From Offshore to Ship-to-Shore
4/5/2005 11:18:00 PM
Roger Green and David Cook seem like your run-of-the-mill high tech execs -- well dressed, well spoken, bright guys. That is, until they tell you their business plan. (I heard it at a party last night here at the Gartner conference, then did a quick interview with them.) And then you have to wonder, are these guys whacked?
Here’s their basic idea:
Take a used cruise ship, plant it in international waters three miles off the coast of El Segundo, near Los Angeles, people it with 600 of the brightest software engineers they can find around the world (both men and women), and run a 24-hour-a-day programming shop, thereby avoiding H-1B visa hassles while still exploiting offshore labor cost arbitrage and completing development projects in half the time they’d take onshore or offshore.
“As more people have run the [offshore] gauntlet and found the joys of traveling to India coach class and having three weeks of stuff on their desk when they come back, [they discover] it’s much more disruptive than they ever imagined it would be,” explains Mr. Green.
Before you think, “sweat-ship,” hear them out. These workers, they say, will each have private rooms with baths, meal service, laundry service, housekeeping and access to on-board leisure-time activities. Picture the Love Boat with a timecard. Staff can make the three-mile voyage into town in their off hours by calling a water taxi. Or they can spend time shopping in the on-board duty-free shop.
“Engineers can be kind of quirky in some ways, but they can be really productive if you give them the right setting,” says Mr. Green. “We think we’re going to be putting them in the perfect setting. Very few distractions. They’ll be with similarly motivated people who are really interested in advancing and doing this engineering work. It’ll be this perfect place for getting engineers to work.”
Half the developers will have the day shift and half will have the night shift. “But they’ll probably meet in the middle and chit-chat,” says Mr. Green.
The scheme first came to Mr. Cook one day while he was cutting his grass in San Diego. With his unusual background as a super-tanker captain and an IT professional, the idea made a lot of sense to him. He took it to Mr. Green, with whom he’d worked before and who has served as both a buyer and provider of outsourcing services, and they saw the possibility of creating a new form of IT sourcing.
A year ago, they formed SeaCode, Inc. with Mr. Cook serving as CEO and Mr. Green as COO. They’ve signed on a marketing director and CTO and, even more importantly, found an investor. Start-up costs won’t be cheap. A broker right now is searching for just the right ship to buy -- somewhere in the neighborhood of $10 million.
And now the duo is searching the seven seas for clients.
Says Mr. Green, there are several markets they’ve identified as SeaCode’s “sweet spot.” One is “projects that are under significant time constraints and are driven by market forces that are beyond the company’s direct control -- things like cell phones [and] video games --where they have multi-generations in a year and they need to have that high level of collaboration. We believe we add tremendous value to that kind of project. And also they don’t tend to be looking for thousands of bodies.”
But because hiring hasn’t really kicked into high gear, the clients also need to be “a bit more strategic in their thinking,” he explains. “Let’s plan the next generation. Anyone in the cell phone or game business, the next one is coming.”
Another potential market: pieces of projects being run by other service providers.
Staffing will start as soon as the first “anchor” client is signed on.
They expect most new hires to come from India. But, says Mr. Green, “If you have a project that requires a [graphical] interface, maybe there’s a back end database, maybe there’s a mainframe component, and there’s some embedded software, you might have to hire from four different countries and operate this virtual team to get the project done. With SeaCode's approach, all the engineers are living and working together on the ship as a true high-performance team.” Even though the programmers will get paid a multiple of what they would earn in their own country, he adds, "this...approach costs the client no more than before."
Americans will also be hired both as part of a land-based service organizations, says Mr. Green. “These will be the very high end individuals managing engagements and [acting as] the liaisons to our customers. We’ll need Americans for that.”
Americans will also work on the ship, to act as “the bridge between the work that gets defined and designed on land and to make sure that it gets executed properly.” The advantage, he says, is that when “you want to collaborate with your engineers, it won’t mean a three-week trip to India. If you’re in LA, it means a 30 minute boat ride. If you’re in San Francisco, it’s an hour plane ride and then a 30-minute boat ride.”
That proximity is a definite advantage to the ship-based sourcing, says Mr. Green. “We expect collaboration to be a much higher level than [it is] traditionally. It’s one of the main areas where people get into trouble in managing distant projects. They lose touch. And the cultural differences make it hard to communicate. We expect to fully take advantage of that proximity.”
Also, he explains, “We address a lot of the gotchas -- security issues, intellectual property rights.”
Teams of workers will be “pod”-based -- small groups who collaborate and work together. Mr. Cook dreams of a day when these pods will “party together, they’ll go to shore together. They’ll work together. And pretty soon, they don’t even have to speak, and they’ll know what the other one is thinking... It’s almost like the military, like bootcamp, where they break them down and mold them as a team. [But] that’ll happen just naturally, by these people living in close approximation.”
Clients will have access to on-board facilities as well -- including “first-class” cabins, conference rooms looking out onto Los Angeles, and a helipad for the helicopter that will take them to and from the ship.
Mr. Green and Mr. Cook point out that they’re not doing pure offshoring. “It does disturb me to think that when we spend all these dollars over seas, all of the money leaves [the country],” says Mr. Green. “It goes to real estate, it goes to food, it goes to workers over there. We’re going to keep about 10 percent back, which goes to direct wages. And the rest of the money that we get as revenue goes to the US. We’re an American company with American shareholders. We’re going to buy our fuel and food right in the US. And the money is going to get returned right in California.”
The operation will use T3 connections via microwave, cell phone access and local area codes. US providers will supply phone and Internet access.
A year from now, SeaCode expects its first ship to be fully staffed and tackling development projects. When that reaches capacity, the two men will scale up operations by buying another ship and planting it offshore somewhere else, perhaps in another US location, perhaps near Europe.
“We can take our ship anywhere we want,” says Mr. Green. Mr. Cook, the former tanker ship captain, gets a certain faraway look in his eyes at that statement. This CEO plans to serve as first master too.
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