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[Oct 3, 2003] The Future of Outsourcing September 11, 2011 at InformIT.com

From the book: Outsourcing Dilemma, The: The Search for Competitiveness

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:

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.


In 15 years or so robots will take over all service industry jobs and manufacturing jobs. This is of far more concern to me than any outsourcing to China or India. China and India will grow a local demand for high tech services and products that will inevitably catch up with their supply. This will happen sooner than you think. China right now has a middle class population of 250 million people which incidently happens to be equal to the US total population. Outsourcing will be a non issue in a couple of years I almost guarantee it. Robots will be the worst thing that's ever happened to humanity however because there's nothing that the displaced workers will be able to do to make a living.

What happens when societies have large numbers of military aged unemployed people? WAR. Get ready for it.

Good article, funny, if the issue wasn't so serious... Save
by rmukunda
This is what happens when globalization is allowed to run
amok, without any safeguards. Unfortunately, this is the way business
runs today. First, it was the steel workers, then it was the garment workers, now it is some of the white collar jobs. I always wondered
why all these people didn't march on Washington.

The business argument for getting the work done for cheaper, a lot cheaper, thus creating efficiencies is undeniable. However, shouldn't there be some limits on this, some balance, so everyone's interests are taken into account? I agree this is very difficult to do, but the debate must begin, appropriate changes made, and the politicians must be held ultimately held accountable.

Outsourcing Save
by dryg77
I have vitnesed outsourcing in one company X. This company is located in Toronto. They transfered quality assurance department to India. Prior to transfer people from India were comming here for 8 months. Note that they had to sleep somwhere, eat somwhere and so on. They were learning products. When everything was transfered it took another 4 month to set the right environement in India. The the real work started. Toronto based company laied off 25 testers. They left just 5 high paid testers for final verification just for couple more months. What a surprise, those 5 testers are still working but five times more. Why because the data that comes from India is always OK, stating that there are a few bugs in every release which is not true. Now these 5 guys are working days and evenings in order verify the quality of the product and finding hundrends of bugs. Now this Toronto company probably spend more money then before in hope that one day it will become cheaper.

I am personaly work with smart people from many contries including India. Mostly they have good education but the main problem with them is that they are not reliable in their work. I have a coworker and he has a good education. When we disscuss some new ideas he always knows everything and suggesting the new tecnics. One day, when we had bear I told him how smart he was and that I wish to know as much as he does. He told me the sicret. "Always say that you know everything, be agressive and then if you do not know, you will learn it."

Another guys are Chinese. I am immigrant myselfe but I can not understand 3/4 of what they are saying. Besides, most of those who I worked with are former medical workers, chemical engineers or some other engineers who get 6 month Chinese training program in Toronto and got the job. People are lying on the interviews show false diplomas. You know that Canada is the socialist country, so if you got the job and your are visible minority then you will not be fired unless company goes bancrupt.
I think the best way to survive is to by a farm and to start growing vegetables because in five - ten years we will have pay with tomatos fore services.

It's not the Indian programmers... (Score:5, Insightful)
by fildo (683072) * on Tuesday January 27, @06:18PM (#8105831)
... it's the white collar execs (and wannabe execs) here in Corporate America that we're mad at!

They get the nice fat promotions and bonuses, while our jobs go elsewhere. And we are the same people they praised just last year as invaluable assets to the company.

So what happened? They can't get rich pulling fancy accounting tricks, so this is what they've resorted to.

I seriously hope that I'm wrong when I predict that this whole thing will fail miserably (taking the off-shore jobs with it).

How many steel workers are left today? (Score:5, Insightful)
by SPYvSPY (166790) on Tuesday January 27, @06:55PM (#8106339)
(http://slashdot.org/)
How many loggers while you're at it? Face it--the fantasy world of overpaid IT jobs is gone forever. You have a skill that is basically fungible in today's world, and can be purchased at a lower price than would sustain or satisfy you. What IT people have been failing to understand for years now is that technology expertise is not as valuable a skill as it was once perceived. In fact, a lot of technology work is drudgery on the order of rivetting and lever-pulling. Too bad for those who were counting on making $300,000 a year. Time to reinvent yourself. The steelworkers did it. The loggers did it. Now it's your turn.
The problems with outsourcing (Score:5, Interesting)
by SilentSage (656382) * on Tuesday January 27, @06:24PM (#8105903)
This article makes interesting advertising for outsourcing firms and raises some very valid points but hardly can be considered either objective or entirely factual. The article talks about the quality of Indian IT firms (and they do have some high quality professional firms). However, they fail to mention the many negative experiences U.S. firms have had with botched projects, poor service and support compounded by language issues despite claims that Indian English skills are adequate (albeit this is not true in every instance). One of the main issues offsetting these facts is that they work for a tenth of what their US counterparts do. Companies find it cost effective to allow them to make these mistakes and learn from them (which they seem to be doing). Outsourcing is a minefield that can lead to extraordinary success or disastrous failure. From an economic perspective the cost savings you reap from outsourcing you pay for in the long term (as a nation) by the erosion of your markets buying power. 3 Million consumers in your home market (making $70,000 dollars a year) are replaced by consumers in a market hostile to foreign competition making $8000 dollars a year (for the top tier anyway). Sooner or later America will realize this and legislation will be put into place to stop it. But in the meantime hang onto your seats
Rather pointless article (Score:5, Interesting)
by khyron664 (311649) on Tuesday January 27, @06:24PM (#8105896)
Outsourcing isn't the magic arrow CEOs want it to be. This article doesn't really address anything important at all. Ratings are pretty meaningless. I know parts of companies that are rated at SEI Level 5, but produce some of the worst crap I've seen. They're rated well though, so they much be good.

Why doesn't someone write an article about all the times outsourcing has been tried before? How about what happened with Malaysia? How about the fact that the overhead involved in trying to manage people half-way around the world is higher than the amount they save by outsourcing? This isn't a new fad people. Sure, the people and the places change but the problems don't.

Things are different now than they were in the 80's I'll grant you, but no one seems to be drawing the comparisons. Health Care costs are rising in the US, thus possibly providing better savings when outsourcing now. However, it's not like this is a new concept and that the problems aren't well known. Let's see some hard questions asked and analysis done based on past experience!

The problems with outsourcing (Score:5, Interesting)
by SilentSage (656382) * on Tuesday January 27, @06:24PM (#8105903)
This article makes interesting advertising for outsourcing firms and raises some very valid points but hardly can be considered either objective or entirely factual. The article talks about the quality of Indian IT firms (and they do have some high quality professional firms). However, they fail to mention the many negative experiences U.S. firms have had with botched projects, poor service and support compounded by language issues despite claims that Indian English skills are adequate (albeit this is not true in every instance). One of the main issues offsetting these facts is that they work for a tenth of what their US counterparts do. Companies find it cost effective to allow them to make these mistakes and learn from them (which they seem to be doing). Outsourcing is a minefield that can lead to extraordinary success or disastrous failure. From an economic perspective the cost savings you reap from outsourcing you pay for in the long term (as a nation) by the erosion of your markets buying power. 3 Million consumers in your home market (making $70,000 dollars a year) are replaced by consumers in a market hostile to foreign competition making $8000 dollars a year (for the top tier anyway). Sooner or later America will realize this and legislation will be put into place to stop it. But in the meantime hang onto your seats
Just more hype (Score:5, Interesting)
by jafac (1449) on Tuesday January 27, @06:29PM (#8105982)
(http://slashdot.org/)
That's all this Indian Outsourcing thing is.

Are there really really good, really smart Indian programmers? Of course there are! But overall, on the average, outsourcing will end up biting most companies in the ass, in the long run. There are hidden costs to it, like the 11 hour time difference, language barriers, cultural differences (anecdotally, from many accounts, Indians tend not to raise questions, or think independently when a design sucks, etc.)

Worse yet, this will bite the US Software industry in the ass when we suffer from brain drain - when software engineering is no longer a sought after degree. Then the Indians will start their own companies, and eat our lunches.

Worse still - with the decimation of these high-paying jobs, comes an overall lowering of the standard of living here in the US. These companies got rich by selling to the richest market in the world - American consumers. By gutting their own customers, these companies are shooting themselves in the foot.

- - -
That said - the writing, in big letters, in crayon, is:
Investors should believe that a wise company outsources, because it's a move towards efficiency. It will eliminate those overpaid "web designers" that are sapping corporate profits. Companies are "cutting fat". It's perceived as a gutsy move.

Actually, it's the herd mentality. "Oh my god! IBM's outsourcing, they're going to KILL us unless we outsource too."

But mainly - it's a movement designed to lure investment dollars back to the Tech Industry. It's basically hype. Companies who outsource are selling stock. Not products and services. This is their motivation, their drive. And it's very much a herd mentality. Among investors, AND corporations. They may be heading off a cliff. They may be heading to the slaughterhouse. Or perhaps greener pastures. But make no mistake. The Outsourcing Movement is NOT a drive to offer better service, or find better talent, or even save real money. It's a drive to LOOK like they are.

Re:Just more hype (Score:1)
by Zeromous (668365) on Tuesday January 27, @07:22PM (#8106722)
(http://www.whiteravens.com/)
While I've noticed some of the Indian people I work with are quiet and don't rock the boat, I consider it a cultural thing- sort of like how you would zip your mouth in a Honda Design meeting. Also there are plently of outspoken Indian people I work with. So obviously- let's forget the blatent stereotyping. It serves no one It seems to me most of the comments below are having trouble with this and miss the point in the process.

