- Introduction
- Offshore IT and Call Centers Are Now Mainstream
- Many Other Industries Are Where IT Was in the Mid-1990s
- Work Is Expanding to Other Countries: China, Eastern Europe, and Others
- Potential "External" Factors
- Other Industries Provide Models
- Possible Novel Twists on Outsourcing
This chapter is from the book
This chapter is from the book
This chapter is from the book
Many Other Industries Are Where IT Was in the Mid-1990s
Many of the knowledge-based industries discussed in Chapter 4 are approximately at the same stage, vis-à-vis offshore outsourcing, that the IT industry was in during the mid-1990s. The U.S.-based companies looking for offshore outsourcing solutions are often considered innovators and early adopters; and the companies providing these knowledge-based products and solutions are just getting started, with some rough edges and growing pains. But three things are significantly different.
First, as already noted, the telecommunications/Internet infrastructure is vastly faster, cheaper, and more robust than it was a decade ago. Thus, a company that wants to focus on outsourcing its mortgage-approval department doesn't have to worry about being a technological pioneer, nor does it have to worry that high telecommunication costs will swamp whatever savings would have been achieved through lower wage costs.
Second, there is much more general knowledge and experience about offshore outsourcing than there was a decade ago. There are conferences to explain the details8; consultants9 to help select the vendors, negotiate the contracts, and oversee the implementation details; and books10 for managers and planners who want to get their information the old-fashioned way. This overwhelming cornucopia of information doesn't guarantee that new entrants in the outsourcing game will necessarily succeed, but they'll certainly have much more advice and guidance than the IT and data entry pioneers did a decade ago.
And third, companies face more pressure to investigate offshore outsourcing than they did a decade ago. Although it might seem like a distant memory at this point, the 1990s were a boom time for many companies, and the overall economy was one that supported generous wages and steady growth in employment. Yes, there was global competition, and there was the beginning of an offshore outsourcing industry; but one of the main reasons why my Decline and Fall of the American Programmer "dodo bird" forecast turned out to be inaccurate (or at least premature) was that global demand for goods and services outstripped supply.
That has not been the case since the U.S. economy began spiraling downhill in the second half of 2000, followed by economies in other parts of the world. In many knowledge-based industries today, there is a surplus of workers—which means that employers have more of an opportunity to choose the least-expensive workers, wherever they might be located. And because of tight economic conditions, and even more intense global competition, companies are under far more pressure to cut costs than they were a decade ago.
All of this suggests that during the next five to ten years, we should expect to see many of the newer forms of offshore outsourcing—for example, in fields such as financial research, clinical trial management, mortgage approvals, and back-office legal work—will grow to roughly the same level of activity that we see in the IT industry today. But precisely because of the three motivating factors discussed earlier in this chapter, it's likely to happen much more quickly than it did with IT.
For example, although my 1992 Decline and Fall book was not the first, or only, source of information about offshore outsourcing in the IT field, one could at least argue that it gave programmers and software engineers a full decade of warning before their jobs began disappearing in large numbers around 2002. By contrast, we might find that lawyers and doctors and various other categories of knowledge workers have only three to five years to begin acting on the advice covered in Chapter 6. And the nation, as a whole, might only have five years to organize a master plan before offshore outsourcing begins gobbling up millions of jobs throughout the economy.