Careers: IT Pros Sound Off on Offshore Outsourcing

IT pros are surprisingly nuanced in their objections to, or support of, offshore outsourcing.

IT pros aren’t, as a rule, knee-jerk opponents of offshore outsourcing. Some, for example, are earning their livings (or at least scraping by) as outsourcing contractors—in some cases, in near-shore locales, such as Canada. Others sanguinely embrace offshoring as a particularly challenging consequence of free trade—or wanly acquiesce to it as an ineluctable force of global capitalism.

The upshot, then, is that IT pros are surprisingly nuanced in their objections to, or support of, offshore outsourcing.

Even many offshore dissidents acknowledge that there’s sometimes a compelling economic case to be made in favor of offshoring, although they vigorously question its logic on other grounds. It doesn’t help, either, that outsourcing as a phenomenon—and offshore outsourcing, in particular—are linked in the public imagination with cost cutting, so much so that—rightly or wrongly—the desire to reduce costs is frequently cited as one of outsourcing’s most important drivers.

This has many IT pros crying foul.

You Get What You Pay For

Some skeptics argue that outsourcing is nothing less than high-tech bait and switch. “When a company outsources, two main issues are present,” claims Neil Rieck, an OpenVMS programmer with a prominent Canadian telecommunications company. The first, he says, is that the company is trying to save money by shifting IT operations to so-called experts; in this model, companies position the decision as an effort to “concentrate on [its] core business.”

Rieck knows whereof he speaks. His own company outsources some of its IT tasks to domestic (North American) and offshore providers.

The rub, he observes, is that outsourcing providers are trying to keep their own costs down by “doing the least amount of work for the most amount of money.” The ugly truth, he notes, is that outsourcing firms are typically operating under many of the same constraints as their customers: in some cases (e.g., IBM or EDS), they’re listed on the same stock exchanges and are subject to the same financial pressures. Just because IT is the “core” business of such providers doesn’t mean they can keep costs down simply by realizing “untapped efficiencies” or “synergies”—at least, not without moving IT tasks offshore.

That’s the elephant in the closet, Rieck and other skeptics argue: outsourcing arrangements with domestic outsourcing providers frequently have offshore components; in some cases, the decision to go offshore is built into the arrangement from the outset, as a means to further reduce costs for outsourcer and outsourcing provider alike. “[T]hese companies also try to save money by maintaining skeleton staffs and re-outsource work to secondary-contractors ... who may be offshore,” Rieck says. This is par for the course with outsourcing in general—not just with the offshore type: “Outsourcing of any kind will always add at least two layers of inefficiency to every software development project. Offshore outsourcing only makes things slightly more difficult.”

Bottom Line: It’s About Quality

Some IT pros cite another, more fundamental problem with outsourcing: companies aren’t doing it for the right reasons. According to David Dachtera, an OpenVMS programmer and principal with his own software development house (DJE Systems), most organizations see outsourcing first and foremost as a chance to cut costs.

“My concerns [as a prospective customer] center more on getting competent support quickly without slogging through call-taking scripts with people who may or may not understand what they are asking, much less understand the answers and the implications of those answers,” says Dachtera, who—for the record --provides contract (i.e., outsourced) programming services to his customers. “Quality of service is the issue. Show me someone who does not understand that quality comes at a price and I'll show you the next buyer of the Brooklyn Bridge, [the] Washington Monument, [or] the Grand Canyon.”

Organizations sometimes pay lip service to the idea that outsourcing will help improve quality levels, Dachtera concedes, but outsourcing decisions are rarely, if ever, made solely on the basis of quality improvement. This is particularly the case with offshore outsourcing arrangements, he argues.

“Whenever anyone mentions cost-savings [as a reason to outsource], I have a standard question that I ask them back: ‘How much money can you afford to save?’ Rare is the person who understands the question,” he indicates.

The simple upshot, Dachtera concludes, is that outsourcing—and particularly outsourcing of the offshore type—has certain costs. “[The] loss of customer goodwill, loss of customer loyalty, loss of customer mind-share, loss of market share … all these are consequences that companies must be prepared to face when they choose to displace U.S. workers and ship their jobs offshore.”

Independent COBOL code jockey Peter Lacey—who, like Dachtera, is a nominal outsourcer in his own right—expands on this theme.

