Outsourcing and productivity

I believe that productivity is very important. Productivity means doing more for less. Productivity means lower costs to consumers, which, in turn, frees consumers to spend the money they save on new products and services. That leads to economic growth.

In 1900, 40% of US employees worked on farms. Today, less then 2% of the US population generates all the food the US needs — which is quite a bit. At the same time, purchasing food requires a far smaller percentage of our paycheck than it cost our grandparents in 1900.

We then use our excess money to buy computers, DVDs, and trail bikes or to take vacations. Indirectly, our food cost savings has paid for the creation of a vast array of new products and services introduced since 1900, as well as jobs for the people who work to create and sell those products and services.

The only chance that those (billions) in the world who live on very little have of someday living lifestyles like those of us in the US lies in economic growth. And economic growth is driven by increases in productivity.

Today, one path to productivity lies in outsourcing — in shifting jobs that can be done abroad by cheaper and, in some cases, less skilled, workers to foreign locations. As a result of outsourcing, prices fall, Americans have more money left after they buy what they need, and can then spend it on new products and services, creating new industries and new jobs in the US and elsewhere.

I truly believe that this is necessary and, ultimately, for the common good. I’m quick to admit, however, that this is a lot easier to think about in the abstract. It’s easier to discuss outsourcing when it involves the loss of jobs for those I don’t know personally (e.g., auto and textile workers), than it is to talk of it when my friends who are programmers or software architects are displaced. IT outsourcing, coming on top of the dot-com recession from which we are just beginning to emerge, seems like an attack focused primarily on those of us in IT.

Last month I received a preprint of a new book by Cutter Business Technology Council Fellow Ed Yourdon, entitled Outsource: Competing in the Global Productivity Race (to be published this October by Prentice Hall PTR).

Those who have followed Yourdon’s career know that he’s written several books on closely related issues.

Earlier, for example, he wrote Decline & Fall of the American Programmer, which talked about technologies that were enabling foreign programmers to compete with US programmers. Yourdon has a tendency to “overreact” by describing the worse possible case.

However, he then provides a lot of good advice and suggests that the future he describes doesn’t have to be so grim if people take action now. In a sense, his advice to American programmers in the early 1990s probably led many of them to acquire skills that extended their value and preserved their jobs.

In Outsource, Yourdon does something similar. I’m not suggesting that he doesn’t believe a lot of work will be outsourced. He clearly believes that a great amount of outsourcing will occur and explains both the technological and business reasons for it.

At the same time, however, he points to areas where outsourcing will lead to serious problems and, probably, some backlash. More important, he offers individuals advice on how to “outsource-proof” themselves.

Some of this advice is obvious: those with more general skills are more flexible and, hence safer, than those in narrow specialties, and so forth. In other cases, Yourdon provides advice that isn’t so obvious yet is very insightful.

This isn’t exactly fun summer reading, so it’s just as well it won’t be published until October. When it does come out, however, it will be worth reading. We are going to have to live with the realities of a global economy and the relentless demands for greater productivity and outsourcing for the rest of our lives.

And our children are going to have to live with the same realities. Some will suffer while others will prosper as we negotiate the changes. This book is a good start toward ensuring that you position yourself appropriately, and advise your children as well as possible.

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