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An Interesting view on demoralization This time from French
perspective.
Aug 16, 2004 (MSNBC) You sit next to idiots, loathe
office bonhomie and crave escape. You're half-crazy with boredom, pretend to
work when you hear footsteps and kill time by taking newspapers into the
washrooms. Your career is blocked, your job is at risk and the most ineffective
people get promoted to where they can do least harm: management. You recoil at
jargon, consider the expression 'business culture' an oxymoron and wish you had
the guts to resign. If this is you, help is at hand.
Bonjour paresse (Hello Laziness), a call to middle
managers of the world to rise up and throw out their laptops, organigrams and
mission statements, is the unexpected publishing sensation of the summer in
France.
Sub-titled The Art and the Importance of Doing the
Least Possible in the Workplace, the 113-page "ephlet" (part-essay,
part-pamphlet) is to France's managerial class - the cadres - what the Communist
Manifesto once was to the lumpen proletariat.
Written by Corinne Maier, an economist at state-owned
Electricité de France, Bonjour paresse flashed albeit briefly to the number one
spot on Amazon's French best-seller list.
An anarchic antidote to management tomes promising the
secrets of ever greater productivity, Bonjour paresse is a slacker's bible, a
manual for those who devote their professional lives to the sole pursuit of
idleness.
There have been many works in praise of idleness over
the decades, but with the French work ethic weakened by the introduction of the
35 hour work week, the siren's appeal has never been stronger.
The truculent chapter titles, including Business
Culture: My Arse!, The Cretins Who Sit Next To You, The Best Management
Con-Tricks and Why You Lose Nothing By Resigning, set the tone of the book.
Ms Maier is the closest thing France has to Scott
Adams, the comic genius behind the best-selling Dilbert cartoon strips in the
U.S., whose influence strongly marks her writing. Like Adams's satires of life
in corporate America, her observations generate one universal reaction among
readers: "Ohmigod, that's just like my company!"
The actively disengaged
Over lunch at the Café Bonaparte off the Boulevard Saint Germain, the
40-year-old mother of two says it is time for wage slaves to hit back.
"Businesses don't wish you well and don't respect the values they champion. This
book will help you take advantage of your company, rather than the other way
around. It will explain why it's in your interest to work as little as possible
and how to screw the system from within without anyone noticing."
Many already are. An IFOP
poll cited in the book claims 17 percent of French managers are already so
"actively disengaged" with their work that they are practically committing
industrial sabotage.
Even if Bonjour paresse is quite obviously a
tongue-in-cheek send-up of French corporate life, EDF, is far from amused and
has started disciplinary action.
But the book is about so much more than EDF. It is a
book of its time and place. France is entering a long-promised Age of Leisure.
No other OECD country has witnessed as dramatic a fall in the number of hours
worked per inhabitant.
In its 2004 employment outlook, the OECD reported that
the French worked 24 per cent fewer hours than in 1970, whereas Americans toiled
20 percent more. France was not alone. Large declines were also seen in Germany
and Japan. But the situation in France is extreme.
Two factors explain why. First, the proportion of
people of working age in France who manage to find jobs has plunged to 61.9
percent, compared to over 70 percent in the UK, the U.S. and Denmark. Second,
the introduction of the 35 hour week means French workers put in less time than
ever.
Ms Maier, who works just 2 ½ days a week, is hardly
unusual. The average French worker clocks only 1,459 hours per year, compared
with a mean of 1,762 for the OECD as a whole and almost 2,000 for the
Stakhanovites in the Czech Republic.
As the rest of the world becomes "always-on", bosses
complain French workers are now "always-off".
In the Dilbert comics, one lesson is that it is not
enough for you to succeed, others must fail. You have to improve your own
standing by subtly disparaging those who surround you.
Demotivating others is also a core management skill as
with employee self-esteem come unreasonable requests for money. There are many
ways to make it clear to the grunts that their work is not valued: reading
magazines when they are talking to you, asking for information "urgently" then
leaving it untouched for weeks, and having your secretary return their calls or
e-mails.
In Bonjour paresse, the very notion of personal
advancement is ludicrous. Whereas Scott Adams drew his inspiration from his nine
years as a middle manager occupying cubicle 4S700R for the Pacific Bell phone
company, Ms Maier has had a very different taste of life in the executive slow
lane - twelve years in the bowels of the French public sector.
This bureaucratic sprawl provides jobs for an
astonishing one in four workers in France and enough comic material to keep
business humorists in work for decades. Yet it is the private sector she most
abhors.
Ms Maier describes how middle managers who have no
strings to pull fail to win promotion because all the senior positions in big
French companies are monopolized by well-connected alumni of the elite grandes
écoles, notably the énarques from the Ecole Nationale d'Administration.
She writes for a group of people who no longer believe
that work is the path to personal fulfilment. "It is de rigueur to claim you
work because 'your job interests you' and even if in reality everyone is only
there to pay the bills at the end of the month, it is a complete taboo to say
so," she says. "One day I said in the middle of a meeting that I could only be
bothered to turn up in order to put food on the table: there was 15 seconds of
absolute silence during which everyone looked agonized."
It is a world where the over 50s are shoved out the
door in early retirement programs at a rate that has left only a third of
France's 55-64 year olds still working - "a world record", Ms Maier says.
It is
a world where companies parrot "our people are our most important asset" yet
throw them out like used Kleenex. It is a world where impossible demands are
made of the young thruster who believes the words pro-active and benchmarking
actually mean something and who hopes his talents will be recognized and that he
will be loved and cherished.
The disenchantment with corporate life is total. Forget
In Praise of Slow, Carl Honoré's faddish new treatise on "marrying la dolce vita
with the dynamism of the information age" and all the other wimpy pleas for
work-life balance. It is hard to see Ms Maier and her electrician buddies
rushing into new Spanish siesta salons' selling 20 minutes of sleep for €4.
They'd much rather zonk out on the job for free. There's no "I don't know how
she does it" quest for the tempo giusto because the object of work is simply to
do as little of it as possible.
So what are some of her ten commandments for the idle?
Take number three: "As what you do is pointless and as you can be replaced from
one day to the next by the cretin sitting next to you, work as little as
possible and spend time (not too much, if you can help it) cultivating your
personal network so that you're untouchable when the next restructuring comes
around."
Then there's number five: "Never accept a position of
responsibility for any reason. You'll only have to work more in exchange for a
few thousand more francs (effectively peanuts)." The others are in similarly,
subversive vein.
A publisher's surprise Bonjour paresse initially seemed destined to disappear without trace.
Published at the end of April by the little-known Editions Michalon, the book,
whose title is a nod to Françoise Sagan's 1954 novel Bonjour tristesse,
generated little comment. At the end of July, however, Le Monde, the leading
daily, unexpectedly devoted a front page article to EDF's disciplinary action
against the book's author. The newspaper of reference reported that Ms Maier had
been summoned to a preliminary hearing on Aug. 17th.
Failing to see the funny side, EDF accused Ms Maier of
"repeatedly failing to respect her obligations of loyalty towards the company,"
and of running a "personal campaign, clearly proclaimed in the book, to spread
gangrene through the system from within." Citing her habit of reading newspapers
in meetings and of leaving one gathering early on May 3rd, the charge sheet also
alleged she had neglected to secure permission to mention on the back cover that
she worked for EDF.
Corinne Maier is as bolshy and unrepentant as her book
leads you to expect. Her motor-bike helmet by her side and her long brown hair
looking like it could use a good brush, she declares she has no intention of
attending the disciplinary meeting. "It's the middle of August and I will
obviously be on holiday," she says. "I have sent them copies of my train and
ferry reservations to prove it." But she insists she is not looking to get
fired. Her situation clearly suits her well.
Born into a family of aluminium siding salesmen, she
studied in Paris at Sciences-Po, the French equivalent of the London School of
Economics, before taking further degrees in industrial economics and later a
doctorate in psychoanalysis. She has found time to write eight books since 2001,
including several works on Jacques Lacan, the French psychoanalyst. Three of
these come out later this year, two introductory books on Gaullism and Nazi
Germany and "a more intello" book on Pasteur.
France's unions have championed her cause. They see EDF
as determined to crush all sources of dissent to its transformation from
quintessential symbol of the French public service into a regular société
anonyme, a public company that the center-right government will then be able to
privatize. An umbrella body representing the six main unions at EDF has issued a
statement defending Ms Maier's freedom of speech, saying she had "not revealed
any secrets, jeopardized any business or even mentioned EDF by name once in the
book."
"EDF has cited the pettiest offenses," says Ms. Maier.
"The real reason is that they don't like my book." Refusing to comment on "an
ongoing disciplinary procedure", EDF is belatedly trying to bury the row its own
clumsy response had started. The book, however, is already being re-printed. "My
publisher is delighted with EDF's reaction," says Ms Maier. "It is all thanks to
them that we have a best-seller. We have had interest from numerous overseas
publishers wanting the translation rights."
