August 28, 2007

Offshore outsourcing can seem a questionable and at times very unfair practice, particularly if you've just lost your job to a cheaper counterpart overseas. Is it good policy—is it good citizenship—to sacrifice American workers to foreigners for the sake of profit?In response one might argue that "for the sake of profit" is a loaded expression, and that the guiding principle is one of economy—doing what makes sense for investors and also for consumers by reducing operational costs. If the offshore option is available, decision-makers have to consider it the way they would other options; if offshoring is prudent and cost-effective, CIOs may have no choice but to outsource. And besides, America has been lecturing about the benefits of free trade as against protection for a very long time. It would be unseemly and counterproductive to change its tune when its own industry or labor force began to feel the pinch of competition.

Opponents of offshoring might respond that there is no level playing field for labor. Through the efforts of organized labor and the enlightened decisions of many employers, the United States has built a better standard of living through better wages and salaries, to say nothing of other features, such as government regulated workplace safety standards. Offshoring overturns those accumulated benfits in one quick-and-dirty step.

That's a hard point to argue against, but America would nevertheless appear unfair in its trade practices, were it to go protectionist on outsourcing. And in the world of diplomacy, appearances matter more than reality. Better, perhaps, to focus on maintaining an edge on work higher up on the value chain.

But there may be yet another response: developing competitive domestic alternatives to offshore outsourcing. While the arguments are developed at greater length in my piece in today's I&T News, the gist is that the United States has an underutilized workforce, including students and retirees, that can do work at comparable cost and less risk than offshore alternatives.

I am aware of at least one small-but-growing company that has begun to succeed through utilizing this approach, and whose proprietor believes the model can be replicated across the country. And a study commissioned by the Information Technology Association of America includes recommendations for government, academic and public sector cooperation that can only have a beneficial effect not just for competitive outsourcing alternatives but for the quality of the American IT and business workforce in general.

Personally, I like the idea of the economic interdependence between countries like the United States and India and rejoice in the greater well-being the business of outsourcing can bring for people in less prosperous countries. But I also like the idea of creating more opportunity for domestic students to make a buck and gain invaluable experience. It is also pleasant-as we hear ad nauseam about the aging population of the United States and the West in general-to envision our nation's superannuated IT experts rocking on, like the Rolling Stones, and making a novel contribution to the nation's competitive capabilities, both for now and as the foundation for a better future.

Posted by Anthony O'Donnell

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek ...