Like it or not, industry experts and CIOs agree that overseas outsourcing is here to stay, and many are now focusing their attention on the best ways to assist the American workers displaced as a result of the practice.
Joy Howland is one of those experts. The development director for RATEC, a Bellevue, Wash.-based non-profit organization dedicated to workforce issues, Howland recently conducted a study that confirmed the growing strength of outsourcing, and went on to make recommendations as to what the public and private sectors can do to improve the chances for workers who lose their jobs to low-cost, overseas labor.
Howland explained that the keys to helping those displaced by outsourcing fall into the areas of education, economic development and workforce planning. But in the end, she said, it all comes down to the question of whether the country decides to be a victim - or a champion - of outsourcing.
"By champion, I mean that we need to start looking at how we're educating people coming into the workforce," Howland said. "Are we giving them the right skills? Are we differentiating them from other countries? Are we focusing on [research and development] in order to increase the momentum of technological innovation?"
Despite the displaced employees and the ensuing image problems associated with overseas outsourcing, or offshoring, industry experts and CIOs see no sign of the trend dissipating anytime soon.
Companies, the experts say, cannot ignore the savings incurred by opting for less expensive overseas labor. Some industry players even go as far as to say that offshoring has become a necessity for many businesses that want to remain competitive.
If there was any uncertainty about the future of offshoring prior to last week, analysts say that it has been cleared up with the re-election of U.S. President George W. Bush, whose policies are viewed as friendly to the trend. His opponent in the election, Sen. John F. Kerry, had promised to make it harder for companies to go offshore.
Improving the workforce
The RATEC study was conducted in conjunction with the Seattle Chapter of the Society for Information Management (SIM), and focused on companies in Washington. But, Howland said, the findings of the study and the ensuing recommendations have nationwide implications.
In the area of economic development, RATEC and SIM suggest that the government and private companies work harder to empower workers to navigate their career and acquire new skills as needed. This goal can be achieved through tax-free savings plans that enable workers to save money for continuing education.
To further aid in workforce development, Howland said that individual state governments should take a hard look at their displaced populations and identify the root causes for continued unemployment. Doing so will help identify the skills that are needed in a particular area and ultimately lead to best practices for getting people retrained and re-employed.
With the increase in global sourcing of entry level IT tasks and functions, RATEC and SIM suggest that educational institutions and private sector employees should focus on developing alternative programs to assist students in gaining the necessary hands-on experience needed to enter the workforce at a more advanced level.
The study says that two-year community and technical colleges could be instrumental in this area by developing innovative courses that integrate business, analysis and technical skills. IT professionals with knowledge of the business side of the equation are less likely to lose their jobs to outsourcing.
"The community and technical college system is going to face one of the largest challenges in adapting to this trend," Howland said. "It's hard to integrate a whole lot of business courses in just two years."
Improving businesses' approach to outsourcing
Another way for companies to help the workforce in the face of outsourcing is to continually reinvest profits in research and development, which ultimately leads to technological innovation and new jobs, according to the study. Governments can assist in this area as well by creating tax incentives for companies that invest in R&D programs.
Businesses that may consider outsourcing at some future date can help their employees by communicating honestly about those plans, and by creating a "future skills inventory," Howland explained.
"If you're communicating to your employees what they need to remain with your company then you're giving them the message that you value them there," Howland said.
Marc Hebert, executive vice president of Sierra Atlantic, former CIO of Oracle Corp., agrees that communication is the key to preparing employees to face the prospect of outsourcing.
Hebert, who was an early adopter of India-based offshore outsourcing firms while working for Oracle, said that when there is a lack of communication, the threat or imminence of an offshore strategy can create a lot of unnecessary anxiety within a company's employee base.
"I think that conditioning your employees to expect change, to live in an era of change, and to embrace it in a positive way rather than fight it, is an important theme in almost every industry," Hebert said.