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Executive Editor

IT job changes afoot

May 31, 20043 mins
Enterprise Applications

Offshore outsourcing, automation will change workplace, consultant says.

BOSTON – Entrepreneur and corporate strategist Michael Treacy says one-third of IT jobs will be lost to automation over the next decade. An equal number of IT jobs will be outsourced to national or offshore providers.

Treacy spoke about the trend to outsource not only IT functions but also other professional roles, and clerical and labor-based manufacturing positions. Companies that don’t consider alternatives to in-house labor “will become uncompetitive and die,” Treacy said last week at an event hosted by public relations firm Brodeur Worldwide. “The driver to outsource and offshore is survival.”

Treacy is a strong advocate of finding talent outside of corporate and country borders. The globalization of product innovation is the premise behind the consulting firm Treacy founded, GEN3 Partners, which helps companies outsource portions of their research and development work.

For example, GEN3 Partners funded a wireless start-up that uses phase array radar technology to identify and track signal availability. Called AirGain, the company developed its technology in St. Petersburg, Russia, and is having its product manufactured in China.

To have developed the product in the U.S. would have been prohibitively expensive – about $20 million, as compared with AirGain’s $5 million funding. Access to low-cost research and development resources in Russia made the start-up possible, Treacy said.

He acknowledged the issue of offshore outsourcing is highly politically charged these days. The primary reason for all the fervor is that it’s an election year, Treacy said. In addition, fear of a jobless recovery and the realization that white-collar jobs are at stake is elevating the issue.

But Treacy doesn’t expect any legislation will result from politicians’ anti-offshore rhetoric. 

IT evolution

Consultant Michael Treacy says IT will be radically transformed in the next 10 years as auto-mation and outsourcing mature.
30% of IT work will go away because of improved tools, packages and automation capabilities.
Another 30% of IT work will be outsourced, including operations, maintenance and programming functions.
The remaining 40% of IT work will be focused on architecture and high-level application planning and implementation.

Politicians won’t take action to limit corporations’ ability to offshore work, Treacy predicted. “They’re going to do nothing. This is all hot air,” he said.

Meanwhile, it’s the labor-based manufacturing jobs that U.S. companies have been sending to developing nations first. Next up for relocation and obsolescence are clerical jobs. “Clerical work will go the way of agricultural work – we don’t need it,” he said.

After that, professional jobs: “Professionals will have to compete for their jobs globally,” Treacy said.

Within 20 years, 50% of blue-collar roles, 80% of clerical roles and 20% of professional roles will be outsourced or eliminated, according to Treacy. The elimination of jobs will be a result of productivity gains through automation, for example.

Historically, a far greater number of jobs have been lost to automation than to offshore outsourcing, Treacy said. “Yes, offshore outsourcing eliminates jobs, but at a modest rate compared to other productivity impacts,” he said.

Nonetheless, individuals should look to protect themselves should their jobs become obsolete. “Employees have to take responsibility for maintaining marketable skills,” Treacy said.