CXO

New study says more IT jobs at risk

Executive leadership coach John M McKee notes that higher level IT jobs are expected to move overseas according to new research discussed in this article. Are you prepared for it?

At the end of April, The Wharton School and CareerBuilder.com released new research on offshoring based on data from 3,000 hiring managers and HR professionals.

If you're in any of the sectors audited, you should be aware of some of the findings. With abounding uncertainty regarding the long-term outlook of both companies and employees, I found this report to be valuable and insightful because since 2003 I have been warning that nobody is bulletproof when it comes to offshoring.

Now, with business results dicey in many organizations, and the economy making it tougher to get new investment funds, the economics of using overseas staff and management become ever more persuasive.

Here are some of the key findings:

69% of employers believe high skill service positions are now at equal or greater risk of being sent overseas than low skill jobs. Examples they cite included programmers, software developers, marketing, system analysts and general managers. Industries cited as being at risk included technology services, telecom, engineering, banking, utilities, and communications. For the most part, these are organizations that haven't yet felt a great impact in the management ranks from offshoring. Regarding what happened to those employees who had their jobs sent overseas - 71% were let go. 44% of those who are offshoring are using India as the locale of choice, China picked up 24% and Mexico 12%. Most employers felt they could save money while keeping their service and quality at the same levels.

If you're in a role that, for the most part, is dependent upon decision-tree logic to make decisions, you need to be concerned about this. Research had already shown that accountants can be replaced (TurboTax), lawyers can be replaced (Completecase.com), and medical doctors can be replaced with MRI's now being read overnight in South Asia for hospitals in the west.

My advice: Prepare for the worst and ensure that you are doing work that demands more from the creative side for success. No software or computer has yet figured out how to reproduce that type of work. And many think it's far more enjoyable work.

john

Leadership Coach

About

John M. McKee is the founder and CEO of BusinessSuccessCoach.net, an international consulting and coaching practice with subscribers in 43 countries. One of the founding senior executives of DIRECTV, his hands-on experience includes leading billion d...

43 comments
mike_patburgess
mike_patburgess

For all of those people in senior management who are all consumed by the bottom lin. Remember Victor Kiam of Remington and what happened at Remington with offshore manufacturing (read his book). The essence, they were having a quality issue with his razors one in three were bad. After careful analysis, they found that the majority of razors manufactured off shore were bad. His solution was to close down all off shore manufacturing and consolidate back home. Result.. problem solved. Right now, we have that same problem with China and their practices (lead paint used for childrens toys etc). Our western governments need to step up and provide some form of legislation that limits this overseas production of goods and services. My solution would be to tax them very heavily if they decided to move these types of jobs off shore. The rational used would be that the tax base is being eroded by not having the manufacturing being done at home. They have the power to make the change.

flyboyanderson
flyboyanderson

This country has three great powers: Government - serves the people and has the Bill of Rights to protect us. Religion - serves the people and separation of church and state protects us from theocracy. Business - serves business and protects its fidutiary responsibility to earn a profit. Which of the three is the dominant power? We would like to think it is either government or religion since we have a measure of control. But ask those who have lost their jobs to outsourcing, offshoring, right sizing, leveraged buyouts, mergers and acquisitions; or those who lost their retirements and investments to Enron, MCI, dotcom bust, savings and loan meltdown; or Sub Prime fiasco. I think they would have a more realistic view of where the power is and who has control. How about an economic "Bill of Rights" in which we protect business from business and insure that the consumer has real voting power $$$ in the economy. Business leaders can never be trusted to do the right thing. They don't know how, there is no MBA to address this. Globalization, offshoring, we're screwed.

jscharts
jscharts

I say we are screwed, I've worked in the computer field for the last 15 years. In the last two projects, there were two white personnel and 25 indian technical people. I consider 50% of them quite talented, but by the same token, I know I probably be homeless, as computer salaries and rates keep dropping. I'm a Oracle Applications Database admin, they consider that a good position, but I'm stuck now with no way to get out. No savings to get out. I already tried to build a assisted living business, but failed from insufficient funding. I'm just glad I'm not raising children in this joke country. Everything for the rich in america, the hell with everyone else.