The interesting thing is companies are using this outsourcing thing as FUD to tow their bottom lines. This is standard practice during recession and visions of Roger, GM and Capt. Da (Da-Da for short) are grossly exaggerated.

Thank god we don't have a union to negotiate our jobs away rather than a common readjusting of our worth as IT workers in North American society like our poor friends the American Autoworker.

The parent comment is spot on in asserting "The Outsourcing Movement is NOT a drive to offer better service, or find better talent, or even save real money. It's a drive to LOOK like they are". The good news is, things are not as bad as they seem.

The IT Workers Bottom line: You want your job to be safe? That is entirely up to you. But in reality no job is safe.

[ Reply to This | Parent ]
Re:Just more hype (Score:2)
by pipingguy (566974) on Tuesday January 27, @09:46PM (#8108342)
(http://www.pipingdesign.org/)
Then the Indians will start their own companies, and eat our lunches.

That's a natural progression, since someone has already moved the cheese.

[ Reply to This | Parent ]
Re:This problem is not as big as some think (Score:2, Interesting)
by Tablizer (95088) on Tuesday January 27, @08:20PM (#8107356)
(http://www.geocities.com/tablizer | Last Journal: Saturday March 15, @01:22PM)
most of the jobs that are moving out of the country are the type of jobs that are high profile.... projects that require teams of 20 or 30 people (maybe) and that lasts for a year or longer....But many programmers are employed where proximity is important....Maybe it is a small... institution....which needs a few programmers to build in house systems.

I agree with that assessment, however, the loss of the "big projects" will flood the market with programmers for many years. It is like musical chairs with 3 chairs and 10 players. Your point focuses on the 3 chairs, but not the 7 players without a chair. Nobody is suggesting that *all* programming jobs are disappearing.

Re:This problem is not as big as some think (Score:2, Interesting)
by anantherous coward (695798) on Tuesday January 27, @08:22PM (#8107374)
You are right!

Here is an article of interest: The Myth of the Race to the Bottom [freetrade.org].

It is easy to be fearful due to the short term pain due to economic dislocations, but growth will continue. We haven't come close yet to exhausting all the new areas. Note two emerging revolutions: nano-tech and bio-tech. Also, we still have a long way to go in the whole knowledge revolution area. My own belief is that total programming jobs in the US will grow over time, not shrink. Expect a new expansion in a few years time. Look for jobs in small business and nich industries.

Re:Opposition is racist (Score:5, Insightful)
by javiercero (518708) on Tuesday January 27, @06:23PM (#8105878)
The key word is not "better" but "cheaper", it happened with manufacturing jobs in the past 2 decades... it started happening with other jobs now. As long as executive positions are not being outsourced Corporate America could care less about who is doing the job, and the quality of it.

In some sense it is economic suicide, sure you produce cheaper goods, but those who are in this country to buy them are out of jobs. I.e. they have no money to buy those cheap goods, and the people who produced the goods are too underpayed to afford those goods. This is why MBA schools should be shut down once and for all, they have been produced miserable failures for the past 2 decades, a ton of greedy idiot savants who are unable to see the whole picture.

I could care less if Indian companies can do the same job better, or cheaper. If that was the case Indian corporations would rule the market, if there was indeed a perfect free economic system as the article sort of tried to hint.

George Monbiot - The Flight to India (Score:4, Interesting)
by gordoni (7864) on Tuesday January 27, @06:53PM (#8106299)
(http://www.base.com/)
Here is an insightful recent article on outsourcing by George Monbiot [monbiot.com] (one of the world's leading overachievers):

The Flight to India

The jobs Britain stole from the Asian subcontinent 300 years ago are now returning. Is this a good thing or a bad one?

If you live in a rich nation in the English-speaking world, and most of your work involves a computer or a telephone, don't expect to have a job in five years' time. Almost every large company which relies upon remote transactions is starting to dump its workers and hire a cheaper labour force overseas. All those concerned about economic justice and the distribution of wealth at home should despair. All those concerned about global justice and the distribution of wealth around the world should rejoice. As we are, by and large, the same people, we have a problem.

Britain's industrialisation was secured by destroying the manufacturing capacity of India. In 1699, the British government banned the import of woollen cloth from Ireland, and in 1700 the import of cotton cloth (or calico) from India.1 Both products were forbidden because they were superior to our own. As the industrial revolution was built on the textiles industry, we could not have achieved our global economic dominance if we had let them in. Throughout the 18th and 19th centuries, India was forced to supply raw materials to Britain's manufacturers, but forbidden to produce competing finished products.2 We are rich because the Indians are poor.

Now the jobs we stole 300 years ago are returning to India. Last week the Guardian revealed that the National Rail Enquiries service is likely to move to Bangalore, in south-west India. Two days later, the HSBC bank announced that it is cutting 4000 customer service jobs in Britain, and shifting them to Asia. BT, British Airways, Lloyds TSB, Prudential, Standard Chartered, Norwich Union, BUPA, Reuters, Abbey National and Powergen have already begun to move their call centres to India. The British workers at the end of the line are approaching the end of the line.

There is a profound historical irony here. Indian workers can outcompete British workers today because Britain smashed their ability to compete in the past. Having destroyed India's own industries, the East India Company and the colonial authorities obliged its people to speak our language, adopt our working practices and surrender their labour to multinational corporations. Workers in call centres in Germany and Holland are less vulnerable than ours, as Germany and Holland were less successful colonists, with the result that fewer people in the poor world now speak their languages.

The impact on British workers will be devastating. Service jobs of the kind now being exported were supposed to make up for the loss of employment in the manufacturing industries which disappeared overseas in the 1980s and 1990s. The government handed out grants for cybersweatshops in places whose industrial workforce had been crushed by the closure of mines, shipyards and steelworks. But the companies running the call centres appear to have been testing their systems at government expense before exporting them somewhere cheaper.

It is not hard to see why almost all of them have chosen India. The wages of workers in the service and technology industries there are roughly one tenth of those of workers in the same sectors over here. Standards of education are high, and almost all educated Indians speak English. While British workers will take call centre jobs only when they have no choice, Indian workers see them as glamorous.3 One technical support company in Bangalore recently advertised 800 jobs. It received 87,000 applications.4 British call centres moving to India can choose the most charming, patient, biddable, intelligent workers the labour market has to offer.

There is nothing new about multinational corporations forcing workers in distant parts of the world to undercut each other. What is new is the extent to which the labour forces of the poor nations are also beginning to threaten the security of our middle classes. In August, the Evening Standard came across some leaked consultancy documents suggesting that at least 30,000 executive positions in Britain's finance and insurance industries are likely to be transferred to India over the next five years.5 In the same month, the American consultants Forrester Research predicted that the US will lose 3.3 million white collar jobs between now and 2015.6 Most of them will go to India. Just over half of these are menial "back office" jobs, such as taking calls and typing up data. The rest belong to managers, accountants, underwriters, computer programmers, IT consultants, biotechnicians, architects, designers and corporate lawyers.7 For the first time in history, the professional classes of Britain and America find themselves in direct competition with the professional classes of another nation. Over the next few years, we can expect to encounter a lot less enthusiasm for free trade and globalisation in the parties and the newspapers which represent them. Free trade is fine, as long as it affects someone else's job.

So an historical restitution appears to be taking place, as hundreds of thousands of jobs, many of them good ones, flee to the economy we ruined. Low as the wages for these positions are by comparison to our own, they are generally much higher than those offered by domestic employers. A new middle class is developing in cities previously dominated by caste. Its spending will stimulate the economy, which in turn may lead to higher wages and improved conditions of employment. The corporations, of course, will then flee to a cheaper country, but not before they have left some of their money behind. According to the consultants Nasscom and McKinsey, India -- which is always short of foreign exchange -- will be earning some $17 billion a year from outsourced jobs by 2008.8

On the other hand, the most vulnerable communities in Britain are losing the jobs which were supposed to have rescued them. Almost two-thirds of call centre workers are women,9 so the disadvantaged sex will slip still further behind. As jobs become less secure, multinational corporations will be able to demand ever harsher conditions of employment in an industry which is already one of the most exploitative in Britain. At the same time, extending the practices of their colonial predecessors, they will oblige their Indian workers to mimic not only our working methods, but also our accents, our tastes and our enthusiasms, in order to persuade customers in Britain that they are talking to someone down the road.10 The most marketable skill in India today is the ability to abandon your identity and slip into someone else's.

So is the flight to India a good thing or a bad thing? The only reasonable answer is both. The benefits do not cancel out the harm. They exist, and have to exist, side by side. This is the reality of the world order Britain established, and which is sustained by the heirs to the East India Company, the multinational corporations. The corporations operate only in their own interests. Sometimes these interests will coincide with those of a disadvantaged group, but only by disadvantaging another.

For centuries, we have permitted ourselves to ignore the extent to which our welfare is dependant on the denial of other people's. We begin to understand the implications of the system we have created only when it turns against ourselves.

Re:George Monbiot - The Flight to India (Score:1)
by Adam_Trask (694692) on Tuesday January 27, @10:07PM (#8108539)
Wish i had some mod points for ya.

Never had thought of it this way...but yes, if India (or any other 3rd world country) was not left behind in the last few centuries, then we would not have had any outsourcing. Ah, the irony...

