The outsourcing trend will be interesting to watch. Policy will become the number one issue. Who's watching the hen house? If IT and Accounting are outsourced by two independent, separate companies (not two companies under different names owned by the same people) there is the possiblity of proper "checks-and-balances", but there is also the window of opportunity for management to take advantage of the "grey area" and a publically traded company outside of the US (and outside of SEC regulations) can delete data and manipulate the books to suit them. Special interest will rise and the next thing you know -- you have another Tyco yet on the European front operated in the US. Authentic, ethical leadership will be of the upmost importance to the interest of the company and the shareholder(s). A formal compliance policy will be of the utmost importance. As JFK's father told he and Robert, "If you don't want anyone to know... Don't write it down!"

How depressing. Middle class occupations leaving the country for good.

I'm glad I'm not a young man trying to decide on a career or a college major. I don't know what I would choose. Certainly not IT or Computer Science. Even the game programming that colleges are increasingly pushing as a way to get kids to major in CS is going offshore.

Auto Mechanic? Barber? Something in the service industry I guess. Best bet would probably be something that targets the increasingly wealthy management class, like Nanny or Dog Groomer, or auto detailer.

On the positive side, the value of the U.S. dollar continues to drop like a rock. There is a good chance that 10 or 20 years from now, it will be cheaper for China to outsource their IT work to us. I would gladly pay more for Chinese DVD players if it meant greater job security for me and my children. My grandparents had a lot fewer possesions, but they didn't have to worry about being homeless.

Who says "outsourcing works!"? I mean - what people who are in the trenches, and in a position to know - NOT the folks who decided to do it, and of course will declare it a success?

My personal, in the trenches experience is that it's a disaster. The folks offshore are just out of college. They have no experience. They're trained to be robots - do EXACTLY what they're told, and nothing more. If something falls outside their "box", they stop.

Also, at a higher level, if one compares IT to your body's brain and nervous system, who wants to outsource THAT? It's far too important!

Additionally, when you outsource, you immediately have an organization (or more, if you outsource to more than one company) who are working at cross-purposes to your company: They want to make as much money as they can from you, while doing the very least work they possibly can.

That is a fact, and I've seen it over and over.

If someone starts telling you that they're your "partner" - put your hand over your wallet/purse, and RUN-DON'T WALK away from them at top speed.

I wish I had such little self respect that I could speak in buzz-terms and wild, blue-sky theories - I'd be a consultant rather than a developer.

Season's Greeting to All.

-Rip

The reality is, our capitalistic society has created this. Cheaper, cheaper, cheaper, is at the tongue of every CEO. Why should a CEO pay premium money for IT? IT "helps" run the business, it is not the business - in most cases. I have been a software engineer for 18 years - do I like seeing jobs move over seas - no. Am I doing something about it? Yes, I am making sure I am a step ahead of everyone else. Will it work? I have no idea - but I will keep trying. Rip is right, outsourcing is not the greatest - today. But these countries are building a knowledge base and their salaries get higher and higher each year. It almost seems by the time they get the experience of their American counterparts their salaries might be comparable to ours. In the mean time, outsourcing countries like India are already looking to China. So the concept is also global at this point.

Anyway, good luck to all in 2008!

I doubt that the U.S. dollar will continue to slide. It will probably rebound.

As far as outsourcing out the U.S. is concerned, there's some other macro-economic factors that aren't being taken into account in this article.

At the moment, India is running out of IT personnel for their companies to hire. That's probably a temporary condition, but IT salaries are starting to go up in that country, and will continue to do so. China will also start to see upward salary pressure on their IT personnel.

I also wonder, with their own economies growing at a high clip, won't their own countries need their own IT personnel to maintain their own infra-structure?

We may very well see downward pressure on our salaries, but things could also even out.

Riposte made a great point. I own a Chicago based offshore outsourcing company. We do mostly offshore product development (very little IT outsourcing) Most offshore firms are little more than 'software sweatshops' that hire recent grads (really good engineers are EXTREMELY expensive)

Our customers are SMB's. This market probably needs outsourcing the most but they get burned by software sweatshops the most also. We keep hearing from clients who have either been burned before or are disgruntled with their current outsourcing providers. Like Rip said, the developers are really bad. They miss deadlines, don't communicate well, aren't responsive, etc. We end up inheriting projects that have been screwed up pretty bad. It's caused me to start a blog about this phenomenon (http://BoycottSoftwareSweatshops.com)

My advice to SMB's considering to offshore is to know that outsourcing is about high value, not low cost. Be prepared to invest time and money in a RELATIONSHIP with an offshore vendor... and make sure they're willing to do the same. The vendor should see themselves as a partner that understands what you're trying to do. Otherwise it's not worth the trouble.

Raza Imam
http://BoycottSoftwareSweatshops.com

The large corporation I work for has been offshoring work as much as possible, as fast as possible - to cut costs.

Unfortunately, in my organization, the cost savings have been small if any due to low productivity and poor quality of delivery.

In the last 18 months, approximately a dozen of my coworkers have been layed off. Approximately half my organization's work has been offshored to India. While your mileage may vary, here are my specific observations:

The Indian resources are relatively unskilled compared to US labor. Only a small minority have equivalent skills to an average US based employee. I also think many Indian colleges and universities have relatively less rigorous requirements for technical degrees. The best there from the best universities are probably world class.

The Indian resources are extremely inexperienced, they seem to have less experience than a US university graduate. Apparently they don't have the concept of internships over there.

The Indian resources tend to not be aggressive in work habits. A lack of urgency is a common issue.

The impression that all Indians are hardworking, highly motivated and industrious is not consistent with our experience. Some are, but many aren't.

You cannot trust what is in the resume to be accurate - experience, skills, education all seem to be exaggerated and inflated. Buyer beware.

Turnover is unacceptably high, especially for the more talented and skilled personnel.

Training is an issue. We have trained ours ever since they were brought onboard. We expected that they would be productive within 6 months and be able to work independently in 9 months. It has been 18 months and they don't yet meet productivity and quality requirements, and are not yet independent. Recently, improvement has stagnated.

Pay is also rapidly growing over there - 40% increase per year is not unheard of, although 25-30% is more the norm.

We have found that infrastructure is troublesome there - including power, transporation, landlines, cellphones, paging, telecommunications. Redundancy of services is not widely available. All of this adds cost to doing business there.

Time differences have been difficult to manage. Due to the nature of the work, they need to work the equivalent of our time zone which means they work terribly crazy hours over there, thus strong resistence to work the hours we need them to.

Last, when considering offshoring you must do your due diligence and consider the total cost - include turnover, education/training, infrastructure, telecommunications, rapidly rising salaries, quality issues, responsiveness issues, cross-organization procedures, auditing/validation, etc. You must carefully understand how the home-based team will interface with the offshore team. You should identify what processes and procedures will be changed in light of what functions are moved. There is no way you can possibly over-plan this. You should identify possible problems and have contingency plans to handle the most likely problem scenarios. You should also have a contingency plan to pull the work back in case offshoring fails to do what it was intended.

it's not just software dev. It's outsourced technical support too. Same issues with quality, turnover, doing the "least", then dumping the feotid result on a "badged" employee to sort out (and take the heat from the angry customer).