spammer man
spammer man

The key to securing your future is to work in a role that is customer facing. It's not possible to out source customer interactions, face-to-face.

tungstendiadem
tungstendiadem

From a perspective that is as objective as I can muster I would have to say that it is generally a matter of specifics. Sometimes it is important to cut costs in order to remain competitive, however if your firm is relying on having lower operating costs as its sole method of differentiating itself then you are in for a bumpy ride. Technology ultimately is supposed to serve business purposes, namely reducing the costs of data manipulation and information transfer and retrieval, however information can be a firm's most valuable asset and cutting costs excessively can jeopardize the firm's competitiveness. In short you pay people to keep your information your information and available to you. If you trust valuable information to out of country firms you are taking an enormous risk. The very purchasing power parity differentials that make offshoring your information services tempting are the same forces that make industrial sabotage cheaper and more difficult to detect and remedy. Ultimately it comes to making sound decisions about the value of the IS components your firm has and risks associated with trusting management and development of those components to offshore companies. A rival firm or hostile political entity may see as desirable to engineer exploits into your information services. On the plus side they'll never get depot work farther than transportation costs will allow. Some firms will take the offshoring of competitors IS as an opportunity some will take the opportunity to commit sabotage with impunity, others will make a push for PR, some will jump on the band wagon and have rather expensive operations nationalized, and some will look up from their work after the smoke has cleared and take advantages of the opportunities created by the activities of others. I would say if you are going to move your IS overseas play it safe and keep the equipment in cargo containers so you can recover as much as possible when some Junta or another decides to claim it as the peoples'.

wlportwashington
wlportwashington

The United States has always sought offshore places for products at cheaper levels. This has been the way since the square riggers sailed the oceans. Now that Bill Clinton signed the NAFTA accord we have seen a growing outflow of American jobs to offshore all in the name of a global economy. It was cited that this was good for American industry by providing greater opportunities. Where? I???d like to know. George Bush in his infinite wisdom pork bellied a tax law allowing it to become more profitable for companies to offshore work. There by eliminating American jobs and increasing the unemployment rolls. This law allows the employer to take a 100% tax write off of the salaries of the offshored employee. As an example, a mid-range JAVA developer in the United States would make between $80K to $120K per year, plus benefits. Off shore that very same job to India, the employee makes $12K per year with no benefits and the company can write off that $12. In essence, free labor. This equates to higher profits for the company. With this thought, it is no wonder way the bottom line of the companies that offshore is increasing. Meanwhile, Americans go on unemployment, loose their homes, self-esteem and what have you. At first it was the ???low-end??? jobs like help desk, data entry, call center, etc. that made their way out of the U.S. Now with the success of that for the parent companies, it was only a matter of time when higher level jobs are now in jeopardy. Think about the irony of it all. You had a great job. It went offshore to a third world nation. You cannot find work, your resources are now dried up and you have to go to social services for help. You call a 1-800 number to find out what you need to file, and that call is answered by the same third world nation that took your job in the first place. The New Jersey Department of Social Services tried this a few years back by sending the call center to India but saw that it was a major failure and brought the jobs back. They saw the light before it was too late. An insurance company had their claims processed in India. When the processing company demanded more money, the U.S. insurance firm declined. The India company threatened to release all of the private information about the patients onto the internet unless their demands where met. The U.S. firm had no choice and since our laws do not apply to them, there is no enforcement. How is that for security? Now taxes are being process over there as well. Give you that warm and fuzzy feeling to know that a third world nation with no morals and is processing your taxes un-protected by U.S. laws. With our own sector, we most likely have been hit the worst especially with remote administration, VoIP, and e-mail as valuable tools which does not require an on-site tech. Many of the IT jobs are gone, gone and gone and will continue to go unless Washington wakes up and mandates that these jobs (with the others) are brought back. As IT professionals, we need to call various manufactures for assistance with their products. We get a foreign national on the other end of the phone that has no clue of what you are talking about and makes a support call an exercise in frustration. As an example, we had a brand new HP desktop fail on us. I spent over three weeks on the phone with India trying to resolve the problem. The best I was able to get, ???Is your computer plugged in???? And that is a direct quote. Most recently we had the fifth HP Laserjet P2015 go down. The unit was under warranty and we bought the extended warranty on it. I spent three days arguing with HP tech support in India to get the unit replaced. I was even asked if the printer was at least turned on. Finally out of frustration from being treated like a moron, I told them it sounded like something they were use to, an AK-47 going off. Regardless they refused to honor the warranty. In another incident with HP???s India tech support on another PC, I was told how they hate Americans by the tech. But you know they love the American dollar. This is only part of a long list of experiences with the garbage that we as IT professionals must endure as our jobs are offshored. Bill Clinton opened the flood gates, George Bush blew the dam apart. Pretty soon, there will be no jobs left in the United States. Thank you Bill, Thank you George for taking our jobs away from us.

