CXO

Why I love offshoring and outsourcing

Most IT employees look at offshoring and outsourcing with begrudging acceptance to thinly veiled (or outright) xenophobia, but Patrick Gray believes they have made the IT profession stronger and more competitive. Here's why.

Offshoring and its close cousin outsourcing are loaded topics in most workplaces and especially in IT departments. We were one of the first business units to experience outsourcing and offshoring on a massive scale, and many in IT still smart from the wounds (real and perceived) inflicted by these controversial siblings. Perhaps most painful is that many of the technologists most acutely affected by outsourcing are specialists in the very technologies that made offshoring possible: high-speed, long-haul networks, and cheap, ubiquitous collaboration tools.

The feelings of most IT employees I've worked with around these topics range from begrudging acceptance, to thinly veiled (or outright) xenophobia, but I believe outsourcing and offshoring have made the IT profession stronger and more competitive. Here's why:

A global playing field is inevitable

If you want breathless praise from globalization, take a gander through Thomas Friedman's The World Is Flat. I'm a bit less sanguine in my views than Friedman, but along with cheap connectivity and an increasingly universal technical "vocabulary" based on common standards and development tools, IT simply arrived en masse on the global stage before many other business functions. While it's easy to lament the negatives of this global playing field, mainly that an organization can now draw on a global pool of smart and/or cheap people, I believe this competition makes IT as a profession better.

You can agree or disagree with this assessment, but this global playing field works in both directions. IT is one of the least location-sensitive professions, allowing workers to telecommute and market their skills worldwide. The rapid adoption of offshoring has made companies far more willing to hire outside expertise, and a tiny company like mine can now do business with Fortune 500 monoliths with neither party finding anything unusual in the arrangement.

While high-volume, low-quality manufacturing has largely left the United States, an opportunity has arisen for high-quality, localized, or specialized manufacturing. Similarly in the United States the days where you could make a comfortable living working in a desktop support call center are probably over, but more challenging (and presumably rewarding) opportunities have arisen in their place.

In an interesting role reversal, many formerly low-cost outsourcing centers have now been so flooded with demand and money that they have become yet another high-cost technology hub, and many CIOs are chasing "the next India" since that country is no longer as cost-competitive as it once was. Highly cost-sensitive skills are almost always headed for commoditization, so if your area of expertise begins to be outsourced it might be time to bone up your skill set.

Salary and skills are rapidly rationalizing

Like any new technology or business practice, offshoring in particular was subject to an initial hype cycle that has since rationalized. I remember sitting in a meeting with the CEO of a large company as he extolled the benefits of offshoring, mentioning that one could hire a PhD in computer science in another country for pennies that was "even better" than a local resource. While this may have been true for a brief period in the 1990s, the mythical "5 times smarter at 1/100th the cost" person no longer exists. Companies have largely figured out that you get what you pay for, just as highly skilled people in low-income countries realize that they can charge similar rates to local resources.

Educational credentials are also rationalizing, and firms are realizing that a high-level degree doesn't always mean high-level skills. At the end of the day, many companies are realizing that a slew of letters after one's name doesn't guarantee talent, critical thinking, problem-solving skills, or business expertise.

Outsource and offshore yourself

Big companies aren't the only beneficiary of outsourcing and offshoring, and arguably the technologies that make these practices possible can be deployed even more effectively by small organizations or individuals. I've tapped the global talent pool for everything from high-end legal expertise in contract law, to rudimentary administrative work. The two O's have made many IT shops more sensitive to what you accomplish than how many hours you sit in a cube, and with your own outsourced "staff" helping you with everything from booking doctor's appointments to assisting you directly in your business (where possible, legal, and allowed by your employer), we can garner many of the benefits of these practices ourselves.

While it's tempting to lament the way things used to be, or at the extreme attempt to legislate away the global playing field, it's clearly the new normal and I'd rather exploit the opportunities that it presents than be washed away in a tide of nostalgia.

Patrick Gray is the founder and president of Prevoyance Group and author of Breakthrough IT: Supercharging Organizational Value through Technology as well as the companion e-book The Breakthrough CIO's Companion. Prevoyance Group provides strategy consulting services to Fortune 500 and 1000 companies. Patrick can be reached at patrick.gray@prevoyancegroup.com, and you can follow his blog at www.itbswatch.com.

About

Patrick Gray works for a global Fortune 500 consulting and IT services company and is the author of Breakthrough IT: Supercharging Organizational Value through Technology as well as the companion e-book The Breakthrough CIO's Companion. He has spent ...

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