US-based companies’ IT work going global

The field of information technology (IT) has seen more than its fair share of jobs going offshore, mainly to save money on the tech-related payroll.

Companies that feel compelled to slash jobs locally while staffing up their offshore operations have received a lot of media coverage, usually good from the investors’ angle and usually bad from everyone else.

To this day, the whole offshoring trend isn’t well understood by the IT managers and even less by the general public so InformationWeek’s September 2008 Analytics Report, revealing IT strategies from the 500 (alleged) best and brightest companies, in North America may further help us put numbers on this globalized work phenomenon.

So the basic assumption is that United States companies are looking beyond their borders when it comes to their latest IT strategies.

The following numbers seem to be going in that direction…

• 67% (of the 500 companies that have been surveyed) use offshore IT services — If anybody still doubted the outsourcing trend was for real, this is the number that ends the debate;
• 46% have full-time IT employees outside the US — The offshore wages are so low compared to domestic ones that setting-up a foreign shop can be done relitively cheaply;
• 40% conduct business process outsourcing offshore — This is the proverbial cherry on the outsourcing sunday as whoever determines the BPOs has a lot of power over “how things get done”;
• 14% encourage US IT workers to work in offshore comapny offices — And most of the time, it’s a matter of setting things up “over there” so that unit can (eventually) become “worthy” of “local quality standards”.

So the numbers are pretty clear about the fact that offshoring has moved into “mainstrem IT” but qualitywise, many US-based companies are still seeing very serious problems stemming from their “cheap” offshore workforce that perhaps entertain a different relation with the whole “quality matters”.

US companies using offshore workers report countless problems ranging from poor communications, sloppy code, tech short-sightedness, critical lack of “vision” and scalability as well a general sense of having to reinvent the wheel every time a more challenging project comes up.

In other words, even though some American companies might be celebrating the spectacular cuts in employee wages, when they offshore their IT work, the end result isn’t necessarily going to be in-line with the standards they’ve been enjoying for several decades, domestically.

When the US-based companies fired hundreds of thousands of workers to send their work offshore, many of those IT-proficient workers decided to leave the “crazy 9-to-5 rat race cubicle experience” to go “independent”, usually as consultants. Their take on the situation is positive, overall. By being their own boss, they decide everything about their job, including their fees so, at anywhere between $75 and $175 per hour, it’s relatively easy to make as much (or more) money as their previous “full-time” job… and, as a bonus, they get to see their family a lot more.

Of course, there’s a huge lot of IT workers who have yet to find themselves another job (since they’ve been offshored so massively) and that’s very sad as these qualified workers are being replaced by foreigners who cost less but probably are worth less, also… and their managers only see the wage part, blissfully ignoring the quality part of the global equation.

US customers are also on the losing end of this offshoring proposition because they stand to receive sub-standard services while the price they pay isn’t likely to go down as the difference will generally be passed along to the shareholders, as generous dividends. And… since the rich shareholders often send off their money to offshore bank accounts, the domestic economy is likely to suffer a lot more (over the coming years) as offshoring gets even more prevalent and shareholders continue to use “fiscal havens” to legally evade their tax responsibilities, at home.

So offshoring is good for…

• the rich shareholders; and
• for the workers at these “exotic” locations.

…but bad for everybody else, such as…

• the fired workers who (previously) contributed so massively to the tax base and the social economy;
• the consumers who basically do business with an “American-front” while providing all their sensitive private information to an “offshore back-end” where no (credible) legal framework exists; and
• the US government which gets a lot less taxation money to carry out its social projets and responsibilities.

Some experts are saying that within a decade or so, foreigners from countries such as India, China, Vietnam and Romania will catch-up with the US IT workforce’s typical high-quality results.

Until then, the US IT workers will likely further their qualifications and make themselves “essential” all over again, namely by shifting the current computing paradigm, meaning that the basic “rules” of the IT game could change in the US’ favor, once again.

Whatever you think of all this, offshoring will continue to have a very real impact on how the domestic IT workforce evolves — fortunately, worthwhile opportunities still exist for “the locals” although it’s wise to assume that, from this point on, it might not be that way forever.

Tags: offshore, offshoring, offshored workers, foreign worker, it workers, exotic locations, us-based companies, us it work, domestic wages, foreign wages, high it wages, low it wages, india, china, vietnam, united states, politics, taxation, fiscal havens, fiscal evasion, shareholders, money, dividends