paul.synnott
paul.synnott

As a customer of some companies who have offshored, I can say that no, you definitely can't keep service and quality at the same levels. Saying so in a business case doesn't make it true.

jean_guy_bureau
jean_guy_bureau

Well there is one thing that You do if u call tech support asked to speak to some one in your contry

AlphaW
AlphaW

The people within the company that have the least knowledge about IT and see it as a cost center are the ones quickest to outsource. Unfortunately that is the majority of the firms and majority of upper management out there. It would be nice to hear more stories where the outsourcing has failed and the company has moved IT operations back in house. That happens a lot more than is publicized.

paul.huber
paul.huber

I think the model for cheap labor from Accenture reflects what people want in off shore workers, what they get (a quote from an Accenture partner) is a masters degree in Computer Science form some place you never heard of, and little or no experience. Hallmark mentioned they also put one person on the phone interview, and sent another on site. It is a risking proposal to engage with these firms.

pgm554
pgm554

And water is wet. So what's yer point? We in the biz know that there is no loyalty to a company's employees regardless of position. To think otherwise would be a mistake.

jonybader
jonybader

This disturbing trend is a result of the executive pay plans: stock goes up, get a bonus; stock goes down; get bonus; leave the company, get a massive retirement and buy-out. But here is the other side of the story. The companies that embrace this rush to save $1 an hour are one day going to be faced with 1) a massive offshore communication outage that cripples their business, 2) political unrest that shuts down their off-shore operations, and/or 3) growing nationalism that results in the take-over of the off-shore operations. This is a big gamble. Just ask the oil companies what happened to many of their off-shore investments. Copying a bunch of files is a lot easier and less detectable than stealing oil field equipment.

Nsaf
Nsaf

I think we should offshore Techrepublic.com, zdnet.com, cnet.com to India...what do you all think?

jmckee7307
jmckee7307

Have you seen any impact from this yet?

martenscs
martenscs

Obviously you don't see that every job short of Administrative is a customer facing job. Software development is highly interactive with the business and requires communication skills that rival any sales position that I have held. The issue has nothing to do with logical reasoning and only has to do with quarterly earnings reports. Short sighted corporate mentality that they will pay for at some point.

herlizness
herlizness

The key to securing your future is to work in a role that is customer facing. It's not possible to out source customer interactions, face-to-face. Dale Carnegie started teaching that in 1912.

herlizness
herlizness

I would say if you are going to move your IS overseas play it safe and keep the equipment in cargo containers so you can recover as much as possible when some Junta or another decides to claim it as the peoples'. The equipment? Who gives a crap about the equipment? Ever heard of insurance?

jimmyreed4tech
jimmyreed4tech

Why the surprise! It's about time everyone realize that we are working in an international economy. All your crying about job losts will not change it!

tungstendiadem
tungstendiadem

You can always be an informed consumer and refuse to do business with firms that have put profit before quality.

Sigman
Sigman

I had this happen to me. Interviewed a guy on the phone, asked him a tough technical question, after some delay he gave a 90% right solution. Problem was, I asked the same question to the person who showed up for the interview. Watched him alternate stammering with a blank look on his face for ten minutes, before we termed the interview. I've added re-asking a detail-oriented question to all applicants now as part of my interviewing technique. Also, I'm getting laid off in two weeks for an Indian company after twelve years of helping to build a company and department from 120/4 employees to 3000+/~100+. But I'm supposed to be loyal...

