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U.S. Software: Now It May Be Made in Bulgaria

February 21, 1995

Plamen Dumkov of Sofia, Bulgaria, is a math whiz, but it didn’t take fancy figuring to persuade him to leave his employer of 25 years. Mr. Dumkov doubled his salary by quitting Bulgaria’s biggest state-run software concern and joining the local unit of Great Bear Technology, a Moraga, Calif., producer of multimedia titles.

Bulgaria isn’t known as a software hotbed. But then neither is Beijing, Budapest, Moscow or Bangalore, India _ all places where U.S. companies have hired hundreds of programmers in recent years. Today in Moscow, for instance, almost ``every programmer worth his salt works for a Western company,″ says Esther Dyson, a newsletter editor.

For programmers in developing countries, U.S. employers are appealing because they offer relatively good salaries and the chance to learn from overseas colleagues. For their part, American employers can get bright workers for bargain wages at a time when there is a shortage of skilled U.S. programmers. Great Bear won’t divulge Mr. Dumkov’s salary, but U.S. companies typically pay software writers in former Soviet bloc countries from $10,000 to $20,000 a year, or about one-fifth what U.S.-based programmers usually earn.

Software makers aren’t publicizing their use of far-flung talent. ``Companies consider it a competitive advantage that they’ve found a low-cost work force, so they keep it quiet,″ Ms. Dyson says.

Another reason for their reticence: Some critics say that over the long term the shift of software jobs abroad could threaten America’s grip on this vital industry. ``As critical talent locates abroad, critical innovations might, too,″ says Robert Forman, president of IMI Systems, a New York City software company.

To be sure, any day of reckoning for the rich U.S. software industry would be years, if not decades, away. U.S. companies now define and reap the benefits from emerging software markets and routinely strip foreign countries of their top talent, moving hundreds, if not thousands, of programmers to the U.S. each year, in addition to those who work for them abroad.

``Clearly, we’re not invulnerable, but this isn’t a cost-based business,″ says Mitchell Kertzman, chief of Sybase Inc.’s Powersoft unit. ``So I don’t think U.S. industry is threatened by inexpensive programmers.″

But American programmers could be. Just a few years ago, hardly any code writers from China or the former Soviet bloc worked for Western concerns, and the software centers in India and Southeast Asia were still more notable for the people they sent permanently to the U.S. than for the lesser talents who stayed home. But the rush to hire code writers who stay in their native lands is changing the equation for U.S. programmers, says Ed Yourdon, a New York City consultant who has written a book predicting the decline of programming as a high-paying U.S. occupation. ``Competition from programmers in developing countries is one factor making things tougher,″ he says.

It isn’t clear how many foreign programmers work for U.S. companies abroad, but the number is generally believed to be rising rapidly. This is partly because of soaring demand for programmers in the U.S. in recent years. In some parts of the country, and for some specialties, many jobs go unfilled for months. Good, experienced programmers in the U.S. earn between $50,000 and $80,000, with top talent making six-figure salaries. And that’s before stock bonuses and profit-sharing.

``The U.S. has a ton of prima donna code writers who charge an arm and a leg and are a pain to deal with,″ says Doug Cole, chief executive of Great Bear.

The solution? About two years ago, Mr. Cole opened the Sofia coding subsidiary where Mr. Dumkov works. He now employs about 85 Bulgarians who built the bulk of the two dozen educational and entertainment products the company released last year. Only eight Great Bear programmers work in the U.S., and they mainly stitch together and polish the pieces of code written in Sofia.

Mr. Cole says he isn’t simply hiring on the cheap and insists that Bulgaria is loaded with software talent. Mr. Dumkov, his top programmer in Bulgaria, learned to write code on an IBM 360 minicomputer, then moved to the PDP-11 made by Digital Equipment Corp. During the Cold War, these and other computers were smuggled into Bulgaria in violation of U.S. export controls, and Mr. Dumkov and his colleagues used them as models to help create an entire family of computers.