>>> [EMAIL PROTECTED] 07/29/03 11:00AM >>> > I just found an article on Counterpunch by Standard Schaefer that > deals with this topic: > http://www.counterpunch.org/schaefer07262003.html
Here's an article from the corporate IT manager point of view, about how to spin in for your employees as you send high-paying jobs overseas. Taboo: Companies going offshore to outsource IT need to learn how to talk about this increasingly sensitive subject By Mary Hayes, InformationWeek July 28, 2003 URL: http://www.informationweek.com/story/showArticle.jhtml?articleID=12800945 Jim Honerkamp, CIO at building-materials company Clopay Corp., knows his decision to outsource two-thirds of the company's technology work, including sending database administration to contract programmers in India, infuriated some of his staff. "IT people went to human resources and said I was destroying the department," he says. "And one time someone asked what kind of car I drove. I think the intent was to flatten my tires." Yet Honerkamp has no regrets. Clopay executives decided years ago to outsource tasks that aren't core to the company's mission, and it's Honerkamp's job to implement that strategy in IT. "Would my boss hesitate to take me out and replace me with a more-effective way to get my job done to make the business more profitable? No, he wouldn't," Honerkamp says. "If I hire a very talented Oracle developer, but that developer is going to charge me three times what I'd pay offshore, then I will not measure up." >From a social perspective, Honerkamp says offshore outsourcing bothers him a bit. >"But then again, what do you do?" he asks. Clopay employees complained to human resources that CIO Honerkamp was destroying the department by having IT work done offshore. Photo by Bob Stefko Honerkamp isn't unusual in his concern about the tension and backlash that comes from sending jobs overseas. Where he's exceedingly rare is in the blunt honesty with which he's willing to discuss it. The movement of a portion of high-tech jobs from the United States to cheaper labor markets in India, China, Eastern Europe, and elsewhere seems irreversible. Analysts say it's a vital strategy on which companies will depend to stay competitive. Yet many business-technology managers are uncomfortable discussing offshore-outsourcing decisions with people outside their companies, a fact that may contribute to their doing a poor job of communicating those plans internally. But they'd better learn to talk about the issue. The difficulties of discussing offshore outsourcing with employees may soon pale in comparison with the impact of the political and social debate that's brewing. At issue is the cost offshore outsourcing extracts in terms of American jobs and the U.S. economy. And outsourcing isn't the only concern: The practice of bringing lower-cost foreign technologists into the United States on work visas also faces scrutiny. Unemployed technologists and other white-collar workers who oppose offshore outsourcing are increasingly vocal and organized, and in recent months, members of Congress have introduced bills that could crimp the conventional offshore-outsourcing model by limiting foreign work visas or giving tax breaks to companies that keep jobs here. Executives considering offshore outsourcing need to monitor the political issues, and those who decide to go ahead must be prepared to articulate why it's so important. The rancor over offshore outsourcing isn't only changing how executives need to talk about the issue, it's also changing the nature of the risks involved with sending work abroad. "Whenever we assessed the risk of offshore outsourcing for clients, it came in the form of, 'If you move your cash flow and transaction processes to India, and India has [political upheaval], what will it do to your business?'" says Eduardo Alvarez, a VP at consulting firm Booz Allen Hamilton. "Now there are perceived risks in the [U.S.] market. What will the market backlash be to a consumer company if it moves its business overseas?" Booz Allen Hamilton co-sponsored an outsourcing conference last month at the Waldorf Astoria in New York that included discussion of moving jobs overseas. As the business-technology execs arrived at the hotel, dozens of protesters accosted them. "It surprised people," Alvarez says. "It made them think about proceeding with their eyes open." Joe Drouin, CIO at TRW Inc., sees the changing mood. TRW has a 600-person IT staff supplemented with 40 contract employees in India. The auto-parts company hired Indian IT-services firm Satyam Computer Services Ltd. three years ago, "but only in the last five or six months have I heard negative feedback [about offshore outsourcing] in the press and personally," Drouin says. The pressure won't change his staffing formula, but changes to U.S. policy could. "Unless the government steps in and makes the whole notion of offshore outsourcing less promising financially, we're committed to it," he says. "But there has been a lot of talk about taxing it and all of the kinds of stuff government could do to protect