Outsourcing is good

In the 1980s, when many manufacturers were closing U.S. plants and exporting jobs overseas, how did you feel? Did you ever think that, as painful as it all was, the resulting economic, cultural and personal upheaval simply wasn’t your problem, that this was something that happened to other, older industries, and that it was really just the normal forces of capitalism at work?

If you did, you were not alone. As long as it was automobile, textile and even computer hardware makers that had to change their ways, software and services professionals had the luxury of focusing on the long-term benefits of globalization. Over the past 20 years, it’s been relatively easy to argue that increased market competition and improved business efficiencies eventually result in a net economic gain for both the U.S. and the world. Given time, this is what typically happens.

But it will be interesting to see how well these attitudes hold up, now that globalization is challenging the U.S. software and services industry itself. While offshore IT projects are certainly not new, business interest in overseas software development, call centres and other IT services is accelerating. Predictably, given today’s depressed U.S. IT job market, shifting work abroad has become a controversial media issue; witness the recent New York Times front-page story featuring a leaked audiotape of an internal IBM discussion about offshore staffing.

How should the IT community react to this important trend? First, we shouldn’t be outraged or surprised. The conventional wisdom that our increasingly services-based economy will be shielded from globalization has always been only half-true at best. Offshore workers can’t fix your car, but many IT services are vulnerable to competition. Indeed, in many ways, exporting bit-based IT work is actually much easier than exporting work in industries that need to worry about physical supply chains, inventories and related distribution costs.

Aside from the aesthetics of the name, software development could just as easily be relabelled as software manufacturing, and increasingly it will be treated as such. The amount of software that the world needs is virtually limitless, and the idea that this production will remain the special preserve of highly paid U.S. workers is fundamentally silly. Multinational companies are supposed to adopt a country-neutral, global perspective. For these firms, lowering software development and customer support costs are perfectly reasonable business objectives.

Thus, no matter how heated the debates over U.S. job losses, wage cuts and even national security risks, companies will do what they believe is in their interest. The challenge for the U.S. IT community is to continue to demonstrate that hiring American software and services talent is a sound business decision. Fortunately, this shouldn’t be that hard. The potential for software innovation is as great as ever, and the market will be much bigger than any one nation can handle.

The bottom line is that no workers have benefited more from globalization than IT professionals. It’s what most of our giant corporate networks were designed to support. To protest that globalization is now harming U.S. IT workers is essentially hypocritical and largely pointless. Global competition doesn’t come with guarantees, but its long-term results are hard to argue with. Software globalization will, on balance, be a good thing, with many unforeseen benefits. We should do our best to accept it.