[March 26, 2003] Report examines outsourcing failures Gartner Says Half Of Outsourcing Projects Doomed To Failure

(techweb.com) Half of this year's IT outsourcing projects will be tagged as losers by senior decision-makers for not delivering on bottom-line promises, said research firm Gartner.

Outsourcing is prone to failure because of breakdowns in communications between outsourcing providers and their clients, Gartner said.

Gartner's analysts said outsourcers must do a better job of communicating with clients and become more accommodating. But the blame isn't all on one foot.

Parties should "commit to regularly scheduled, formal meetings to review the progress and achievement of objectives," said Linda Cohen, a managing vice president for Gartner. "Failing to do this, the relationship can be seriously compromised because corrections are not made in a timely fashion."

Cohen and her co-analysts released the study at the ongoing Gartner Symposium/ITxpo 2003, which wraps up Thursday in San Diego. The symposium and exposition draws an audience of about 10,000 IT professionals from companies around the world.

In 2003, Gartner said, fewer than a third of companies will have formal plans for managing their relationships with their chosen outsourcers, contributing to the perceived failure rate by executives. Companies outsourcing some or all of their IT needs can buck the odds and prove the worth of their deals by putting plans in place, especially ones which recognize that technology and business needs are constantly in flux. Mechanisms for renewing and modifying contracts can catch problems before they bring down an outsourcing arrangement.

"Long-term arrangements with [outsourcers] must be built for change, rather than 'built to last,'"

[Nov 20, 2003]SEATTLE POST-INTELLIGENCER REPORTER/AT&T Wireless outsourcing jobs overseas by JOHN COOK. Consultants from two Indian companies sent to Bothell

AT&T Wireless Services has begun plans to outsource some of its information technology work to lower-cost operations overseas, according to people familiar with the situation and documents obtained by the Seattle Post-Intelligencer.

The Redmond wireless service provider, which employs 30,000 people, including about 3,800 in the information-technology group, said it is still evaluating options and no decisions have been made.

But employees and internal documents indicate that the outsourcing process has already started.

"The marching orders are that we are going to do it," said one employee who expects to receive his layoff notice in January. "Now we are just trying to figure out the mechanics of how to do it." He said as many as 70 percent of the IT staff could lose their jobs.

Tata Consultancy Services and Wipro, outsourcing companies with large operations in India, have consultants working on the AT&T Wireless campus in Bothell, said the employee, who requested that his name not be used. That is creating an awkward situation for some AT&T Wireless employees who believe that they are essentially training their replacements.

"It kind of feels like you are talking to your hangman," said the employee, who is working directly with the Indian consultants. A second source confirmed that Tata has consultants working at the company.

A document provided to the P-I by high-tech labor organization WashTech indicates that Tata has a plan for shipping the IT work overseas. Titled "Knowledge Transfer Plan for Process, Tools, Automation," the 26-page document details such things as transition times and staffing.

Three Tata managers did not return calls and a fourth hung up before a question could be asked. A spokeswoman at Tata declined to comment, referring questions to AT&T Wireless. AT&T Wireless spokesman Mark Siegel declined to comment on the plan or the partners working with the company on it.

In a memo to the company's information technology workers yesterday, AT&T Wireless Chief Information Officer Christopher Corrado confirmed the company was outsourcing some work. AT&T Wireless yesterday signed a letter of intent with Hewlett-Packard to take over desktop services, retail field services, the service desk and other functions, the memo said. It was unclear how many jobs would be affected by the switch or if employees could transition into HP positions. It was unclear if some of the work would be sent to India, where HP has an operation in Bangalore. HP executives could not be reached for comment.

Siegel declined to comment. But Corrado -- a former executive at Wipro who joined AT&T Wireless in April -- did not rule out more outsourcing agreements.

"Outsourcing always plays a role in balancing quality services and costs. We currently outsource work throughout the company, including work within both customer services and IT," the memo said. "We will continue evaluating the best mix of internal and external resources as we work to achieve best-in-class margins."

AT&T Wireless has initiated a plan called "Project Pinnacle," a companywide effort to cut costs while boosting profit margins to as high as 40 percent. Part of that plan includes 1,900 job cuts, which were disclosed last week in a Securities and Exchange Commission filing. Those cuts will occur throughout the company. The Wall Street Journal reported yesterday that an additional 3,000 jobs could be cut, with the work being sent overseas.

If AT&T Wireless follows through with plans to ship work to India or other locations, it certainly would not be the first Seattle area high-tech company to do so. Amazon.com, Click2learn, Microsoft Corp., WatchMark and Talisma have either set up Indian operations or partnered with companies that conduct business there.

Marcus Courtney, who heads WashTech, has been fighting to bring attention to the issue. He said AT&T Wireless' decision could be the biggest blow yet, representing as much as 20 percent of the work force in the state's wireless telecommunications sector.

"I think it is another example of a company that is exporting our region's best-paying, best-skilled jobs overseas for a short-term strategy of slashing its labor costs," Courtney said.

P-I reporter John Cook can be reached at 206-448-8075 or johncook@seattlepi.com

Slashdot Replaced by Outsourcing -- What's a Geek to Do

SafariShane asks: "Yesterday I was fired from my position as 'Network Security Analyst' from a financial institution. I was pushed out by a 3rd party vendor, who labeled me the major security risk, after performing a 'vulnerability assessment.' At the time, I thought a vulnerability assessment of our network was a good idea, but in retrospect, it occurs to me that this company, who's other product is 'Outsourced Network Monitoring and Intrusion Detection' may pull this little trick everywhere they go. Has this happened to any other network security folks out there. Does anyone know if this is a common practice, and what's a geek to do if they find out a 3rd party assessment is on the way? If this happens again at another institution, should I just start polishing my resume right away?" Here's a question I always wish I could ask managers, whenever the topic of 'outsourcing' comes up: if dealing with programmers overseas is more appealing to the bottom line, why not let your programmers work from home for 50-80% of their current in-office pay? For those of you who feel the threat of Outsourcing breathing down your neck, what are you doing to try and stay in your current job, or even in this current market?

"Here comes the obligatory South Park reference:

  1. Perform Network Vulnerability Assessment
  2. ?
  3. Profit! (Sell Outsourced product)

Looks like they came up with an actual step 2:

Label anyone who is responsible for network security as the risk, and get them fired.

I wouldn't even dream up the above situation, except that when the assessment was done, all results were hidden from me. The company presented the results not to the geeks that can interpret them, but directly to the executives that still think 'Clippy' is a great product.

I'll also note, because people will ask me anyway, if there were other problems. In my year on the job, there was only 1 network intrusion: Welchia, which was contained in twenty minutes. Anyone familiar with Welchia will know that it is no easy task. I was never reprimanded for anything. In fact, I received a 12.5% raise only two months ago for job performance.

I doubt what they did was illegal, but it's bad business at best. Here is a group of network security geeks, who get other network security geeks fired, so they can increase their bottom line.

I'd like to hear comments from folks this has happened to, and what did you do as a result?"

Network Security Analyst - bad position (Score:5, Insightful)
by Skapare (16644) on Friday December 19, @11:55AM (#7765440)
(http://linuxhomepage.com/)
If all you did there was security, then you were in a bad position to begin with. Security should be a part of everything that is done, not handled simply by one person somewhere.

Network engineer - The person or persons responsible for designing, managing, and maintaining the enterprise network should be the ones responsible for its security through all aspects of their work. Security has to be designed in to begin with, so that the network has the absolute minimum expent firms.

As to your current situation I advise the following:

Hire a lawyer. Have this lawyer contact the company pretending to be your new potential employer, and ask them for reference information about you. Actually do this twice (be sure completely different people call and pretend to be completely different companies). In one case your "new" position should basically be described as one similar to what you had at the company that outsourced you out. In the other case your "new" position should basically be central to your non-security skill set, such as a network administrator or network engineer (or whatever is appropriate for you). If they give you a good recommendation, then move on with your life and don't worry about it (just don't open your own personal accounts there, etc). However, if they give you a bad recommendation (such as "he was assessed to be a security risk") then discuss with your lawyer that situation and determine what can be done (you may have a case for a defamation lawsuit against either your employer or the outsourcing company).

Be aware that most companies do tend to try to protect themselves from lawsuits when giving references. They may very well not specify any problems. But that can also be interpreted by future employers as a problem, if they didn't give you a glowing recommendation. You'll have to determine how that will affect your career future.

You might want to start your own small "security management and monitoring services company". There are lots of smaller businesses that will need this kind of service (whether they know that or not ... but that's a salesman's job to work on), but are too small to hire someone full time, and not big enough to hire the big security contracting firms. In a few years, as the big security firms expand to the smaller businesses (to keep up equity growth as their big business market saturates), they may come along and offer to buy up your business. If you play your cards right, you could end up being more "successful" than the managers of the financial institution that fired you.

