The movement to offshore outsourcing has been far more subdued here than in the U.S., where the trend has grown quickly, and opposing it has become a politically popular stance. Proposals to ban such outsourcing have been tabled in several states, including New York, New Jersey, Connecticut and Washington. In France, Germany and the U.K., too, there is growing opposition to giving local jobs to non-nationals.
The attraction of offshore outsourcing is, primarily, favourable labour rates, and the key driver is the intense pressure that U.S. CIOs have felt over the last three years to reduce costs.
Although Canadian organizations have also felt the pinch, the Canadian economy has been more stable than its counterpart south of the border, and pressure on IT budgets, though painful, has been less severe. One result is a slower movement to outsourcing offshore.
It’s inevitable, of course. Just as industries such as textiles, clothing manufacture, electronics and even automobiles have, over time, migrated to take advantage of cheaper labour pools in developing countries, so it will be with the increasingly commoditized elements of IT manufacture and software development. Meta Group Inc. predicts that nearly every corporation will outsource some aspect of its IT operations by 2006.
In the case of programming resources, their transfer to an outsourcing supplier is for the individual simply a shift in employer. The real danger for programmers is that their position could become redundant if their new employer transfers their function offshore. The cold hard truth is that commoditized programming resources will become an economic burden as cheaper offshore resources reduce your competitors’ costs. The reality of that is evident in the IT jobless rate in the U.S. and in the falling compensation plans for programmers.
For the IT manager, the danger lies in seeing all programming resources as commodities. Really good programmers are those who have developed a business view and an understanding of how the systems they work on contribute to the goals of the company. That knowledge is not a commodity item and it’s difficult, perhaps impossible, to replicate offshore.
If you don’t have such people in your development organization, you should probably take pains to create some; it’s in their interests and yours that they develop that business/technical view. And keeping a few of those around, despite an outsourcing arrangement – either in-house, or though a guarantee of their continued availability – will do a lot to add value to your development efforts.
jpickett@itworldcanada.com