Perspective: Offshoring obsessions miss the point

"No, you can't outsource your homework to India!" the gruff father in the cartoon pinned to our lunchroom board tells his son. Jeez, now that even the cartoonists have picked up on offshoring, it must be a hot trend.

With all due respect to the people whose livelihood is being affected by software offshoring, I frankly think all this obsessive focus on the subject misses the real point.

The software industry clearly is in dramatic upheaval. Some 90 percent of software start-ups have gone out of business, and many of the rest are likely doomed. Yes, newly funded software start-ups are required by venture capitalists to do their product development offshore, and chief information officers are aggressively using offshoring to reduce their operational IT costs.

Meanwhile, the domestic IT services industry is being ravaged by deflation. Independent consultants today command half or less of their pre-2000 billing rates, as the labor arbitrage between the United States and India quickly erodes.

All these realities are well-documented in the press. To me, however, they are symptoms of a different and much more interesting trend.

It is easy to miss the fact that we work in the most violently catalytic industry at the fastest-paced moment in human economic history. We overlook the fact that we are largely responsible for the return of amazingly high productivity rate gains in the U.S. economy (and soon, the world economy). The price we pay for this success is volatility: the sacrifice of the individual for the good of the whole.

The price we pay for this success is volatility: the sacrifice of the individual for the good of the whole.

The point is that we have only just begun. We're only a short way up the beginning slant of history's biggest rollercoaster ride. Offshoring seems like such an irresistible force, but in the not-too-distant future, much of the work that is pushing offshore will be eliminated altogether by continual improvements in software technology.

Legacy code is replaced by modern, off-the-shelf software packages. Custom-coded enhancements to software packages are replaced by highly configurable upgrades to those same packages. User help desks are bypassed by people who learn to solve problems themselves with knowledge management programs and databases. Tough business integration problems ultimately get solved by true software standards, accepted business object definitions and Web services.

Ultimately, the holy grail of codeless development using great software design tools will be discovered. By then, the loss of jobs to offshoring won't seem so important after all.

That's scary. What jobs will be left, then? The new jobs that haven't even been thought of yet, the kind that always arise out of creative destruction, the ones that will surely emanate from the United States because that's where the creative forces thrive.

So what do we do until they arrive? Thankfully, we are the smartest, most adaptive workers in the history of the world. We look for the light and go for it, like the laid off tech worker who started a new business selling T-shirts reading, "I lost my job to offshoring, and all I got was this lousy T-shirt!" We hunker down and use our survival instincts.

For our reward, just look at what is a short way ahead of us in IT: virtually free hardware and network bandwidth (Gilder's telecosm is really arriving); unimaginable computing power (growing indefinitely at Moore's law); limitless, virtually free data storage; increasingly intelligent, self-learning applications; evolving, highly integrated business transaction networks; highly personalized, instantaneous self-service systems.

All of these tools will liberate us to the point where we are constrained mainly by our imaginations.

Biography
Marc Hebert is executive vice president of Sierra Atlantic, a Silicon Valley-based application development company that has a branch in India.

More Perspectives

[dohoney]

outsourcing

Its seem that the people who are for outsourcing, American jobs overseas. Either have not seen the devastation and are not affected by it. Or simply do not care as long as their jobs and money are safe. All this outsourcing has done. Is to make a few selfish business people and goverment officials very rich. While the rest of the country becomes poorer.

[papy006]

You'd better keep silent.

If that's everything you can say about outsourcing you'd better keep quiet. Somebody with your position ought to be more responsible when broadcasting.

Systemic Dynamism

Every point in the article is right if you revisit history and imagine the unimaginable. The author paints a compelling picture of the future--the new jobs will be titles and roles that HR groups won't quite grasp--at least not right away. How enterprises behave when a merger takes place will be the focus--not how we integrate 25 year old systems, because those systems will no longer be running. And, if they are, you can bet it won't be long before they are replaced with more easy to integrate technologies.

The jobs and roles will focus on how to create new value in systematic ways through innovation and new methods for truly collaborating. The future is being designed right now if we are brave enough to step out from shadows and into the forefront. Just like history, the outsourcing of today will ultimately pass once American companies get the courage to trash the old systems and start to truly think, behave and execute with more zest and reward those behaviors. This will be the value proposition of IT in the future...

Where have I heard all this before?

I remember hearing all this stuff about a bright wonderful tomorrow when Local Area Networks hit the scene. Old technology was going away (namely mainframes) and new would take over and end world hunger.
Well, we still have mainframes and LANs have indeed tranformed communication.
Offshoring has nothing to do with technological advancement. It has to do with money.
Economics pushes jobs overseas and to Mexico. They have the cheap supply and we have the demand.
It's also a reality that the best workers go where they can make the best living. The future, at least in the short run, brain drain for the US and a lower standard of living for those who stay.

[ace942]

Outsourcing does not work

Corporations may decide to outsource but eventually it comes back to bite them. Look at what happened with PayPal who used to outsource customer service requests to India. People complained when they could not resolve a problem because the person that they were talking to did not understand English well enough.

