Download the authoritative guide: Cloud Computing 2019: Using the Cloud for Competitive Advantage
It used to be that outsourcing or offshoring meant significant risk and limited success rates because of very limited insight into the results.
Well, my IT friends, times they are a-changin.
Why? Because there are more options today to more effectively bring on IT workers as you need them and thus let them go when youre done with them.
So whats changed? A combination of factors is converging to create the optimal environment for the effective end of the time when a majority of IT department workers are employees. First, the tough economic environment has recreated the early 90s and 2000s culture of cost cutting in IT departments around the globe. Whats different this time around is the easily accessible affordable workforce.
Lets start with affordable. The affordability index for IT staff programmers, testers, infrastructure engineers, etc. has dropped significantly since the end of the last century. This is because of the availability of affordable offshore resources and the decreased cost and improved reliability of international communication.
The only thing that isnt different is that the rising unemployment rates around the world put the power back in managements hand and not the formerly in-demand IT worker.
Second, the Internet has led to the availability of global marketplaces of widgets and people. There are a growing number of programmers-for-hire Web sites that offer an unprecedented level of information to evaluate individual contractors and outsourcing firms.
Some examples include RentACoder, eLance, oDesk and Guru. The combination of lower hourly or fixed costs and more widely available IT talent is important. But the real differentiator this time around is the insight that these Web sites provide into the quality, reliability and timeliness of outsourced work.
Lets say I need a C# developer. My search on Guru returned over 3,700 profiles, ranked in order of best to last. How they determine the ranking is the key. Customer feedback is only part of the formula, because we all know this can be fudged.
Their quality score is the most important factor. Its calculated based on their success rate in landing business, ability to get paid for work and how much repeat business they receive. These are real business metrics that cannot be fudged easily.
For example, I can see that Remoting Coders based in Argentina is ranked first as a C# shop, has a five-out-of-five star ranking, and earnings of $197,970 this year at a rate of $40 per hour. I can also see there are two customer quotes recommending this firm in the last 30 days.
And this is just the thumbnail overview.
When I clicked on the profile I can see when the firm joined Guru and each individual project description along with ranking and feedback quotes. The company profile shows that its a Microsoft Certified Partner and that its employees have authored two books. Finally, you can see examples of their work uploaded to the site.
Well, if you are a C# programmer here in the US, you have to wonder what is stopping your employer from cutting your continuous big salary, annual increases and your costly benefits for this bargain in Argentina.
And to top it off, Guru pays you back 2% and has an escrow guarantee so your likelihood of being hoodwinked is limited, while you can gain cash kickbacks the more you use the site.
But how do you know your hired help isnt goofing off on the job? oDesk actually allows you to monitor screen shots of each developer to ensure they werent shopping on Woot when they should be writing code.
But I see this as more of a gimmick because developers are developers they figure out ways around these Big Brother ploys. Besides, they should be measured more on results.
Lets put this all into perspective. There are two sides to this story. You have IT management who is looking to control costs while not hurting quality and performance. On the flip side you have the IT professional who wants the security of a job, but wants to maximize their earning potential.
(I know job security ha ha.)
The employee could decide to become a freelancer on their own or be forced into it when IT employee jobs dry up. But then how will they compete when the global workforce is driving rates down?
For every $40 rate in Argentina you can find 100 similar profiles that charge under $15 per hour in Eastern Europe and India. There is limited earnings potential and even more limited security because your time between contracts could be significant.
This all leads me to the conclusion that the age of IT employees is coming to an end. IT management will control their work force based on the ebb and flow of projects needs, while cutting costs and not having to deal with HR related costs and issues.
Plus: no more annual reviews to write!
What about the average US-based IT employee? Im beginning to see a creek, a boat and no paddle.
Do companies have a responsibility to take into consideration the impact of outsourcing local economies? Id say public companies do not. They are slaves to the bottom line.
My advice to the employed IT worker is to start taking your future seriously and find ways to make yourself as indispensable as possible to your employer.
Become an expert in your employers business, while staying current on the changing technologies that will impact your employers systems or are critical to your companys industry. The more you are involved in requirements gathering and design, the harder it will be to replace you with someone not intimate with the companys business practices.
As for you heartless IT managers (I know you all arent heartless!), dont forget the drawbacks of outsourcing to this extent.
You will lose significant company business knowledge and historical context, and thus be possibly doomed to repeat mistakes that would have been avoided by a seasoned internal employee. You also will face support challenges when production goes down and your Argentine coder isnt available.
More important, you could sacrifice the competitive advantage of innovation to others who grow and nurture talent in-house talent that eventually grows into IT managers who will themselves be forced to make really hard decisions (and be heartless?).
I believe they would make better decisions because they are employees instilled with company values and history, and not some outsider found on a Web marketplace the same marketplace where a companys competitor could acquire the same talent.
Yep, Id suggest IT managers think long and hard before putting a nail in the coffin of IT employees. You may just end up burying yourself in the long run.
Eric Spiegel is CEO and co-founder of XTS, which provides software for planning, managing and auditing Citrix and other virtualization platforms.