Re:Network Security Analyst - bad position (Score:3, Insightful)
by TheBitterRaven (697902) on Friday December 19, @02:04PM (#7767139)
Security as everyone's job is an admirable idea, and one that I'd love to see implemented everywhere. My experience, though, as a security analyst myself has been that if security gets in the way of a project, then there won't be any security unless someone insists.
just move on (Score:5, Insightful)
by gagy (675425) on Friday December 19, @11:17AM (#7764885)
(http://isteppedin.virtualdogshit.com/ | Last Journal: Friday May 23, @01:22AM)
You can't take things like this personally. If they're outsourcing you, the wheels are already in motion and there's not much you can do to stop them. I have no attachment to my employer. I have an awesome team right now, and I feel loyal to them, but not to the company, but that's what they teach us in Business School. You have a chance of being outsourced, much like you have a chance of getting into a car accident. Nothing you can do once it happens. Collect your insurance and buy a new ride.
I am a security consultant... (Score:5, Insightful)
by JRHelgeson (576325) <jrhelgeson@nOSpam.hotmail.com> on Friday December 19, @11:37AM (#7765190)
(Last Journal: Sunday October 19, @04:54PM)
We outsource security all the time, and we have our outsourced IDS products, etc.

One of the first things I say when I meet with a company is tell them that it's not the IT persons fault that the company is insecure. Network security is a relatively new field that ALL companies in existence are trying to get their arms around. I do NOT want to put anyone out of a job just for the sake of getting some consulting dollars. I feel that it is my responsibility to train the internal staff to be more aware of security issues rather than to terminate everyone and outsource it all.

How can anyone thats not even on-site on a daily basis make the network more secure? When it comes to real security, you need to start with the folks that know the network the best. If they're resistant to change, then fire them. If they're willing to learn, train them.

Network insecurity is fundamentally a management problem. Security inititaves must come from the top down, not the bottom up. I have never met a network administrator yet that has set out to create an insecure network. They likely were ignorant to the threats - therefore they needed training, which should have been ordered by management. Otherwise, you have security aware employees that are trying to push security up the chain to management, and management is completely unresponsive.

I recently blasted a luddite CEO for not paying enough attention to his IT department. His company was compromised by a hacker and I came in to clean things up. I asked him; "Do you realize that your business relies 100% on what goes on in that server room?"

Things are now changing in that company. We've now established data owners on the executive committee (Those that will hang if the data they own gets compromised), and now the IT department actually has a budget. 80% of the time I spend doing my security consulting is with executives, the remainder is with the tecnical staff giving them direction and training/pointers.

Anyone that preaches anything different is trying to sell a magic fix for security, which doesn't exist

Outsourcing wont be here for long.. (Score:5, Informative)
by cOdEgUru (181536) on Friday December 19, @11:39AM (#7765227)
(http://www.hackorama.com/ | Last Journal: Thursday November 06, @02:02PM)
Trust me, I manage a project which is outsourced and currently employs 3 software engg offshore.
The pluses -

(1) Benefit in terms of costs. Well they bill us 30 bucks for a software developer where here I would assume it will be around 60.. Whoopee doo..

(2) The supposed 24 hour day where your team onsite would plug 12 straight hours and your offshore team would plug in another 12 hours, therefore giving the client the impression that his project was worked upon for 24 hours..

(3) Now that implementation is made seperate and outsourced, the client just needs to focus on the business aspect and the designm therefore having more time to themselves to focus on issues that need attention

Minuses

(1) Cost is not that much better. Quite soon, firms will try to up the prices and then you will lose the benefit in terms of cost

(2) The 24 hour Day - Its quite different from what you are led to believe. Mostly both teams would take a couple of hours everyday trying to understand what the other has done, interact and to a certain extent, also play the blame game.

(3) The client would find himself being pulled more often back in to the implementation and design, since his offshore partner cant understand the design or has a "better" design. Chaos ensues.

Mostly from my experiences, what makes all the difference is the people who are developing this offshore. If they are intelligent enough and has good communication abilities, then you have a success story. If what you have is a guy who did a 14 day java crash course and has one year experience in plugging java code in to Helloworld.java, then you have an absolute wreck waiting to happen. It happened to me, I had two stupid asses with whom I spent 3-4 hours every night trying to drill in, the architecture, the requirements, the implementation details. And then I would wake up in the morning and they would have probably coded 10 lines and sent two emails with questions which either are stupid or should have been asked the night before. So what you have is two asswipes who just billed you for 16 hours and turned out 10 lines of code, of which 9 you will probably rewrite and a bunch of questions which doesnt amount to nada.

I dont think that any firm who is currently doing outsourcing has thought about the actual implementation through and through. They are all given rosy pictures of intelligent professionals back home plugging away on their keyboards churning out code that works on the first try.

More so, in a few years, the real picture would come out where probably 10% outsourcing actually churned out something positive and the rest 90% lost money, less money in fact, on projects which had no direction, no able offshore partner and a bunch of developers who doesnt know the difference between a class and an object if it kicked them in the ass with it.

Sorry I just had to rant, since I spent a better part of my night trying to work with some idiots and two days ago I kicked them out of the project. And in a combined 300 hour period, they coded two classes, and the style of coding will make you puke.

Re:Bigot (Score:4, Informative)
by cOdEgUru (181536) on Friday December 19, @12:31PM (#7765977)
(http://www.hackorama.com/ | Last Journal: Thursday November 06, @02:02PM)
Dude,

I am as Indian as they get :). I have nothing against any race or any color. And yes, my ex-offshore partner was Indian as well, but that doesnt change the fact that they were incompetent.

I wasnt issuing a blanket statement about all Indian outsourcing firms. I am merely referring to the fact that most of the firms who indulge in outsourcing are plainly jumping on the bandwagon with nary a thought about its implications in the long run. And hence outsourcing isnt here to stay, it will blow over very soon when firms and managers realize that it makes more sense to have the team onsite rather than having someone do most of the work at night when you arent around to manage.

And if your offshore partner is a plain schmuck, like was mine, they will shaft you at every step possible, by overbilling you, by working on other projects in the hour they bill you. Believe me, I have been a witness to this and much more.

Re:Outsourcing wont be here for long.. (Score:2)
by Mr.Spaz (468833) on Friday December 19, @11:58AM (#7765480)
I can agree with some of your points here. An associate of mine (let's call him Joe) is nearing the end of a contract with an offshore development "team" that was supposed to have put together a complex system for retrieving large amounts of data over a network to local systems based on a user-defined set of criteria (sorry to be light on the details, but I don't want to compromise his project).

In 1 year, they cobbled together a system that meets some of the criteria and is subject to constant failures. Testing was non-existent. When a new version of the system was submitted to Joe, he would run it through the most rudimentary tests and it would die. He'd send back these results and was usually met with "Oh, but it can't do that much of X, just this much." This resulted in a review of the requirements and a tug-of-war before the issue was corrected. This happened every single time it would break. The final product is, bluntly, of inferior quality, despite the company claiming they have 20 full time developers working on it.

Now, about 4 months ago, in exasperation, Joe called a local freelance developer and asked if he could build the system. He said that he could. His system is now nearing completion, and exceeds the requirements, all for less than was blown on the offshore shop.

In the end, 1 experienced, albeit expensive, developer was able to complete a complicated project in 1/3 the time of the offshore shop, and for about 1/2 the cost.

This is not the only example I've seen, but it's the most pertinent. The other poster's story seems to simply reinforce my experience that in the very short term, these offshore solutions look great, but they don't seem to deliver on what they promise.

Re:Outsourcing wont be here for long.. (Score:2)
by DukeyToo (681226) on Friday December 19, @01:32PM (#7766762)
Outsourcing works fine for manufacturing, and probably a bunch of other service oriented things. The common aspect of the things it works for, are that the problems are well defined. Wind it up and release it, and awaayyy you go.

For programming, outsourcing is a spectacularly bad idea, because it is almost never well defined. In fact, in my experience, the quality of a programming product is driven by constant communication between the lead programmers and those that want the software developed.

I just cannot see how that can consistently happen when outsourcing to a different location, in a different timezone, with different accents and native languages and no face-to-face communication.

It could have been my company (Score:5, Insightful)
by LiNT_ (65569) on Friday December 19, @11:40AM (#7765236)
I work for a major MSSP. Yes, it's common practice to try and upsell our managed security services based off of consulting gigs. No, I've never heard of them trying to cut out the local security guy.

I feel safe saying that every engineer I work with understands that our service is provided to supplement existing security practices. We can provide some security services which companies cannot perform on thier own. Whether because of cost or technical reasons. We cannot replace a companies entire security team. There are too many small details which need to be handled which an MSSP cannot do remotely. Nor do we want to. We'd also much rather work with a knowledgeable insider than get an incompetent IT manager who's claim to fame was programming Cobol 20 years ago.

My guess is, some overzealous sales weenie got you canned. He probably pitched the MSSP services to the suits. The suits probably replied they already had in house security expertise. The sales weenie, fearing he would lose the sale, pitched the MSSP as a replacement for you. Something he never should have done. Most sales people will do anything they have to do to make the sale.

My biggest experience with Outsourcing... (Score:4, Interesting)
by Colossus (9063) on Friday December 19, @11:40AM (#7765239)
...went along the same lines.

I was working for a development firm, we had long term client who had made use of many other development firms.

We landed a big project, the client had us work with another development firm, this one out of India to supplement our skill set, throw more bodies on the project, and so they had a clear understanding of the architecture when they took it over later.

We came to find out that the head programmer working with us would go directly to the client and tell them how poorly we performed, that we didn't know what we were doing and other such niceties.

The PM from the client bought it, and we were removed from the project (an action that within 6 month caused 130 people to loose jobs.)

The other firm left with our architecture, our code, and our self esteem, we left the company with 2 weeks severance.

The most ironic part was that these guys came in with no knowledge of the platform! We taught them to Java as we went! That was the biggest slap in the face that I have ever received.

