A not so simple path
Sending tech jobs overseas hasn't been as easy as some firms believed. But they persevere.
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On the American side, too, managers face a learning curve as they begin to oversee offshore projects. "The 'Ugly American' image of [businesspeople] throwing their weight around overseas and not understanding the differences in time zones and policies is beginning to disappear," says Rosabeth Kanter, a professor at Harvard Business School in Boston. Courses there now deal with crosscultural management and values tradeoffs. "One of the questions [students explore] is at what cost do you keep jobs in a community to protect the community versus your other responsibility to make a product at a reasonable cost for the consumer," she says.Skip to next paragraph
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Some companies eager to increase their global outsourcing realize they need hand-holding, says Katrina Teague, a vice president at Lionbridge Technologies. The product- development and outsourcing firm is based in Waltham, Mass., and operates in 10 countries.
Ms. Teague tells of a multibillion- dollar US healthcare firm that set up personnel, Intranet, and help-desk systems with offshore vendors. It enjoyed cost savings, but when communication and management problems cropped up, it turned to Lionbridge. In addition to offering staff in a low-cost country, Lionbridge sent a team with crosscultural experience to work at the client site in the US.
It's not uncommon for companies to abdicate too much responsibility and then be disappointed with the results.
"You need to leave behind enough management talent and enough checks and balances so you don't ... find out a year later that you have no control," says Pallab Chatterjee, president of solutions operations at i2 Technologies, a supply-chain management company in Dallas.
Nearly half of i2's 2,800 employees work abroad, mostly in India. Mr. Chatterjee talks to remote staff at the start and end of each day, and he recommends that companies that outsource do the same. "We call it 5-15 meetings - no more than 5 topics and 15 minutes," he says. The Internet makes those calls affordable, and because the end of the day in the US is the start of the day in India, he has the advantages of a 24-7 operation.
The Dallas company is part of another related trend: reverse migration. About 180 staffers of Indian origin who had been working in the US volunteered to work at i2 in India two years ago, at Indian salaries. "We were able to take the cost advantages ... [and] inject a level of expertise [in India]," Chatterjee says.
Some Americans complain that too many foreigners are let in on special visas and that after they gain experience, they might set up services in their home countries and offer labor rates that Americans can't compete with. But others counter that without these immigrants, many start-ups that have created jobs here wouldn't exist. "The flow is in both directions," Ms. Kanter says. "We end up capturing a lot of technology because of it."
Offshore outsourcing's impact on American white-collar jobs depends on factors that are difficult to predict. Forrester Research in Cambridge, Mass., estimates that by 2015, 3.3 million high-tech and service jobs will have moved overseas. But the Census Bureau predicts a labor shortage, because retirements will outpace new entries into the workforce.
The positives and negatives of offshore outsourcing are both being overstated, says Mr. Sinha of neoIT. But he adds, "The hype is about the potential future of this market, not the current reality ... and if the supply side scales up to meet demand, that potential is fairly significant."
From Chatterjee's perspective, we're headed toward more global equality in technology wages.
"IT professionals have to accept that their trade is becoming more like an average trade," he says. If salaries hadn't gotten so overheated in the 1990s, he says, it wouldn't be worthwhile to outsource. "Once your standard of living and expectations have gone up, bringing those back [down] is tough. But that's what's happening slowly but surely."