December 20, 2006
(Computerworld) -- Facing a possible layoff from his job as
an IT systems administrator, a 50-year-old New Jersey man was
charged yesterday with planting malicious "logic bomb" code into
the company systems where he worked that could have damaged more
than 70 servers.
In a five-page
indictment, Yung-Hsun Lin, also known as Andy Lin, 50,
of Montville, N.J., was charged with two counts of intending to
cause fraudulent, unauthorized changes to computer systems in
violation of U.S. laws. Each count is punishable by up to 10
years in prison and up to a $250,000 fine. A federal grand jury
handed down the indictment.
Lin was arrested yesterday by FBI agents and made an initial
appearance before a federal magistrate. He is scheduled for
arraignment on the indictment on Jan. 3.
In a statement, U.S. Attorney Christopher J. Christie in
Newark
alleged that Lin planted the logic bomb in HP Unix
servers at Medco Health Solutions Inc. The bomb could have
destroyed critical customer prescription data, payroll
information and other records stored on more than 70 servers
used by the Franklin Lakes, N.J.-based company.
Lin, who worked in Medco's Fair Lawn offices, apparently
inserted the logic bomb into Medco's IT systems in October 2003
because he feared losing his job. Lin learned that his IT group
was being merged with another group inside the company after it
was spun off from pharmaceutical company Merck & Co., according
to the indictment.
Instead, Lin was spared a layoff while four colleagues lost
their jobs, according to the U.S. attorney's statement.
...recently, there have been allegations that call center
employees there have stolen data entrusted to their employers. As a result,
concerns have risen about the security of data held by Indian service
providers, and companies that outsource to India are seeking out the
remedies that are available to them to deal with and prevent the misuse of
data in India.
...The Indian legal system is substantially based on the
British common law system. While there is no omnibus Indian data security
law, there are several laws that apply to data theft or misuse in India.
Typically, when an incident involving data occurs, a complaint is filed for
theft, cheating, criminal breach of trust, dishonest misappropriation of
data and/or criminal conspiracy under the provisions of the Indian Penal
Code (IPC) of 1846 and for hacking under the Information Technology Act (ITA)
of 2000. Many of these offenses under the IPC and the ITA allow for an
arrest without a warrant, are nonbailable and carry penalties that range
from one year to life imprisonment, as well as fines.
...
While several measures have been
put in place to deal with data security issues, some concerns
still remain regarding the Indian legal system. Indian courts
are overburdened – in 2005, the lower courts had over 20 million
pending cases, while the high courts had over 3 million. Delays
in the system are common, and an average case can take several
years to be resolved. However, things are changing. Several
measures are under way, and the prime minister and chief justice
of the Indian Supreme Court have committed to dealing with the
issues facing the Indian courts. Further, the system itself,
while slow, works. More importantly, as previously discussed,
several preventative measures are being put into place by the
service providers themselves to deal with data security and
privacy issues.
Paul raise important questions about race to the bottom that IT is engage
it. IT ignorant manager are danger for the corporation and I agree that
"Misinformed business executives and timid CIOs have allowed these
look-alike systems to proliferate. On the surface, it always appears
easier to install an outside package and not have to deal with the problems
associated with customized development. Cost overruns, missed deadlines and
unfulfilled expectations are no fun. It's a lot easier to be wined and dined
by the ERP vendors and be convinced that this is the best way to accomplish
your objectives. "
July 31, 2006 (Computerworld) In the early days of IT, we
would never suggest to users that they should adjust their operations to
the requirements of the software that we were developing. It was always
the other way around. We wrote software so that it worked exactly as the
users requested. After all, the users were the clients, and IT was
trying to automate their departments, not make life easier for itself.
Somewhere along the way, this whole theory changed. It may have
started with the rapidly escalating cost of custom development, or with
one too many missed deadlines or busted budgets. It may have started
with the onset of ERP systems that established best practices for the
entire organization. It may have happened when companies realized that
they had outsourced so much of their IT operations that they no longer
had competent development staffs.
Regardless of the origins of this change, the state of the art today is that users must bend their requirements
to conform to off-the-shelf packages. The result: In his
controversial article in Harvard Business Review a few years back
titled "IT Doesn't Matter," Nicholas G. Carr told us that because so
many companies use identical software, IT no longer provides any
competitive advantage (see
"Get Over Yourself," May 12, 2003).
Isn't it ironic that the very systems that are promising great value
to companies are causing IT to be less strategic? Is this really what
business wants?
Misinformed business executives and timid CIOs have allowed these
look-alike systems to proliferate. On the surface, it always appears
easier to install an outside package and not have to deal with the
problems associated with customized development. Cost overruns, missed
deadlines and unfulfilled expectations are no fun. It's a lot easier to
be wined and dined by the ERP vendors and be convinced that this is the
best way to accomplish your objectives.
Unfortunately, IT doesn't do a good job of explaining to the business
the shortcomings of these new systems, the hardships encountered when
users really need IT to make a strategic change, or the true cost of
supporting and implementing off-the-shelf software today and into the
future. Ask any CIO about the cost of outside support for one of the
major ERP systems.
But perhaps more important is the cost of opportunities lost by using
software that everyone else uses. If you have custom software, you can
usually accommodate a new requirement at a reasonable cost. With an
off-the-shelf package, this is often impossible. If a strategic
initiative can't be accomplished because of the shortcomings of the
packaged system, then the cost could be incalculable. This is the true
cost of off-the-shelf. You must learn to use the software the same way
most everyone else uses it.
I wonder if Dell could have developed its logistics system under this
type of constraint. I wonder if FedEx and UPS could have revolutionized
the shipping industry when faced with this type of scenario. I wonder if
Cemex in Mexico could have become a high-tech cement producer using this
approach.
Call me old-fashioned, but I think that there are still opportunities
for companies to differentiate themselves through creative approaches to
the marketplace that require the development of innovative IT systems.
Perhaps, for example, Web services will enable companies to develop a
much more customized software suite than is currently available through
local installations of packaged enterprise systems. By skillfully
interfacing some disparate elements, a creative CIO may be able to
achieve some competitive advantage.
This opportunity may already be lost, however. The significant
outsourcing and offshoring that companies are doing may deprive us of
the talent needed to customize a Web services system or develop unusual
systems.
Perhaps the dire predictions of the demise of internal IT have scared
off the good developers. Perhaps Carr's thesis has become
self-fulfilling, and IT is destined to subside to the role of a utility.
I'm reminded of the story about the head of the U.S. Patent and
Trademark Office who submitted his resignation in 1899 because
"everything that can be invented has been invented." Although probably
apocryphal, it does serve to emphasize the danger of second-guessing the
innovative mind. I think IT has a great opportunity to bring new and
exciting ideas to business that will enable companies to develop
innovative processes and products. I think our brightest days are still ahead of us.
But we can't be afraid, and we must be able to do some
customized development that will give our companies that elusive
competitive advantage.
Paul M. Ingevaldson retired as CIO at Ace Hardware Corp. in
2004 after 40 years in the IT business. Contact him atingepi@aol.com.
Nice example of biased reporting. If database administration is
commodity then anything else in corporate It is commodity too. And this myth
about dual shore we already heard.
September 27, 2006 (InfoWorld) It's been a common refrain for
years, growing to a chorus in the election year of 2004. As technology
workers rail against the exporting of IT jobs to India, China, the
Philippines and beyond, their would-be bosses bemoan an ever-shrinking
IT talent pool.
Who's right? Well, both are -- but not for the reasons you might
expect.
Offshoring has had less of an effect on IT jobs than many people
commonly believe, says Dice.com CEO Scot Melland. In part that's because
the overall percentage of IT jobs that has been exported is relatively
low, according to Melland. Those jobs are mostly commodities: help desk,
database administration and some application development. Higher-end,
more strategic jobs are still kept in-house and continue to be in great
demand.
Another reason: Offshore is rapidly becoming "dual shore," as
Indian-based outsourcers expand their U.S. operations. For
example, Mumbai-based Tata Consultancy Services says it plans to hire
1,000 stateside employees in 2006. As the earth grows flatter, global
companies find themselves in desperate need of project managers who can
communicate with clients on one side of an ocean while managing
employees on the other side.
Hiring to fill a niche
If there's a talent gap, it's at the high end, says Harry Wallaesa,
founder of tech consultancy The W Group.
"I think the talent gap exists at the really innovative technical
positions that are driving new business models and helping companies
compete on a different level," Wallaesa says. "They're not the ones
whose jobs get outsourced."
The shortage lies not in the number of tech-savvy workers but in the
types of skills and experience they possess. IT needs have become so
granular that it's difficult to find people who fit a particular niche,
says Jim Lanzalotto, vice president of strategy and marketing at Yoh, a
$367 million talent and outsourcing company based in Philadelphia.
"The talent gap is really a 'specificity gap,' " Lanzalotto says.
