Outsourcing and offshoring, revisited

Patrick Gray discusses the comments that he received after writing about his fondness for outsourcing and offshoring.

I received quite a few emails regarding my previous column "Why I Love Outsourcing and Offshoring," and the comment counter seems to be moving rapidly upward (I do my best to respond to email comments, so if you'd like a response, please use that channel). I wanted to discuss some of the themes from the emails I received, and start with the comment that this is an obviously contentious issue, but one that is well worth discussing since it has clearly affected our profession dramatically.

Cost cutting and Wall Street fat cats

Several comments covered the familiar ground of nefarious corporations and greedy corporate titans launching ill-conceived outsourcing and offshoring initiatives all in the name of the mighty dollar. Filter out the bromides and self-righteousness, and you are absolutely correct: Many of these initiatives are cost-driven.

I found it interesting that these comments could originate from people in IT, a profession long tasked with making internal operations most cost-effective. In most cases, we in IT are not hired to "play" with technology, but to implement new technologies that will save companies money. Do you lament the lost jobs in the mail room every time you perform an upgrade on your corporate email infrastructure, or consider the thousands of typewriter repairmen and typists put out of business by the upgraded office suite you provided? Corporations generally exist to make money; this is not a conspiracy or somehow evil; it's a fact of a market-based economy.

"Good American jobs"

Another common response to the initial article was that outsourcing and offshoring cost "good American jobs." I find two flaws with that line of reasoning. First is the assumption that the United States should have some sort of natural monopoly on technology jobs. Just as manufacturing "hops" to a different country every few decades, sub-sectors within technology will likely do the same, and a sense that the U.S. is somehow entitled to technology jobs is naïve at best and representative of far more disconcerting motives at worst.

There's no escaping the fact that technical jobs based in the U.S. have disappeared at an alarming rate in the past decade, which brings me to my second flaw: that some of this predicament is self-made. The IT "gold rush" during the dot-com boom and bust, combined with the Y2K "non-event," soured many to the IT profession. Whether legitimate or not, a global recession came on the backs of unrealistic expectations combined with unrealistic technical promises that were especially embittering to a generation of young workers who bought into the promise of an IT career and subsequently found a jobless wasteland. Executives are cautious to invest in IT talent in some industries, just as computer science classrooms remain sparsely populated.

Talking about globalization is a debate worth having, but it's not something that I believe can be reversed based on the historical record. The textile industry will likely never return to the eastern seaboard of the U.S., but rarely do I encounter those lamenting all those "good American jobs." If Western IT workers acknowledge that we're competing globally, on a personal level and as an entire profession, this acknowledgement allows you to make career and professional decisions that strengthen us individually and collectively, versus pinning our woes on an imagined foreign boogeyman. Even the idea of a U.S. company is a bit of a throwback from a bygone era. Most large companies make the majority of their income outside the U.S., and consumer companies in particular regard most Western markets as stable, while the high-growth markets they are most interested in are also the ones enriched by newfound wealth from offshoring.

But what about quality?

A point that's highly relevant to this discussion is the argument that several readers made that offshore resources lack quality compared to local ones, a contention I largely agree with and expressed in the original article. Some got into offshoring with the naïve assumption that you could find local-level technical expertise, language ability, etc., for a fraction of the cost, akin to assuming that the $25 "Rolex" sold on the street corner is equivalent to the real thing. This is the core of how the IT profession is changing: everyone is realizing that you get what you pay for.

Continuing with the watch analogy, there are quite a few people who are content with a Timex, and a smaller group that demands a Rolex. While you'll never get Rolex quality at Timex prices, there's a healthy market for each, and appropriate pricing for each. As many readers mentioned, companies are seeing the value of local, domain-specific knowledge that can't easily be replicated or offshored. If you're concerned about offshoring affecting you, strive to become a "Rolex resource." While the corporate profit motive may be off-putting, it's a fairly even-handed judge: if you're more competent and more valuable than all the alternatives, you're likely to stay put. Demonstrate why you're the Rolex (rather than complaining about the Timex's price tag) and you're set.

In addition, for better or worse there are several positions where quality simply isn't valued. Witness the rise of highly functional, lightweight laptops for $200, a price point unimaginable just a few years ago. Consumers want an absolute minimum cost, so things like tech support are also going to be barebones at best.

Is "love" a little too strong?

I love the IT profession. It has allowed me to see the world, interact with all manner of amazing people, and get an inside look at the guts of renowned companies and smaller shops alike. I occasionally wonder where I'd be had I been born 100 years earlier, and in just about every conceivable scenario it's more likely I'd be operating a drill press than working with executives. At the most cerebral level, outsourcing and offshoring extend these opportunities to a wider audience, lifting entire nations out of poverty in less than a generation. At a practical level, the influx of new participants in the IT industry helps all of us improve our game. I'll spare you the bromides about change, but many IT workers have told me that the intellectual excitement and dynamism are what attracted them to IT. Outsourcing and offshoring only turbo-charge that dynamic and give all of us a chance to shape the future of our chosen profession.

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.