Offshore outsourcing has become a major business (and e-business) suise in the past couple of years, as IT job losses in the U.S. have exacerbated the already sensitive topic of farming work out to foreigners.

Some service consumers have pulled back when engagements didn't turn out as planned. But driven by cost savings, and sometimes uniquely available resources, offshore rolls on and provides satisfaction to a lot of adopters.

While the outsourcing proposition is largely unchanged, a growing factor in the offshore equation is the consulting angle, which is a threat to U.S. based firms as much as software engineering is to developers.

Consulting has always been on the mind of Arkadiy Dobkin, founder and CEO of offshore software engineering and services provider EPAM. Dobkin, an electrical engineer from Russia, set up the company with two employees in the early 90s, and today presides over a staff of over a thousand spread across Russia, Belarus, Hungary, and the U.S. While lots of those employees are doing traditional software engineering and support, consulting is a very important part of the proposition.

Dobkin has bet his company's future on the notion of a hybrid model in which EPAM consultants based in the U.S. have just as important a role as software engineers in Minsk or elsewhere. "Twenty to 30 percent of our engagements involve business analysis, strategic discussions, specification development, and architectural design," he says. "It's similar to any consulting organization."

The idea is not only to bring higher value-added services into the outsourcing picture, but also to establish a footprint in the same geography as the client - which can be reassuring. While Dobkin has been following this strategy since just a few years after the end of the Cold War, other offshore service providers are just beginning to pursue the consulting angle.

This raises of the question of how, in a world in which outsourcing has become a permanent part of doing business, U.S.-based companies can best choose their overseas partners. Dobkin concedes that Russia is not yet in the vanguard. "We're the largest company with this model based in the Eastern European resource pool," he says. "But right now, no one can come close to Indian resources."

Dobkin says that the Eastern European resource pool can be distinguished from other offshore centers by its quality. "In the former USSR and Eastern Bloc, the economy was built on engineering," he says, explaining the high competence of that geographic resource pool.

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