U.S. jobs." Drouin and Clopay's Honerkamp say they haven't laid off U.S. employees; work sent overseas replaced open and new positions. In Clopay's case, most of the IT jobs that have disappeared in recent years went to U.S. services companies at which Clopay employees were offered jobs. Its contract for Indian workers through services firm Sierra Atlantic is relatively new. Drouin and Honerkamp haven't had to deal with any outsourcing controversy beyond their companies' walls. But a few companies, particularly those that replaced U.S. workers, have been stung by the backlash. Their experiences illustrate why some companies say little, if anything, about their outsourcing plans. On April 17, Kevin Flanagan was let go from his job at Bank of America's Concord, Calif., division. Later that day, he committed suicide, shooting himself in the parking lot. His father, Tom Flanagan, says his son, a software developer with seven years at the bank, was troubled because his job was being sent overseas. "He knew for a year that Bank of America was dumping programmers and tech people, and he knew it was coming," the elder Flanagan says. "And he knew people from India were brought into his building and trained to do his job and sent back to New Delhi." For a smart, hard-working 41-year-old man to take his life, there must have been troubles beyond the loss of a job, Flanagan acknowledges. And as a former manager and engineer himself, he understands that companies need to cut costs and please shareholders. What's more, Kevin got a generous severance package from the bank. Still, several groups have latched onto the younger Flanagan's suicide as an example of what happens when a company sends jobs overseas. A Bank of America spokesman declined requests for interviews for this story. Bank of America isn't alone in its reluctance to talk. About a dozen large companies known or believed to use offshore outsourcing, including Best Buy, General Electric, and Nationwide Financial, declined comment or didn't return phone calls. Customer conferences hosted by Indian IT-services companies are often closed to the media at the request of the business clients attending. Indian IT-services providers such as Infosys, Satyam Computer Services, Tata Consultancy, and Wipro have difficulty convincing customers to talk to the press; U.S. IT-services companies face far less resistance. If it were just a reticence to talk to the press, the issue wouldn't matter much. But the growing debate will make offshore outsourcing increasingly important to two groups that companies care most about--shareholders and customers--and one they'd just as soon avoid--politicians. Atul Vashistha, CEO of NeoIT, a company that helps U.S. businesses find overseas contract-services firms, sees clients becoming reluctant to make their offshore-outsourcing plans public and putting more thought into how they communicate their plans inside their companies. They can't afford to keep under wraps a key piece of their business strategy. "If senior managers aren't explaining [their offshore-outsourcing strategies] to everyone in the company--and their customers--they're making a mistake," Vashistha says. Another reason companies should make outsourcing plans public is that their shareholders need to know how they're spending and saving money, Vashistha says. He predicts that within five years, outsourcing will consume a third to a half of many companies' IT budgets. That's too big a number not to make it part of the strategic discussion with shareholders. Today's economy intensifies the tension, since workers replaced by offshore outsourcing often have trouble finding new jobs. It's those unemployed workers who keep the political pressure on. John Bauman, president of the Organization for the Rights of American Workers and an unemployed IT consultant, says the nonprofit group, which is funded by its members, has a database of 3,000 professional technologists, 1,200 of them unemployed. It's gradually taking on a more activist role, staging protests and lobbying politicians. "Will we be able to convince companies [not to send job overseas]? Maybe through laws," Bauman says (see sidebar story, Politics: Lawmakers Jump Into The IT-Jobs Debate). Perhaps the greatest risk companies face in trying to keep their offshore-outsourcing plans a secret is sinking morale among remaining employees. TRW's Drouin wasn't concerned about publicity, but he still wishes he'd done a better job communicating the company's offshore strategy with employees. Company executives didn't spell out clearly what Satyam would do and what work would stay with in-house staff, Drouin says. "Because we didn't do that, everyone was worried about whether their job was going away." Now that the relationship is clear, TRW employees are more trusting of it. In today's political and economic climate, decisions to outsource abroad come with a whole new set of communication challenges along with the everyday operational risks. Ignoring the challenges won't make them any easier to overcome. Next week: How to avoid offshore-outsourcing pitfalls