"Five years ago companies were looking for anyone with any experience in
CRM. Today they want a CRM project manager with experience in a
particular industry, such as manufacturing or pharmaceuticals. When you
get that precise, you start to develop supply issues."
Lauren Barker, manager of staffing at USi, an ERP managed services
provider, says her company's biggest challenge is finding .Net
consultants. It's not easy to find someone with the right mix of
technical, business, and communication skills.
"It's easy to find developers who make $60K or $70K to do
coding," Barker says. "It's much harder to find a senior principal
consultant who is able to travel to a client's office, articulate what
our developers will be able to do for them, then come back here to
develop the project."
A touch of gray
On the other hand, as baby boomers retire, companies face the
opposite problem. "Twenty years ago, you couldn't get enough mainframe
guys," Yoh's Lanzalotto says. "Now companies can't find them at all.
It's not a cool technology, but it's something companies still need to
have in place."
Federal and state governments, with their combination of aging
workforce and legacy applications, will be especially hard hit, Dice's
Melland says.
"If you're a tech professional in the D.C. area with an active
government security clearance, you can basically write your own ticket,"
Melland says. "Agencies have had to slow down certain programs or shut
them down entirely because they can't find people qualified to do the
work."
As a response to the looming shortage of workers with knowledge of
legacy apps, IBM user group SHARE launched the zNextGen initiative to
offer career guidance and mentoring to young IT professionals. Its goal
is to attract 20,000 new techies to the mainframe by 2010. Meanwhile,
the Computing Technology Industry Association has joined forces with
American Association of Retired Persons to create the Alliance for An
Experienced Workforce. Its aim is to encourage the graybeards to stay on
as consultants and part-time workers until a new generation of mainframe
wonks arrives.
Bottom to top
The talent gap reaches the very top of the IT org chart, says Paul
Groce, who heads up the CIO recruiting practice at Christian & Timbers
in New York. But it's not due to a lack of tech savvy.
"There's no less [technology] talent today at the CIO level than
there was 10 years ago," Groce says. "The difference is that CEOs are
demanding a different type of CIO for the future. Very few of today's
CIOs are trained to be general managers. That's where the talent gap
is."
Groce says his company was engaged by a major corporation that needed
to replace a CIO. The corporation has internal candidates with excellent
technology backgrounds, but the CEO wanted to look outside for
someone with more business experience.[ another
Dilbert style CEO hiring binge --NNB]
"He wanted a CIO who had the skill sets to grow within the company
and eventually manage a P&L," Groce says. "It's a shame the CIO had not
trained and prepared a suitable replacement."
If anything, the talent gap is only likely to grow wider, Dice's
Melland says. Post-9/11 restrictions on foreign worker visas, coupled
with a dearth of tech-trained college grads and the retirement of the
boomer generation, will drive more companies to seek expertise overseas.
[ Whom are they trying to deceive ? --NNB]
"We seem to be headed into an era of not having enough highly skilled
people at the same time we have this need for these people," Melland
says.
by BWJones (18351)*on Monday October 02, @12:09AM (#16272613)
(http://prometheus.med.utah.edu/~bwjones/
| Last Journal: Tuesday September
26, @11:57AM)
Of course most folks who are actually working in IT could
have told you this. I know a number of folks at companies who experienced
several rounds of layoffs. They have survived the layoffs, but they
are also currently doing the job of two to three employees now versus
prior to the layoffs. Morale is low, pay has not kept up with the cost
of living increases, the cost of health care or inflation. Productivity
is still there, but burnout is likely in these individuals. Other people
I know that did lose their jobs ended up going back to school and getting
out of IT entirely which I suspect is not an isolated situation and
would lead to skewed unemployment statistics.
The thing that worries me is that this is not an isolated employment
sector, and I predict that we are in more trouble than we might know.
Historically we have relied on our research and development to keep
this country on top technologically, but over the last five years or
so, we have been reducing the amount of funding we spend on research
and development, particularly in the biosciences. For example, if you
were to look at NIH grant paylines, five years ago the payline was around
33%. Next year it is predicted to be anywhere from 10-14% meaning the
likelihood that a researcher will obtain funding has been cut by more
than half. In fact, research and education spending on the whole is
down under the current White House administration. So, if we are supposed
to rely on education, technology and research and development to keep
our edge as a country, we are already in trouble, especially when one
considers that even if we were to turn things around tomorrow, we have
likely done enough damage that it will take a decade to recover.
(Score:5, Interesting)
by TheUglyAmerican (767829)on Monday October 02, @01:27AM (#16273329)
Disclaimer: I am an IT manager who sets up and runs IT groups in India.
So I'm the "bad guy" I guess.
1. Outsourcing is not new. And the reaction by the IT industry is not
new. The garment industry was outsourced, the steel industry, to a degree
the automotive industry. It happens. The people directly impacted don't
like it but as long as it make economic sense, outsourcing will happen.
Adapt to survive and thrive.
2. Isolated protective measures to limit outsourcing will ultimately
fail. If you put restrictions on US companies that increase their costs
while overseas competitors have no such restrictions, US companies will
be at a competitive disadvantage ultimately hurting their growth and
their employees.
3. Outsourcing is not easy in the IT industry. I can point to as many
failures as successes. Not every company in the US that needs IT resources
will be candidates for outsourcing. Not every job will end up overseas.
In fact even though my entire IT organization is in India I'll soon
be looking for a Systems Engineer in the US because I'm not happy with
what I find in India.
4. Salaries for IT candidates in India are increasing very rapidly (think
Silicon Valley, 1999). Given the inherent inefficiency of dealing with
people great distances away, the economics of outsourcing are getting
worse.
5. Decimation means to kill off 10%, not 90% as some posts have said.
From Wikipedia: The word decimation is derived from Latin meaning "removal
of a tenth." So the article is correct, this is decimation.
(Score:2)
by N3WBI3 (595976)on Monday October 02, @09:38AM (#16275919)
(http://tim.timriordan.com/)
1. Outsourcing is not new. And the reaction by the IT industry is
not new. The garment industry was outsourced, the steel industry, to
a degree the automotive industry. It happens. The people directly impacted
don't like it but as long as it make economic sense, outsourcing will
happen. Adapt to survive and thrive.
But you could (not that we do) put tariffs on the garments and steel
that 'American' companies try to send back here from the nations they
outsourced to. Thus if an American corporation decides it wants to make
its garments in vietnam they would have to consider that while they
can run slave labor wages, with little or no environment regulation
they might have to pay for it before they can send their crap to Wal-Mart.
With information that's a little harder to do.
2. Isolated protective measures to limit outsourcing will ultimately
fail. If you put restrictions on US companies that increase their costs
while overseas competitors have no such restrictions, US companies will
be at a competitive disadvantage ultimately hurting their growth and
their employees
And if their employees are in India why should this bother me? I
would not put any American company in a situation where they are treated
any worse than a foreign company but I would not treat them as well
as an American company.
3. Outsourcing is not easy in the IT industry. I can point to
as many failures as successes. Not every company in the US that needs
IT resources will be candidates for outsourcing. Not every job will
end up overseas. In fact even though my entire IT organization is in
India I'll soon be looking for a Systems Engineer in the US because
I'm not happy with what I find in India.
You dont need every job to go for it to *&^% can the industry, if
10% of the jobs go you now have a downward pressure on wages and benefits.
You make it harder for that 10% and the 90% who are working to keep
up with inflation let alone actually grow in their careers.
4. Salaries for IT candidates in India are increasing very rapidly
(think Silicon Valley, 1999). Given the inherent inefficiency of dealing
with people great distances away, the economics of outsourcing are getting
worse
Then they will start moving to Africa (http://www.corpwatch.org/article.php?id=11824).
5. Decimation means to kill off 10%, not 90% as some posts have
said. From Wikipedia: The word decimation is derived from Latin meaning
"removal of a tenth." So the article is correct, this is decimation.
That is not the common use, look at the dictionay not wiki:
decimate/dsmet/ Pronunciation Key - Show Spelled
Pronunciation[des-uh-meyt] Pronunciation Key - Show IPA Pronunciation
-verb (used with object), -mated, -mating.
1. to destroy a great number or proportion of: The population was decimated
by a plague.
2. to select by lot and kill every tenth person of.
3. Obsolete. to take a tenth of or from.
(Score:1)
by Ixne (599904)
on Monday October 02, @09:49AM (#16276047)
1. Outsourcing is not new. And the reaction by the IT industry is
not new. The garment industry was outsourced, the steel industry, to
a degree the automotive industry. It happens. The people directly impacted
don't like it but as long as it make economic sense, outsourcing will
happen. Adapt to survive and thrive.
And look what that's wrought in those industries: there are now less
than a handful of US-owned steel companies. My wife's father worked
for a US Steel company before it was bought by a foreign company. Now
he works for a Russian-owned steel company. And consider: US car companies
buy foreign steel, while companies like Toyota buy American steel. What
does that tell you? I don't think I need to more than mention what's
going on in the auto industry.