Far from helping organizations shrug off their distractions and focus on core business competencies, ratchet up efficiencies, realize new synergies, or improve overall quality levels, Lacey sees outsourcing as the newest spin on a very old idea—that of cost cutting.

“Once upon a time, not so long ago, downsizing was the solution for everything,” he observes, arguing that outsourcing amounts to a have-your-IT-and-downsize-it-too reprisal of this practice. “Expecting outsourcing to be the magic bullet for everything will … cause pratfalls,” citing “drastic” understaffing as well as the erosion—or disappearance—of homegrown IT skills.

Lacey, too, reserves the bulk of his ire for offshore outsourcing. “In every case that I've read about or encountered, offshoring is employed to [eliminate] the need to keep certain expertise in-house, to cut down costs for this or that by employing outfits with greater knowledge or lower costs, or to supplement in-house productivity.” Like a lot of his IT colleagues, Lacey doesn’t buy the argument that outsourcing (of the offshore type, that is) tends to even out in the end. “The more expenses you get rid of locally, the less money you're spending locally, so the less you can expect to sell locally,” he points out. “I can't imagine how cutting expenses in this way at home is going to create more jobs at home.”

It All Evens Out

Not all IT pros are anti-outsourcing, of course. Some—such as Joe Zitzelberger, a COBOL pro with a U.S. financial data processing firm—even seem to revel in the challenge. “I really like outsourcing. As a programmer, I welcome the competition. I think it makes us a bit better as a group.”

In another sense, he suggests, outsourcing functions as a kind of Darwinian—or culling—force, too. “[P]erhaps it inspires some less-talented domestic programmers to 'pursue other opportunities.' Either way, I think outsourcing is a net win for the IT industry” because free trade is always a net win. “Free trade always creates more jobs and more economic activity than protectionism. It also works both ways. You don't hear complaints from the rest of the world that they have outsourced operating systems development [he cites the example of Microsoft], chip design [Intel], Internet searching [Google] or online retailing [Amazon] to the United States.”

The point isn’t necessarily that these are like-kind exchanges, Zitzelberger and other outsourcing proponents say (in fact, Microsoft, Intel, and Google, at least, are all bullish offshore outsourcers), but that free and uninhibited trade helps create programming jobs in undeveloped economies such as that of the Indian subcontinent even as it fosters the emergence of new markets in established economies.

Zitzelberger says his company’s own outsourcing experience is a textbook example of this. “We insourced before we outsourced. About 10 years ago, we were in the middle of a huge project and we could not find trained resources, so we hired a few dozen [programmers] from India. We got some well-trained, hard-working programmers that were willing to move to Columbus, Georgia.” Since then, he explains, his company has continued to insource—even as it has expanded its outsourcing activities, too. “We have since hired many more programmers from India … and other places … with great success. As well as sent projects to programmers in other countries. It has been a great success.”

Charles J. Fisher, author of Red Hat Linux Administration Tools and an Oracle, DB2, and HP-UX Certified Professional, talks like a man who has more or less made his peace with offshore outsourcing.

“It is inevitable. Trade barriers will never stop it. Market capitalism will naturally seek out the lowest cost producer,” he comments. “The art of a modern IT career is situating yourself in positions that can't be outsourced.”

In his 9-to-5 job as a contract worker with a prominent metallurgical company, Fisher has first-hand experience with the hows, whys, and whens of outsourcing. For example, he says, his organization didn’t conduct an ROI study before first plunging into the outsourcing waters. Nor, he stresses, was cost necessarily a concern. Nope: Fisher’s employer became an outsourcer because it almost didn’t have any other choice. “We didn't have time. An ERP rollout effort took all our developers away; we replaced their efforts on legacy systems with an outsourcer that has a large office in Mumbai. Our case wasn't about cost.”

In many cases, he says, offshore outsourcing does deliver lower costs—although in still other cases organizations might be hard-pressed to outsource some activities. “Development using modern tools is inexpensive, but some more esoteric legacy technologies might not find a market. Outsourcing isn't a magic wand, and there are real privacy issues that almost always add concerns.” In the final analysis, he concludes, outsourcing isn’t something an organization should undertake lightly. “For non-trivial projects, it will never be as easy or as cheap as you hope.”

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