The guys who wrote the "Pragamatic Programmer" have a set of slides titled "How To Keep Your Job". The essence of the piece is that your skill set should be managed the same way you manage your financial portfolio.  That is, to diversify and manage risk.

However I was struck by one slide:

Nearly 1 million IT-related jobs will move offshore over the course of the next 15 years, according to a new report released by Forrester Research, Inc.

The thought alone is enough to give me shivers down my spine!

However, all may not be lost. A company named Assembla has a new business model based on the the following three trends:

• The Global Labor Market
• Software Surplus
• Online Services

All three trends contributing to IT deflation:

A compute cycle costs one tenth as much as it did ten years ago, so we can now afford much better computers. We are about to see the same scale of deflationary forces acting on IT systems as a whole. I think it's reasonable to expect to get twice as much for every IT dollar next year as last year, with more to come.

One of my favorite examples of a business that is well positioned to survive and thrive in a deflationary environment is Caucho, the makers of the Caucho Resin application server. Caucho has 1500 licensed customers using their core product, the Resin java application server. This server is used by many sophisticated application service providers, including PowerSteering. New releases come out about every two months. Much larger competitors like IBM and BEA have experienced difficulty expanding sales, but in the first quarter of 2002, Caucho sales increased 43% from the previous year.

This remarkable business has only two core employees. Scott Ferguson develops the (sophisticated) software, fixes bugs, and handles technical support. He lives in San Francisco. Steve Montal handles sales, finance, and operations. He lives in San Diego. They have recently added two additional employees to come up to a total staff of four. Caucho uses outside professional services aggressively. According to Montal, at any given time we have less than 10 people working He also notes that some people can do the work of 10, and Scott is one of those people. Their philosophy is to only hire the best people, and they expect to reach a maximum size of about 10 in the next few years. All of their hosting is handled by Servlets.com in Portland, a company that according to Montal shares our philosophy of hands on work and organic growth without the distraction of venture capital.

Caucho is an example of a business that I would call long, strong, and lean. It's long because it's distributed geographically and reaches out to outside service providers. It's strong because it competes globally, every day, and wins. It's lean because it has a small team and fixed costs that would qualify as roundoff error on the accounts of its competitors.

Gone are the days when an IPO could make you wealthy beyond imagination. Businesses with more moderate and organic growth works and are definitely more sustainable. The fact that Caucho is able to survive selling a version of commodity software (i.e. Java Webservers) gives me hope. Hope that there's a way to make a living developing open source software. The details now remain, how to build a long, strong and lean business for other open source projects.

A question to the blog community, who else is operating this way? We all would like to hear your stories!