Your "adapt to survive and thrive" sounds an aweful lot like "That's
the way it is, live with it." That attitude never survived anything.
With an attitude like that, the US will become a nation of fast-food
and Walmart employees.
2. Isolated protective measures to limit outsourcing will ultimately
fail. If you put restrictions on US companies that increase their costs
while overseas competitors have no such restrictions, US companies will
be at a competitive disadvantage ultimately hurting their growth and
their employees.
(Score:2)
by plumby (179557)
on Monday October 02, @08:43AM
(#16275445)
There is a significant difference between the two -
Outsourcing without offshoring is usually a positive strategic
choice, and a result of businesses moving non-core activities
to firms more focussed on that activity and likely to be
more efficient/effective at that activity. For instance,
most large firms outsource their catering to an external
provider. It may have some effect on the overall job market,
but usually just means that your role gets moved to a more
specialist employer. As this is a move based largely on
specialist people being able to do the job better, costs
should stay cheaper.
Offshoring, on the other hand, is almost always negative
and tactical and little more than a race to the bottom on
simple employee cost (usually as a result of poor employment
regulation/health and safety/general standard of living
etc in the target country). Eventually, however, increased
demand for jobs in that country will force wages up, and
the only option is to move on to the next cheap economy.
2. Isolated protective measures to limit outsourcing will ultimately
fail. If you put restrictions on US companies that increase their
costs while overseas competitors have no such restrictions, US companies
will be at a competitive disadvantage ultimately hurting their growth
and their employees.
Wrong attitude for businesses to take, seems to me -- competing on cost
alone results in a race to the bottom, which is what we seem to be experiencing.
I've worked with Indian teams, in person, and they are *exactly* like everyone
else I've ever worked with, i.e., 10% were essentially unproductive, 10%
were utter joys to work with -- sharp, organized, capable, motivated and
could communicate well -- the remaining 80% were somewhere in between.
Over the last 20 years I've watched as American business management seemed
to forget about delivering the best product, and focused on maximizing profits
instead, as if the two could be entirely separated. Stupid, and it will
take probably at least a *generation* to fix that.
I want to raise a counterpoint to your point 2: 2. Isolated protective
measures to limit outsourcing will ultimately fail. If you put restrictions
on US companies that increase their costs while overseas competitors have
no such restrictions, US companies will be at a competitive disadvantage
ultimately hurting their growth and their employees. I'm not sure I agree
with this, although I think that protective measures would have to be carefully
thought out. What you are ignoring, is America is a HUGE consumer nation,
and through this and other mechanisms has a tremendous impact on the strategies
of other countries. I don't see the "we can't compete with other countries"
as a valid argument. I have a hard enough time understanding the argument
that I find it difficult to argue against. What's the competition? What's
the metric for who's winning? Is it who's economy is biggest? I'd rather
have a smooth and well functioning economy than a big one, but maybe I'm
unusual...
Anyway, I see offshoring production (be it intelectual or labor oriented)
as having 3 pretty significant problems.
1. Is ethical, since offshoring is basically the practice of maintaining
a slave class, just not within the borders of own country. Okay, I'll grant
you that's something of an overstatement in the case of India, where conditions
seem to be improving as money flows there. But in the case of China, Malaysia,
and other sweatshop countries where we get our cheap clothing from it holds
quite true.
2. The second issue is, if you keep offshoring everything, what the hell
are people in the U.S. going to do? You'll have a 2 class system, the wealthy
and the service industry. The wealthy will enjoy a tremendous standard of
living, which they can afford because goods (shipped in from mesa-slaver
countries overseas) are insanely cheap, and so's labor, since no one can
get a decent manufacturing job. And the service sector will be a kind of
second class system.
I think anyone with open eyes can see this process taking place. Gated
communities are, imo, a symptom of this.
3. Is tightly coupled to 2. I think it is desirable for a country to
have many opportunities for its citizens. So if you are someone who enjoys
manual labor, who enjoys intelectual labor, who enjoys servicing people,
who enjoys producing art, you should be able to find a job doing what it
is you love. This, more than just raw wealth, has a greater impact on overall
happiness, but unfortunately does not get calculated into "standard of living"
indices.
So I think some kinds of legislation to mitigate these points could be
worked out. In broad strokes, what I think is needed is some kind of penalization
on the flow of capitol to, and the flow of goods from, countries whos working
conditions are poorer than ours. Hourly pay wouldn't be a good indicator,
but pay as a ration of the cost of living in that country would work (yes,
some thought would have to be put into this formula). More important, things
like safe working conditions, sane work weeks, and espcially child welfare
laws should rank heavily into the system. It wouldn't have to be a binary
system where yes we trade, no we don't, rather a system that indexes how
much we tax transactions to and fro, based on an index computed once or
twice a year, based on compliance with a set of guidelines ideally provided
through the U.N.
Not that it would fix everything, but it ought to help. Does anyone know
of a good existing proposal out there?
September 04, 2006 (Computerworld) I have been in IT for 25
years, and I can understand why younger people are not entering the
field ["Workforce
Crisis," Management, July 3]. All you hear is "outsourcing, outsourcing."
Why go into the field when that threat is always hanging over your head?
I know profitability is key, but Americans cannot live as cheaply as
the people in India.
L. Puckett Systems analyst
Albuquerque
There is no reason to believe that baby boomer IT workers won't simply
be replaced with cheap offshore labor -- workers who work long hours
for low wages and don't need flexible work arrangements or flexible
benefits, or even any of the simple securities afforded Western workers.
The "boomer crunch" myth doesn't have any traction outside of technical
college recruiting offices.
Keith Tyler Seattle
We have heard these same scare tactics for years. If you look at
the history of IT worker shortages, you will find that the reasons are
always the same. Technology has a boom-and-bust cycle. Our free economy
will take care of any worker shortages if companies pay for skills and
treat workers fairly.
Bill Stutters DBA
Denver
The so-called lack of IT talent does not exist. There are hundreds
of thousands, if not millions, of unemployed or non-IT-employed IT people
in the U.S. Because of the rash of outsourcing to other countries, many
people with IT skills now work at McDonald's or Wal-Mart or drive taxi
cabs. Others can't get a job at all because they are overqualified for
everything they apply for.
David Somner Freelance contract programmer
Hollywood, Fla.
The real reason why computer science and IT enrollment is down at
schools, why average retirement among IT workers is at a young 63 and
why there is a coming crunch in IT workers is simply this: IT jobs are
not enjoyable anymore. With the crash of the dot-coms and the merger
of many large companies into even larger companies, IT positions have
become little more than bureaucratic form jobs, reporting to some MBA
who resents his IT people being paid so much and is eagerly waiting
to shovel the work overseas.
Students in college aren't stupid; they know that IT is not where
anyone places any value. They'd rather be doing something cool and fun
and that has an impact.
Personally, I can't wait to take my three degrees in computer science
and retire, or at least go do something I enjoy. Because company IT
certainly is not it anymore.
Edward Reasor Senior architect
Tampa, Fla.
Frankly, I can't feel too sorry for U.S. companies suddenly facing
the prospect of labor shortages because older workers are leaving the
workforce ["
'Perfect Storm' on Horizon for U.S. Labor Market,"Computerworld.com,
July 10]. I am one of those older workers, and I and many of my generation
would like to work until close to 70 years old. But having been laid
off in 2002, partly because employers could find cheaper labor in H-1Bs
and younger workers, I have been functionally unemployed for over four
years. Even companies where I would have been an excellent fit were
not interested and took "a different direction." Age discrimination?
Maybe.
Come on, guys. A highly skilled profession has been destroyed by
allowing millions of unskilled individuals to replace the skilled workers
["New
Recruits Still Scarce," Special Report: Careers, July 17]. And you
wonder why nobody wants into it?
Thanks to the greed of companies thinking to balance their balance
sheets with foreign workers armed with paper degrees but totally devoid
of any kind of expertise, everybody is jumping off the U.S. IT ship.
The article "New Recruits Still Scarce" cites several initiatives
meant to encourage more workers to join the IT field, such as helping
students who are currently taking computer science courses complete
their studies, or targeting K-12 students with free software, classroom
speakers and age-appropriate curricula. But the best way to turn the
trend around is to stop the proliferation of H-1Bs and L-1s and to put
an end to offshoring. We need to make IT a career worthy of consideration
again and bring the pay back to where it was before we fell victim to
the "Benedict Arnolds of Industry."
Ken Ward Business analyst/project manager
DaimlerChrysler
Beverly Hills, Mich. wrk13@dcx.com
India in the international press has been getting rave
reviews of late. There was a time whenever international journalists wrote
about India it was confined to snakes, sadhus, holy men, dust, heat and
bride burning. It was the country where people had no food, where girls
were killed in their infancy to save the dowry and where children were sold
because their parents had no money to feed them.
