A while ago I posted about a podcast I heard with MS’s Harry Pierson, titled “Developer 2.0”. This podcast talked about the outsourcing of IT skilled labour into developing countries like India, where labour is much cheaper, and concluded/proposed that the kind of jobs that won’t be outsourced include the ones in architecture. But there’s a lot happening in this area.
A known analyst, Cringely, recently wrote in his blog about a supposed reduction of ~150k IT workers at IBM Global Services, to be replaced by workers in BRIC (Brasil Russia India and China) and this post spurred over 1000 comments, by IBMer’s, former IBM’rs, people working in IT, people calling for sindicates, nationalists, people in developing countries, etc. I read through the part of the sequence of comments, and found it immensely interesting, a true management lesson. It’s true, that skilled IT work is being outsourced to these countries, and everybody in IT should be aware of this and consider the options.
Some of the comments I found most interesting talked about a decrease of interest in Computer Science or Engineering at universities. I have heard people complain more than once, in *Portugal*, that working as a developer can be underpaid work (600/mo, for example), so I wouldn’t be surprised if this also happens here. Other people complain that IT is too hard, requiring lots of work and skills in Math. Here’s an article on this subject. Apparently, in the UK, there’s “a 43 per cent drop in those studying computer science at A-Level between 2001 and 2006.”
Another argument I found interesting was about Intelectual Property and Innovation: if the work and skills are being outsourced for cheaper labour, won’t those same workers/countries eventually take the lead in technological innovation, R&D, and creativity, especially as their own markets expand? Someone said: “As the companies in India and China do more of the work functions there will be a day when they determine that they can cut much of their overhead by cutting the link to their foriegn management team.” Other comment about innovation was: “Upgrades tend to get pushed back as staffs become leaner. In most outsourcing contracts, outsourcers are required to keep you on currently supported levels.”
Also interesting were some of the comments from people in India, in part in response to the complaints that their work lacks quality, especially in customer support: “The US counterparts assign only that work to us which they would not like to do. […] It is very unfair of you people to blame our communication skills.We unlike you not only have to learn english but also the local provincial language(kannada in my case),the so called “national” language hindi, the language spoken at home (tamil in my case). […] A beautiful and peaceful city like Bangalore which was called the garden city has turned into a garbage city.You will get to see the worst traffic in the world here. […] There is huge disparity of incomes between those in IT and the rest.This has led to lot of unrest throughout the country. […] I would also like to warn the multinationals that exiting India and layoffs will not be as easy as in US.” This last point ties into another argument: the standard of living in these developing countries will undoubtledly go up, and in so become less appealing to contractors. In India, for example, inflation alone is at about ~6%.
Several people ask for government control, and apparently the Federal Government does have some limits on what can be done outside the country in their projects (“National Security” concerns and all), but this seems to be inneficient or not enough. Still more people complain about the quality of the top management and their compensation packages. I can’t talk about the quality of the management, but it’s true that when CEO’s of large companies leave they tend to take several US Million with them, which (at least to me) seems way too much.
One of the side-effects of these kinds of large-scale layoffs is that smaller companies appear, occasionaly lead by former employees, and betting on making a difference by their agility, proximity and ease of communication, not on price. After all, you don’t buy the cheapest house/car/… available, but the one that better fits your criteria and needs. And “It’s a heck of a lot more fun being the predator than it is being the prey!”, or “I think if you want good service, go to a smaller IT professional services company. They know they have to work harder than the big guys, but they are also more nimble, and customer focussed because they have to be.” And a huge problem to the company doing the lay-offs, like IBM seems to be doing, is the sharp decline in morale by remaining workers.
I know of several deals in Portugal involving outsourcing, so even if we are cheaper than most other countries in Europe, I have no doubt we will feel this as well. Most people know about India’s WiPro buying Enabler in Porto, or the global Microsoft Call-Center in Lisboa, or calls for support that are answered from India and/or Brasil, and there are more deals with countries from eastern Europe and India, as well as Brasil. And with Brasil there isn’t the cultural, language or timezone differences that happens between the US and India.
Assuming you can’t compete on price or skills (because outsourced work IS skilled work), you have to find a way to make a difference and keep yourself in business. IT tends to be an area where professional service companies run only to stay in the same place, much like Lewys Carrol’s red-queen. Maybe we have to run in slightly different direction, and finds paths others can’t take.
“Don’t fight the current. Accept that all forms of service jobs are going the way of manufacturing jobs and work to make yourself more valuable in the domestic marketplace through new skills and a new offer that can’t easily be sent to a distant land.” (also from the comments)
As to Portugal, I also found a list with the Top-50 global outsourcing locations, where the country is listed at #46.
On a related topic, I was researching about multi-national projects using agile methods, and among several horror stories (there are several of these related to outsourced work, but I honestly suspect some of them are just folklore) found Martin Fowler’s post on this same topic, describing his experience at ThoughtWorks. Most of the advice he gives is based on the problem of communication and cultural differences. It does seem complicated, delivering a project using an agile methodology (like scrum or XP) with teams in different countries, seen as it is that those approaches are based in communication itself. He describes some of the ways to minimize this problem.
Food for thought.