On Wednesday, I had the pleasure of attending a small group lunch in honor of Pat Cox, President of the EU Parliament. It was quite a treat as I got to hear his viewpoint on Spain, terrorism, immigration, and offshoring amongst other things. Since I tend not to write about politics, I thought I would share Pat’s thoughts on offshoring. As you know, in the US, there is increasing political pressure on offshoring and a movement to put legislation in place to prevent and slow this down. Offshoring is certainly a key issue in the EU as well, and Pat offered an interesting and growing perspective on offshoring and how to deal with it. Pat believes strongly that it is not about protecting jobs but protecting people. The jobs will come and go but to the extent we can protect people and train them and teach new skills then we will all be better off in the long run. I certainly share this viewpoint and would like all of us to figure out how we can contribute to this line of thought.
If you want to stay on top of all things offshore, I suggest that you visit a new site called Offshoreupdate.com. The site is currently an aggregator of offshore outsourcing stories, but it will soon begin publishing news stories. This is a perfect example of what Jeff Jarvis calls “microcontent.” Throw up a blog, some links, and some Google Adsense and see where it takes you.
Ed: My father lost his job Dec. 24th, 1974. He’d worked for the company for 31 years, starting in high school as a copy boy and ending up as foreman and a proof-reader. But for the union, which “placed” him in jobs at six-month intervals so he could qualify for benefits, he didn’t work steadily again for more than 10 years.
I was 11 in 1974 and I grew up with the constant threat of not having food or clothes or the things folks expect in America.
I say all that to blunt any criticism of what I’m about to say: I don’t get the furor over the latest round of outsourcing. How is outsourcing programming to India any worse than outsourcing garment sewing from New York to non-Union North Carolina? The list of inevitable migrations fueled by capitalism is endless. So why does David Kirkpatrick at Forutne and all these other folks feel so upset by this?
You can’t stop this trend (and I’m not even sure it’s wise to stop it if necessary). But job-retrianing isn’t the answer. Continued and increased investment in basic education IS.
Jerry
Jerry: Thanks for sharing your family story-it is truly enlightening. I do agree with you that the media makes it worse than it really is. I too am a true believer in the free markets and specialization of talent. In an earlier post http://www.beyondvc.com/2004/01/outsourcing_and.html I write that “Rather than worry about losing jobs offshore, let’s assume it will happen and focus on how we can get better and further move up the value chain on product development.” You are right, in the long run, education is the only way to deal with the inevitability of offshoring. However, in the short-term, I do believe that “softening the blow” for some by retraining can be helpful. I have some examples in smaller companies where some of the domestic engineers stepped up into new roles and moved up the value chain by becoming team leaders/project managers helping manage offshore processes. Just to be clear, I am not advocating legislation, but I just wanted to highlight the fact that Pat Cox in the EU seems more progressive on this matter than many domestic politicians. And if you want to protect people and not jobs, in the long run, education is the way.
Exactly, Ed. There’s been a concerted “de-funding” of education at all levels. The real reason that India and China represent such attractive locations for outsourced programming has as much to do with the number of Ph.Ds. they graduate every year as much as it has to do with the lower cost of their salaries.
The REAL threat comes not from their lower cost but the fact that many of those companies are wisely using the dollars coming from outsourced programming assignments to build REAL, innovative software companies themselves. That’s good news for companies that use technology…competition and innovation are good things. But bad news for our local economy. The best counter measure to increase funding to education and encourage more of our little boys (and little girls, but that’s a whole ‘nother story) to become real engineers and not merely consumers of technology. If 10% of the pre-teen video game addicts turned that obession into an obession about building bigger, better, faster, cheaper, cooler technology, the dominance of the US IT sector would be secured forever.
IMHO.
So true. And to your point with what they are doing with the $$$ from offshoring, China is a perfect example. They want to build their own multi-billion industry there with their own standards-DVD, wifi encryption, no use of Windows, etc. Sadly enough, I believe the number of CS graduates in the US has not really increased over the past few years. So if we can continue to move up the value chain, design, and continue to create real IP, we will be ok.
Exactly. Unlike so many other industries, the information technology/computer/software industries are nearly limitless in their ability to, as you put is so well, “move up the value chain, design, and continue to create real IP.”
In the end, that is the ONLY defensible trade barrier; that is, innovation is the real driver behind all growing, prosperous, economies.
I think in order to see how off shoring will influence the US, we first need to ask the question why has the US been so successful?
I believe the answer is innovation and much of this has been from foreign born individuals. If these people decide not to immigrate, and try to make it locally we have problems.
I am a strong believer in offshoring, my only concern is that if the pace is too quick, it may not give Americans time to retrain. While I am against government meddling, it my offer a side effect of giving US works time to adjust.
It may be genetic; the DRD4 7R gene is more prevalent in the US than in any other country.
Einstein, Edison, Ben Franklin and other innovators most likely had this gene. It’s associated with risk taking, and most Americans are offspring of risk takers, since getting on a boat (or a plan) to come to another country is a risk. This gene is also associated with ADHD which is very prevalent in the US and almost non existent in countries like Japan.
http://www.additudemag.com/additude.asp?DEPT_NO=102&ARTICLE_NO=29&ARCV=1 – link