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Offshoring and Outsourcing Induced Demoralization

IEEE Software. From the Editor: The Sabateur Within by Warren Harrison

 Insiders exploit their legitimate role within an organization to harm it. Their knowledge of and access to the organization pose a substantial threatóprobably greater than external threats. In many cases, the only thing preventing insiders from exploiting their privileged access and knowledge is the perception that their interests and the organizationís are aligned. So, if delivering a project on time or making a customer happy is in the insidersí best interests, you can expect them to contribute and work toward a common goal. However, when individual and corporate goals arenít so clearly aligned, a certain segment of the workforce will have no qualms about passively or actively pursuing their own interests at their employerís cost.

Reform and demoralization in the US federal public service

Stephen Barr's article, "Report Highlights Risks of 'Reform'", in the Washington Post on November 23 examines the demoralizing impact of downsizing, reinventing, and outsourcing on the US federal public service. "Many federal employees have seen their ranks reduced and operations streamlined," he writes. "Today, they see "competitive sourcing" studies aimed at determining whether federal work should be turned over to the private sector. Such "tides of reform," as public policy expert Paul C. Light calls them, sometimes splash across the federal workforce with troubling results."

"A new report on the concerns of federal employees, issued this month by the Merit Systems Protection Board, suggests that workforce reductions during the 1990s placed a number of agencies at risk of being unable to fully deliver services and programs to the public. The report warns that a surge of departures could happen again -- this time because large numbers of federal employees are eligible to retire. ... Pressures from organizational restructuring and outsourcing may abruptly shift the balance from employees staying to employees leaving... Government managers need to be prepared and not caught off-guard by an unexpected loss of critical employees."

"The MSPB survey of federal employees turned up substantial frustration. For example, 45 percent of the 6,958 survey respondents cited job stress as a reason for retiring. Forty percent said they would consider retiring because there were too few people in their office to handle the workload."

Posted by Graham at 02:09 PM | Comments (0)

Outsourcing Pipeline Opinion Offshore Outsourcing Prevention Starts at Home

Editor's Note (01/10/05) We've received a number of letters from readers voicing their opinions on Rob Preston's column. Below are several that we wanted to share. Look for others in an upcoming issue of our print magazine.

In his column, Rob Preston raises red herrings when discussing offshore outsourcing and H-1B visas (cheap labor).

Preston opines, "For one reason or another, the children of American computer scientists, mathematicians and engineers are choosing other careers." Can anyone really blame them? What bright prospect do students see in an industry that's being devastated by cheap labor from Third World nations with which they cannot compete? The economic ramifications are staggering and will eventually erode our nation's status as a world superpower.

The IT positions being lost are the higher-paying knowledge jobs that many former manufacturing workers had trained for after getting laid off as a result of NAFTA. Perhaps we could complete if our standard of living were on a par with that of Third World countries. My fear is that eventually it will be. The issue of whether the United States is graduating sufficient math, science and engineering students from universities might be a valid concern for the future (15 to 20 years out), but it definitely doesn't apply to the current scenario. In fact, the cheap-labor policies are actually creating a self-fulfilling prophecy by discouraging enrollment in the technology field.

The unemployment rate among U.S. IT workers is nearly 9 percent. Many are degreed with decades of experience, yet can't find work in the United States. Education or experience is not an issue at present. Rather than fill jobs with qualified Americans, corporations are using the thousands of "purple squirrel" postings that flood the job boards to justify their claim that more cheap foreign labor is needed.

Last year, student enrollment in engineering programs was down 25 percent at Carnegie Mellon and as much as 40 percent at other U.S. universities. This is the direct effect of declining wages and opportunity. Who would even think of incurring $100,000 in student-loan debt for a low-wage job in technology? If students are smart, they'll go into fields like law or political science to grab more lucrative jobs. Preston writes that U.S. tech employers "want access to a wider, deeper pool of highly motivated talent-and they're prepared to head offshore if their choices are limited in the States." This is fine. Let the offshoring corporations look for labor (and customers!) overseas in Third World nations, which often don't open their own markets to American products. U.S. consumers can show their displeasure by shunning the products and services of businesses that outsource American jobs offshore. After all, we live in a world of "free trade." The void left behind in the United States will be filled by some entrepreneurial small business that will hire American workers.

Businesses that desire to profit from a community have an ethical obligation to that same community. The jobs that businesses create provide more dollars for consumers to buy more of those businesses' goods and services, thereby fueling a growing middle class.

The free market should resolve the problem on its own. When offshoring corporations' profits suffer because of consumer boycotts, they'll have to rethink their cheap-labor policies. Dell did this recently, moving its commercial support back to the United States after customers complained. Corporations are shooting themselves in the foot. They're taking away the world's best shoppers (Americans) and replacing them with low wage earners who either can't afford to buy the companies' products or aren't allowed to purchase them because of government regulations. The situation is really no different from the corporate-governance scandals of the'90s. Companies are driven by short-term greed and ignore the long-term effects of their misguided policies on the U.S. economy.

