Your Outsourced Future

Date: Thursday, February 06, 2003 2:42 PM

H-1B and JOB DESTRUCTION NEWSLETTER

www.ZaZona.com

It's difficult to comprehend how an "editor in chief" of Computerworld
could be so giddy that American IT jobs are being shipped overseas. She
proved her lack of understanding of the industry when she said that
there is a silver lining to outsourcing because executives will be able
to manage projects all over the world.

Does Maryfran think that anybody will read Computerworld once those
rich executives are flitting around the world to play golf in Malaysia?

Computerworld owes American technical workers an apology for allowing
this pathetic excuse for editorial journalism to be allowed on their
site. Until then, you can contact them at letters@computerworld.com

http://computerworld.com/careertopics/careers/labor/story/0,10801,78047,00.html

Your Outsourced Future

By MARYFRAN JOHNSON
FEBRUARY 03, 2003

Reader reaction was swift and scornful last week after we ran a story
predicting that 35% to 45% of existing IT jobs in the U.S. and Canada
will be outsourced, shifted to contractors or moved offshore within the
next two years [QuickLink 35866]. So many jobs? So soon? No way.
Headline-grabbing nonsense, this was.
That was my initial reaction, too. Analyst predictions tend to be
notoriously off base, although we in the press cheerfully troop along
and write stories about them anyway. As one reader put it, "I think
that you guys are sometimes guilty of oversimplification of the
issues." Indeed.

In 10 years, though, I suspect we'll see these painful outsourcing
trends as the inevitable transition of a workforce in a maturing
industry that plays a critical role in the emerging global economy.
What IT is going through today mirrors what the automobile and
electronics industries went through in previous decades, as
once-valued, highly paid skills became commoditized, automated or more
cheaply available elsewhere. New skills rise in value to keep pace with
changing technologies, sharpening competition and shifting business
needs. Outsourcing trends historically move in great waves, cresting in
economic downtimes when cost savings become paramount.

Our government has certainly embraced outsourcing. Federal IT
outsourcing is expected to hit $15 billion annually by fiscal 2007 -- a
127% increase over the $6.6 billion spent last year. That push is
coming from two directions: a mandate to cut costs, and the increasing
difficulty of replacing qualified technical and program management
employees [QuickLink 35533].

We can also see outsourcing taking hold in the bellwether financial
industry. Megadeals are making headlines again, as they did in the
early 1990s. J.P. Morgan Chase recently signed a seven-year, $5 billion
deal with IBM. Bank of America inked a 10-year, $4.5 billion deal with
EDS. Canadian Imperial Bank of Commerce signed up for $2 billion in IT
services from Hewlett-Packard. And so on. When Gartner researchers
surveyed 39 Fortune 500 banks a few months ago, they found half of them
outsourcing back-office and operational tasks more extensively than
ever. Intensifying competition, a depressed economy and the attraction
of the pay-as-you-go model for IT services are a powerful trio of
business drivers.

Offshore outsourcing is also rising, as the economic lure of cheaper
programmer labor continues to beckon. The one wild card that may slow
the trend this year is the threat of war with Iraq. Yet Forrester
Research estimates that the $4 billion in U.S. wages that floated
offshore in 2000 will become a riptide of $136 billion and 3.3 million
IT-related jobs by 2015. Web-based collaborative tools, inexpensive
bandwidth and standardized business applications make it easier to
contract out maintenance and support.

In spite of all this, I see a silver lining in this outsourcing cloud:
the way American IT executives are rising -- or will rise -- to the
challenge of managing projects involving workers outside their
companies and around the world. Forrester is releasing a report today
called "Unlocking the Savings in Offshore," in which analyst John
McCarthy lays out some of the best practices involved in making these
projects work. They include centralized management, commitment and
support from senior executives, and relentless project discipline.

No rocket science. No great mysteries. Nothing you can't handle. After
all, isn't this the industry where the one constant is change?

Maryfran Johnson is editor in chief of Computerworld. You can contact
her at maryfran_johnson@computerworld.com.

Source: Computerworld

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