“The move to shift IT and business services is permanent.” – David Tapper, analysis firm IDC
RESEARCH TRIANGLE PARK — The new motto for America’s tech industry should be: “Audaces fortuna iuvat.”
It’s time to get out of the bunkers, forget protectionism, and fight to shape the future. Be bold. Be daring. Fortunes are to be made.
As the outsourcing of IT jobs continues to increase, it’s up to entrepreneurs to develop the new ideas, products and technology to create a new wave of job growth.
A local tech executive confessed to me recently that he’s been called “The greatest threat to Western civilization.” His crime? Outsourcing programming jobs overseas. He is not alone in being called names.
However, today’s edition of The New York Times reports that Dell recently began rerouting tech support calls back to the United States from India due to customer demand.
“In Dell’s case,” The Times says, “some of its most coveted business customers complained to management that Indian technical support workers relied too heavily on scripted answers and were unable to handle more complex computer problems.”
A victory. But will it be a turning point in the war? Probably not.
Whether we like it or not, outsourcing is a fact of life for American businesses, especially in high tech with thousands of high-paying jobs shipped to foreign lands. These aren’t just call center positions or simple programming, either.
A looming tidal wave?
More bad news is coming. The job outsourcing trend also is going to worsen, according to a new report from research firm IDC, which forecasts more than 20 percent of IT services will be shipped to foreign countries by 2007. This also isn’t a fad.
“The move to shift IT and business services is permanent,” wrote David Tapper, program manager, IT Outsourcing and Utility Services and Global Offshore Services at IDC. “IDC believes that success in the IT and business services market will require all major players to incorporate offshore capabilities and build a robust global sourcing model. While achieving this for existing large and regional players will take considerable effort, the effort for offshore providers to match these large player capabilities is not only significantly greater but may not be that easily achievable.”
So what is the solution to keeping or, more importantly, generating more jobs in the homeland?
Stephen Roach, managing director and chief economist of Morgan Stanley, rules out protectionism, which has been getting a lot of attention from vote-seeking politicians as the 2004 elections near.
“It’s a race to the bottom if we spend all our energy trying to protect existing sources of job creation, as the politicians in the US Congress are inclined to do,” Roach said in a recent forum moderated by The International Herald Tribune. “The problem is that globalization is growing asymmetrically, so initially it creates more supply than demand. We’re living through that asymmetry right now, and that has caused a potentially dangerous political backlash.”
Chinese Premier Wen Jiabao makes his first visit to Washington this week. Wouldn’t you like to be a fly on the wall at the White House as President Bush and Wen discuss trade — plus the growing problem of independence for Taiwan?
Patience vs. unemployment
In the panel discussion, Roach pointed out the Chinese have their own problems.
“The Chinese — are reluctant to transform their habits from savers to consumers because they’re losing jobs through the reform of their own economy,” he said, “and they don’t have social security or retirement. Over time there is a rising tide. But the political process is not that patient.”
That may be true, but in North Carolina where a lot of constituents have lost jobs, politicians are going to feel pressure to react. People who have used up their unemployment benefits tend not to be patient.
The panelists made an interesting point in their discussion about job growth — or the lack of it — even as the US economy continues its strong recovery. A key factor has been soaring worker productivity. A by-product of that achievement, however, is a reluctance by CEOs to hire. The unemployment rate dipped to 5.9 percent last week, but Roach noted that “23 months into the recovery, private sector jobs are running nearly 7 million workers below the norm of the typical hiring cycle. Something new is going on. America is short of jobs as never before, and the major candidates for our offshore outsourcing are ramping up employment as never before.”
What is the solution if protectionism isn’t?
“In the future there are two roads,” Roach said. “One is to look backward and hang on to what we think we’re entitled to. The other is to recognize what made America. Our virtues lie in a flexible and open, technology friendly, risk-taking, entrepreneurial, market-driven system.”
But the Dell case demonstrates that customers have a say in this as well. Remember when Wal Mart promoted “Buy American”?
Let’s promote more American entrepreneurs — and their ideas.
“Audaces fortuna iuvat” — Fortune favors the bold.
Feedback? Your ideas? Send email to firstname.lastname@example.org.
Rick Smith is managing editor of Local Tech Wire.