Cloud and the offshore model

In my last post regarding Cloud computing Cloud – What the hype is all about.

I promised that i will be writing more on the Cloud. I work for a company with an offshore office so I would like to look at cloud computing from the this perspective. What effect would cloud computing have on companies that have offshore model and how do such companies need to change to adapt to Cloud environment.

Cloud computing is nothing new for resources who have worked in the offshore model. In one of my recent engagement as CRM project manager we worked by setting up VMs for my developers. One night one of my developers called me to check why they were not able to connect to one of the machines. I explained that the machines they connected to were not physically present in the office because they were in remote data center. It is something that we have been doing for years to enable our offshore teams to work from remote locations. Offshore resources work by connecting to remote machines.  These remote machines for them are somewhere in the “CLOUD”. When the offshore model was in its infancy and the VMs were not available we would setup separate machines but subsequently with VMs it became easier as hardware cost also reduced for this model. So the business model was simple “services at reduced cost”. Of course this only covers one aspect of Cloud computing and the more compelling selling pitch of increased computational power was never addressed by the early pioneers of the offshore model. I think it was mostly because most of the businesses would not buy the idea of having their mission critical data in offshore locations. Time has changed and who knows maybe a Cloud offering at reduced cost with data centers in Ireland, China or Pakistan would be a good business plan. Anyways so although companies with offshore model need to reorient themselves to take advantage of cloud computational power yet they have loads of experience working on remote machines and are familiar with the problems Cloud environment has to offer.

Offshore developers have a lot to offer as they have worked with remote machines, VPN setups, integration between offshore and on campus applications, Firewalls, security issues and workarounds, authentication on remote servers and Data migrations. I was recently in a conference where one of the presenters described the authentication and impersonation requirements for an application to talk to another application on windows azure platform. Although the methodology described was new but the problem was an old one. So as far as technical know how is concerned Cloud is something that offshore model would embrace.

As far as the business side is concerned I already mentioned in my last blog that the cost on services need to be reduced. One way of doing that could be by developing IP and the other is of course to reduce cost on resources and increase IRR. Offshore model inherently offers great IRR per resource but offshore teams don’t necessarily do a great job building products and reusable services. So when i look at cloud i feel it’s a new opportunity for companies that outsource work load as with Cloud the outsourcing model would be more acceptable. However it’s also a matter of companies, with offshore business models, stepping up and making a case of partnering with other businesses so that they could sell their expertise. In order to do this they need to train their resources to take advantage of Cloud infrastructure and build applications that leverage the computational power available.

Overall i feel its exciting times to be in the IT business and more so for companies with offshore model. In fact I feel that with Cloud every business model is an offshore model.