What are you going to do, hopefully this kind of stuff will run rampant and leave a nasty taste in everyones mouth.

Security risk? (Score:4, Insightful)
by deepvoid (175028) on Friday December 19, @11:40AM (#7765249)
(Last Journal: Thursday August 21, @12:19PM)
The real security risk is the outsourcing company. The number one cause of security breaches in the US during the 90's was from outside (foreign) contractors who had access to information of confidential, secret, or restricted in nature. Now instead of having access to the data, the have access to the methods as well. Having a cheaper Software Engineer or Security Analyst does not mean you will get better engineering or more security. As evidence look at the airport system. The wages paid to security personnel are some of the lowest in the country, and hence cannot keep more skill individuals. Ex-convicts and high security risk individuals can be found in those occupations due to the poor fiscal incentives. We all know what that poor security led to.

The lowest bidder does not necessarily produce a quality product. When is the last time you found real wood in a piece of furniture in our country?

I have heard the statement that the market is moving overseas to customers in China and India, and thus it is imperative to hire from those localities. But why? If there are no skilled labor or engineering jobs left in the country, what will people do to make ends meet? Occupations at the top of the food chain will suffer as well. Already CEOs in some companies are being replaced by their foreign counterparts, and while the ousted CEO may have money in the bank, his children will end up in a shrinking service industry. Why will it shrink? Because the people they serve will no longer have any money.

When labor went away, blue collar workers were forced to retrain in other fields, many just retired. They pushed their children to get degrees in engineering, law, and medicine. Now the engineering jobs will be gone.

Who will pay the taxes to support those millions who will retire in the next few years? Not the engineers and laborers, they live in China and India.

What industry would you tell a young adult to get into, if all of them are destined to either be outsourced, or priced out of existence?

Without the brain the body dies.

The other side of the story. (Score:5, Informative)
by Maradine (194191) * on Friday December 19, @11:43AM (#7765296)
(http://www.drahzia.net/)
Coming from the standpoint of a security auditor in a firm that specializes in Managed Security Services, let me lay a couple of things down in our defense.

1. Security firms are told to audit against a certain set of criteria when the audit, be it GLBA, HIPAA, or one of the open security standards. Our work only identifies human security risks in process and policy, not people. If you were individually and specifically labelled a security risk, you should demand to know why.

2. The firm's auditors likely had nothing to do with the loss of your job. Rather, it was your management. Managed Security Firms have two sales models:

  • Unfunded Risk
  • Savings.

My guess is that their sales team was working on the Savings principle and presented a more cost effective security solution. Your management team decided that cost savings were more important than your job. I hate being a catalyst for that kind of change, because I don't like seeing good people get laid off. Most of our clients use us as a supplement, rather than a replacement. I wish it always worked that way.

3. You lost your job. But we're hiring, and we have a hell of a lot more fun than should be legal. Jobless security professionals and analysts, feel free to reply.

Re:What's good for the goose is good for the gande (Score:4, Insightful)
by geoswan (316494) <swangeo@yahoo.ca> on Friday December 19, @01:39PM (#7766852)
(Last Journal: Saturday November 22, @10:48PM)

SafariShane needs to turn around and hack back in to the system in a week and show that the new company's security measures weren't that great. ;-) This will ingratiate himself with the CEO and get the new company kicked out.

Shane, this sounds like a truly rotten experience. And some of the advice you have gotten here is pretty crappy too.

Before you consider taking revenge, do you think there is anyone in management or H.R. to whom you could have a conversation? The idea that management had had a sudden, abrupt reversal in their confidence in your ability and trustworthiness must be a disturbing one. Perhaps there is someone to whom you can turn to for some reassurance.

"I thought I was doing a good job. I did get a 12.5% merit increase in pay. But the secrecy around how my employment was terminated is disturbing. Is there something in the security report that will cause the firm to give future employers a less than enthusiastic endorsement of my skills? I'd like to know this."

You don't absolutely know the outside consultant's slagged your performance or trustworthiness. And, if I read your account correctly, you don't know that your former employers turned around and hired the consulting firm to replace you.

Good luck.

Re:What's good for the goose is good for the gande (Score:2, Insightful)
by fastidious edward (728351) on Friday December 19, @01:14PM (#7766525)
Yes, choose a legal option... do not endanger your future.

But something I'm confused is your say this was a major financial institution (well, the story seems to have been edited to remove major, but it was major on first read :) ). Does this company have only one 'Network Security Analyst'? Even a small company should have at least 2, from a contingency perspective. My financial company employer has a team of 20 on network security, though headcount of the company is under 2000. So what are the rest of your team doing? If they really only had you then they ran a poor show, and if completely outsourced (bad practice IMHO, in-house monitoring must exist at a minimum) a case can be made to monitor.

Well, you have my sympathies, if this 3rd party consultant really does urge firing all staff (well, replacing staff as the security risk with a 3rd party as the security risk) and not keeping anything in-house as you suggest, then I urge you to name them, sir.

Re:I don't trust you (Score:4, Insightful)
by lightsaber1 (686686) on Friday December 19, @12:30PM (#7765962)
How badly do you want to work for a company like this anyhow? Seems to me if your manager absolutely refuses to listen to his employees and just wants people to do what they're told, then maybe outsourcing is right for them, or perhaps a trained monkey would work, but I'd say their company is going down soon enough and you'd be out of a job anyhow.

One of the most important things a manager must do is listen to his/her employees' ideas and criticisms, whether valid comments or not, they must be at least considered. If this doesn't happen, how can there be any chance for a) advancement, or b) true improvement of the product?

Re:What's good for the goose is good for the gande (Score:5, Insightful)
by rutledjw (447990) <rutledjw@@@yahoo...com> on Friday December 19, @12:52PM (#7766228)
(http://slashdot.org/)
Revenge? you want revenge? Just sit back and watch as the security for that company gets pummeled.

I've rarely seen outsourcing go well. Now we're talking about info-sec? You're going to outsource the "guardians at the gate" job to a company whose tactics should be seen as seedy by the dumbest of Pointy-Haired-Bosses??? They'll get what they deserve. Maybe not sooner, but certainly later. Considering they are a financial company, the PR cost alone could be disastrous.

Pardon my language, but f**k 'em. I'd leave cordially but expressing reservation about their tactics and ability to execute. IMHO there's no reason to burn bridges, IT is too close knit to do that. Plus there's no benefit for the guy who got canned. They could come back and beg him to return if there's a bridge left standing

Finally, companies who act like greedy sheep are inevitably led to slaughter. I know, I work for one and we're getting killed for bone-headed accountant-driven decisions very similar to those described here...

Can't beat 'em? Join 'em! (Score:4, Interesting)
by saudadelinux (574392) <rolandjdc@yahoo.com> on Friday December 19, @11:36AM (#7765177)
SafariShane needs to get onboard with a company that does this kind of work. A buddy of mine ran a one-guy development/network admin company for several years, and got into security as well, picking up a cert or two.

Due to the economic downturn (and his bread and butter client not falling under the Prompt Payment Act), he had to get a job with The Man.

He got a job with these people [ncircle.com], as the tech half of a two-guy sales team, by leveraging his knowledge of Windows and *nix networking and security.

He's working like a sled dog, can't say anything about what clients he's seeing, or much about the product. But he's a very, very well paid sled dog in terms of base salary, benefits and commission; he went out and got a 32" TV and laser-corrected his eyes

LAWSUIT?? (Score:2)
by t0ny (590331) on Friday December 19, @02:32PM (#7767462)
Now IANAL, but I think the guy posting this article may have a possible lawsuit for wrongful dismissal against his former employer. An assessment is meant to be a piece of information used to form a decision, it isn't supposed to make your decision for you.

Another point: yes, all admins are inherently a security risk, because they have access to the system. But they are a managed risk (like they all should be), in that the company has history with this person, and there is most likely no wrong-doing in his record. What I view as a greater risk is outsourcing to a company- in this case, how can you manage the risk of a 3rd party outside your control? Answer- you cant.

So from just a risk-management viewpoint, the company has assumed MORE risk by outsourcing their security.

Re:And then get arrested, convicted... (Score:5, Interesting)
by theglassishalf (216497) on Friday December 19, @01:18PM (#7766575)
(http://www.solvideo.com/)
Well, he could sue them. It's called "slander." If they wrote it down as well, it's called "libel." As a bonus, as part of the trial he could subpoena all the documents related to the case, and find out what they really had to say about him.
Courts tend to look at libel related to employment very favorably. He should contact a lawyer.
Re:And then get arrested, convicted... (Score:2)
by adamy (78406) on Friday December 19, @01:47PM (#7766927)
(http://www.younglogic.com/ | Last Journal: Tuesday December 16, @01:04PM)
You don't get modded up because...

You post this on the day I don't have mod points.

Re:And then get arrested, convicted... (Score:3, Interesting)
by zabieru (622547) on Friday December 19, @02:55PM (#7767792)
Eh, on the other hand, a company engaged in this sort of practice is likely to go over their stuff with a fine-toothed legal comb. It's probably all couched in terms of '54% of senior network security personnel at some point blah blah, and therefore hiring outside consultants from such firms as blah, blah, or oh, yeah, us, is safer, and blah, blah' rather than

'How could you possibly trust a commie pinko faggot like X? Fire him immediately so you can hire us!' Unfortunately, libel laws are fairly specific, so although he can clearly prove damages (usually the hard part) next he's going to have to show that they said something deliberately and provably false about him, which it's not likely they did.

