The “Good Ol’ Days” Are Gone

By Tiziana Perinotti
TGP Consulting and Silicon Valley Localization Forum

tiziana@TGPConsulting.com

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You can be sure that the current economic slowdown in Silicon Valley is definitely different than past ones, when you hear engineers complain about it. I have been working in the hi-tech industry in Silicon Valley since 1988, and I’ve never heard of a lack of jobs for technical people. As a matter of fact, this area has always been considered “nirvana” by anyone with a scientific background and entrepreneurial spirit.

Times Are Different Now

Today’s mission is not just to reduce the cost of doing internationalization and localization, but the overall cost of developing and shipping products.

Unless you possess very unique skills and are working in a very specialized field, chances are your company is outsourcing your coding skills to other parts of the world at a third of the cost to do software development in Silicon Valley. Most companies located in the Valley have been forced to revisit their priorities, cut back on their new projects and think of ways to bring products to market in a much more cost-effective way. Today’s mission is not just to reduce the cost of doing internationalization and localization, but the overall cost of developing and shipping products. Most executives, at both large and small corporations, have been restructuring their R&D divisions and have now located them outside of California, primarily in India and China, where products can be developed using low-cost engineering labor.

This trend has been adopted by startups as well. The initial product/service ideas, prototypes, demos and business plans are still formulated in Silicon Valley, where it is still relatively easy to raise venture capital, but the actual development is done outside of the region. The economic advantage of outsourcing the whole or part of the product development cycle is clear: you can hire a software programmer in India, China or the Ukraine for much less than the minimum hourly rate in Silicon Valley where the cost of living is very high.

This is not a new phenomenon: the low-cost regions in Asia and Eastern Europe represent what Ireland came to be in the eighties. Many Californian hi-tech companies back then started to outsource to Ireland, which was very attractive for its well-educated and low-cost labor force, its tax advantages, and the ideal location that it provided for exports to the European market.

What is peculiar about the new scenario of doing business in Silicon Valley is that these changes in its business model seem to be permanent.

What is peculiar about the new scenario of doing business in Silicon Valley is that these changes in its business model seem to be permanent. People who believe that the Valley will eventually revert to the “good ol’ days” prior to the economic recession that started in the first quarter of 2000 may well be disappointed.

Structural Changes in the Corporate Environment

In this scenario, it was only a question of time before a change would take place in the Silicon Valley localization industry.

We are witnessing very drastic changes in the corporate environment that reflect slow economic growth. U.S. economists are predicting that we need an average monthly increase of about 150,000 new jobs in order to provide a sustainable economic recovery with the potential to produce above-average gross domestic product (GDP) growth over several consecutive quarters. So, if there is no improvement in the job market, it is questionable that we will witness a sustained economic recovery.

The short-term effect of these corporate and economic changes has been an exodus of hi-tech professionals from Silicon Valley to other geographies in search of steady jobs, and a migration into other fields and professional careers. For instance, due to the shortage of nurses, hospitals have seen a large increase in the number of job applications by professionals who have lost their jobs in the hi-tech industry and chosen a totally different career path.

I believe that the structural changes of these new economic times are such that the short-term effect will have repercussions over the long haul.

The new corporate environment in Silicon Valley has restructured its organization to include development centers overseas doing the bulk of the coding. Due to the nature of writing software, services such as quality assurance, localization, technical writing and project management have now been added to the list of tasks assigned to these overseas offices.

In this scenario, it was only a question of time before a change would take place in the Silicon Valley localization industry. Typically, localization vendors in the Valley used to shop for compatible business partners among the many small translation agencies located in the above-mentioned regions. Localizers who work in Silicon Valley have now been replaced by their colleagues located in India, China, Korea, South America and Eastern Europe. Local translators can’t compete with the pricing offered in those regions. Even large localization houses headquartered in Silicon Valley that have enough capital to survive poor economic times have had to change their operations to favor translators overseas over local staff.

