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The Future of Outsourcing: September 11, 2011

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What's wrong with global outsourcing? Instead of belaboring the predictable arguments (you know them all already), real-life consultant Alan Gore imagines a future in which he takes the situation to the — inevitable? — conclusion.
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One of the drawbacks of being an IT professional is being experimented on by pointy-haired bosses who have fallen in love with a new management fad. The PHBs have taken us through downsizing, rightsizing, vision statements, mission statements, dead Chinese warriors, SPC, Extreme Programming, Quality Circles, Synchronous Manufacturing, Total Quality Management and (if you were among the really unlucky ones), weeks of butt-numbing meetings on something called Six Sigma. But we can survive such things, for geeks have developed a unique ability to doze off with our eyes open.

The latest PHB craze, however, is far more baleful than any of those dear old nostrums. It's called offshore outsourcing.

Remember back in 1999, when you had a job, what a hard time you had talking the boss into letting you telecommute two days a week? "Look at the savings on office supplies," you said. "Four more hours a week I can spend working instead of plowing the freeway!" Management's counters to your arguments were always the same: "All environments other than the Datawhack Inc cube farm are potentially distracting;" "When you're not there physically, how will anyone know what you're doing?" and that ultimate deal killer, "We can't possibly allow our proprietary software and sensitive client data in the insecure environment of a spare bedroom!"

Well, the good news of the 21st century is that management now fully buys into your case for telecommuting. The bad news is that your entire job, six days a week plus holidays and unpaid overtime, is now being done by someone whom the boss has never met, working in a Third World country for a fraction of your old salary.

While America's pundit logorrheasphere may not particularly care that your geekly coding job is now being beamed in from offshore, it might be a lot more interested to know that every back-office job where there is no face-to-face contact with customers is at risk. Your credit card records, banking information, medical records, and insurance claims are now being worked on in countries where civil wars are being waged against terrorist insurgencies. So much for management's patrician concern over the security of its ones and zeroes.

There are a number of other well-known problems with offshore outsourcing. In the interest of brevity I'll breeze through some of the larger objections:

  • Project design is a tennis game played between developer and customer: Customer asks you to do X, you respond with a client-level explanation of what it would take to do X, he strokes his beard and asks you if X-prime would be possible, you volley back a revised design, and so on. It goes on for at least a few iterations before you put cursor to code development window. How long does this game take if the developer is halfway around the world, learned the customer's language as a college junior, and is embedded in a totally different culture?

  • Offshoring is the ultimate development of the management philosophy that all IT people are as interchangeable as urinal cakes. What happens in the middle of a multi-year implementation when, in their ongoing quest for a country where people will work for free, the PHBs switch to a development team in a different part of the world?

  • The ongoing controversy over patent and copyright in America leads us to believe that corporate boards are concerned about protecting their intellectual property. What happens to IP when the work is being done in a country with a radically different legal system? And if a legal dispute were to arise, do you appeal to a tribunal run by a tribal chieftain, or do you burn incense before a multi-armed deity and hope for the best?

  • When you outsource, you don't go overseas to hire your own staff. You retain a consulting firm based where the workers are. Of course, you made sure that this firm had expertise in your company's field. So now how do you know how many of your direct competitors the same staff might be working for, right at this moment?

  • The first outsourcing operations farmed out programming tasks only. That was, after all, where most of the money went. Everyone promised to audit the hell out of the code being sent back. And of course, it was all going to be rigorously tested. But then you discovered business process outsourcing! Now that you've sent the whole back office overseas, including the auditors and testers... well, let's just say that if I find out who you are, I'm not going to ride on your planes or rely on power from your grid.

  • The North American developers who used to work for you had an average of 16 years of experience. But those doddering 28-year-olds demanded three meals a day, medical care and in a few cases, weekends off, so you plugged in offshore replacements with an average of 4 years on the job. What do you think might be the actual depth of their knowledge? How adaptable will they be as new technologies come along?

  • Dealing with work located at a great distance requires advanced remote management. Folks, we're talking about people who are not confident of their ability to manage a project on the other side of town.

The PHBs love outsourcing because it saves money. In long-range corporate planning departments, where the B-school elite gaze ahead all the way to the hazy outlines of next quarter, the thinking is that the savings will goose the value of their shares, so that the last eight employees left in the company will someday retire rich.

What these folks are ignoring is the effect of outsourcing on politics. Geeks are not very political, but have until now leaned libertarian. All through the 80s and 90s, the tech vote created the sunny business climate that made the big boom possible. Today the geeks – and office workers in general - are running through their own retirement savings as they vainly look for work. Once they lose their houses, they will turn into another sullen huddle of trailer-dwelling outsiders. Like the Greens, their sole political focus will become vengeance against "the suits." Management, by jumping into one fad too many, will lose the very political world it had hoped to create for its own comfort. Look forward to a nation of fifty Californias where every city is Eugene, Oregon.

Hence, I offer this scenario of what may happen if this goes on. Let's look forward to what America might look like after a few more laps of the race to the bottom have been run....

September 11, 2011

Nobody expected this to be an ordinary Sunday. Airport security was especially tight on this significant anniversary. The random-pluck programs were turned off today. Every passenger was required to step into the X-ray booth, undress, and place all clothing into the gamma box before being allowed to proceed.

