While the economic benefits of offshore outsourcing are well-known, Gartner is warning CIOs and other executives about the impact offshore outsourcing may have on business strategies. Gartner cites three areas of concern: loss of future talent, loss of intellectual assets, and loss of organizational performance.
"To many CIOs and business executives, the decision to outsource activities offshore is fiscally sound — the cost, quality, value, and process advantages are well-proven," said Diane Morello, vice president and research director at Gartner. "At a time when IS organizations are struggling with poor credibility and IT is being scrutinized, offshore outsourcing is becoming a tool for improving service delivery and a source of highly qualified talent in greater numbers."
Many workers in the high-tech sector might question whether it is the number of highly qualified workers looking for jobs offshore or the price at which they are willing to work. In the United States, the computer industry lost 3,473 jobs in June of 2003, while telecommunications lost 5,528, reports Challenger, Gray & Christmas, a Chicago-based outplacement firm that tracks job cuts and hiring trends. The two sectors combined lost 54,278 jobs between January and May 2003, which is 67 percent fewer cuts than the 165,391 logged in the same five-month period last year.
Last week, IBM made headlines when a recording of a conference call discussing the potential movement of white-collar jobs overseas was leaked by an IBM employee to the Washington Alliance of Technology to Workers, which is seeking to unionize technology employees. The recording then found its way to The New York Times.
On the recording, two senior IBM officials said the company needed to shift job overseas to compete with rivals such as Microsoft and Oracle. IBM already has more than 8,000 employees in India and China.
The Seattle Times reported today that Microsoft Chairman Bill Gates told a gathering of 340 researchers Monday that his company will always keep its research headquarters in Redmond, Wash., even though the number of computer scientists in countries like China and India continue to grow.
According to a survey by the Computing Research Association of 182 university departments that issue Ph.D. degrees in computer science or computer engineering in the United States and Canada, a total of 849 Ph.D. degrees were awarded in 2002, the lowest number since 1989. Master's degrees were awarded to 7,918 students, a decrease of 4 percent from the previous year. Bachelor's degrees numbered 20,677, an increase of 21 percent.
For companies that do choose offshore outsourcing, Gartner recommends they be open and honest with employees who are affected, while at the same time maintaining organizational performance.
"CIOs need to communicate clearly, honestly and respectfully about the transition plan, and about the options available to affected employees," Morello said. "The way in which enterprises deal with employees during the offshore transition will be lasting testament to the perception of leadership and the reputation of the company as an employer."