My hope is that the next generation of Americans can have the same opportunities we all had to live the American dream with good, plentiful jobs.

 

Mary Shubert
President
Technology Innovations
mashubert@comcast.net

I agree that there aren't enough American students pursuing careers in science and engineering. But even there were, would the skills taught at a typical U.S. university today be sufficient to make American graduates competitive? I have my sincere doubts.

In Germany, I attended a university of applied sciences (comparable to a high-quality community college) and received a BS in electrical engineering. Its curriculum was far more rigorous than that of the U.S. master's degree program in which I'm currently enrolled.

The German program comprised 33 courses. I took one class in management, one in technical English, one in mass communication and one in occupational safety. The remaining courses were about plain core electrical engineering.

When I take a look at a U.S. university, the BS programs offer mostly general-studies courses and only a small portion in the major itself. After 12 years of school, is it really necessary for students to take yet another course in English or history? Or is it that the high schools are so bad as to require the college freshmen to improve their reading and writing skills? I'm not surprised that a U.S company would rather hire an engineer from India who didn't waste his or her undergraduate years studying the geography of the former Soviet Union or playing basketball.

Another more favorable aspect of European higher education is financial accessibility to technology programs. My studies in Germany didn't cost me a dime. On the contrary, I was given money for living and other expenses-half grant, half noninterest loan. The loan was due five years after graduation. I paid it back in a lump sum for a 28 percent reduction.

Contrast this with the United States. For one graduate course at a state university, I pay way over $1,000 tuition and at least $150 extra for books and materials. The campus looks like a park, and the student-faculty ratio is lopsided in the wrong direction. Granted, there's a nice baseball and football stadium, but the courses are anything but state of the art. In no way would I be able to afford such an artificially overpriced education were it not for the tuition reimbursement program my company offers. The German educational approach is to produce graduates who are highly trained in one core area, whereas American universities tend to offer courses covering a broad spectrum. Both approaches have their advantages. I think that U.S. engineering programs should combine the two strategies, and at a much-reduced cost to students.

If U.S. colleges shift their focus away from the football teams and toward the science centers, many good things can happen. But as long as the schools and their students put a premium on running fast and knocking heads, classic degrees will remain on the back burner.

With the proper training, American engineering and science graduates could have a competitive advantage over H-1B visa holders, particularly when applying for jobs involving U.S. government contracts-I sent rsums to many local companies that wouldn't even interview me because I'm not a U.S. citizen. These contracts aren't likely to go outside the country, and many don't involve any military application.

David Krings Engineer
Company name and e-mail address withheld by request

read Rob Preston's column "A Foreign Concept" with great interest. I think I can answer somewhat why the children of high-tech professionals aren't going into the same careers as their parents.

I work for a large telecommunications company. I have more than 20 years of IT/engineering experience, with graduate degrees in electrical engineering and business administration. I bought into the fallacy that education is the key to a good job and a good future. What I have found instead is that advancement has more to do with nepotism, paternalism and cronyism.

My situation is hardly unique. I've seen individuals with electrical engineering doctorates and numerous other distinctions passed over for promotions in favor of Billy-Bob's cousin with a BA in art appreciation. I know of one electrical engineering Ph.D. who quit his job after six months because he was fed up with the technical ignorance prevalent at the company.

My employer pays me a significant amount of money to perform tasks that any high school student could accomplish. For the same pay, I would gladly do interesting technology work if it existed within this company. I should point out that the company is a large outsourcer of IT jobs.

As far as I can see, the intellectual infrastructure of this country is being quickly destroyed. And large corporations are the major culprits. The problem isn't that there aren't enough Americans with technology skills-it's that most of us give up and move on to other areas. The vast majority of advanced-degreed individuals I know are biding their time to either start their own enterprises or work for smaller-and, hopefully, more benevolent-companies.

Bottom line, I encourage my children to pursue careers in health care or the legal profession. Given the current state of technology careers in this country, I cannot in good conscience advise them to work in my field.

Name withheld by request


The main reason fewer U.S. students are pursuing degrees in math, science and engineering is that Americans don't see a great demand for jobs in these areas. During the tech boom, U.S. enrollment in CS (computer science) grew. Afterward, this enrollment went down again. Why is this? Because friends and relatives warned the students they wouldn't be able to find tech jobs once they graduated. I earned a CS degree in 2002, but couldn't find a job until 2004. So I told all my friends to avoid the field if possible.

Once I did get my job, I realized how little my required CS degree actually gets used. I run automated tests all day. In reality, anyone with a high school diploma and a technical inclination could do this job. However, since I work at Microsoft and it hires only "the smartest and best" --  just like any other company -- I'm stuck in a position for which I'm overqualified. Judging from what family and friends tell me, hiring overqualified people is a common practice.

