Software shoves off for Y2K

With less than two years to go, and software glitches already crashing systems, companies are quickly becoming serious about ensuring that the software used to run their businesses works beyond the Year 2000.

"We are getting into the very critical time period for the Year 2000 problem," said Rick Hayes, director of solutions at Mastech Corp. While most companies are already evaluating the extent of the problem, many have not begun fixing it.

For the U.S., the delays could be costly. Already, the tab of the millennium bug is estimated at anywhere between $115 billion by International Data Corp. to $300 billion by NationsBanc Montgomery Securities LLC. "It's not whose numbers are the most accurate," explained Bob Austrian, an analyst in Montgomery's enterprise software group, "but the fact that we are talking about hundreds of billions of dollars."

With 10 percent fewer software engineers than positions available, that's a problem, according to a study by NationsBanc Montgomery. And with an estimated 60 billion lines of code that need analysis, the programmer shortage could spell disaster.

One solution: Look abroad. "There are a lot of companies taking their software development offshore," said Austrian. Montgomery believes that up to 30 percent of the Year 2000 problem could end up being corrected in software houses overseas. "[In many cases,] companies have to go offshore or not get their work done in time," said Mastech's Hayes.

The industry is moving into countries with a solid telecommunications network, a high level of education, and solid English skills. "Currently, [Mastech] only has an office in India," said Hayes, "but the Philippines and Ireland are also becoming popular." Other countries such as Russia, where some companies have developed software, has failed to mature into an industry due to language problems.

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In addition, as the Year 2000 deadline approaches, being able to do development around the clock may become critical. "Offshore lets you accelerate development by working three shifts around the globe, and take advantage of resources at off-peak times," said Mastech's Hayes.

Yet most Year 2000 development is not a candidate to go abroad, said Montgomery's Austrian. "I can't see software that runs critical systems, or is proprietary, being sent to a third party -- never mind abroad," he said. That makes such services out of the question for banks, most government agencies, and many software firms.

Yet with the deadline looming, some companies might not have the choice, said Mastech's Hayes. "Companies may have to go offshore or not get their work done in time," he said.