During last five years this has changed, which is kind
of surprising, since all these things are happening even today - though
on a lesser magnitude, thank God. Today foreign journalists sing an entirely
different tune: that of India having "arrived." They glorify India for its
software proficiency, for its role in stealing the jobs of Western clerks
and service professionals and for being an Asian tiger.
Nothing can be further from the truth. It is true that
India has achieved some success in software industry, it is true that the
country generates hundreds of thousands of code writers and programmers,
the fact is the all the software exports from the country even today amount
to nothing more than 1% of the global IT industry turnover.
Indian BPO companies employ almost half a million people
today, but none of them have a guaranteed job. Their jobs depend on the
wish of the U.S. companies and the politicians. In every western country
there has been some political backlash against the job outsourcing to India,
even though, according to a report of McKinsey, for every dollar of work
outsourced to India, the U.S. gains $1.12-$1.14.
John Kerry, the Democratic candidate in the U.S. elections
had made a lot of hue and cry about it, and other politicians have done
the same in other countries. They are not to be blamed; the general population
itself is not happy. Many Europeans and Americans abuse Indian call center
workers on the telephone. Many say "I don't want to talk to you, pass me
to someone who can speak my language."
According to a report published recently, the BPO industry
analysts have seen the phenomenon of "racist" clients grow in recent years,
as customers in the U.K. and the U.S. become increasingly sensitive to the
political issue of jobs outsourced to India. The report states, "The issue
of xenophobia cannot be resolved from India-end: there must be a battle
against it in the countries responsible."
There can only be one end to this problem: let it last
while it last. Sooner or later, the U.S./Western companies may cut down
on outsourcing work to India either due to economic considerations or due
to rising political pressure. And when that happens, India will be soaked
in a sea of tears. After all those Americans/Europeans who have lost their
jobs to Indians still have their social security, can still move around
in minivans, and can still afford deluxe health treatment. No sacked Indian
worker will have such privileges.
And this is the industry on which entire Indian economy
is pinning its hope.
Coming to the mismanagement of the economy, the gold
bugs complain about budget and trade deficits in the U.S. They talk of U.S.
trade deficit with China alone reaching beyond $200 billion; they talk of
how these days it takes five dollars of debt to create one dollar of growth.
All of this is true, but let me tell them what Indian politicians and economists
have done in this glorious land of Vedas and holy rivers. Recent official
data showed the country's deficit for April and May stood at Rs 777.40 billion
during the first quarter of 2006-2007, accounting for 52.30% of the projected
figure of Rs 1486.86 billion for the entire fiscal.
Of course like his U.S. counterparts, the Indian Finance
Minister is unfazed. "We should be able to be within our target," Chidambaram
said when asked if huge spending plans threatened government finances. "It
is good that spending is happening. We are not unhappy about it. Increased
spending will mean more money in the system," Chidambaram said, even as
the international rating agencies and multilateral institutions cite India's
large fiscal deficit as a barrier to sought after double-digit economic
growth.
Just as in the U.S. the politicians don't wish to confront
the population by telling people in their face that they are living beyond
their means and need to curtail their spending, the politicians in India
don't wish to tell the people to reduce their oil consumption. Neither do
they increase the prices, fearing the backlash of opposition parties and
a loss of votes during the elections. So the government goes on selling
petrol and diesel at much cheaper price even as the international crude
price goes on rising.
Yet another parallel. Budget deficits are a fact of life,
virtually in every country where the politicians are either corrupt or inefficient,
often both, as is the case in India. The risk here in India however is that
the borrowed funds are used for non-priority and unproductive expenditure.
More money is spent on doling out compensation to the relatives of the dead
people in a train accident than is spent on improving the infrastructure
so that accidents could be minimized or avoided. Such expenditure, goes
without saying, only fuels inflation and reduces funds for critical public
investment.
Peter Schiff accuses the U.S. government of camouflaging
the inflation figures. He has been tirelessly highlighting how the government
has been fiddling with the core CPI basket, and how it has been hedonically
adjusting the prices and transforming a 5% increase into a 3% decrease based
on a subjective assessment of quality improvement. My word, if Peter was
observing Indian politics and governance closely, his attack would be even
more scathing.
In India the government doesn't even show the true deficit
in the budget. According to an article by A Rangachari, "the budget is insulated
from the effects of oil price increases by issuing special oil bonds to
the oil companies to cover partly under recoveries of cooking gas and kerosene
subsidies payable by the Government (Rs 73,500 crore in 2006-07 and Rs 40,000
crore in 2005-06) and these are not shown as expenditure in the budget."
The gold bugs often joke about comments by the U.S. Finance
Secretary or the Fed Chairman, poking fun at their inane comments; all I
can say is they ain't seen nothing yet. They ought to listen to Indian politicians
on a daily basis if they wish to have the best of financial buffoonery.
Take for example the present Finance Minister; though he is worshipped by
the media here and abroad, he keeps coming out with statements which only
can result from a serious foot in the mouth disease. During May 2006 when
gold was on its path to scale glorious heights, this FM had a string of
meetings with officials to find out if international gold price was going
up because of hoarding by Indians.
Even a child knows that Indians can't hoard that much
gold to influence the international price. Even an Economics junior understands
that India, even though the largest buyer of gold in the world, is basically
a "price taker" and not a "price maker."
Recently the same Finance Minister urged various sectors
of business and industry to replicate the success achieved in the information
technology industry - without realizing that Indian success in IT was a
matter of luck, simply because when the boom came two decades back, Indians
were the only people who spoke English and were willing to work at a tenth
of the salary given to an American programmer. More luck came their way
when the Y2K scare pushed more and more work to Indian shores.
Fortune doesn't favour every time, and such a success
is impossible to replicate in other fields. In fact India is not even likely
to keep its software advantage beyond another decade. As more and more countries
gear up their younger lot is catching up fast with Indians. China is doing
everything to beat India at its own game. Millions of people are learning
English in China , thousands of students are coming to India to study software
technology and dozens of Indian companies are setting up shop in China to
teach them everything about IT and ITES. Reason enough why recently the
doyen of Indian software industry Narayan Murthy predicted that China could
catch up with India in the IT industry in five years.
"I do think China is running very fast to catch up with
India. Chinese are much more determined than we are. And already we are
seeing visible signs of progress by China in our industry," said Murthy.
His own company, Infosys, has major plans to expand operations
in China. It is right now using China as a development centre for their
global clients. In phase-II, they will enhance our focus on the market opportunity
in China from multinational companies. In phase-III, they will focus on
the Chinese companies. As anybody can understand, by the time all these
phases phase out, the doughty Chinese would have seized the software advantage.
While I don't wish to approve of the actions of Bush,
Bernanke & Co., I wish to highlight the fact that most of the governments
are mismanaging their finances and playing with the future of their populations.
No doubt Bush, Bernanke & Co. are to be blamed but let us not spare other
charlatans either.
Meanwhile, the presence of so many bogeymen simply means
extra bullish factors for gold. When people around the world ultimately
lose their faith in fiat currencies, they will realise that all are worse
than one another, and that there is only one currency which can't be debauched
by the governments, bureaucrats and politicians: gold.
Incidentally this will also prove the veracity of good
ole ' Greenspan's words: "In the absence of the gold standard, there is
no way to protect savings from confiscation through inflation. There is
no safe store of value."
Copyright ╘ 2006 Shailendra Kakani. All rights reserved.
June 9, 2006COSTS are rising everywhere for American
corporations, from energy to employee health insurance premiums. Yet in their drive
to cut expenses, most notably by moving factories and call centers to other countries,
they are overlooking the escalating cost of the executive suite. It's time to apply
market logic to this disturbing trend and begin outsourcing chief executives. This
measure would unlock tremendous value for shareholders.
So far, outsourcing manufacturing and services has led to higher chief executive
compensation, at the expense of shareholder profit. For example, I.B.M.'s chief
executive, Samuel J. Palmisano, who has been moving jobs to India, last year saw
his total compensation rise 19 percent to $18.9 million — even as the total return
for his company's stock fell 16 percent.
That's proof that globalization hasn't gone far enough. China, India and other
emerging markets offer shareholders a virtually unlimited talent pool from which
to draw chief executives. With an increased supply of candidates, a truly independent
corporate compensation committee would be easily able to hire superior leaders at
salaries and benefits that are a small fraction of what their American counterparts
in those fancy corner offices demand.
Several orders of magnitude separate the compensation of American and overseas
chief executives; the Federal Reserve notes that while a typical American
chief executive in 2004 got a compensation package 170 times greater than that of
the average American workers, in Britain it was 22 times and in Japan 11.
But there are several benefits beyond the immediate savings. Major American corporations
have been shifting their factories and labor force to China and India for some time
now. It would make sense for the chief executive of an American corporation to come
from, and be based in, those areas of the world where the potential for market growth
is the greatest. It would be reassuring to have a chief executive who understood
the local business practices, the country's cultural underpinnings and the language.
