Down To Business: Offshorers Coming Out Of The Closet - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
News
Commentary
3/31/2006
04:45 PM
Rob Preston
Rob Preston
Commentary
Connect Directly
LinkedIn
Twitter
RSS
E-Mail
50%
50%

Down To Business: Offshorers Coming Out Of The Closet

Whether driven by some extrapolation of the Wal-Mart Effect or even the Madonna Effect, companies are starting to make noise about the work they're doing abroad.

Technology companies are coming out of the closet. Rather than hide the fact that they're moving more development and other work offshore, they’re publicizing it. Bill Gates and Michael Dell are posing for photos with Indian tech executives. Capgemini, EDS, and IBM are issuing press releases about the thousands of workers they plan to add abroad. Even big IT shops are less defensive than they used to be about their overseas ambitions. It's suddenly OK, if still not quite chic, to talk publicly about your global workforce.

For a parallel trend, consider Wal-Mart, which single-handedly pushed thousands of its manufacturer suppliers into low-cost China as part of its inexorable drive to beat down prices. While critics still portray the giant retailer as a glorified sweat shop and community wrecker, plenty of others give it credit for helping to keep U.S. inflation in check--the so-called Wal-Mart Effect. Rather than have to hide from the fact that cheap offshore manufacturing is behind its success, Wal-Mart can point to the good it bestows on consumers and the economy at large.

Likewise, as Fortune 1,000 companies move more of their work offshore and push their suppliers and partners to do the same, they're opening up about the overall economic benefits. Dell's public persona is now tied as much to the efficiencies of its global supply chain as to the quality of its products and service. IBM, which will employ about 55,000 people in India by next year, more than double the number it had there last year, talks not just about lowering its costs and the costs of customers, but also about accelerating the innovation of entire industries. IBM's huge multinational customers, by extension, are hoping to promote their own Wal-Mart Effects by leveraging the software and services developed offshore.

Of course, not every organization is eager to play up its offshoring exploits. A Government Accountability Office report issued last week shows that two states--Arizona and New Jersey--still prohibit offshoring as part of state contracts, while most of the 43 states that offshore work to administer at least one federal program must justify why they're doing so. For the most part, the federal government doesn't specify what can and can't be done offshore, but it's in no hurry to publicize what it's up to outside the United States.

Regardless of how you view this issue, understand that even negative publicity is pumping up the market. Call this the Madonna Effect. Want to draw attention to something? Fan the flames of controversy around it.

The single biggest boost to the Indian IT and professional services trade over the past couple of years, according to a top exec of one of India's leading IT and professional services firms, is none other than CNN's Lou Dobbs. That's right. It seems that the country's pre-eminent offshoring basher has piqued corporate America's interest in this subject. But instead of dissuading the Fortune 1,000 from turning abroad for software development, payroll, business consulting, customer support, HR, legal, and other services, Dobbs got those companies to investigate what all the fuss is about--and, to his chagrin, many of them like what they're learning.

Meantime, with U.S. tech unemployment at only 3%, congressional leaders now are talking openly about allowing more foreign-born professionals to work in the United States under temporary visas. One proposal would raise the cap on H-1B visas from 65,000 a year to 115,000, with an option to increase the cap 20% annually.

Globalization has officially arrived. Even that bastion of progressive thought leadership, The New York Times, in the person of columnist Thomas Friedman, now realizes that the "flat" business world in which we live won't be structured country by country. We can disagree on whether that trend ultimately serves our long-term economic interests, but there's no disagreeing on whether it will happen. It's here, to stay.

Rob Preston,
VP/Editor In Chief
[email protected]


To find out more about Rob Preston, please visit his page.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
State of the Cloud
State of the Cloud
Cloud has drastically changed how IT organizations consume and deploy services in the digital age. This research report will delve into public, private and hybrid cloud adoption trends, with a special focus on infrastructure as a service and its role in the enterprise. Find out the challenges organizations are experiencing, and the technologies and strategies they are using to manage and mitigate those challenges today.
Slideshows
IT Careers: 12 Job Skills in Demand for 2020
Cynthia Harvey, Freelance Journalist, InformationWeek,  10/1/2019
Commentary
Enterprise Guide to Multi-Cloud Adoption
Cathleen Gagne, Managing Editor, InformationWeek,  9/27/2019
Commentary
5 Ways CIOs Can Better Compete to Recruit Top Tech Talent
Guest Commentary, Guest Commentary,  10/2/2019
Register for InformationWeek Newsletters
Video
Current Issue
Data Science and AI in the Fast Lane
This IT Trend Report will help you gain insight into how quickly and dramatically data science is influencing how enterprises are managed and where they will derive business success. Read the report today!
White Papers
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll