Offshoring . . . offshore?

Former supertanker captain David Cook and his partner Roger Green wave off critics who say their plan to put 600 software engineers on a ship just off the coast of Los Angeles is another anti-American move to steal jobs from U.S. workers.

And with the other hand, they wave off skeptics who say the whole thing is surely a hoax.

“This is absolutely real,” Cook says.

The idea is to put software engineers on a fully staffed luxury liner that is flagged in a foreign country such as the Bahamas or the Marshall Islands in order to get around the H-1B visa requirements that have put a limit on the number of foreign workers that U.S. businesses can bring into the country. The company itself, called SeaCode, has its headquarters in San Diego and will pay U.S. taxes.

The idea has been called everything from bizarre to “a real threat.” Some analysts question its feasibility, noting that start-up costs and overhead will be huge. SeaCode is working with a broker to find a suitable ship that will cost anywhere from $10 million to $300 million.

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Once the ship is in the water, which company founders predict will happen by the beginning of next year, SeaCode will employ a full onboard staff, providing its programmers with private living quarters, laundry service, three meals a day and medical care.

“I had a discussion about this with my research team … and none of us – all of whom have worked in the IT industry for decades; most of whom have been business executives; and several of whom have accounting, finance and MBA degrees – could come up with a working rationale as to why this would work,” says Bruce Guptill, managing director at consulting firm Saugatuck Technology.

But Cook – who is the company’s CEO – and Green – the COO – believe it will. They already have investors lined up and say they are talking with a number of Fortune 1000 companies as potential clients. They say their business model – which includes round-the-clock shift work – will enable them to pay foreign workers two to three times as much as they would make in places such as India or China and still offer U.S. clients outsourcing packages that rival true offshore deals.

“We’re cutting our margins compared to what some of the foreign outsourcers are making, and that allows us to be competitive,” Green says.

While at first blush the whole thing might sound exactly like what critics call it, another drain on U.S. jobs, Cook and Green are quick to note that as much as half of their shipside staff could be made up of Americans, not to mention the onshore support team in San Diego that will consist entirely of U.S. workers. In addition, 90% of the company’s revenues will flow back into the U.S. economy through the purchase of necessities such as food, supplies, maintenance, fuel, and Internet and phone service, Green says.

“As far as I can tell, we’re the only company bringing jobs back to the U.S.,” says Green, who explains that so far potential clients consist of companies that already have moved jobs out of the country but have had less-than-pleasant offshore experiences.

“The value proposition we’re talking about really only makes sense to people who have experienced the dark side,” he says.

The “dark side” of offshoring refers to lengthy and expensive travel demands, the threat of disease in foreign countries, cultural and language hurdles, and even the risk of kidnapping, Green says.

“If you haven’t done it, it seems perfect,” he says. “It’s only when you go and send projects offshore that all of a sudden the gotchas start lining up.”

SeaCode expects to get around those gotchas with what it calls “hybrid-sourcing,” combining a land-based organization in the U.S. with the engineering group on the ship, Green says.

In addition, while most offshore locales lack intellectual property laws, SeaCode will offer tighter IP protection since all code written on the boat will be transmitted via microwave to the company’s San Diego office, placing all IP under U.S. regulation, Green says.

Cook, who left the seafaring world five years ago to become a network consultant, and Green, a software architect who most recently was the CTO of an outsourcing firm, incorporated SeaCode about a year ago. They say their Web site has been “pounded flat” since they told their story to a blogger during a party at Gartner’s Outsourcing Summit in early April. Cook says he came up with the idea while mowing his lawn.

“We had slightly over 2 million hits in the first month” after the news broke, Green says.

What is perhaps most interesting is the number of résumés Green and Cook have received from American job seekers.

“The new engineers will not be making as much as they would here in the U.S.,” Cook concedes. “But if you take away someone’s living expenses, they really don’t do bad at all. They don’t need an apartment, they don’t need a car, they don’t need to make meals or do their laundry. So for somebody coming out of school the pay is going to be pretty good.”

Both men and women will work on the ship, although families will not be allowed onboard. Water taxis will shuttle employees to and from the mainland. Contracts will be for a year, though if the situation isn’t right for someone, he’ll be allowed to leave, no strings attached, Cook says.

“I worked on a ship for many years. I can talk to someone and pretty much tell if they’ll be fine with that kind of condition or not,” Cook says. “We’re not hijacking these people. Everything is explained to them from day one.”

A vice president of engineering at a large software firm, who declined to be named, says it’s the people-side of things that will be the biggest challenge for SeaCode.

“I don’t think the technology is going to be the tricky thing in this,” he says. “Really critical is the skill of the manager of the people on the boat. If they don’t invest in HR to make that work, that’s where I see the biggest risk. This is a big HR experiment.”

There will be romances, there will be gangs, there will be bullies, he says. “It’s going to be like public school. With so many people in such close proximity, it’s just going to be a nuthouse.”

At the same time, the vice president of engineering says he is intrigued by what the floating software development facility could offer, believing the lifestyle will attract high-caliber talent.

“Think about it, you’re basically going to a place where they’re going to feed you meals, pay your room and board then give you a salary,” he says. “That’s what’s compelling about the opportunity and might attract better-than-average talent at a lower-than-average wage.”

He says he is considering sending some low-risk projects to SeaCode after it gets its sea legs.

Critics, meanwhile, still view the venture as a flagrant attempt to get around U.S. immigration laws.

“Symbolically, it’s such an obvious attempt to circumvent traditional cost structures,” says Jeff Kaplan, managing director of Thinkstrategies. “It magnifies the whole question of outsourcing, as well as offshoring.”

The good news is that technology permits entrepreneurs to take innovative approaches to existing problems, he says.

“The bad news is it’s permitting them to do it in such a way that there are riskier and riskier enterprises like this that pose a real threat to traditional jobs and processes. It gives you a kind of queasy feeling. It makes you seasick.”