Also, given the importance placed on performing well in science and math in countries
like China and India, it would be more likely that an offshored chief executive
would have had a rigorous technical education instead of degrees in the "softer"
management disciplines that are common at American business schools. Critics may
question whether it is wise for an American company to have its chief executive
in Bangalore or Beijing. But this is the thinking of a bygone era. More and more
corporate chiefs say that they do not want their companies to be seen as American
anymore. Cisco's chief executive, John Chambers, has declared, "What we're
trying to do is outline an entire strategy of becoming a Chinese company."
Indeed, considering how the United States is perceived by the world these days,
this is just smart marketing. And installing a foreigner from a developing country
as chief executive would be a savvy move.
Other critics might point out that while a chief executive's compensation package
may be eye-popping to the average person, in terms of his company's total market
capitalization, it is really quite modest. This is an excuse, not a justification.
Current chief executive compensation creates what economists term a perverse
incentive. An American chief executive, who is paid an average of $11.3 million
annually, gets rewarded enough in one year to exceed the lifetime standard of living
of 99.99 percent of the world's population. Even if he's booted from his job because
of poor performance, he's set for life.
It is far better for shareholders to have chief executives whose compensation
packages are based on the long-term performance of the company. Or in plain language,
it is better to have a "hungry" executive instead of one who stays fat and happy
even when the corporate ship capsizes into the troubled waters of bankruptcy.
In addition to perverse incentives, the current level of chief executive
compensation creates opportunity costs. The money saved by hiring a cheaper executive
can be invested in even more offshoring initiatives. A virtuous circle of shareholder
profitability can be established.
Moreover, this would be a boon for management consultancies that can help companies
scour the world for chief executives. McKinsey and Booz Allen, take note, and take
outsourcing to its logical conclusion.
Lawrence Orlowski is an equity
analyst. Florian Lengyel is the assistant director
of research computing at the City University of
New York Graduate Center.
IBM has invested $2 billion in India in the past three
years. The $6 billion investment announced today will go toward the cost of
increasing its workforce, expansion of IBM's facilities in the country, and
projects such as education and health that the company is working on with the
Indian government, said Shanker Annaswamy, managing director of IBM India. IBM
did not, however, say how many additional people it will be hiring in India.
IBM's Indian unit is already the largest of any country outside the U.S.
As part of the investment, IBM is setting up in India the
first in a new kind of IBM service delivery centers that deploy processes and
technologies to automate IT services delivery, the company said. After the pilot
is complete, the technologies will be rolled out across other IBM service centers.
It is also setting up a Telecommunications Research and Innovation Center at
its lab in India. The new center will serve as a key resource for IBM's telecommunications
companies around the world, the company said.
India's exports of software and services such as call centers
and back-office operations totaled $23.6 billion in the year to
March 31, up by 33% from a year earlier, the National Association
of Software Companies (Nasscom) in Delhi announced Thursday.
Preliminary estimates released by Nasscom in February had indicated
that the growth in export revenue was 32%.
Nasscom is also upbeat about revenue growth in the country's
software and services industry for the year ahead. The country's
exports of software and services are expected to grow by 27% to
30% in the year to March 31, 2007, to a total of between $29 billion
and $31 billion, Nasscom said.
The domestic market for software and services is also projected
to grow by 20% on account of e-governance projects, and investments
in IT by the health care and retail sectors.
... ... ...
Of the total exports in the year to March 31, exports
of software and related services grew by 33% to $13.3
billion, while revenue from call centers and business
process outsourcing grew 37% to $6.2 billion. Engineering
services and product exports earned $4 billion, up by
27% from the previous fiscal year.
Revenue from software
and services delivered in the domestic market grew by
25% to $6 billion.
The country's software and services sector employed
1.3 million as of March 31, of which 930,000 were employed
in the export sector. Indirect employment by the software
and services sector was 3 million.
A few years back Boston-based FBI special agent Nenette Day busted a rogue
programmer in India who had stolen the source code to SolidWorks Corp's CAD
program. The sting, which took place in India, was a success in that SolidWorks
was able to recover its software. If you think the perpetrator is rotting in
jail, however, you'd be sadly mistaken.
The case is still dragging on in court, and it's unlikely that the defendant
will ever serve jail time due to weak laws, Day says. In the SolidWorks case,
which involved the theft of intellectual property valued at $750 million, the
perpetrator is free, walking the streets and working in another programming
job. He is unlikely to see any jail time.
Day provided an update on the SolidWorks case during a presentation last
week at the CIO Forum.
SolidWorks was lucky. Once the source code goes out the door it could be
posted on the Internet and at that point the damage is done. Prevention is key.
Nondisclosure agreements with offshore organizations won't help reduce this
risk because they have no legal standing in other countries. The only way to
contractually protect your intellectual property is to have the local outsourcer
bind employees to an agreement under local laws, says Day. But when the
laws are weak, she says, even these agreements provide little protection.
Day says before sending source code to a country companies should check what
laws are available to protect them - and whether they've been successfully used
by prosecutors. The prevalence of corruption in law enforcement can also stop
a case. In many parts of the world, for example, it's not uncommon for police
to refuse to help unless bribes are paid first.
To mitigate the risk of offshoring, Day says companies should use an offshore
partner with tight security practices and release only portions of the source
code at any one time so that the offshore programmers never have the complete
program.
It's also important to work with an offshore partner who will be committed
to working with local authorities to track down and prosecute any perpetrators,
should a loss occur.
Still another way organizations are migitating this risk is by offshoring
through a U.S.-based company like
Gap International Inc. in Springfield, PA. The consulting company has a
division in India where it hires local programmers as employees. While that
still won't prevent a disgruntled employee from trying to steal trade secrets,
you can bet that a company that can be sued in the U.S. is going to be
very careful. I asked Rich Rothman, director, what would happen if just one
disgruntled employee got away with a client's source code? "We'd be out of business,"
he said without hesitation.
"So in addition to being rigid and slow,
outsourcing also proved costly and an impediment to serving customers well."
When Diebold
said Wednesday
that it will take over--or more precisely, take back--an Oracle ERP implementation
and some additional IT-related functions, resulting in a financial charge and
an end to its contract with Deloitte Consulting, it didn't explicitly point
fingers or assign blame.
It's not a stretch, however, to read between the lines and conclude that
outsourcing failed in this case. Or at least, outsourcing failed to meet the
company's expectations. Diebold said in a statement: "This decision is designed
to provide the company with more control and flexibility over its IT operations
as well as the ability to accelerate its remaining ERP deployment."
Of course, outsourcing proponents often contend that hiring out IT gives
companies the flexibility to focus on "core functions" (a position that presumes
IT isn't a core function) and greater speed in deploying systems and achieving
business goals. But Diebold is saying, in effect, outsourcing wasn't fast enough
and didn't deliver the expected flexibility.
"Regaining direct control of our IT operations and ERP implementation will
allow us to expedite the process of realizing the long-term benefits of an enterprise-wide
information system," Diebold CEO Thomas Swidarski said in the company's statement.
"This strategic decision is critical to achieving the operational improvement
targets we have set as well as positioning us to be more flexible and responsive
in meeting the needs of our customers."
So in addition to being rigid and slow, outsourcing also proved costly
and an impediment to serving customers well. I've
argued previously
in this space that we will see more companies express dissatisfaction with outsourcing
as they turn over more functions to third parties.
What can we learn from Diebold? Efficient, effective IT is as much a part
of a company's financial success as quality products, good customer service,
and strong financial controls. That's not to say that outsourcing doesn't or
can't work, or that there's no place for outsourcing. But the view that
IT is a function that any third party can come in and take over, on a plug-and-play
basis, is naive and dangerous.It can also be costly:
Diebold will incur a 7-cent-per-share quarterly charge to terminate its contract
with Deloitte.
What's your view? Is this one in what will be a long line of failed outsourcing
efforts? Or is this an isolated case where reality couldn't meet expectations?
Please weigh in at my
Outsourcing is a source of stress, struggle and angst for many IT managers,
and no wonder: More than half of outsourcing agreements end up prematurely terminated,
according to a study released last year by DiamondCluster International Inc.,
a Chicago-based consulting firm. That leaves a lot of companies far from outsourcing
nirvana, but it doesn't have to be that way. We asked IT experts and veterans
to talk about the bad decisions and faulty assumptions that can cause your outsourcing
project to fall from grace. They came up with seven deadly sins.
1. Feeble governance
Vice: You assume that your organization will auto-matically fall into
a smooth working relationship with your outsourcing vendor. Three months later,
you encounter management snafus that seem to have come out of nowhere. One large
retailer outsourced a project that was supposed to take six months, but 18 months
later, the CIO was still waiting for results. Why? "There was no governance
plan other than a target for the end date," says Atul Vashistha, chairman and
CEO of neoIT Inc., a consulting firm in San Ramon, Calif. "If they'd had a governance
plan with milestones in place, they would have realized early on that targets
weren't being met."