Challenges Created by Outsourcing

This need for a different focus on Project Manager and IT staff training also exists for translation/localization companies.

Job responsibilities such as upper-level management, user interface (UI) development, usability studies, marketing and sales are still handled at corporate headquarters in Silicon Valley. However, because of the new logistics of where products are developed, tested, localized and documented, it can be a real challenge to coordinate all these activities in a timely and efficient fashion. It is very hard for members of the same product team, pressed to meet strict deadlines, to communicate with each other when they operate in different time zones.

Cultural differences between staff at the R&D centers overseas and Silicon Valley headquarters also add their toll to an already challenging development process. That’s why there is a need for training Project Managers, IT, Marketing and Sales staff to operate in a multi-cultural environment when supporting their offices in India, China or Russia to quickly solve or prevent issues that can easily arise from dealing with personnel in different geographies. This need for a different focus on Project Manager and IT staff training also exists for translation/localization companies.

Job Prospects Under the New Rules

In the localization business, opportunities are still available at biotech, medical device and pharmaceutical companies, as well as Government-funded companies and agencies.

So, what are the prospects for technical professionals to find work in Silicon Valley these days?

Product design is not being outsourced, and even foreign companies prefer to have the design of their consumer products done in Silicon Valley. If you have a degree in Human-Computer Interaction, Cognitive Science, Psychology or related fields, and/or professional design experience (including UI design) and visual design skills, you will find many job opportunities as Technical Producers, Usability Leads and Designers.

In the localization business, opportunities are still available at biotech, medical device and pharmaceutical companies, as well as U.S. Government-funded companies and agencies. The Government in particular is in need of replacing a large portion of its staff that will retire in the next five years or so. It is currently seeking out hi-tech professionals with language skills, especially those with knowledge of Middle Eastern languages, Korean and Chinese.

Companies in Silicon Valley are primarily interested in working with localization suppliers who can offer the cheapest bid, without compromising quality (so, what else is new?!). Companies new to localization and what it entails tend to focus primarily on time-to-market. They select vendors only on the basis of their ability to offer the lowest price. As a result, price pressure has forced many independent consultants, as well as localization service vendors, to significantly lower their rates.

Yet, the challenge remains the same. It is still critical for startups and other businesses starting their first localization projects to educate their team on the subject, establish a process, and define and assign roles and responsibilities to team members. Working with experienced Localizers can help them balance the need to meet product deadlines with a level of quality that is acceptable to the marketplace.

There are still some companies that do care about quality enough to have a validation process in place at their headquarters in Silicon Valley. In this case, the Product Marketing Manager typically hires local independent Localizers/Linguists to verify the quality of the translation done overseas.

The Upside and The Downside to Outsourcing

On the minus side, outsourcing imposes a much more challenging product development process on staff that requires retraining.

In summary, on the plus side, corporations benefit from outsourcing by now being able to develop and localize their products and services at incredible savings. This enables them to remain competitive in the marketplace. On the minus side, outsourcing imposes a much more challenging product development process on staff that requires retraining.

From the translation/localization vendors’ prospective, the price pressure has caused larger companies to merge and/or to acquire their partners in the low-cost regions in order to continue to offer their services to price-sensitive Silicon Valley companies. On the plus side, vendors who are able to really compete (on the basis of quality, project management, knowledge of a customer’s market/product, seamless integration into a customer’s new product development process, and training and educational skills) will not only survive, but thrive.

Tiziana Perinotti has more than fifteen years of successful international software development and product marketing management experience with companies such as Apple Computer, Macromedia, Microsoft, Netscape, Olivetti, Oracle and Palm. She is the founder of TGP Consulting where she developed the award-winning Silicon Valley Localization Forum. She co-authored the first book on Software Internationalization and Localization and is a requested speaker at international conferences on software and human-computer interaction. Tiziana can be reached at tiziana@TGPConsulting.com

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