No one will ever know why Austin was the first to be affected, that morning. Perhaps it had something to do with the city having one of the last "Bushvilles," tin shanties clustered near the airport. With the exception of Austin, most of the nation's geeks had been resettled in huge public dormitories on farms run by the National Forfeiture Administration. There (living on land once owned by some farmer accused of smoking a joint, downloading music, violating the new .03 blood-alcohol DUI limit, visiting a prostitute, or returning DVDs late), a computer person could compete for regular contracts on the global market, sustaining himself on a world-average annual income by growing his own food and sharing camp chores with bunkmates.

But Austin still had a cell of active Republicans, with the ear of one recalcitrant state appeals judge. The Austin resettlement colony had been held up on one technicality after another. If you wanted to find a computer maven in this city, you'd do the pretend-you-don't-see-them stroll past the beggars at the Bushville perimeter wire, then prowl the rows of shacks until you found the ragged person whose battered solar-powered laptop produced the E-mail message that had looked so good on your watchtablet. If there was going to be any repeat of the Cupertino food riot of 2005, it was highly likely to happen right here.

A hotel executive from Hearst Dreamland Resort happened to be the first. After stepping off her flight from San Luis Obispo, she pushed her card into the Bank of India ATM near Baggage Claim, and keyed in her PIN. Instead of the usual flood of tiny aluminum dollar coins, the machine flashed ACCOUNT DECLINED. She was too busy to pick up the Help Line receiver and wait the twenty minutes it took to get a fuzzy, accented voice that might or might not have been able to diagnose her problem. After all, California had only just emerged from Chapter 9 reorganization after six years, and was still under martial law. Public resentment simmered over the mass sale of state assets in bankruptcy, even after Gov. Boxer mandated that eBay hire local temps to run the sale servers. When the Soros/Tiger Balm partnership snapped up Hearst on the third day of bidding, the Silicon Valley Geek-Green Alliance had posted anonymized threats to burn the Castle down. A wall of military security kept the GGA out, but all the execs had seen hacker attacks in one form or another. Since the lynching of the Advistron board in 2007, most upper-level corporate folk had found it prudent to stay in their gated compounds and let Trav-L-Temp proxies in stiff white Kevlar suits run all their out-of-town errands.

Up one level in the Austin terminal, there was a commotion at the Southwest Delta United counter. The reservation system seemed to be running, but at 0800 sharp it had stopped accepting locator codes. Every ticket in the system had, apparently, electronically vanished. Passengers were waving e-ticket confirmation printouts that no longer corresponded to reservations.

High above the waiting area, the CNN monitor carried first reports from the airline's check-in counters in New York, Chicago, Zurich, Beijing, Sydney, and Dubai: every ticket query was coming up Not Found. Twenty-three minutes later, a corporate rep at the Guangzhou datacenter came on the air to report an "intrusion" that would require a "software rollback and restore." The airline would be down the rest of the day.

At the same moment in Los Angeles, every one of the electronic signs on the Spielberg Freeway began flashing EMERGENCY! EXIT NOW! Five minutes later, the signs on the Caltrans public freeways followed suit. Traffic surged onto surface streets to form a puzzled mass of weekend drivers wondering where to go, just as tourists shopping for souvenirs at the Chinese Chinese Theater became the first in the nation to discover that their credit cards had just electronically left home without them.

At the "Summer White House" in upstate New York, President Clinton was finishing up a working vacation, polishing her Homecoming Week speech for Wellesley College. Late in her administration, she was looking forward to summing up the country's years of strife and triumph: the California bankruptcy, the National Health Plan, the scandal over the Chinese invasion of Taiwan, and her landmark solution to the outsourcing crisis: the Labor Resettlement Act.

The Labor Resettlement Act had allowed Americans to get back into competition with the Third World -- not by imposing tariffs and embargos, but by competing directly on standard of living. It had almost worked, too: with the American technical wage brought down to the new-dollar equivalent of $5,000 a year, the new "dorm geek army" began winning back software contracts, just in time to boost Clinton's polls enough to hold off Stossel in 2008, gaining a second term. But in the following year, the traditional outsourcing havens began to lose share to Vietnam, Indonesia, and the emerging "Stans" of southwest Asia, where the standard of living remained still lower, and people will work for even less. The world back-office wage dropped to $2,500 per year, and only Federal Reserve Chairman Paul Krugman's program to devalue the dollar kept America in the running. The country was clawing its way back, and by now it was rumored that over ten percent of the latest Windows release was American-made subcontracted code.

Two hours after the first signs of attack, Clinton received a call on the Pentagon secure link. Defense Secretary Ramsey Clark, white-faced, broke the news of a nationwide software meltdown. Virus detectors saw no unusual activity. It was only after the Pentagon, which fortunately still had a back office staff all its own, began to put together the stories of al Qaeda operatives who had trickled out of their caves and gone to computer schools all over the Third World, that the picture began to come into focus.

In the minutes left before the embedded software that tied America's TV networks together failed for good, Clinton went on the air, bit her lip, and began to tell the nation an ancient story of Troy and an outsourced horse.

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