Virtue: Before you sign with an outsourcer, nail down an organizational
structure, establish methods for keeping tabs on the work being done, and spell
out how you will manage the outsourced project on a day-to-day basis. "Your
governance system should provide continual feedback to the organization regarding
how the relationship is working, what value you are getting, how you are solving
problems that have cropped up," says Michael F. Corbett, executive director
of the International Association of Outsourcing Professionals in LaGrangeville,
N.Y.
Build the management costs into your budget. The average cost to manage an
outsourcing contract is 3% to 6% of the size of the contract, according to Julie
Giera, an analyst at Forrester Research Inc. in Cambridge, Mass.
2. Overblown expectations
Vice: You choose an outsourcing company for its ability to meet your primary
goal, but later the company falls short in other areas. For example, one of
Europe's largest manufacturers was so eager to trim expenses that it negotiated
an outsourcing contract purely on cost. As the project progressed, the manufacturer
complained that the outsourcer wasn't innovative enough. How bad was it? Less
than two years after signing the contract, the manufacturer terminated the agreement
-- a move that carried a steep price tag in penalties and legal fees.
Virtue: Don't even approach a service provider until you have prioritized
what you expect to achieve by outsourcing. If you're shopping based on cost,
you may have to give a little on service level. Keep in mind that a cost-based
contract might be appropriate for standard services like infrastructure management
but not for specialized skills such as application development. "You don't necessarily
want the cheapest brain surgeon," says Giera.
When considering vendors, look beyond the sales pitches. "People select suppliers
based on marketing and size rather than a true capability evaluation," says
Vashistha. He suggests that you focus on the location where the work will actually
be done. Ask the vendor about its resource pool. Are its employees experienced
in your industry? Do they have the appropriate technical skills? How much training
does the vendor provide? Talk to clients that the vendor has served from that
location for at least 12 months.
3. Blindly banishing projects
Vice: You have offshored critical areas of your business to overseas suppliers
that are inexperienced in your field or otherwise ill-equipped to handle the
task, and customers are up in arms. For example, after Dell Inc. outsourced
its technical support to offshore providers, the company was inundated with
complaints from U.S.-based customers who reported that they couldn't understand
the service providers because of their accents. Dell had to move a chunk of
its technical support services back home to Texas.
Virtue: Use common sense and send projects offshore only to countries where
your industry is mature. India and the Philippines, for example, while good
choices for services like health insurance data entry, are poor choices for
jobs that require decision-making related to health insurance, says Vashistha.
That's because in-depth knowledge of the field is still scarce in those areas.
"Health insurance wasn't prevalent even 10 years ago in those locations," he
says.
Keep in mind that offshore projects cost more to manage than projects that
are sent to domestic outsourcers. That can make small projects especially costly
to send offshore. "A lot of people look at the money they'll save per hour but
ignore that they'll probably have a 20% to 25% increase in administration costs,"
says Rich Hoffman, president and CEO of Hyundai Information Services North America
LLC in Fountain Valley, Calif.
4. Dumbly disowning projects
Vice: You've outsourced so much of IT that your outsourcer knows almost as
much about your customers, your products and your industry as you do. According
to Hoffman, the IT department of another major automotive manufacturer recently
realized that it outsourced too aggressively and is now trying to rehire nearly
150 former employees who went to work for the outsourcer. "When they outsourced
all of those people, half left because they didn't want to work for an outsourcer,
and the other half ultimately got transferred by the outsourcer to other companies,"
he says. "So they lost all the people who knew their customers, products, the
automotive industry and business processes."
Virtue: Don't outsource functions that require you to provide outsourcing
vendors with strategic information about your company and your industry. Also,
Hoffman advises keeping most of your internal help desk activities in-house
and discouraging other business units from outsourcing customer-facing activities.
You will have more control over which processes get outsourced if you insist
on being involved in all discussions about outsourcing. "Run an analysis ahead
of time, and get a consensus with business leaders about what must stay in versus
what must go out," says Hoffman.
5. Bad assumptions
Vice: Your five-year outsourcing contract failed to take into account
that technologies and business requirements would evolve within those five years.
Now you can't move forward with new technologies. Giera notes that because of
changes in server technology, for example, many companies will need fewer, but
larger, servers down the line. If your contract is based on a per-server, per-month
formula, you may not be able to change that without being penalized financially,
she says.
Virtue: Write a contract that gives you the flexibility to reprioritize
projects and resources without a major penalty.
"Technologies change so fast and the needs of clients change so fast, most
parties should go into the contract expecting that after the first two years
there is a pretty high likelihood that they'll have to renegotiate the contract,"
says Robert M. Finkel, an attorney at Milbank, Tweed, Hadley & McCloy LLP in
New York.
Also, be sure the contact compels your outsourcer to keep costs in line as
the market evolves. "Include benchmarking clauses every two to three years so
that you can look at what's gone on in the market and make sure that the outsourcer
is still competitive," says Giera.
6. Sloppy service levels
Vice: You've signed a contract that gives you minimal leverage on service
levels. Now the outsourcer's poor service is interfering with your business,
but you've got nothing to back up your demands for improvements.
Virtue: Define service levels in the contract and stipulate penalties for
missed service levels. Having the service levels in hand not only helps ensure
that you get the quality of service you expect, but it can also help when negotiating
the contract's price tag. "It's hard to fix a price without knowing what the
service levels are," says Finkel. But he says that it's not uncommon for vendors
to want to wait until after the contract is signed before agreeing to specific
service levels. That takes away your leverage and makes it less likely that
you will reach a satisfactory agreement.
The penalties should escalate based on how frequently service levels are
missed and how much the resulting disruption affects your business. "You shouldn't
have penalties for one miss, but the penalties should get exponentially larger
the more frequently a service level is missed," Giera says. And your contract
can stipulate that you have the right to terminate or take back part of the
service that the vendor is providing if the number or severity of the service-level
problems reaches a certain point, Finkel says.
7. End-game myopia
Vice: You didn't include a transition plan in your contract. Now,
as it draws to a close, your efforts to move to another outsourcer or bring
the work in-house are stymied. An even worse case: Your outsourcing relationship
ends abruptly. One of Giera's clients, a midsize manufacturing company, outsourced
all of its payroll functions to a firm that suddenly went out of business. "My
client couldn't pay its hourly workers on time that Friday. There were no provisions
in the contract to get the data and employee records back, so they had to go
to a manual payroll system," she recalls. The manufacturer ultimately spent
eight months rebuilding its payroll system, including manually reconstructing
tax, unemployment insurance and benefits records.
Virtue: To minimize disruptions to your business, make sure your contract
calls for the outsourcer to be involved with the end-game transition. "Otherwise,
what's the incentive for the vendor to help you?" says Finkel.
Your contract should stipulate that you may offer jobs to people on the outsourcer's
staff who have developed knowledge critical to your company. You should also
be able to buy at a reasonable price the hardware and software that your outsourcer
is using on your behalf. In addition, be certain that the contract gives you
usage rights to any software that the outsourcer develops for you.
And be sure to give yourself enough time to make the transition. "When you
terminate an outsourcing contract, you'll probably need more time than you think,"
Giera says. "Specify in the agreement that you can extend the agreement with
appropriate notice at your existing terms, conditions and price for up to 90
days."
Artunian is a freelance writer in Newport Beach, Calif. Contact her at
jartunian@sbcglobal.net.
Information Week Editor's Note: Analyzing The Outsourcers
As a researcher at InformationWeek, I have the
opportunity to read a lot of research. Most of the outsourcing research
that passes through my E-mail pertains to job loss or the employment implications
of outsourcing on IT careers. In fact, with the release of our National IT Salary
Survey, there was an
article
devoted to just this topic. But the goal I've been tasked with is to determine
how successful outsourcing partnerships are, and which outsourcing vendors are
truly helping customers meet goals and save money. And it was you, the readers,
who set this goal. We've had many requests to revisit our
Analyzing the Outsourcers
research, last conducted in November of 2004.
Back then, InformationWeek Research conducted a survey of more than
300 IT professionals, all customers of various outsourcing firms. We asked those
IT professionals about their outsourcing plans, spending plans, and satisfaction
with their providers.
We've just started fielding an updated version of this research and would
like any and all customers of outsourcing vendors to sign on and
weigh in
about your partnerships.
While most would consider data two years old to be ancient history, some
of the results from the previous wave of this research are still thought-provoking:
In 2004, nearly three out of five companies were spending $1 million
or more on outsourcing, and a quarter were spending over $10 million. Contrary to popular belief, most of these dollars stayed onshore. For every dollar spent with outsourcers, an average of 76 cents stayed
in the United States, 5 cents went to Mexico/Canada, and 19 cents went offshore.
How does this spending compare to outsourcing spending in 2006? Give us
your input.
Outsourcing is often a way for companies to find expertise not readily
available within the organization. This is why nearly half of organizations
surveyed in 2004 reported that operational expertise was the most important
factor driving companies to outsource. Tell us
why
your company outsources.
