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One of the major annoyances I have with corporate America at the moment is offshore outsourcing. No, this isn’t going to be the rant that you hear so often about calling a service center and speaking to someone with a thick accent. What has me concerned is the weakening of not only the American tech sector, but the tech companies themselves.

A recent article discussed this very topic siting that there have been 18,500 US high-tech industry jobs added in the first two quarters of 2007. Given the current housing market trouble, this news about new tech jobs is very good for the economy because, as the article points out, tech sector jobs tend to pay more than most jobs. But who exactly will fill these jobs?

The idea of outsourcing was not uncommon in the 1980’s and really took off in the 1990’s. Originally, most organizations were outsourcing to other organizations within the country but, while this caused concern over customer service quality, the jobs were retained within the US. In the late-1990’s the concept of offshore outsourcing became commonplace and really tipped in the early 2000’s to the point were most tech sector companies were offshore outsourcing customer service, programming, and data entry jobs.

Offshore outsourcing has had negative side-effects ranging from customer service quality to loss of knowledge. The customer service issue has been a complaint even with onshore outsourcing, so I do not believe that offshoring customer service has caused any more of a decrease in quality of service than did onshore outsourcing which got so out of hand that some companies were outsourcing call centers to prison inmates. The argument in favor of this was that the jobs were kept onshore, the argument against was the obvious: convicted criminals were being given access to our personal information. The real issue with outsourcing, be it onshore or offshore, comes into play with jobs that provide the company an advantage over other companies.

But, there are over 18,000 US high-tech industry jobs added between Q107 and Q207, so what’s the problem? How about less qualified US citizens to apply for these jobs? This is not a matter of too much work but not enough people, but rather not enough qualified people. And it is not as though we do not have the education in place to train the up-and-coming college graduates in these fields, its that our children see what is happening. They see mom and dad, uncle Joe and cousin Betty getting laid-off from their jobs as telecommunications engineers, software programmers, etc. and these kids think to themselves that there is no future in high-tech in the US. Those jobs are being offshore outsourced, so why bother? The graduates of today are training in other fields. This effect of offshore outsourcing will cause the US to weaken and possibly lose it’s foothold in technology, be it high-tech or bio-tech, and this will weaken the country on the whole because technology is our new Industrial Revolution. But its not even just about the country, its about the company. These organizations have been selling their technical knowledge to other companies. There is the argument about how technology is not the core function of many businesses, so why should they spend time and effort on it? The answer is that, while tech may not be their core function, it is their vehicle to achieving their core function. It is their vehicle to fulfilling customer orders. Like it or not, technology runs business these days, core functionality be damned.

The obvious fix to this is to stop outsourcing. But this is easier said than done, isn’t it? Afterall, this slippery slope that corporate America started down has seen ripples that should have, but may not have, been anticipated. The main being the lack of qualified individuals coming out of school these days. So, even if an organization wants to insource, the lack of a qualified workforce may inhibit them from doing so. Furthermore, those who have gone on to become educated in technology tend to eschew the corporate lifestyle. Instead, they are doing things like running their own startups. Mark Zuckerberg of Facebook being a perfect example. Without a customer coup against outsourcing, I don’t see the AT&T’s, Dell’s, or HP’s of the world changing their ways. They will continue to trade away their knowledge a little at a time until some faceless, offshore organization is the crux of the company leaving behind a small, skeleton executive-level force in the US as long as it continues to look good on the books and make the shareholders happy. By outsourcing, corporate America is trading away their future (as well as the US’s tech future) for a small profit today.

Another good article on this topic:
CIO.com: The Hidden Costs of Outsourcing