people in this story...can you just feel the knife twisting in your ribs as you read this if you happen to work in this industry, especially if you're looking for a job?).

Reddi started his first company, EZPower Systems Inc., a supplier of workflow and document-management software, in the 1990s.

No wonder he bailed out of that line of business - I would have too.

After EZPower was acquired by DocuCorp International Inc., a Safeguard Scientifics Inc. company, Reddi started iCoop, an ill-timed dot-com that was developing online purchasing software for business groups.

I would pretty much kiss off any notion of a "Philadelphia angle" in this story by now, by the way.

The same week that iCoop filed patents, Reddi said, another company backed by billionaire Microsoft Corp. cofounder Paul Allen also filed patents "to do exactly the same thing. There was no way I was going to be able to succeed."

He turned, instead, to services, and freed himself from the tedium and expense of building and marketing a software product.

Reddi said the coming merger with VisualSoft would broaden AppLabs offerings to include software writing and consulting services, though he expects most of the company's business to remain in testing.

Diversifying "gives them more wedges into accounts," said Forrester's Schwaber. So, "if the market for testing services ever cools down, they have other investments, too."

Testing, Testing (funny...what dweebs)

AppLabs Inc. tests software developed by other companies, including SAP, Broderbund and American Airlines.

Founded: April 2001.

Headquarters: Philadelphia.

Founder & CEO: Sashi Reddi.

Employees: More than 900, including 850 in Hyderabad, India.

This public service announcement has been brought to you by the Greater India Chamber of Commerce.

Update: Regarding a comment I was asked to reject, my only answer is that I can be reached via Email from a link near the very bottom of the right nav bar.