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IBM's is at the core of IT offshoring







IBM's is at the core of IT offshoring

IBM's is at the core of IT offshoring 03/08/2004 11:20 PM

The WSJ rips IBM's claim that it is adding jobs to its US workforce.  Basically, the slight of hand works like this:  a company outsources thousands of IT jobs to IBM.  IBM quickly moves to offshore them and radically cuts the pay/benefits of those that remain.  The net result is a net gain in jobs (from the few that remain after the offshoring).  IBM is basically a big blue job destruction machine.  For example:

Bonny Berger, a computer programmer in Elizabeth, N.J., had worked for AT&T for 21 years when she likewise was moved to IBM in 1999. Within four months, the project she was working on was moved to Canada and she was put to work updating software used to collect unpaid bills. After five months, she says, she was told that work would be moved to India and that she would train a replacement. Ms. Berger moved on to yet another IBM task. But in March 2002 she was told to retrain a replacement from Canada, after which she got a layoff notice.

NOTE:  remember that each good IT job outsourced destroys up to 4.5 other jobs in the general economy. 

NOTE2: The speed of this realignment in the economy is something that should concern everyone.  Prayer at the alter of the invisible hand is misguided.The invisible hand is a vengeful god that rains economic destruction down on the non-competitive. It has no special place in its heart for Americans.




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Offshoring By Any Other Name


Offshoring By Any Other Name 09/24/2004 08:06 PM
Not too many people like the sound of "offshoring" -- literally, the sound of the word -- not just it's meaning. So the euphemisms to replace "offshoring" are springing up everywhere, with not-so-sneaky terms like "co-sourcing" and "global sourcing" peppering our vernacular. Outsourcing is dead, too, replaced with the mouthful: "business process transformation services" agreements. Isn't that so double-plus-ungood? Obviously, offshoring is still with us, and it's going to be with us, and it arguably should be with us. So while avoiding the word offshoring might avoid the spread of panic, hopefully we're not forgetting to address the root causes of our concerns: that we haven't answered the 'What's Next?' question. Though perhaps using bigger words and round-about descriptions is part of the plan to help educate the country to think more critically.

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I felt really sorry for the guy that called the office last week. I get the holler from across the hallway hey some guy wants to talk to you about offshoring wanna take it? Hmmmmmmm those of you that have been reading here for awhile know my stance on offshoring. (When Hell freezes over) So I take the guys call. The least he could have done is called me via a real land-line instead I get the common static buzz of a net based call. We talk for about 30 minutes while I pick the guys brain nothing really brain shattering came out of the discussion.

He ask to send me some info and I say sure, I would be happy to look at their promotion material. A week later what finally shows up in my inbox, his pitch material curious read to say the least. Call me traditional, "Made in the USA" and "Support Stays in the USA". If any of you would like a copy of what they sent me drop me a line, I'll forward it to you. Companies are now weighing the backlash of their customers before offshoring some say it makes up at least 50% of the decision level process. [ZDNet]


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Yet another article that takes a look at the "offshoring trend", but this one actually takes a step back to put the whole thing in perspective. From a historical vantage point, this trend doesn't seem all that different that past trends where products made in the US were eventually outsourced. The article quotes Walter Mondale from twenty years ago, when he was worried about chip production going to Japan, saying: "What are our kids supposed to do? Sweep up around Japanese computers and sell McDonald's hamburgers the rest of their lives?" Instead, what happened was that cheap chips resulted in a technology boom that certainly helped the US economy quite a bit over the next two decades. The article also points out what we've been saying here all along: the rush to outsource is a bit shortsighted for most companies. Those who are only looking at the salary aspect of it, don't realize that there are many more costs involved, and many are already starting to regret the decision to outsource. However, in some areas, it clearly does make sense to outsource, but the number of jobs that will go overseas each year is a very very small number - and pales when compared to the number of jobs lost each year naturally through layoffs and company closings. Finally, the article points out that, when done right, offshoring is a net positive for our economy - and has been historically. This doesn't mean that it doesn't make life hard for some people who lost their jobs. However, instead of thinking up protectionist plans, the US should be making an effort to train these displaced employees for better jobs in sectors that need them.

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While I've made it clear that I think both sides on the outsourcing debate have taken their arguments too far, I don't deny that the decision comes down to a money question. The companies that are rapidly pushing towards offshoring are convinced that it will save them a ton of money. What many are finding out, of course, is that it's much more costly, for a variety of reasons (from cultural differences to communication problems halfway around the world). However, now some analysts are saying, beyond the money issue there are other good reasons for offshoring. They even believe that offshoring will help rejuvenate the US software industry by allowing developers here to focus on innovative products, rather than mundane projects that can be outsourced. While I highly doubt that any company is taking that into account in coming up with their outsourcing plans, it is a reasonable response to those who continue to favor protectionist policies that will only make the economic situation worse for the American software industry by making us less competitive.

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The Human Side Of Offshoring 01/28/2004 04:39 AM
A great set of articles from the latest issue of Wired takes a look at the outsourcing issue by taking a closer look at some of the people it impacts on both sides of the debate. It's absolutely true that the offshoring process is a terrible thing to go through for those who lose their jobs. There's simply nothing you can say to make the situation better for them while they go through that process. However, if their companies can't compete, then they're going to end up losing their jobs anyway. As one of the additional articles points out, the anger against outsourcing is no different than the Luddite anger against computers taking away jobs. However, as always, whether outsourcing to cheaper labor or automation, the end result has been a net positive - opening up plenty of new job opportunities. In fact, the article profiles one "angry programmer" who is pushing for protectionist policies. However, even he found a new job relatively quickly that appears to have more challenges, more responsibility and will be a lot harder to offshore.

Offshoring: A view from both shores


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Offshoring: An irresistible force 06/04/2004 07:11 PM
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