• United States
IDG Enterprise Consulting Director

Are we the enablers of outsourcing?

Mar 05, 20045 mins
Data Center

Those who cannot remember the past are condemned to repeat it.George Santayana

Dear Vorticians,

In the week since we last spoke, the topic of outsourcing has picked up even more momentum, although it hardly seems possible. More cover stories, more columns, more breathless commentary on television and radio, more outrage.

I’ve also heard from many of you on the topic, thoughts which I’ll share below.

Oddly enough, I neglected in my discussion last week to mention one very germane point – it is the networked information systems that you have built or inspired that have made the current wave of white collar outsourcing possible. The Internet, broadband, collaborative technologies. All of these have enabled services work to flow to other parts of the globe like water seeking its level.

Maybe I neglected to mention it because it seems such a natural outgrowth of everything we’ve said and worked toward for decades. Networking really does change the world. But networks don’t honor or abide by boundaries, whether they be the walls of a corporation or the arbitrary and invisible demarcations between countries and cultures. Broadband lets a programmer play “Star Wars” online with all his pals after work. It also puts him on the same footing as his counterpart in India with the same PC and high-speed connection.

Some would say that I didn’t bring up the network connection because it compounds the blame: Not only are tech companies outsourcing high-priced jobs, they’re making it possible for every other CEO to put Americans out of work!

However, the issue was sounded by Vortician Andy Voss, who wrote, “The irony to me is that technology itself has contributed greatly to the movement of tech jobs to cheaper production sites overseas.  The Internet, IP, VPNs, VoIP, distributed processing/networking/storage and other technologies mostly invented and developed in the U.S. are what enable U.S. employers to remotely manage projects and to source software/hardware design and customer contact overseas.  

“(But) it’s hard to think of a market where protection does anything other than weaken the protected producers – ultimately the cost is borne by consumers in the protected market in terms of higher prices for second-rate products, and by the protectionist country which loses its competitive edge against foreign competitors and fails to maintain a world-class industry.”

Thanks, Andy, for both well-stated points. On the latter point, Vortician Angelo Santinelli added: “John, don’t you think the outsourcing issue is getting mired in politics and not really being dissected properly?  Why are people missing the fact that it is part of a natural evolution that has taken place since the beginnings of trade and economics?

“Why did the South want to protect slavery? Because they had a low-cost labor force and otherwise would not be able to compete. Why did the textile industry move overseas and why isn’t the New England landscape dotted with shoe factories? In every one of these examples, and there are many more, the economies of these regions, and our country, became stronger. American ingenuity and innovation kick in and, voila, you have a new industry.

“Thomas Friedman wrote a good article (recently) in the ‘New York Times,’ where he talked about a recent trip to India.  He noted that while visiting an outsourcing company in Bangalore, all of the PCs were from Compaq, the phones from Lucent and the water from Coke. It would be interesting to see how American companies’ sales to India have grown since the outsourcing boom started.

“All too often the media, driven by politicians, seem to not want to peel the onion on such complex issues and really get to the core of what is happening. They all seem to enjoy stoking the flames and emotions, rather than seeking to learn from history and do some thoughtful digging into the real numbers. Where have all the good investigative reporters gone?”

Angelo, to answer your questions – yes. This is a hugely political issue, both because it’s an easy target (Foreigners are stealing our jobs!) and because people genuinely feel pain when they lose their jobs or see others being displaced. Voters don’t get outsourced and an out-of-work voter is an unhappy voter. Placating such a person can pay off nicely.

And, yes, the media has done a generally lousy job exploring the topic. Again, it’s a big, fat target. Outsourcing makes great fodder for editorials and its opponents have done a far better job stating the case against outsourcing than economists and its proponents have done speaking in favor of it. In fact, in a recent “Wall Street Journal” piece, a top economist said the misconceptions around an issue like outsourcing are so pervasive that it’s almost not worth raising a voice in its defense. It’s a no-win situation.

This current wave of outsourcing is treated as something new and particularly ominous when, as Vortician Santinelli reminds us, it’s simply history repeating itself.

Well, I don’t want to repeat myself this week so I’ll sign off for now. Next week, I’ll share the thoughts of one IT professional who certainly doesn’t agree with me or the writers above. You’ll also hear from someone who describes herself as “one of those evil Indian programmers” stealing jobs. Her take on all this is fascinating.

You can always share your fascinating thoughts with me at Bye for now.