Viren.Aggarwal
Viren.Aggarwal

Frankly, I don't want to lose my job to someone else from somewhere else. However, consider the following- 1. IBM makes majority of the money by 'consulting' overseas. EDS, Accenture and many others do the same. These companies as VERY expensive and have a positive image(of course determined by who controls the media) 2. Hollywood makes money around the world providing dollars back home and employment to many. 3. Boeing is doing a favor to many countries by selling the aircrafts The examples are endless. When developing countries make extra dollar, they spend that on buying big ticket'brand' items that come from developed countries-Cars, arms, very expensive planes etc etc. Small ticket 'brand' items may not be manufactured in 'developed' countries, but the profit dollars go back to the owners and distributed to the share holders and investors. The warning is not only for countries like India to build a positive media image but also for the developed countries to 're-invent' themselves, to be more on the 'cutting-edge' of technology and development. This is free market world economy and the best ideas win.

Hurell.Lyons
Hurell.Lyons

There is small hope. The company I left last year was bidding on IT contracts and some of the contracts had explicit language in them stating that no operations for said contract are to be off shored. The other thing: I had to comment on the loss of quality comment by the original topic poster......THERE IS NO QUALITY. Have you call HP or Bellsouth (now AT&T). I can call and tell them everything I've done to troubleshoot the problem and get put on hold of 10 minutes while the tech support person researches my problem (try to take what i said and apply it to there knowledgebase). When they come up empty (because usually when I'm calling it means that I have tried all the conventional, non-conventional and then even fixes they would even know about and it didn't work), they usually come up with....oh its the computer or something else i know for a fact it isn;t. But thats me....its frustrating for people who don;t have the knowledge...and its frustrating for me who has the knowledge but has to deal with these people. If we are gonna waste money on people who can;t do that job lets waste on american's at least.

htp
htp

>>there is no loyalty to a company's employees Quite true. Of course, if we are "disloyal" to our company, that is another matter entirely.

Lawrence0
Lawrence0

Out sourcing is less attractive than in the past and becomes more so everyday. The declining comparative value of the dollar increases the cost of hiring services in other countries. At the same time, the employees to whom the work is outsourced are demanding higher salaries. Both decrease the cost competitiveness of outsourcing firms. Combine that with the political and social instability, and the exposer of company information to theft mentioned elsewhere, and outsourcing is not very attractive in the long run. The respondents to the survey were plan strategies for last year's reality and not next year's. The greater risk is lost of jobs due to technology. For example; computers and word processors have eliminated typing pools and secretarial positions. COBOL was supposed to reduce the need for programmers, but that didn't workout. The point on developing creative skills is very much on target. Graphic art's and typesetters took a hit with wysiwyg desktop publishing software (and other typesetting software). Web developers took a hit with software like Front page and other wysiwyg code generators. While these depressed salaries in the low end of the market, and produced a lot of poor quality, the high quality market has remained solid. For programmer's, it seems the need is to remain current and know the underlying theory. Both require an investment of time and effort outside of the job.

martenscs
martenscs

This is not something new but it definitely shows how most executives did not pay attention in there "Economics 101" classes. They are basically trading one time hits in lower wages for longterm wage expense. The fundamental problem is that in the U.S. we are seeing year over year wage decreases where the wages in India's are increasing year over year. So they get a big hit to the bottom line the first year they outsource labor but the year after they will see wages increase more than prior to the move. When you throw in the higher inflation rate, in the countries alluded to, this will eventually mean much higher wage growth than they would have seen if they would have kept the U.S. based work force. These increases show up also as an inability to keep workers. This increases training cost and knowledge transfer issues. You can also throw in the weakness in the Dollar that will multiply the above issues. I can also just state that there are other issues associated that anybody that has worked with outsourced staff. Time zone, language and just not being Americanized always leads to many issues in getting product out into the production environment. This just increases cost and is as bad as inflation. Another issue is the fact that they are outsourced to third world countries. American companies will at some point pay a price for having a majority of their knowledge base in countries that do not benefit from the political stability that is enjoyed by first world countries. This can be seen by the recent food riots throughout the world and the lack of reliable energy sources. The last thing is the growing sentiment in U.S. political circles concerning this subject. It will only take a few simple laws to make this not worth doing for a business and leave them scrambling to hire U.S. workers. So I am pessimistic short term but in the long term all of the above factors will at some point force these jobs back to the U.S. This may take a few years but after the current down business cycle I think a more long-term view toward American workers will be initiated.