Before suing... (Score:2, Informative)
by JawFunk (722169) on Friday December 19, @03:54PM (#7768469)
...I would subpoena the report to see what criteria "surfaced" that convinced his employer to replace him with the new guys. This could win the case for SafariShane, if there were no other "problems" with his history at the company.
Re:And then get arrested, convicted... (Score:3, Informative)
by jordandeamattson (261036) on Friday December 19, @04:00PM (#7768535)
I have to say that I agree strongly with this position. If they identified him as a security vunerability, and did so with mailice and an intent to profit, then they have done him harm (known in legalise as a "tort") and he does have ground against them.

That said, he probably doesn't have grounds against the employer (though if he is in California, with its loosey/goosey definition of "at will", he is sure to find someone to take his case).

I would have him contact an attorney who specialize in employment law in his state (contact the local bar association for a referral).

I would then put together a very clear and concise summary of his involvement in the situation starting from the beginning and running through to the end. Start with his hiring and running through to his termination. Put dates, summary titles, and then details. Be dispassionate. If there are any warts (do you gamble, drink to excess, use controlled substances, surf porn sites at work, in heavy debt, previous convictions, etc.) be honest about them.

This summary of your situation would be the backbone of any suit. I would send this to the attorney prior to meeting with them with a note saying, "please review and then lets meet for you to ask me questions of clarification and to discuss the chances of this proposed action."

The author of the parent post is correct: once you get into a suit, you will be able to get into discovery and will be able to ask for the report, any communications related to the report, commmunications related to yourself, etc. This would be a potential goldmine.

A "Diplomatic" Geek. (Score:2, Insightful)
by Anonymous Coward on Friday December 19, @05:43PM (#7769498)
"At my last job (one of the big 3 ISP's) one of the NT admin's screwed up and opened our one internal systems to the whole world. One of our techs studying security discovered the hole and reported it our PHB. Who came to our SA team to check and confirm. They were more concerned about the tech finding the hole, than the idiot NT admin who screw up an NT security setting. "

Then one of two things.
He could have gone to the "idiot"(a hint here. It's not good to go to a person with your prejudices. It could have been an honest error), and told him about the problem and let him correct it, with the boss being none the wiser, and his "image" intact.

He could have fixed the mistake, with no one the wiser. If everyone is as clueless as you state? Then this should have been an easy task.

The main thing that stories like the above demonstrate is that geeks make lousy diplomats. There's a right way and a wrong way to present "difficult" news. Learn how (among other things) and you'll do well in life, and work. Forget how, and you're the subject of a story on Slashdot.

Re:I don't trust you (Score:5, Interesting)
by Anonymous Coward on Friday December 19, @12:16PM (#7765783)
My own experience relating to this:

1) Medium to large size business do not trust individuals: only other businesses are trusted. A local Goodwill (yeah, really, Goodwill) used to outsource work to me on a very regular basis. I'd give them plenty of freebies (again, it's Goodwill) along with the outsourced work. Eventually they hired someone to take care of internal matters and the outsourced work finally stopped (he had a gripe with me apparently). The CEO didn't question his judgment because he was moving to Microsoft products and outsourcing to larger companies. It didn't matter that they were paying six times (I kid you not) as much for the same work, their firewall had been removed (the new guy didn't understand how to manage it), and they removed a perfectly stable Linux box in favor of Exchange (easier to maintain for him, but DID go down frequently). None of this mattered. The CEO and kin felt more comfortable with larger businesses despite the problems. They care about feeling better, not about how much they're paying or how often something goes down. They will excuse ANYTHING if they're happy.

2) This (security assessment) is a new tactic from a small group of companies/individuals that have been around for a while. Years ago I handled support for a local ISP. The ISP had (shame on them) sold bandwidth to an adjacent office which was plopped right on the main network (no bridge/firewall/etc). This office had a MUD server which was compromised and made a really great packet sniffer. Account info was snagged and used....by a **network security firm** working out of Canada. They changed a few passwords to get attention, then e-mailed the owner of the ISP with a 'Hey, we didn't do anything but we wanted you to know your setup is easily corrupted. We can supply you with services to prevent this in the future.'. It's like, some kind of dorky geek mafia.

The original submitter could be a dick or a great employee. Either way, it doesn't matter because these security goons are out there and using a much better tactic to get business. It's pathetic, but it's real and there are enough ignorant businesses out there to make it profitable. All the education in the world won't help some employers, they're just too fucking stupid. Maybe the submitter's best bet is to hook up with one of these shitty security firms....join 'em before they beat you out of the market (re: multiple bad security profiles).

Sorry for the long rant...too much coffee ;-)

Re:I don't trust you (Score:5, Informative)
by Kurt Gray (935) <<moc.liamtoh> <ta> <gwtruk>> on Friday December 19, @01:44PM (#7766898)
(http://slashdot.org/ | Last Journal: Thursday September 19, @04:41PM)
I think you're right, part of what's going on here is a cultural divide that exists in many companies between the managers in suits and the admins in the back cubes watching the network. In some offices these two types hardly ever speak to each other: no kinship, no trust, no loyalty. Both parties bear the responsibility to walk across the office and speak directly to each other once in a while.

My years in sys admin middle management taught me that some admins just don't want to speak the managers in suits. They automatically distrust the management, they resent that anyone who knows less about networking is being paid more and is manager of many departments. They view anyone who meets with management and eats lunch with management as a kiss-ass or someone not to be trusted. This to me is exactly the kind of attitude that holds people back from getting promotions, being recognized, and makes one more vulnerable to becoming a victim of downsizing. If management has no idea who you are and what you do all day then you are effectively nobody to them, you are just another labor expense on the accounting books.

The easiest way to let management know that you have value is find a problem, and don't just whine about, do a little homework and propose a practical solution along with some numbers as to how much it will cost/save the company. If your department manager is the type of prick who would try to steal credit for your brilliant ideas then walk around his desk and talk directly to his boss about your brilliant ideas... if you have enough of those conversations with that boss you may even find yourself being promoted to replace the prick who stole credit for all of your ideas. Don't be someone who complains all the time, try to be someone who has solutions rather than complaints. Leaders have answers, followers have complaints. Managers value people they can go to for answers.

So in summary if you make no attempt to talk to management then don't be surprised if they become more comfortable dealing with some out-sourced vendor then they are dealing with you... don't be surprised if someday the managers you hardly ever spoke to tell you to pack up your desk.

Re:What to do? (Score:5, Insightful)
by Fnkmaster (89084) * <fnkmaster@vi[ ]y.com ['erg' in gap]> on Friday December 19, @12:03PM (#7765585)
(http://www.screengardens.com/)
And more importantly, learn your lesson. Next time some huckster wants to sell you a "security audit", don't buy into it. Use it as justification to do an internal audit, or convince your bosses to bring in consultants of your choosing. Make it a collaborative process with your managers. Prize your relationship with your bosses above all else - don't be an ass kisser, be good, and make them look good. If when they think of you they think of the guy who saved their asses lots of times, they would have to be fools to let you go.

Control is greatly undervalued in business. Often times, control is more important than your bottom line salary. You want to be in control without people knowing that you're in control - don't play politics or backstab people, just be very important to the bottom line and very trusted. If you are unable to make your boss realize that you are important, you should find another job as soon as possible. Also, ALWAYS keep a backup plan in place, enough money in the bank, and have lots of friends in your line of work to help give you an in to other job openings.

It's a cheery little Machiavellian world we live in. :)

Re:Easy solution (Score:5, Interesting)
by haystor (102186) on Friday December 19, @11:34AM (#7765155)
Yea, become a consultant. You've already got one business in your rolodex that will buy a product from the same person inspecting whether they need that product.

What I'd do is file for unemployment immediately. This would be good to find out if they claim they fired you for cause. In Texas at least, if they want to make that claim, it has to be done in writing which means they would have to commit to those statements. If you wanted to pursue it, you could eventually find out why they say you were fired. Likely they will just take the hit on their unemployment insurance and not contest your unemployment.

If you think that something was a little bit shady, like a manager getting a kickback from the consultants you might try to use your current contacts to feel that out. Unlikely you'll find out anything there but if you do you could be a real bastard about it.

I ran into a situation where I was hired by a business consulting group to do some work they normally didn't do. I had contract signed and everything when they never called back with a start date. After two weeks of expecting a firm date, I called them and they said it was a no go. I suspect they filled the position internally after using me to land the contract. They had accidentally let me know the company they were pitching and it turns out the President of that company is a family friend. All I had to do was ask an uncle to ask this guy over lunch if they had someone doing this job from company xxx. After weighing the possibilities of what I would/could do if I was right, I decided I just didn't want to know and time would be best spent concentrating on a job/career instead of money and time lost. When lawyers get involved the only sure thing is that the lawyers make money.

Not just in IT (Score:5, Interesting)
by The Tyro (247333) on Friday December 19, @12:00PM (#7765529)
medicine has become the same way.

Many hospitals are contracting with large national companies to provide physicians services that were traditionally provided "in house." This is most easily done for things like Radiology, where films can be digitized and shipped anywhere in the world to be read by a room full of radiologists. It's also being done (and has been for years) with Pathology services... send your slides and tissue specimens to a big lab to be examined rather than the employing a bunch of local pathologists. Admittedly, there are some economies of scale that enter into the picture... "sending out" can be more efficient.

