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By eweek  |  Posted 2003-04-14 Print this article Print

Having been around in this business since the early 1970s, Ive been through a few bouts of unemployment. Texas collapsed in 1986-87 (combination of oil and real estate and the S&L crisis). In this time frame one company here advertising for a dBase programmer got 300 resumes. Offshore hiring works if you have a big-iron project, like what you might see in an insurance company. There are so many costs (language and cultural issues, travel, long-distance phone charges, etc.) that a project, or a company, below a certain size cant use it.
Then there are other issues: do Indians understand American accounting and business practices, do Chinese and Philippinos understand English, and who deploys the project at the user site? This is kind of like buying a Japanese robot for an American car manufacturer. In this case you replace three people on a production line sticking body panels on a car with an industrial engineer being paid three times as much. At the end of all this someone has to make it work where its used.
We dont even need to get into the defense industry, which requires American citizenship, etc. Then we have all the state and local governments, including school districts, that wont really go offshore, even when it can be justified. All of this is the small potatoes. The bigger question is: does the United States, in total, consume more IT services than it produces? In short, if jobs are repatriated until the American workforce is fully engaged, then there are still people doing work offshore? This is not a trivial question. The reason it isnt is that India and China have expanding middle classes (the middle class in India is 20 percent of their population, or 200 million people). Middle class consumers drive cars, use telephones, check into hospitals for surgery, send their kids to secondary school and college, buy life insurance, use credit cards, and travel. All these things require vast amounts of computing. At what point do either or both of these countries have to import IT services? When that happens, where will such services come from? If the United States attempts to raise trade barriers on IT services, the real damage will come from choking off a process that is creating vast markets for all kinds of American goods and services. These will be high-tech products, including literally rocket science, concentrated mainly in medical technology, government services (air traffic control systems and environmental remediation, as two examples) and design tools (CAD, software development, FEA, etc.). What we wont be writing here is more banking and insurance apps: projects that require lots of bodies because of the heterogeneous nature. The new grad is going to have to start at a tech level, fixing PCs, installing networks, developing websites, and other stuff that is a bit beneath the 4-year Bachelors degree-holder. If their writing and communication skills are less than highly polished, these need to be improved. A lot of people got into computing related jobs through other avenues; some started out as engineers, others accountants, and some were just practical people that ending up having to master computers because they couldnt find anyone to take care of them. Since when was a degree a license? There is still plenty of work out there; it just isnt ideal. First, Id like to thank you for the very neat commentary on Eweek titled Perils of going offshore. I guess we need a lot of this kind of commentary delivered at the door step of each member of the Congress. Outsourcing is fast becoming a household name in Corporate IT these days. From the Chairman of the Board to CEO to COO to CFO to CIO and all of oohhhhs out there in corporate ladder are being convinced about the need to explore these frontier. A lot of them are still looking for ways to recover their huge IT investment because of the fact that what theyve bought are poorly conceived (i guess because of marketing hype) or simply doesnt work on their environment. While I agree that theres a need to maximize IT investment or keep the cost down (whichever you want it) and outsourcing would play a key role in this area. I do believe however, that with current economy (in general perspective), offshore outsourcing would not fit at this moment. Why? Ok, lets look down past for at least a decade. We all know that Information Technology have played a huge role in keeping US economy afloat. Creating huge demands for highly skill people that US cant supply so it has opened its door to foreign people who can provide the necessary knowledge to keep the job done. Now, as the bubble burst and demand stumble, we now have a glut of the same people taken out of corporate payroll because the money are not there anymore. And a lot of these titans though still needs the services but they cant simply commit their meager financial resources due to the fact that they want their bottom line look attractive to investors. Enter offshore outsourcing. People believed that its the best option that Corporate IT has in order keep the ball rolling while keeping the checkbook at bay. But in reality check, your simply robbing the local IT people the job that belongs to them because you want to save money. But try to sum up everything and youll find that its the whole US economy thats being battered. Weve seen what happened in more than a decade and now everybody is trying to figure out how give life to this ailing economy. So which one do you want to accomplish first, keep your checkbook as you outsource the job offshore or bring life to this huge economy that spills to global kitchen table. Should we start in our own backyard or clean up the mess of our next door neighbor. Sid


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