Outsourcing customers were generally satisfied with their outsourcers,
and seven out of 10 companies stated their outsourcing relationship met
or exceeded expectations.
Rate
your outsourcing vendors.
Now it's your turn. Check out
my blog
and tell me about your organization's outsourcing successes and challenges.
Even better, participate in our
2006 Analyzing the Outsourcers
research. Not only will you be heard by your vendors, but you'll also get a
free copy of the results.
The world is suddenly faced with a new economic policy dispute: national
governments questioning the benefits and wisdom of cross-border mergers and
acquisitions, versus the imperative of economic globalization relentlessly pushing
such restructuring in the name of productivity and cost-cutting. The depth and
importance of this battle is not widely understood, despite its obvious importance
for the future of globalization.
The battle lines are visible both in Europe and in the US, and beginning to
be seen in Asia. After the implementation of the single European market in 1993,
the Europeans reaped considerable benefits from economies of scale, and restructuring
of the continent's enterprises was the next logical step. A truly European industrial
structure, it was argued, should replace the out-of-date structure tailor-made
to individual national markets but not the large and now-single European market.
Consolidation got off to a promising start. A wave of mergers and acquisitions
improving productivity swept through the individual European nation-states.
But cross-border mergers and acquisitions - which promised the largest efficiency
benefits - proved a harder nut to crack. Admittedly there have been some European
cross-border mergers and acquisitions, but not nearly to the extent hoped for;
and the apparent European lag in productivity compared to the US has been partly
ascribed to the lack of European restructuring.
Recently, several proposed deals have run into crossfire from national governments
in Europe - for example, the plan by Italy's ENEL to purchase France's Suez;
a planned merger of German energy and environmental giant E.ON and Spain's Endesa;
the Indian global steel giant Mittal's attempt to purchase Luxembourg-based
Arcelor, itself one of the most prominent results of cross-border European mergers;
a prospective union of Italy's Unicredito and Germany's HVB; and a merger between
the Dutch bank ABN AMRO and Italy's Antonveneta. That's not to mention the French
government's uproar last summer when rumors circulated that Pepsi planned to
buy the French food giant Danone.
In the US, the China National Offshore Oil Corporation (CNOOC) was not allowed
to buy the oil company Unocal. Chinese PC manufacturer Lenovo managed to get
the green light to buy IBM's computer division, but only after a hard struggle.
And now opposition has seemingly revived with the uproar over the State Department's
purchase of 16,000 computers from a Lenovo/IBM wholesaler. An upcoming case
is the French telecom giant Alcatel's bid for Lucent, where the delicate point
is Lucent's defense and intelligence-related activities for the US government.
A political majority in the US Congress threw a spanner in the works for what
the Bush administration thought was a done-deal purchase by a Dubai-based company
of a firm running US ports, when commentators and politicians began to question
the wisdom of allowing container ports to be managed by a company based in the
Arab Middle East.
A deeper analysis reveals three motives that threaten not only restructuring
of global industry but globalization itself.
First, the fear of losing jobs and income has jumped from blue-collar workers
(factory workers) to white-collar workers with a higher education. Globalization
implies that no job is 100% safe. Education, skills and even performance do
not protect jobs from outsourcing. Politically, that makes a difference,
because white-collar workers have a potentially stronger political influence
than their blue-collar counterparts. They know how to play the political game,
because they form part of the political elite. Opposition from their
side to globalization is thus far more dangerous for globalization than resistance
from blue-collar workers and trade unions. White-collar workers used to be the
elite troops of globalization. For them it was almost entirely beneficial: no
risk of losing jobs, but considerable gains from lower consumer prices. Now,
these professional workers suddenly realize that their jobs may also be in danger,
and they are reacting similarly to the way the blue-collar workers and the trade
unions did. If this trend continues, globalization may lose some of its most
vocal supporters.
Second, governments worry about cross-border restructuring not because
of the potential loss of jobs, which is manageable, but because of the potential
loss of brainpower. After a merger, the purchasing company is not generally
inclined to run duplicate planning staffs, strategic offices, research and development
branches, financial headquarters, etc. These activities of vital importance
for the future of the company must be concentrated in one or at least a few
places to reap the benefits of interaction. And in cross-border mergers,
it is highly doubtful whether the 'brains' of the purchased enterprise will
stay in its original home country. Thus, the loss for this county becomes
twofold. First, it loses the brainpower of the purchased company. Second, it
loses the benefit of other companies either having or planning to establish
brainpower to interact with the existing one now on its way out. Any ambition
of creating an "industry cluster" or building up a high-performing group of
enterprises can be swept away.
The government's position to fight to keep brainpower is logical - it cannot
be brushed aside, labeled as old-fashioned protectionism pursued by people who
don't understand the imperatives of globalization. It goes deeper than that.
The coalition between white-collar workers switching their political view from
staunch supporters of globalization to skepticism and governments strongly motivated
to keep brainpower at home augurs a potentially formidable and acute threat
to globalization.
The third motive is national security. After the end of the Cold War the most
serious threat to developed, Western countries disappeared. Instead, terrorism,
infectious diseases and international crime pose a threat against not the nation
but the well-being of our societies. If and when a cross-border merger
and acquisition is perceived as a security threat, the politicians slam on the
brakes, and after having stimulated the awareness in the population
over precisely this kind of threat, find it difficult or political inopportune
to run any risks. This explains the Dubai case and also explains why the first
reaction to the Alcatel/Lucent case was the raising of questions over national
security, pointing out that Lucent is a provider of high-tech weapons and intelligence-gathering
systems at the heart of the US defense system.
What are the implications for Asia of this new pattern of behavior? The
new skepticism over cross-border mergers is emerging precisely at the moment
when many of Asia's largest and most vibrant companies plan to go multinational,
and many of them look at mergers and acquisitions as the right way to obtain
the expertise and management know-how they need. CNOOC's failed attempt
to purchase Unocal, in this light, may be considered an ominous sign. If the
Europeans and Americans start to put the brakes on, Asia may end up as the big
loser, finding its easiest route into the big leagues of multinational enterprises
full of obstacles or, in the worst case, entirely blocked.
A warning shot has been fired. If the momentum of globalization is to be maintained,
both business leaders and politicians must understand the underlying fear driving
opposition to cross-border mergers and acquisitions. Even more, they must find
ways to deal with that fear and anxiety to ensure an equitable distribution
of globalization's benefits, as developed-country economies transition from
a manufacturing base with threatened blue-collar jobs, to a service or IT economy
with white-collar jobs under fire.
Joergen Oerstroem Moeller is a Visiting Senior Research Fellow at
the Institute of Southeast Asian Affairs in Singapore, and an Adjunct Professor
at the Copenhagen Business School.
[Apr 15, 2006]
http://callcentermovie.com
a
good 12 minute film about call centers outsourcing. Some black humor and stereotyping
but a couple of episodes are extremely funny.
While I work in a USA call center....
the callers where pretty true to form. Even poor Debbie.... who I don't
answer calls from... seemed to be a person who must work with me somewhere
in the building.
For those of you that didn't get the joke? Well you have either
A. not been outsourced yet
B. do not work in a call center
C. do not understand that somewhere in a land foreign to your heritage they
are making movies of YOUR particular stereotype and laughing like hell.
Very creative and funny. Of course I am sure many realize its really
a parody of a call center and the vision many Americans have of an Indian
Call Center.
For those who are upset at this, realize that its really a movie playing
to the stereotypes of Americans and Indians.
Hilarious and Funny but pictured very seriously. The ending (Comp
U Serve) was most punching than any other blockbuster movie. Well
Done the whole Crew.
On flip side, somewhat gives negative feeling on call centre outsourcing
market, if taken seriously.
However, Take it for FUN people! No serious intentions found.
Date:
3/27/2006, 3:46 pm, EDT
Name:
Erik
Number:
100
This was a great movie. I work with
customer support myself, and had a great laught watching this movie
with my colleagues! We're all really looking forward to your next
movie!
'Blessed are those who can laugh at themselves, for they shall never
cease to be amused.' -- Anonymous
Some of the best comedy comes from the worst pain. This film had
me laughing so hard at points that it hurt. But some of the people
posting on here just need to lighten up. Political correctness is
the worst type of censorship there is no matter what country you
come from or call your home. This was one of the things that used
to make the United States such a great place: the ability to laugh
at ANYTHING. Sadly, it is becoming a thing of the past. That's why
it's a pleasure to see such a smart, witty, and well-made movie
such as this one. Keep up the good work
Date:
3/23/2006, 11:45 pm, EDT
Name:
Aisha
Number:
89
And just to add...I do not think
it shows India in a poor light at all. They do customer service
better than most Americans. Their English is better as well!
Date:
3/23/2006, 11:43 pm, EDT
Name:
Aisha
Number:
88
I work in the call service industry.
And from a customer service and supervisor perspective, working
out of my home...this movie is DEAD ON. And hilarious. I loved it.
Right down the customer attitudes and the things they said, it had
me in stiches. Awesome.