The result of outsourcing will be more and more compaints due to the lack of quality and the problems resulting when things go wrong.

However some smart companies will use this to show that they care about their customers and do not outsource as much as their competitors.

Outsourcing

Hopefully, the companies that abandoned the American workers that got them where they are now, will wind up training the terrorists that will take them down in the future. After these companies have taught them what they need to know to destroy the systems they run on. They're all using countries that have high muslim populations.

If nothing else, they're training their own competition.

[dmm]

Big Surprise!

So, someone heading a company that not only depends upon off-shoring but actually organizes it, is telling us not to worry about it. Wow, who would have ever expected that?

Here is the simple ugly truth: off-shoring to places like India is effective because the average standard of living is so much lower there. The vast majority of people live in conditions of squalor that make our worst slums look like pleasure palaces. The long-term effect on America will be to lower our average standard of living in order to bring it more in line with the worldwide average. This effect has been temporarily delayed because technology improved quickly enough to allow us to transfer workers from industrial jobs to information jobs. However, the ability of countries like India to absorb jobs is increasing much faster than our ability to create new ones.

What is the solution for us, as a nation?
1) Reassess our priorities. Our consumption is pleasure-oriented instead of future-oriented. We need much more investment in things like infrastructure, training, and research. The money for this will have to come from things like pets, cosmetics, junk food, SUVs and sports cars, big suburban homes, throwaway electronics, rapidly-changing fashions, season tickets, etc.
2) Level the playing field. Either get rid of expensive regulations, domestic programs, and legal systems that protect American workers and the environment, or else force off-shore producers to obey these regulations and implement such programs and systems. Free-enterprise and capitalism do not care about people dying in the streets or species extinction down-river. Investment will flow to wherever it generates the most return.
3) Conserve energy and develop alternatives to oil. Importing oil is a big drag on our economy and a political handicap. Drive a fuel-efficient car. Move close to work. (This is a biggie! Which is better: a car that gets 20% more mpg, or a daily commute that is 2 miles instead of 30 miles?) Encourage partial telecommuting. (Too much and you get outsourced!) Encourage teleconferencing. Use less heat and AC. (Why is my office colder in summer than winter?)
4) Forget this idiocy about making America a multilingual society. One of our big economic advantages is that we speak English, the lingua franca of world trade, better than anyone else (except perhaps the English). Why undermine that? Certainly, encourage immigrant families to keep their language alive -- that can be a useful skill -- but not at the expense of proficiency in English. And here's another thought: instead of offering French and German in high schools, shouldn't we be offering Mandarin (spoken by a billion Chinese) and Arabic (the lingua franca of a billion Muslims)?

An excellent reply to yet another "outsourcing is good" article

This reply raises many excellent points. In
particular, the United States needs to develop
an industrial policy that takes more than the
interests of multinational companies into account.
I find it interesting that every country that
the United States competes with (India, China,
Japan and even the European Union) has an industrial
policy that attempts to build future economic
growth. The United States has nothing but
the blind faith that what is good for large
multinationals will be good for the United
States.

[mercuryrising]

another David

Hello Mr. Another David,

Again this issue comes up. Do you think India is a poor conuntry ? It has got the best of brain which even your western world recognises. And dont go on telling that Indians have got the lowest standard of living. Most of us do not like your low standard work and can do any work better than you if given a chance. You have spent years telling India the use of free market now when its your turn you are crying wolf.
I can agree with you that India is poor in terms of per capita income but to make it a point of berating India and its people you write these comments then you demerit the argument.
And for your slum issues , I can say that 200 years back western world was also not that great . Instead of just demeaniang people try giving something constructive that would help everyone.

Why yet another editorial telling us that outsourcing is wonderful

So far I have not read an editorial by an
engineer (someone that is involved in the hands
on production of hardware, software or mechanical
engineering designs) extolling the virtues of
outsourcing. Some engineers feel that it is
a force that can't be stopped (and some of these
are leaving the profession). Some feel that
we are reaping what we have sown (automation has
put lots of people out of work). A few buy into
the idea that it will all be for the best in the
end. But even those who buy into this article
of faith are not too happy about the whole process. Playing to part of roadkill on the
highway to a brighter future is not
much fun. Espeically if that brighter future
turns out to be fantasy anyway.

Of course none of this is much of a surprise.
Few people are going to think that higher
unemployment, less job security and lower pay
are good things, at least when it applie to them.
Although engineers and other professionals
are increasingly insecure, we have not seen
any decline in executive pay, especially CEO
pay.

Only those who are involved in profiting from
moving jobs overseas think that all this is
for the best, in this best of all possible worlds.

Which brings us to the question of why C/Net
is constantly running these editorial. Perhaps
it is to suck up to their advertisers. It
certainly is not something that is likely to
appeal to their readers. The replies to these
editorials is almost universally negative.

How about running an editorial from the
Communications Workers of America? As the
organization that is behind TechsUnite and
other engineering organizations I suspect that
they have a different view on the virtues of
offshore outsourcing.