This is also a big deal in my own specialty (emergency medicine); competition is brutal. There are large national "contract management" ER groups that are constantly approaching hospital administrators with sales people, brochures, and a pitch about their high-quality, lower-cost emergency medicine care. Contracts change hands in ER all the time, which is why a lot of ER docs live like gypsies... if your hospital outsources their ER services, you get fired, and have to find another job (if you live in a smaller area with only one or two hospitals, you can be SOL... time to uproot the family and move.)

How do I/we fight it? Relationships and service. We make ourselves available to the administration to address concerns and problems. We build relationships with the community physicians, so that they KNOW who's taking care of their patients in the ER, and KNOW they can trust us to take care of the critically-ill. We integrate ourselves into hospital committees, and get involved in the community. We implement Quality Assurance and Peer Review to ensure that we're practicing up to the standard of care. It can be a lot of work trying to keep your job (never thought you'd hear a doctor say that, did you?).

In ER, losing your contract/job or not usually has nothing to do with bad medicine... it's failure to "play the game" that sinks you. There may be a parallel here for the infosec geek that was fired... If there's one area where the prototypical "geek" personality probably hurts the most, it's in the eschewing of those critical relationships. It's great to have m4d 5ki11z in the server room... but a little face time with the powers that be could make the difference between paycheck and pink slip...

There's no guarantees, however... even with all my efforts, I can still get sold out if my hospital administrator gets a wild hair, or just plain doesn't like me.

It's business reality for lots of folks, not just IT.

Re:One word: (Score:4, Informative)
by jdreed1024 (443938) on Friday December 19, @12:54PM (#7766263)
I always love seeing the "unjust dismissal" or "simissal without cause" arguement. Listen up people. If an employer doesn't like your shirt, they can fire you. It's that simple

Except that it's not. You have to have cause for dismissal in most states, and the employees have to have been informed of the rules and disciplinary procedures and causes for dismissal. You can't even fire someone for being late, unless they were told that being late is firable.

Layoffs are different, though. You can lay someone off for whatever reason (services no longer required is the common one), but then they get severance packages, or whatever.

Trust me, I know. I worked in HR for 2 years - we had a lot of turnover, and we'd have to fire people for being late, or not being properly attired (the job required uniforms) etc. And they'd of course file a claim for wrongful dismissal, and then we'd have to send a representative to the dept of labor, and if the rep didn't show up, the employee automatically won. And if the rep couldn't prove that the employee had received the handbook which contained the rules for dismissal, the employee automatically won.

RED HERRING The Business of Technology

Once popular with cost-conscious IT execs, outsourcing has been shown to be full of security holes.

In October, global outsourcing nearly flat-lined the hospital at the University of California at San Francisco. To save money, the school had been sending out thousands of patient medical records for transcription. Halfway across the world, a woman in Pakistan had taken on some of the work. Things seemed to be working well for both – and neither knew about the other because of three subcontracts in between. That changed when the woman’s subcontractor in Texas did not pay. The Pakistani worker contacted UCSF and threatened to release the confidential patient information over the Internet if they did not help her collect, according to the San Francisco Chronicle, which broke the story.

With that, outsourcing suddenly shifted from an unqualified business no-brainer to a risky financial liability.

IT outsourcing was once essentially limited to software programming and staffing call centers. No longer. Now outsourcing tasks cover everything from storing sensitive financial, tax, and medical records to handling mission-critical database files. With the specter of financial blackmail looming, an outsourcing backlash may emerge in 2004. Security concerns, compounded with the fear of jobs lost to foreigners, as well as the wake-up call that outsourcing does not equal fast and easy cost savings, will lead companies to rethink their practices.

“There are many wrong reasons for outsourcing,” says Lily Mok, a senior consultant at People 3, a New Jersey-based human resources and IT research division of Connecticut-headquartered research firm Gartner. Companies may think they are saving money, she adds, but high costs are involved at the outset, namely related to infrastructure set up.

Offshore IT outsourcing took off during the late 1990s, with Y2K coding. Since 1999, outsourcing has grown an average of 23 percent per year, according to Gartner data. The outsourcing industry now employs 170,000 in India, where it has been the most successful. Revenues there reach more than $2 billion annually, according to market research firm IDC.

But trends can be deceiving. “A reality check is warranted. Offshore outsourcing will not be applicable to all enterprises, all IS roles, or all IS professions,” says Diane Morello, an analyst at Gartner.

Outsourcing’s downside is in the spotlight, especially for firms that failed to thoroughly appraise the costs and risks at the outset. One example of an outsourcing gig gone wrong: Dell’s recent decision to stop sending U.S. technical support calls for two of its corporate computer lines to Bangalore, India. Because the offshore call center workers could not answer customers’ technical questions, Dell faced numerous complaints and had to route calls back to U.S.-based call centers.

In 2004, a presidential election year, the U.S. government could be a key player in curtailing offshore outsourcing. With unemployment and the economy as hot topics, political opposition to issuing H-1B visas, which allow foreigners to enter the U.S. for training, has been mounting. According to an annual report released by the Department of Homeland Security’s Office of Immigration Statistics, the number of H-1Bs issued to workers in the high-tech industry dropped 74.3 percent, from 105,692 in 2001 to 27,199 in 2002.

In defense of struggling U.S. employees, some states have nixed outsourcing government contracts. In one highly publicized move, Indiana governor Joseph Kernan shut down a $15.2 million deal with the Indian company recruited to upgrade the Indiana state computers processing, ironically, unemployment claims. New Jersey has passed a bill to prevent government contracts from being outsourced overseas.

One proposal is the offshore development hybrid model, which enlists trusted U.S. development firms as intermediaries in the offshore development process. “Offshore development is here to stay, but companies are looking for ways to mitigate the risk,” says Robert Northrop, a Design and Development Director with technology consulting firm Tallan. With the hybrid model, the per-hour cost is greater than regular offshore development, but the risk is much lower, because locals with experience in the offshore market are heading up development.

How much does outsourcing really save companies? According to a November 2003 report by People 3, only 21.1 percent of companies surveyed reported a cost savings of greater than 20 percent due to IT outsourcing, while 18.4 percent did not achieve any cost reductions, and 9.2 percent actually had an increase in costs from outsourcing contracts.

“Many companies often neglect to factor in all costs associated with managing outsourcing engagements, which average 4.5 percent of the total contract value and can be as high as 15 percent,” says People 3’s Ms. Mok. The report states that “the word on the street is that companies can save as much as 40 percent by outsourcing some or all of its IT capabilities. The true savings, however, are not always as promising as one would expect.”

Because of the high costs and risks associated with offshoring, some companies are opting to nearshore outsourcing, giving work to neighboring countries instead of going overseas.

Though it once glittered as a savior of IT savings, outsourcing certainly isn’t gold.

Safeguard Information

Gartner expects that the human-resources market will account for 39% of all business-process-outsourcing revenue in 2004 ("HR Outsourcing Ready To Catch A Big Wave"). That's a large volume of information about private individuals flowing out of the country. What safeguards are on this information once it's out of the country? If individual data from HR files is compromised, this can be used to create fraudulent identification to enter this country.

If we overlook the homeland security issues here, surely the personal abuses outweigh any benefits. Would the company that outsourced its HR functions even be held liable in any event?
Mark Kamerer Network Engineer, BellSouth, Sunrise, Fla.

Downward Pressure

The vast majority of new engineering hires in the IT industry over the last three years have gone to H-1B and L-1 workers who work for less than new computer-science graduates were offered in 1999 and half of what experienced programmers typically have earned ("The Programmer's Future").

Companies that hire H-1Bs and use L-1 visa holders can't compete against the wage levels of firms in India, but they can destroy any U.S. firm that hires mainly U.S. citizens.
Harrison Picot Principal Engineer, Alcyon Technologies, Haymarket, Va.

InformationWeek David Post and Bradford C. Brown On The Horizon Outsourcing Deserves Policy Discussion November 17, 2003

Outsourcing is becoming an unstoppable juggernaut.

It was therefore interesting to read the public warning issued by Andy Grove, the chairman of Intel, that the dominant position the United States has held in high technology is in deep trouble because software and technology-services businesses are being undermined by "cheap labor costs and strong incentives for new financial investments," according to a report in The Washington Post. A few days later in the same newspaper, Robert Reich, the former secretary of labor in the Clinton administration, said the opposite under the headline, "High-Tech Jobs Are Going Abroad! But That's OK." So who's right about outsourcing, Andy Grove or Robert Reich? Well, overseas outsourcing may be OK with Reich, but I agree with Grove.

Grove argues that the software and services industries are comparable to the steel and semiconductor industries. In both situations, the United States lost a large percentage of world market share until the federal government intervened. Like Reich, he understands that U.S. companies are under pressure to "cut costs and raise profits," but Grove worries that U.S. workers are being replaced. Reich, on the other hand, believes that worldwide innovation will generate high-tech jobs because "there's no infinite limit to the human mind. And there's no limit to the human needs that can be satisfied." True, but that isn't helping the displaced IT worker who has been looking for a job for the last nine months.

Grove, though, asks the hard question: "What is public policy?" He says further, "I'm hard put to find a document" pointing to any policy strategy. That's because there isn't one. He also points out that none of the presidential candidates has recognized the issue.

