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Why the Pay Raises? - BrainDump

Outsourcing IT to foreign countries is a big and emotional topic for a lot of people (especially in the United States), with career IT professionals now living in fear that their jobs will go to bright-eyed and bushy-tailed southeast Asians. Recent budget reports of several companies, however, seem to contradict the fears. Is it possible that the fear of outsourcing is at best exaggerated and at worst an outright lie?

  1. Outsourcing: the Hoopla, the Reality
  2. Why the Pay Raises?
  3. The Money Myth
  4. Full Disclosure
By: Akinola Akintomide
Rating: starstarstarstarstar / 3
March 14, 2008

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This is basic economics. The assumptions seem to be based on the fact that several billion people translate to a corresponding number of IT-savvy professionals willing to work, but this is not necessarily true. There is a finite supply of skilled labor in any geographical area and this is making the economics of outsourcing change. The highly skilled individuals found in southeast Asian countries were in big demand as more multinationals flocked in and as local businesses grew. All were willing to pay the going rate to hire IT staff and support. And when demand exceeds supply, the prices go up. It has not helped that the rupee is getting stronger (or is it that the dollar is getting weaker?).

Suddenly it has been discovered that bushy-tailed, eager beaver types actually reside in the United States --  what a surprise! -- and very quietly, the outsourcing trend is rapidly reversing, so you can stop bemoaning your fate and get on with your jobs. The outsourcing pundits claim that China and Russia will pick up the slack and keep prices down. How do I say "we don't speak English" in Chinese (or Russian)? And if they do speak English, it soon becomes obvious that English is a second language. Indians speak English pretty well. That was one of the primary reasons why the multinationals flocked to India. I don't think anyone will be putting IT support (or call centers) in China anytime soon. Ehhh, I won't go into details of why not.

For anybody thinking that this is great news for IT professionals or for the managers that work with them -- not exactly. There are other factors that will ensure that prices paid to IT professionals in the United States will not rise and that job security is a contradiction of terms. Outsourcing is just one of them. IT support becoming a commodity will not help long term job security. Neither will the auction down bidding model, where the lowest bidder wins, for building generic platforms. Still, programmers and server and DB admins can now rest easier in knowing that they are once again in demand (in some fashion). In other words, quit the xenophobia; the Indians are not taking your jobs! The competition is definitely out there, but it's not as gloomy as some pundits claim it is.

So how do you react to the sudden relevance of local IT support? In a variety of ways; the more general and the better at current trends an IT analyst is, the better.  Mastering XML RPC and SOAP, open source database support as well as Windows databases and software will help. These teach you skills in using multiple programming languages to build GUIs and back ends, which will keep you relevant and let you pursue an aggressive bidding strategy. And as an IT manager, how do you recruit and manage effectively as you once again come face to face with your IT staff? That, I believe, is a question we will be asking for some time, since there is no clear answer.

"As a generalisation it would be hard to save money, and maintain excellent service, in a well-run service"

-- Richard Steel, CIO, London Borough of Newham

>>> More BrainDump Articles          >>> More By Akinola Akintomide

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