billsommerville
billsommerville

Simple logic people; History has shown us clear as a sunny day that companies care only about money (the root of all evil). Therefore to keep from being a victim of their actions, we need to work together as a team and spur the ideas and desires of grass roots organizations in a operating capacity to cut them off. Yes of course it is easier said than done, but it can be done and the only thing corporate will listen is when they see these small organizations messing with their profits. Yes, again they can just buy them out and continue. Maybe and again maybe not, but at least these small organizations will do what the big guys have failed to do for a long time, support the community on a regular bases. This may be the one thing that will keep larger companies from buying them out. Do not depend on them. We should have never depended on them. Remember when you look at The Constitution, it says ?We The People?. When Corporate looks at the same document, they see ?Them the Sheep?.

ATLDBA
ATLDBA

There were a LOT of generalizations and vague references in this little article that does little to discuss facts and much to accelerate fear. While I don't doubt that a lot of positions have been and will continue to be sent offshore, I don't see ANY kind of survey indicating the satisfaction of employers who have sent work offshore. I do, however, hear a LOT of grumbling about the results, the turnaround time, and quality of effort and this doesn't even take into consideration a major factor, which is a large loss of control. One must also realize that some organizations would offshore their grandmothers if they thought they might earn an extra dollar for the up-coming quarter. When will U.S. companies understand they need to quit being so near-sighted?

Q'sDad
Q'sDad

It seems like your suggestion is to "Shoot the messenger". I have seen the trend here on the Mexican border. It is difficult to get a well-paying tech (IT/Engineering) job down here because they outsource to "sister plants" on the other side of the border. People get about *half* of the pay that you can get in Austin, Houston or Dallas. Employers tell me that the cost of living is lower here. It's not THAT much lower. Housing, food and gasoline cost the same. But then, those aren't Cost of Living Indicators any more. Are they?

des
des

If you do not quaify under the BEE conditions and you have a Univercity qualification you soon reaise that you are in the wrong country. I have a small IT company and have already lost my three top men. Their answere as to why they are leaving, simply put, no future for them or their families.

herlizness
herlizness

offshore higher level jobs? you mean the ones that everyone said would be staying in the US? big companies will do whatever they feel like doing (duh) ... but as someone else suggested here, I think ultimately they're going to feel a LOT of pain if they push too much offshore this is getting old but: just exactly what do people think will happen down the road when China is manufacturing furniture, tools, industrial equipment, cars, jumbo jets, etc and the United States is manufacturing hot air in meetings, team-building exercises, sexual harrassment seminars and endless "consultations" of every manner imaginable? We are getting dumber and dumber in this country with each passing day.

Marko ONO
Marko ONO

the equipment? the data. your health and financial information...sold on the open market....

don.gulledge
don.gulledge

Guess you never heard about the Japanese buying dollars to keep our currency higher and their's lower so they can bolster their production at the expense of ours. Guess you haven't heard about them dumping cheap products on the other 3rd world so they can undercut our market. Guess you haven't heard about China forgoing regulations over growth so they can capture market share. Guess you haven't heard about the 10 million illegal aliens in the US demanding equal rights from a country that never did anything to them. Free market, right. And I bet you believe the oil companies deserve to make billions and billions too.

Marko ONO
Marko ONO

Find information that a company is outsourcing overseas? Publish it everywhere you can. Bad press can shape policy more than good press.

martenscs
martenscs

Just to add....I am currently unemployed due to this issue. So I may be prejudice on the topic.

