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BPO Journal

Friday, February 24, 2006

The Truth on Offshoring

In a study released yesterday by the Association for Computing Machinery, a task force of computer scientists, social scientists, and labor economists from around the world took a hard look at the forces shaping the migration of jobs worldwide in the computing and information technology fields. Prior to this effort, no study has looked at offshoring on a global scale.

Myths were debunked. While you can read the study in its entirety at the ACM website, here's a quick look at the key findings and recommendations - each of these areas is explored in detail in a chapter of the report:
  1. Globalization of, and offshoring within, the software industry are deeply connected and both will continue to grow. Key enablers of this growth are information technology itself, the evolution of work and business processes, education, and national policies.
  2. Both anecdotal evidence and economic theory indicate that offshoring between developed and developing countries can, as a whole, benefit both, but competition is intensifying.
  3. While offshoring will increase, determining the specifics of this increase are difficult given the current quantity, quality, and objectivity of data available. Skepticism is warranted regarding claims about the number of jobs to be offshored and the projected growth of software industries in developing nations.
  4. Standardized jobs are more easily moved from developed to developing countries than are higher-skill jobs. These standardized jobs were the initial focus of offshoring. Today, global competition in higher-end skills, such as research, is increasing. These trends have implications for individuals, companies, and countries.
  5. Offshoring magnifies existing risks and creates new and often poorly understood or addressed threats to national security, business property and processes, and individuals' privacy. While it is unlikely these risks will deter the growth of offshoring, businesses and nations should employ strategies to mitigate them.
  6. To stay competitive in a global IT environment and industry, countries must adopt policies that foster innovation. To this end, policies that improve a country's ability to attract, educate, and retain the best IT talent are critical. Educational policy and investment is at the core.
In essence, globalization and offshoring are inevitable. They're not the threat they're made out to be. However, leveraging this global information technology field will require deep grounding in the fundamentals of computing, new knowledge surrounding business processes and platforms, and a deeper understanding of the global community in which work will be done. The educational systems that underpin our profession will need to change.

Like the study concludes, "the future of IT is exciting, but it is a future very different from the past, and even from the present".

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