CollabNet's arrangement between its U.S. and India offices is not technically outsourcing, in the sense of a particular company task being contracted out to another company. Everyone in the Chennai and Brisbane offices is a CollabNet employee. On the company's intranet, the directory shows the names and faces of employees in Chennai, India; Brisbane, Calif.; and Chicago, Ill., intermingled in an alphabetical index of who works here -- wherever "here" is.

CollabNet has brought its offshore workers into the company, which in an unfortunate parlance of the Indian software industry is known as running a "captive" facility. There are no third-party buffers separating the workers in Chennai from the employees back in Brisbane, aside from the fact that they are paid on scales that are orders of magnitude different.

CollabNet even put the programmers in its offshore facility to work on its core business: writing the SourceCast software. While Q.A. testing is mostly located in the Chennai office, development work now occurs both in the U.S and in India. Programmers in both places not only work on the same projects, they literally modify the same files of code.

How did CollabNet get here? The reasons are a mix of pragmatism and idealism. In late 2002, the business environment for a small technology company looking to expand was brutal. CollabNet had been through layoffs but, paradoxically, what the company really needed was more people -- a lot more people.

"We just needed more arms and legs to be able to provide the robustness that the product needed to have," says CEO Bill Portelli.

"What we were capable of doing with the people on staff was not what we needed to win business," says Behlendorf.

In fall 2002, Portelli says, he was receiving three solicitations a month from outsourcing companies, up from a rate of about one every other month just a year before. E-mails and follow-up phone calls poured in: "We'll help you do this, cheaper, smarter, faster!" (Now, he gets about a dozen such offers a month.)

But the more the company explored these outsourcing options, the less it wanted to pursue them. Behlendorf objected to what he dubs the "fast food" model of services outsourcing: writing a specification, sending it to another company with developers offshore, and waiting weeks for the code to come back. Would this result in software the company wanted? As a pioneer and veteran of the inclusive, open-source world, Behlendorf just found the idea distasteful.

"I wanted a team there that felt like they were CollabNet," he says.

Jack Repenning, 51, a senior software engineer in the Brisbane office, puts the power dynamics of the traditional outsourcing relationship in stark terms: "Enterprise offshoring is a kind of colonialism, like growing pineapples in the Philippines or bananas in Hawaii. It's very demeaning and counterproductive: Do this and shut up."

CollabNet wanted to seed collaboration among all its developers, as opposed to creating a two-tiered model of service provider and client. It's a model taken directly from the open-source world. "This year, you'll call it outsourcing, but in a few years, you'll call it global development, where there are locations everywhere," says Jason Robbins, a developer who was the 10th employee at CollabNet when he worked for the company remotely from Southern California. "And you won't think of breaking off a chunk of development with limited risks and management responsibilities for another second-class team to do. Instead, development organizations will think of it as a global employee pool," says Robbins, now a lecturer at the University of California at Irvine.

This was the model that CollabNet was preaching to its customers and prospects: If they couldn't make it work themselves, did they have any business selling it?

There was another, even more pragmatic reason to avoid the subcontracting-out style of outsourcing. Despite a reputation as a low-cost alternative, outsourcing services still come at a premium, since you're paying a middleman to hire and manage the remote office of cheaper labor. If you can pull it off yourself, in the long run, it's even less expensive to run your own shop.

So, instead of hiring the work out, CollabNet decided to merge with an existing software company, Enlite Networks. Enlite was incorporated in Delaware, with management in Mountain View, Calif., and a few key developers in Plano, Texas. But by far the majority of its coders, some 31 programmers, were in Chennai. From its inception in 1999 Enlite was organized around the assumption that work would flow back and forth between the U.S. and India.

The company product -- a project management tool -- was folded into SourceCast. "They were not doing low-level work out there," says Behlendorf. "They were doing J2EE, heavy database stuff, the same kinds of things that you have people doing out here."

In early January 2003, when the company told the developers in Brisbane about the acquisition, the fallout was immediate and predictable. "A lot of people thought most of the engineering staff was going to lose their jobs," says Dan Rall, 26, a senior software engineer.

At an engineering offsite in the Marin Headlands, soon after the announcement, a "V.C.-type" speaker came in to put the company's move into a larger economic context, developer Leonard Richardson, 24, remembers.

"He talked about how the agricultural economy had become the industrial economy, which in turn had become the knowledge economy. Someone asked him what comes next, after outsourcing takes its toll on the knowledge economy. He said that if anyone had any ideas he was interested in hearing them," says Richardson.

Kevin Maples, another programmer, dubbed this vague notion the "I don't know, you think of something" economy.

The developers in Brisbane weren't the only ones who were worried. The Enlite engineering team in Chennai was also apprehensive. Here they'd been developing their own product, explains Muthu Krishnan, one of Enlite's U.S.-based founders. What exactly would they be doing for this CollabNet company? And what would these American executives in California expect of them? Programmers who had been writing code were put on the relatively less interesting task of testing software for bugs.

CollabNet had almost no QA department back in Brisbane, and this was an easy way to get an immediate benefit from the merger: The engineers in India would find bugs while the U.S. developers slept. Plus, it would help the engineers in India get up to speed on the product. Still, going from writing code to testing can only feel like a demotion.

The story of how CollabNet has striven to integrate its Indian and American engineers offers an illuminating test case in the evolving drama of globalization and its impact on the world's labor force. Along with the usual merger upheavals, the company had to surmount the perpetual barrier of a 13-and-a-half-hour time difference, and vast cultural differences as well. And no matter how enlightened the management, there's no getting around the economic facts. Indian programmers cost less; therefore it makes economic sense to hire them. Even for the most highly valued programmers in Brisbane who support what their company is attempting to do, that equation still chafes.

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