Another reason for American students' waning interest in math, science and engineering is the intense worldwide competition to enter U.S. degree programs in those areas. Foreign students looking to immigrate know that if they can get into such programs, they stand a good chance of staying in our country. So to enroll, U.S. students must compete not only with their fellow citizens, but also with students from around the world. That means only the best U.S. students can enter U.S. grad schools, while otherwise qualified candidates are shut out. Certainly, U.S. colleges are the best in the world and should go after the best students. But U.S. taxpayers pay for these schools and should award positions primarily to citizens of the country footing the bill.

To fix the problem, let's stop the influx of foreign workers. The purpose of the H-1B visa program was to provide temporary assistance for companies requiring specialized skills. These enterprises shouldn't be relying on H-1B visas for their normal business operations. There are plenty of U.S. techies looking for work-nearly 10 percent of them are unemployed. We should take care of our own first. Only after demand picks up will we see more U.S. students taking math, science and engineering courses.

Name withheld by request

What price procrastination By Jack M. Keen

In this article:
Five ways to slay the delay dragon
 

July 1, 1998 You've seen it a hundred times before. The proposed system is crucial. The pros, cons, upsides, and downsides are clear. Benefits are believable, costs manageable, and resources ready. Yet decision procrastination rears at every turn, making it tough to get the project underway. Before demoralization devastates your team as they wait for the final go-ahead, begin mastering the ancient art of "delay" slaying. Here are some tips to get you started.

1. Vocalize time's tyranny. IT time delays can seed enterprise failure. Look at Kmart's loss of industry leadership and market share when Wal-Mart initiated clever, IT-based business strategies based on faster, more accurate responses to customer buying habits. Many industry gurus agree that management of time is the number one critical success factor in 21st century enterprises. Use it to your advantage by clearly stating what delay will cost. For example, "for every four months we delay the beginning of this project, earnings per share will decrease by two cents in 1999."

Five ways to slay the delay dragon
 
1. Vocalize time's tyranny

2. Find the real drivers of delay

3. Speak the right language

4. Expand your "clever reasons" repertoire

5. Dramatize the delay cost


 

2. Find the real drivers of delay. Decision delay is always a symptom of deeper issues. Typical causes include: fear of failure, resistance to perceived power shifts, missing cost/benefit factors, and lack of buy-in. Unearth the real anxiety source, then backfill it with relevant time-delay consequences, such as those outlined below.

3. Speak the right language. Different decision participants respond to different language. Executives react best to words such as profits, market share gains, customer service, and other top-level payoffs. VP and director-level folks typically speak the language of budgets and people availability. First-level managers best understand issues such as fewer transaction problems and more productivity. Tailor the language of your pitch to the hot buttons of each.

4. Expand your "clever reasons" repertoire. Often overlooked "price of procrastination" factors include:

    Loss of "the best" people. The talents and skills of key people can make or break a project. Is critical internal or external staff available now, but not necessarily later? Having average rather than exceptional people can increase complex project costs by more than 20% due to poor task prioritization and mishandled change management.

    Avoidance of time-based premium costs. The multibillion dollar overnight letter industry is based on business' willingness to pay a "speed tax" that's 25 times more expensive than traditional USPS delivery. Do you really need it? Another example: Y2K people costs can be two to three times higher this year than last, due to skill shortages. Delayed projects, that later become urgent, can bloat costs to shocking heights.

    Loss of budget. If you have the money, take it now and run. Don't make the fatal assumption that systems budgets are forever. Enterprise priorities shift. Supportive executives move on. Funding is inherently fluid and wily. Capture it now.

    Cost of pain. Pain is the flip side of benefit. Most decision-makers seek to minimize risk of loss when deciding on systems. Leverage this reality. For example warn them that, instead of proclaiming that the project will "increase market share," restate it as "avoid loss of market share." Turn the benefit--"a new system can improve customer satisfaction by eight percentage points"--into a risk avoidance statement such as, "delaying this system will risk a rise in customer dissatisfaction rise by eight percentage points due to preventable service problems."

5. Dramatize the delay cost. Want an easy way to make the cost of delay more vivid? Jon Gearhart, PeopleSoft's industry director for the public sector, preaches a simple formula: The cost of postponed payoffs equals the net present value (NPV) of the time series of delayed tangible payoffs less the NPV of faster initiation of the same benefits. In other words, every year you wait costs the enterprise the value of the delayed benefits for that year, adjusted for the cost of money. For example, if you delay the beginning of a $10 million stream of benefits until the year 2001 instead of the year 2000, it will cost the enterprise $626,000, assuming an 8% cost of money. A further delay of an additional year--to 2002--penalizes the organization another $580,000.

 

Have a good "price of procrastination" experience to share? Delay not! Let me know via e-mail at jkeen@decidingfactor.com.

Time is everywhere, and so are the costs of letting it slip away. By sharpening your "delay slayer" skills, you can leave procrastination dragons at your feet instead of at your throat.

 

 

 


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