Generally, the high tech market remains soft with no specific signs that things will improve in the near future. In the WSJ Venture Capital Dispatch on July 8, 2009, it was reported that venture capital funding plunged 63% ($5.1 billion) in the first half of 2009 as compared to the first half of 2008 ($13.6 billion). Across all asset classes, the amount of capital raised was down 64% in the first half of 2009 from the same period a year earlier. The inability to raise additional funding, has slowed the flow of funds into both new and existing companies.

There was one bright spot on the horizon as reported in the MHT on July 18, 2009. The second quarter of 2009 appeared to mark a turnaround for venture capital investing, as total dollars invested in venture-backed companies increased over the previous quarter for the first time since Q2, 2008, according to numbers released Saturday by Dow Jones VentureSource.

Nationwide, across all sectors, venture-backed companies took in $5.3 billion in Q2, 2009, spread across 595 funding deals, the financial tracking organization reported. The total dollars represented a 31.7 percent increase over Q1’s dismal $4 billion invested – the greatest Q2 over Q1 increase in the past five years.  Nationally, numbers remained down compared to last year’s second quarter, according to VentureSource.  Overall venture dollars invested dropped 36.7 percent, to $5.3 billion.  IT investment dropped 41.4 percent, to $1.9 billion.  Healthcare investment fell 14.3 percent, to $2.2 billion, and renewable energy investment dropped 75.4 percent, to $220.6 million, quarter over quarter.

(Paul Gasparro is Co-founder and Vice President of Business Development for MapleWorks – the smart choice for on-shore software development.)

The argument for BPO offshore outsourcing may hold water, but it does not apply when it comes to finding a partner to create innovative software products. The real costs of offshore can be found not in the unit labor costs, but in the cost of ownership associated with doing business offshore. There are the obvious ones such as the cost of travel, the cost of communication, and the cost processing H1B visas. The real costs are associated with having inexperienced people with a non- North American development culture attempting to meet the innovative demands of new software products that will meet market demand and enable a profitable business.

Start with the fact that only in North America do developers work in an iterative way with the marketing department to develop a product that meets the demands of the customer base. Going offshore means you are with an inexperienced work force that only knows how to build to specification. No room for deviation or creativity. Products just don’t get developed that way in the US, so the resulting build to spec product has to be built over and over again until finally it is market ready.

Compound this problem with the fact that the people building the product are unfamiliar with the technology and the problem becomes even more severe. Not to mention the fact that the people that started on the project probably are not the ones that are working on it when it is finished, since employee turnover can reach 40%-50% per year in many offshore locations. Oh by the way, did I mention that the language is different, and since the time zones are totally out of synch, there is limited real time communication to keep things on track. Then there is the management issue. Since you are dealing with an inexperienced development team thousands of miles and many time zones away, you need to dedicate staff to managing the team. Also, that manager must spend a lot of time in the foreign country, away from home and family, not doing much for employee morale back home. Hopefully, once the product does get built, your intellectual property will not get stolen and find its way to a position on the shelf next to yours at a fraction of the price.

Unit labor costs of doing business offshore is certainly lest than doing development onshore. But you get what you pay for, which are a big migraine and not much more.

(Paul Gasparro is Co-founder and Vice President of Business Development for MapleWorks – the smart choice for on-shore software development. He posted the above blog as a response at http://www.trybpo.com/offshore-vs-onshore-outsourcing-pros-and-cons/)

(Please welcome Krys Pritchard as our guest blogger this month.)

Where are the technical writing jobs? They aren’t in Ottawa. From what others in the field are telling me, the tech writing jobs aren’t in Seattle or Dallas-Fort Worth or the Silicon Valley or points in between. From the beginning of April through the end of June, there were four positions for technical writers advertised on workopolis.com in Ottawa. I know five senior technical writers who are looking for work. Not one of them landed one of those jobs. Only one of the five has a casual job, she is pouring concrete lawn ornaments. From words to concrete, that’s quite a career change.

The reality of being self-employed
Many technical writers, like others in the writing field, are self-employed. Self-employed people who are without work do not draw employment insurance benefits and are not counted in unemployment statistics. These non-working self-employed people also do not qualify for government-funded retraining programs. Non-working self-employed people are not dining out, having their clothes dry cleaned, picking up a loaf of bread at the bakery, going on vacations, or buying new cars, electronics, or houses. More jobs are affected by offshoring than those directly made redundant.

Business owners don’t blame the self-employed for a dip in your monthly or annual revenues; cast the blame where it belongs: managers at those companies that wanted to please their stockholders by reducing costs, regardless of the price to North American workers and the North American economy. When management started to view employees as “bodies warming chairs,” often the first body to be given a pink slip (or in some cases, sent an email that the person’s services were no longer needed), was the one that the manager perceived as contributing the least value to the project—often the technical writer.

These managers “discovered and exploited” the labor markets in low-cost nations to cut labor costs. The managers of a Canadian flagship company were so good at reducing costs through offshore outsourcing, the company shall soon be no more; stockholders will not receive any financial rewards from misguided decision to take jobs to China or India; and the labor pool of skilled and talented people available in Ottawa will grow. But where are the jobs for these talented people? IBM recently initiated a program called “Project Match” for its redundant North American workers to relocate to in India, China, and Brazil (http://www.informationweek.com/news/global-cio/outsourcing/showArticle.jhtml?articleID=213000389) has drawn heavy criticism in the business world. Employees who accepted this offer would work for the reduced wages in the lower-cost countries. Not to mention the difficulty to return to North America if they lost their newfound jobs.

© Copyright 2009 K. Prichard and Capital Writing Services. All Rights Reserved

Capital Writing Services is located in the Ottawa area. To contact CWS, E-mail cws@ripnet.com.

About the blogger: Krys Prichard, President, Capital Writing Services, has 20 years’ experience in the technical and business communications fields.