The press here in the US has been gaga over the outsourcing of tech jobs to countries like India where the labor rates are often 1/10th the cost or less. It’s a politically charged issue in an election year, particularly in the midst of the so-called jobless economic recovery.
I’ve remained ambivalent about the issue. We’ve been through this before, as we moved from an industrial to a knowledge-based society. Factory jobs moved overseas, and displaced blue-collar workers retrained for more technical work.
In theory, as the global economy expands, the standard of living in developing will grow, eventually normalizing salaries and costs. This is theoretical, and assumes a level playing field; something we probably won’t ever really have in reality.
Still, there are already signs that wages are already inching upward in India’s tech sector, sending firms searching for new, less developed areas with even lower labor rates.
Personally, this doesn’t alarm me, or hasn’t yet. The reality is, the total number of jobs sent overseas is still a drop in the bucket compared to the overall job market. Many companies have scaled back their overseas outsourcing after finding their cost savings eaten away by increased coordination and communication costs. And frankly, it’s always been easy to outstource something that can be easily codified into a step-by-step process, but much more difficult to outsource innovation and creativity.
Daniel Pink visited several tech centers in India while researching his article, “The New Face of the Silicon Valley” (Wired 12.02), and observed:
As I meet programmers and executives, I hear lots of talk about quality and focus and ISO and CMM certifications and getting the details right. But never – not once – does anybody mention innovation, creativity, or changing the world. Again, it reminds me of Japan in the ’80s – dedicated to continuous improvement but often at the expense of bolder leaps of possibility.
And therein lies the opportunity for Americans. It’s inevitable that certain things – fabrication, maintenance, testing, upgrades, and other routine knowledge work – will be done overseas. But that leaves plenty for us to do. After all, before these Indian programmers have something to fabricate, maintain, test, or upgrade, that something first must be imagined and invented. And these creations must be explained to customers and marketed to suppliers and entered into the swirl of commerce in a fashion that people notice, all of which require aptitudes that are more difficult to outsource – imagination, empathy, and the ability to forge relationships. After a week in India, it seems clear that the white-collar jobs with any lasting potential in the US won’t be classically high tech. Instead, they’ll be high concept and high touch.
Exactly the areas that I prefer to work.
From a business, political and ethical standpoint, I don’t have a problem with outsourcing. However, some interesting commentary I’ve read recently is causing me to rethink my ambivalence on the issue.
First, David Lazarus writes in the San Francisco Chronicle about how medical records were illegally outsourced to India — an egregious breach of privacy laws. It’s doubly interesting to me, because the case involved UCSF Medical Center contracting medical transcription to a contractor in Florida, who subcontracted the work out to another person in Florida (or possibly Texas, the details are fuzzy), who sub-subcontracted the work out to a tech worker in India via AOL Instant Messenger. Not even an email address involved in the final links of the food chain.
The second case is hypothetical but even more chilling.
Fellow blogger Daniel Gray speculates: “It’s heart-warming to know that outsourced call center and outsourced IT workers in third-world countries can now work in cubicles and get paid acceptable wages from American corporations, at the cost of American jobs… But what happens when terrorist organizations infiltrate the overseas outsourcing companies? Are there checks and measures in place to prevent unscrupulous individuals and organizations from misdirecting personal data from the call centers and sabotaging code in the IT shops? What heinous leaks will we find out (or not find out) about months or years from now? Who’s to say that it hasn’t happened already?”
Technology has made our lives at home and work more efficient. It has allowed us to expand our private and business reach across the globe. But the same technology that helps, can be used to harm. Those of us with the power to make a difference in business need to proceed cautiously, making sure that in our rush to save money, we don’t give away something irretrievable.