Press Release Summary = COMMENTARY--Few topics are as controversial as outsourcing. This is understandable. To state obvious, jobs are a fundamental part of our ability to lead a happy and productive life.
Press Release Body = COMMENTARY--Few topics are as controversial as outsourcing. This is understandable. To state obvious, jobs are a fundamental part of our ability to lead a happy and productive life. Unfortunately, jobs exist within context of volatile global markets. growth of outsourcing is result of developing nations reaching a point in economic evolution where y have skills to compete in higher-skill domains traditionally served by rich country workers. Same cost advantages offered to lower-level manufacturing are now being brought up value chain to software development. In United States, a number of congressmen have proposed bills which would protect American IT workers from foreign labor competition. Fur more; though few are as overtly anti-trade as Dick Gephardt or Dennis Kucinich, it is increasingly clear those Democratic Party contenders for U.S. presidency view foreign competition as a potential winning issue in 2004 race. Don't deny that Western IT workers will have to make adjustments to accommodate new global reality. However, as I explain in this article, outsourcing is not jobs catastrophe its opponents make it out to be. Fur more, is a number of practical reasons to maintain an open market position which have ramifications for future health of Western economies. In short, like it or not, Western nations need outsourcing. Don't overestimate threat my first job as a programmer was with Price Waterhouse. My memory of that time includes a frightening amount of airplane food, as I made weekly round-trip flights to client destinations from my home \"base\" (at time, Dallas, Texas). Reason for this was that Price Waterhouse assisted clients in creating custom software--and this required close interaction with client. Whole teams of developers would be flown to site to gar requirements, generate prototypes and write code. Real world custom development is often a trial and error process, something that works best when developers on-site can respond instantly. Maintenance work, however, does not require such close interaction since broad outlines of application have already been laid out. This development was often performed off-site, reform, saving client airfare and housing costs. Custom software, even under best conditions, often must contend with \"fuzzy\" requirements. Likewise, most software is of ad-hoc variety, and often is \"temporary\" in that actual code written has a short life span. This means that most software will need kind of close client interactions Price Waterhouse provided to its customers. Such interaction can't occur when consultants are sitting in an office in Hyderabad. Fur more, people best qualified to work with American or European clients will be or Americans or Europeans, given shared cultural context co-nationals share with ir fellow citizens. In or words, most custom development will call upon local citizens, because ir ingrained \"skill\" at dealing with local clients cannot be replicated. Maintenance, however, can be performed off-site, including at offshore locations. This was central to arguments made by Rahul Sood and George Gilbert in ir recent article. y noted that one of best way to use outsourced labor is as a place to offload maintenance tasks, freeing up domestic labor force for higher-value new software development. Even so, this doesn't mean that domestic IT staff won't face jobs pressure. In long term, however, it pays not to underestimate power of software industry to create new jobs. Rise in demand for software developers in 1990s was result of industry's attempt to digest changes introduced by spread of Internet. Technology continues to advance, however, and it is my opinion that we have only seen tip of iceberg in terms of integration of computing power into our daily lives. I spoke of software opportunities created by adoption of RFID technology in a previous article, but also consider advent of smart phone technology, or even growth of wearable processing power (SPOT watches being a good example) to be areas for future growth and jobs. Technological advances in se and or areas will drive demand for new categories of software, and that demand will pick up any slack those results from expansion of global pool of developers to include citizens of developing nations. Lastly, large economies are often ir own biggest markets. Exports account for 10 percent of GDP in United States (which is currently world's largest economy), compared to 43 percent in South Korea and Switzerland, 36 percent in New Zealand and 28 percent in France. This position is mostly a function of America's size, at 300 million people, and its wealth, with a GDP of 10 trillion. As China's 1.3 billion citizens grow in affluence, Chinese companies are bound to find that China is its biggest market. As Asian economies grow, programmers are going to be too busy serving ir own markets to offer much competition for American or European software projects. It is in interest of Western programmers, refore that Asian economies develop as fast as possible. Company competitiveness matters. Many who oppose outsourcing offer no alternative means to make up for cost savings missed by a refusal to outsource. This matters, because modern companies compete on a global stage. Unless every company in world decides to forego use of lower-cost software developers, companies that fail to outsource will make selves less competitive.
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