Supply and Demand

Its a fact: labor costs less in certain foreign countries. Often, its so much less that companies cant resist the opportunity to cut IT costs by sending work overseas. The issue of losing U.S. jobs to offshore outsourcing hasnt received this much attention since Ross Perot was talking about “that giant sucking sound.” Then, it revolved around things like trade agreements, the strength of the dollar, import/export duties and several other terms Ive long forgotten since my economics classes. But in the world of virtualization, IT jobs can be sent overseas without concern for borders, shipping costs or tariffs.

Theres nothing to indicate overseas IT outsourcing will slow soon. Gartner recently issued a report, “U.S. Offshore Outsourcing: Structural Changes, Big Impact,” that says 500,000 of the 10.3 million U.S. technology jobs could move this year and next and that one out of 10 jobs in the U.S. computer services and software industry could shift to lower-cost emerging markets such as India or Russia by the end of next year.

Given the virtualness of it all, legislation or regulation would be useless.

Even the controversies about H-1B and L-1 visas seem pointless when work can be done anyplace in the world with a mouse click. This is a case of supply and demand finding an equilibrium.

Looking at the situation objectively may help you protect your future. Newer and less well-known technologies are less likely to be outsourced, so it will pay to learn them.

More likely to be outsourced are tasks that require the least amount of knowledge about your company and that pose the least strategic and operational risk to your company.

For example, the vendor I choose to outsource the help desk to probably doesnt need to know much about my company, but the vendor I choose to outsource an ERP project to must know a lot about my company.

Most overseas outsourcing is related to the maintenance and enhancement of applications—such as the Y2K code-repair work that put overseas outsourcing on the map for IT. Ive seen very little mention of infrastructure activities being exported overseas.

This would include areas such as networking, data center operations, messaging and hardware support. However, many large, domestic outsourcers are prepared to take on these burdens for their clients.

I think IT has a long, healthy life ahead of it. Your company, however, can be a source of great career volatility. I cant imagine feeling secure in the IT department of a slide-rule maker.

Brian D. Jaffe is an IT director in New York, an eWEEK contributing editor and co-author of the “IT Managers Handbook: Getting Your New Job Done.” Jaffe can be reached at brian@red55.com. Send your comments to free_spectrum@ziffdavis.com.