Offshoring Is So 'Right Now,' But The Future Belongs To Automation

Here's another aspect of offshoring that's lost on Lou Dobbs, John Kerry, and other misinformed critics of the practice. If India didn't exist, much of the IT and call-center work that's taking place overseas would be automated by now. Either way, a job in the United States is still lost.The fact is, moving work to India is, in many cases, still cheaper than the initial investment required to build and equip, say, a fully automated call center. But that's temporary. Technology always gets better and cheaper. Automated voice-recognition and -response systems are improving every year. The number of "exceptions" such systems can't handle, that need to be routed to a human, is getting smaller and smaller. Meanwhile, the technology is becoming more reliable and cost effective.

The same is true in IT. The emergence of code-generating tools like UML2EJB, to take just one example, means reduced programming hours--and fewer programmers, regardless of where they are located. Meanwhile, automated network monitoring and maintenance systems ensure that infrastructure management will become less labor intensive.

Cheap labor in India and China may actually be forestalling the development of these technologies. Offshoring is a practical way to quickly cut costs right now, so companies have less incentive to spend on cutting-edge automation. In turn, vendors of such systems have less capital to invest in R&D. But technology's march is inexorable, and the automation of more and more routine IT and businesses processes is a certainty.

This raises a couple of interesting questions. Would IT workers who protest the loss of jobs to foreign countries shout as loudly if those same jobs were lost to, ironically, computers--ones they perhaps helped build? And what does this trend mean for the economic future of India, which has staked much of its economic growth on its status as America's back office and IT shop? Many of the leading Indian firms know full well that their advantage is temporary and are wisely investing in new, innovative technologies and services that won't be marginalized by automation or the narrowing of the country's cost advantage. Others could be hit hard.

Either way, Dobbs will need a new cause celebre if offshoring is replaced by automation. "Automating America" doesn't carry the same sense of outrage implied by "Exporting America," but it's a start.