Marko ONO
Marko ONO

Right on target. I couldn't agree more. Please take the time to write to those companies and complain. Also inform your congresspersons and senators in regard to the exporting of data oversees.

htp
htp

Companies already doing quite well by anyone's standards decide that they could make even more money by sending jobs offshore. Rather than a considered analysis as to what mixture of off/on-shore labour might work to everyone's advantage, management stampedes towards the pot o' gold and does what would have been unthinkable 15 years ago - turns most if not all of the IT functions over to someone on the far side of the world. Gone is any institutional knowledge and the company becomes even more dependent on an outside entity. Considering that India & Pakistan were on the edge of a nuclear war a while back, one would think that companies would think twice about this but apparantly it is not the case. Meanwhile, most of the IT personnel do find another job but it often pays less. If more jobs outside of IT go overseas, the same things will happen in other areas and the overall standard of living will drop. Companies will bewail the fact that no-one is buying much (products or services) because no-one has must disposable income. We can't all work as greeters at Wal-Mart or barristas at Starbucks. America won World War II because of two important assets: 1. The valour and determination of the American fighting man. 2. The superiour capabilities of American Industry. So much of US industry and thechnical know-how is being shipped to the far side of the world that if another situation like WWII arose, the most expedient thing we would be able to do is surrender. Indeed, we already have.

imcneil3
imcneil3

I received this email not to long ago. It was funny, but so true: How to use the Economic Stimulus tax rebate As you may have heard the Bush Administration said each and every one of us would now get a nice rebate. If we spend that money at Wal-Mart, all the money will go to China. If we spend it on gasoline it will all go to the Arabs, if we purchase a computer it will all go to India, if we purchase fruit and vegetables it will all go to Mexico, Honduras, and Guatamala, if we purchase a good car it will all go to Japan, if we purchase useless crap it will all go to Taiwan and none of it will help the American economy. We need to keep that money here in America, so the only way to keep that money here at home is to buy prostitutes, beer and visit Indian casinos, since those are the only businesses still in the US.

mhbowman
mhbowman

We're selling ourselves out for the short term dollar.

bmente
bmente

To solve the problem of offshoring our jobs to India and other foreign countries, we need to drain the swamp of the MBA's that have permeated our companies over the last 30+ years. Our colleges and universities need to stop the MBA degree NOW - then again HTP is correct - if another major war breaks out, we are SCREWED! Thank the MBA's for sending out our industry and body of knowledge overseas so they can make a fast buck. All the MBA's care about is the short-term - how to make money and lots of it real fast, then get the hell out before their evil intentions are discovered. Short-term thinking has replaced long-term thinking and that is why we are in the mess we are in today. WE NEED TO DRAIN THE CORPORATE CESSPOOL OF MBA'S!

Tony Hopkinson
Tony Hopkinson

Not knocking what you did in the war. But german and british military was way in front. When you started making use of it and your massive quantitative advantage.... It's a good job you had it after all a german panther (which borrowed from a T-34) made a Sherman tank look like a fire-cracker, with horrible regularity. Once you'd picked up that tech boost, coupled with your relatively undamaged economy, and the power vacuum, left by a thoroughly broken europe, then you went from strength to strength. However I do agree that you are 'giving' it away now.

David.R.Cronk
David.R.Cronk

I worked on the help desk of a very large paper manufacturer with locations worldwide. About this time last year all support role jobs and alot of programming jobs went to TATA consulting in India. What made it worst was that about 20 of them came to the US for 8 weeks while we had to teach them to do our jobs when they went back to India

bmente
bmente

Indeed we are! See my posting below. Selling ourselves out for the short-term dollar is the philosophy of the MBA's "modus operandi". We need to drain the corporate cesspool of the MBA's and have our colleges and universities STOP teaching this HIDEOUS nonsense!

don.gulledge
don.gulledge

When all the smarts are gone from the US, then Americans won't be able to buy anything because McDonald's doens't pay that well. Don't these companies realize that going for the fast buck elsewhere will ultimately catch up with them when Americans won't be able to buy even the cheapest of stuff. The US has really shifted it's focus of importance from the science-tech-engineering arena to the Business and Info arena. But, when the other shoe falls, a business degree won't be worth sqaut and that time isn't that far off. I have always felt that I wasted my time getting an EE when all the breaks and great jobs have shifted to the non-tech type degrees. An EE is more-or-less worthless as it once was as is ME, CE and the rest. I think if the US goes down the tubes, they deserve it for being so short minded, greedy and stupid. I'm just glad I'm getting old and I'll be out of the system some time in the near future. It's been a really lousy ride and I'm really tired of the meetings, discussions, and no solutions.

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