What's missing from the electoral debate is a discussion about a very important and fundamental public-policy issue for the IT sector: Is outsourcing something to worry about or just the result of a structural change caused by a global networked economy? Do we need to do something different to maintain the U.S. competitive advantage in technology? Isn't that an issue worthy of a national discussion at the highest levels of government?

Reich argues that to continue to lead, the federal government must continue to invest in basic R&D. If, however, the ultimate commercialized product or related service that results from the research is outsourced overseas, is that a productive use of taxpayer money?

Outsourcing is an issue the federal government needs to look at. Companies have a responsibility to their shareholders to maximize profit. Yet outsourcing raises a host of public-policy issues that haven't been addressed in that context, such as labor conditions, privacy, human rights, quality control, intellectual-property-rights enforcement, and national security. We may decide that outsourcing is fine, but before we do, we need more analysis and a broader public debate.

David Post is a Temple University law professor and senior fellow at the National Center for Technology and Law at the George Mason University School of Law. Reach him at postd@erols.com. Bradford C. Brown is chairman of the National Center for Technology and Law at the George Mason University School of Law. Reach him at bbrown2@gmu.edu.

[Nov 10, 2003] Outsourcing's Dirty Little Secret - Computerworld By BART PERKINS

Outsourcing is perceived as the silver bullet of the day, and many companies indeed benefit from it. But the dirty little secret of outsourcing has emerged: Everyone isn't happy.

By the end of the first year, more than 50% of the companies that have outsourced major IT functions are unhappy with their outsourcers, according to an informal survey of my clients. By the end of the second year, 70% are unhappy. Studies by DiamondCluster International Inc. and PA Consulting Group have also uncovered significant amounts of dissatisfaction with outsourcing deals.

Doing your homework thoroughly is the best investment your organization can make in any attempt to outsource [QuickLink 36778]. Every corporation understands the importance of due diligence. Nevertheless, many organizations try to cut the amount of time spent on investigation before signing the contract. But short-cutting the due-diligence process increases the likelihood of dissatisfaction with your outsourcer down the road.

Even with comprehensive due diligence and detailed contracts, many companies are unhappy with the results of their outsourcing efforts. Some common reasons include:

Changing leadership. In this situation, the leadership team that negotiated the original agreement isn't in place during execution. Outsourcers rarely confuse sales with delivery, and they intentionally bring in a different team to manage delivery. In cases where a large percentage of IT functions get outsourced, the IT executives who negotiated the outsourcing deal often find their resulting jobs too diminished to be satisfying, and they leave. Team members on both sides change, and the new group feels less ownership. The new team needs to form a strong bond by confronting a large, interesting and complex problem that needs resolution.

Mistaking the contract for the relationship. Just as a prenuptial agreement doesn't guarantee a successful marriage, detailed contract terms don't guarantee successful outsourcing (although the relationship will certainly be doomed without them). Moreover, some teams will focus exclusively on the details contained in a contract. In those cases, the original business intent is often lost -- the contract becomes a substitute for leadership and clear thinking.

In addition, team members on each side need to feel they have a strong personal relationship with their counterparts. Changes will inevitably occur; global business is too dynamic to put every possible future event into a contract. Strong relationships will promote a willingness to compromise when needed and find creative solutions instead of pointing fingers.

Sales puffery. The outsourcer's sales team is trained to understand the client's needs and formulate saleable solutions. Their proposals often reflect their fear that the competition can meet the client's demands. Since they know they won't have to deliver, salespeople often overcommit rather than risk losing the sale.

Reduced appetite for risk. When a company makes a bold bet on new technology or new business processes, the individuals responsible usually either receive rewards or suffer career harm. But the risks and rewards are never as personal with an outsourcer (including systems integrators). The outsourcer's IT professionals aren't compensated to take risks. They're paid to make the outsourced functions operate as efficiently as possible and to meet service levels. They don't have the chutzpah to make bold moves. So companies need to make any visionary changes they want before outsourcing.

Insufficient performance monitoring. Without regular, constructive, fact-based performance reviews with your outsourcer, you have little chance of successful outsourcing. Even the best metrics can't contribute to success if they aren't reviewed and used to improve performance. If your outsourcer accuses you of unrealistic expectations, or if performance reviews become confrontational, hire an unbiased third party to validate the accuracy of the metrics and run the review meetings. This will help diffuse tensions between your organization and outsourcer.

Most of all, remember that the responsibility for the success of outsourcing remains with you -- even after the contract is signed. Being aware of the obstacles will give you the leverage to overcome them, and increase the likelihood that your outsourcing efforts will be successful.

Bart Perkins is managing partner at Leverage Partners Inc. in Louisville, Ky., which helps CIOs manage their IT suppliers. He was CIO at Tricon Global Restaurants Inc. and Dole Food Co. Contact him at BartPerkins@LeveragePartners.com.

Bill Gates Unplugged CNET.com

In the recent interview Bill Gates noted that "The IT systems are your brain. If you take your brain and outsource it then any adaptability you want (becomes) a contract negotiation". I think that this aptly describes what we are experiencing now with the helpdesk.

Here is the full quote:

Q: What's your view of this idea of utility computing? And how does it speak to seamlessness if indeed this is a case of "here they go again," putting their twists and turns to what they want to propagate?

Bill Gates: You have to be careful with utility computing. That was a rage during the 1990s, that everything would be hosted and moved outside the company. Where are those hosting companies now? Only a few things--like running Web sites--fit those models. The IT systems are your brain. If you take your brain and outsource it then any adaptability you want (becomes) a contract negotiation.

See Bill Gates Unplugged CNET.com for the full text.

HP loses huge corporate contracts after support debacle. Outsourcing plans antagonise loyal Compaq customers...

Charlie DemerjianFriday 08 August 2003, 12:40

SOURCES FORMERLY WITHIN HP have told the INQUIRER that its outsourcing plans have cost the company several loyal corporate customers with lost business running into very large figures indeed.

Information provided to the INQUIRER by several hired, fired, re-hired, extended, re-trenched, begged back and eventually fired again sources in HP Australia, claim that the firm's plans to outsource support has cost the firm dear.

And individuals who were afraid for their jobs no longer have them, meaning that they now feel free to flesh out what's happened in Australia.

In late spring, HP Australia decided that that could save a few Australian dollars by replacing the ex-Compaq staff there with outsourced staff based in India, as we reported here. But, our sources claim, customers started to wonder why service was getting bad.

The Compaq – now HP call centres in Australia were, by all accounts, top notch and the reason for the outsourcing was cost and certainly not poor performance, according to documents seen by the INQUIRER. The closure of the HP centres went well, but, our sources claim, the opening of the Indian call centres didn't go so well.

HP, however has publicly denied that there was any problem with the move, and said as much to this Australian publication. It quotes an Australian HP representative as saying the outsourcing of India is "going exactly to plan".

But it seems that HP has thoroughly antagonised its formerly cooperative workforce. As we reported here, HP appeared to have made an example of the owner of a web site who attempted to keep all HP and ex-HP staff in touch with each other by peremptorily marching him out of company buildings.

Things appear to have gone so swimmingly that a number of HP staff were told that they would be brought back for a few weeks, the length of the contract being dependant on the staff and office. Universally, that length was extended, and extended, and extended.

What has happened, despite the well oiled HP plan, is that even with the bleak job situation currently facing Aussie techs, the staff got fed up with being jerked around like puppets. And, we understand, last week the entire Commercial Warranty second level support team, when generously offered another week or two of work, got so fed up that they walked out together. So it seems that there is some teamwork left at HP after all.

With the Indian center not working all that well yet, I wonder what will happen when a large customer with a four hour SLA (service level agreement) calls in to get a Proliant fixed? Most CxOs don't like to be told 'live with it, we have problems ourselves', now do they, but where else is HP going to turn, North America? Maybe not.

Customers
How do the HP customers feel about this? While none of them are talking on the record, disgruntled moles from HP Australia tell the INQUIRER they are not happy at all.

One source claimed that Coles Myer, a large Australian retailer, had a very large contract with HP. A loyal Compaq customer for years, we understand, but cannot confirm at press time, that the contract has been canned.

The reason, we understand, is that Coles Myer was unwilling to deal with an overseas help desk. That might be, we think, a bit of an overreaction, but you would think an HP manager would have called an account like that and chatted every once in a while. Will they save the money from a big contract like this by moving the call centres to India? I kind of doubt it.

Coles Myer also had other grievances, but these were far less subjective than the helpdesk issues, and most boil down to service, or lack thereof. Coles had certain SLAs with HP, basically stating that if something went wrong, it would be fixed in a certain time frame, or certain performance targets would be maintained. If these things did not happen, there would be penalties, usually financial ones. We understand that soon after the the retrenchments, the service levels were missed all over the place. Our sources tell us that SLAs are basically warning messages and this compounded a bad situation.

The same sources say that Accenture Australia already had some problems with HP but the call centre "retrenchment" was in the words of one mole, "the straw that broke the kangaroo's back".

If our sources' claims are correct, it appears that few either at HP Australia or the corporate mothership were paying attention to multimillion dollar contracts that were souring.

Call me a penny pincher, but if I had someone with worth megabucks, I'd call them up pretty regularly just to see how things were going. Hell, I would even buy them lunch and get more detailed info as to how my company is serving theirs. If they said something was wrong, or even grumbled a bit I would send a fleet of the best corporate ass kissers in the hemisphere to smooch them into submission.

We understand that other contracts in Australia are also in jeopardy. We'd be happy to give HP the chance to respond to these claims.