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Wednesday, October 27, 2004

Outsourcing Realities: Time to Stop Whining

Edward Yourdon, well known consultant, author and lecturer has recently published a book, “Outsource: Competing in the Global Productivity Race”, writes in the Editorials and Opinion section of the Software Development Times focussing on white-collar jobs, particularly IT jobs that IT workers in the west should stop whining about loss of opportunities due to offshoring and focus on reskilling and upgradation of knowlegde. He adds,"Information technology was the first of the white-collar industries to have experienced offshore outsourcing, but the phenomenon has now spread to call centers, help desks, tax processing, mortgage approvals, medical technicians and a long list of other knowledge-based professions. Yourdon tells IT professionals -Stop whining. Stop waiting for someone else to solve the problem. Take charge of your own jobs, your own career and your own future. Yes, of course tax loopholes should be eliminated to provide fair competition and level playing field for offshore work, just as we have done in various blue-collar industries. We should ensure that offshoring of knowledge-based work doesn’t create security problems and privacy problems. But that’s not going to eliminate the offshore-outsourcing phenomenon; at most, it will simply slow things down a little. Proof - Auto industry, Steel industry and Textile industry.

But there are some key differences between the IT industry and the blue-collar industries that first started moving overseas 20 to 30 years ago. Our knowledge-based industries are not going to be wiped out, or reduced to a mere shadow of their former selves: None of the serious economic forecasts suggests that 60 percent, or 80 percent or 100 percent of IT jobs are going to move to India and China. Instead, the predictions are that 10 percent to 20 percent of IT jobs will move elsewhere. While the loss of 10 percent to 20 percent of IT-related jobs would indeed have a significant impact on the overall national economy (assuming that such jobs were not replaced by other, economically equivalent jobs), the personal impact of such a scenario is fundamentally different than it was for the auto workers, steel workers and textile workers a decade or two ago.
In a Darwinian world, the same is unfortunately true for the hard-working, well-meaning veterans in that vulnerable 10 percent to 20 percent economic bracket: They’re not “entitled” to jobs if there is an alternative supply of lower-cost, higher-quality, higher-productivity people. Understading how one can add consistent value to enterprise, learning new skills/toolsets, are ways of insuring against being rated redundant.You need to understand how your “economic value” is determined by your employer, vis-à-vis alternatives from India. It’s trivial to determine that your salary is four times higher than an Indian programmer with equivalent education and experience, but is your productivity four times higher? Is your defect rate four times lower? Is your “value” four times higher because of your specialized knowledge of your company’s undocumented business processes? Do you have detailed, quantitative metrics with which to make a credible cost-benefit calculation that demonstrates your superior value to the employer? Will your employer respond in an objective, rational fashion if you present such economic figures?Several outsourcing decisions may be taken out of poor judgement and for other reasons - a few of them may fail and a few may meet the objectives.The high-tech boom of the 1990s masked the growth of the Indian IT industry, but now that we’re in a situation where supply exceeds demand, it’s no surprise that employers are looking for what they perceive to be the best source of cheap, productive, high-quality labor. Yourdon states the realities of IT offshoring in a manner that is direct, easily understandable digestible, for the apprehensive IT employee.

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