Softpanorama (slightly skeptical) Open Source Software Educational Society

May the source be with you, but remember the KISS principle ;-)

IT Offshoring Skeptic

(Critique of excessive enthusiasm in "software development offshorism" and research materials to the paper
A Slightly Skeptical View on IT Offshoring)

This is a page that contains research materials to the article: A Slightly Skeptical View on IT Offshoring

Offshore software development and, to lesser extent, moving to software maintenance oversees creates complex and expensive to resolve and contain problems that are usually swiped under the floor in the quest for quick buck. In all cases, but especially in "Total Offshoring" cases, those problems tend to increase with the age of the relationship.

 

Outsourced News ;-)

[Aug 28, 2008] IT workers hit hardest by offshore outsourcing, survey findsBy Patrick Thibodeau

August 28, 2008 | Computerworld

Jobs most at risk for offshore outsourcing are computer programming, development

As many as 8% of IT workers have been displaced by offshore outsourcing, either through job loss or an involuntary transfer to a new job by their employer, which is twice the rate of workers in other occupations, according to a study based on data collected from some 10,000 people, which may be the largest survey of its kind.

The survey, conducted by researchers at the New York University Stern School of Business and the Wharton School of the University of Pennsylvania, also backs up the long-standing view that IT employees in purely technical jobs -- computer programmers and software developers who have little customer interaction -- are at the most risk from offshore outsourcing.

... ... ...

The job site Careerbuilder.com funded the research, which looked at a spectrum of occupations, including technology, and published initial data from the survey in April. But the 44-page paper, posted this week on the Social Science Research Network (registration required) analyzes what the data is saying about the fate of high-tech workers who have been directly affected by offshore outsourcing.

... ... ...

IT workers concerned about displacement "can focus on further developing these interpersonal skills, or may find more robust long-term careers in IT professions that involve significant face-to-face interaction such as those involving cross-organizational process change or hands-on support functions," the report's authors wrote.

Since IT workers have been more severely affected than other types of workers, Tambe and Hitt argue that policy-makers could focus on tech workers to provide help, including job training and government compensation to offset wage losses. Educational institutions will have to react as well, with "increased emphasis on the development of interpersonal and management skills within the IT curriculum."

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[Apr 26, 2008] IT Commandment Leave the ideology to someone else Rational rants ZDNet.com by Paul Murphy

February 21st, 2006  | Managing L'unix

About two o’clock in the morning, I heard Bukowski’s publisher talking about the New Formalists, a group of poets that wanted to take poetry back to the strict forms, such as sonnets and metered verse, alledgedly because they were offended by the likes of Bukowski’s rude honesty in free verse.

... ... ...

"As the spirit wanes, the form appears," Bukowski had written...

Our IT Commandments:

1. Thou shalt not outsource mission critical functions
2. Thou shalt not pretend
3. Thou shalt honor and empower thy (Unix) sysadmins
4. Thou shalt leave the ideology to someone else
5. Thou shalt not condemn departments doing their own IT
6. Thou shalt put thy users first, above all else
7. Thou shalt give something back to the community
8. Thou shalt not use nonsecure protocols on thy network
9. Thou shalt free thy content
10. Thou shalt not ignore security risks when choosing platforms
11. Thou shalt not fear change
12. Thou shalt document all thy works
13. Thou shalt loosely couple

[May 14, 2007] Slashdot Analysts Call IBM Layoff Estimates Hogwash

[May 14, 2007] Slashdot IBM to Lay Off Half of Global Services Division

Re:Thanks Cringely

(Score:5, Insightful)

by MightyMartian (840721) on Friday May 04, @05:08PM (#18995031)
(Last Journal: Tuesday March 13, @03:39PM)

It's true of most corporations, but most certainly true of IBM that management never get touched. They really only did a management purge once that I'm aware, back in the early 1990s, and that was just middle management. It's a general rule that the incompetent CEOs get to completely fuck over the company in every possible way before someone finally figures out that they shouldn't be left alone to manage a Dairy Queen never mind a multi-billion dollar company. Part of that fucking up is to fire a good portion of your workforce, outsource them to India, demoralize the remaining workforce, have your projects then seriously compromized, your customer satisfaction go down the tubes and then watch a stagnant or downward-pointed share price now start some sort of nasty nose dive. Finally the board and the shareholders get all pissed off, fire you (which means paying you millions to vacate your office), and you head off to some other company and start fucking them over.

Re:Thanks Cringely (Score:5, Insightful)

by Thangodin (177516) <elentar@sym p a t i c o.ca> on Friday May 04, @11:29PM (#18998627)
(http://tachyphrenia.blogspot.com/)

Of course, massive layoffs never work. There are two kinds of employees--politicians and workers. The workers are too busy to see the boom come down, so they are the ones who get laid off. The politicians keep their eyes on the politics of the company, which means that they don't really have time to get much work done. They are really good at looking good--but not very good at actually getting work done.

Each time you downsize, you cut a disproportionate quantity of productive employees. Think of it as a crash diet; you waste muscle and increase the percentage of fat. This is why crash dieting is a good predictor of future obesity. It's also why companies that go through this binge/purge cycle become less and less competitive with each cycle. Look at Ford, GM, and Chrysler. How many times have they done this? My, now there's a success story... Re:Thanks Cringely (Score:5, Informative)

by dreethal (985821) on Friday May 04, @04:15PM (#18994049)

It's true. I'm soon to be out of my job at the end of the month, as well as the rest of my team (IBMers and (Perma-Temp) Contractors. My account was slated for transfer to Brazil in January and the talks started before that. We were expected to train our replacements who have basically been warm bodies. They're not even particularly talented. The rest of IBM Global Services is going the same way. So this is a VERY real thing. I was hoping to get hired on this year to IBM from being a contractor and that's shot. I'm just concerned given the massive offshoring that's occurring and how much this WILL impact IT. The displacement of this many workers is still going to have quite an impact on IT.

IBM has also implemented LEAN in effort to cut their IBM'er workforce in response to offshore outsourcing, which ironically is the very thing they're doing themselves. The survivors, although being survivors might mean they sorta wished they weren't. It's seriously bad.

I'd suggest not touching IBM with a 10 foot pole. They're calling this the wave of the future... if they want to turn IT into something equated as fast food. That's the dream they're going for.

Check out http://www.ibmemployee.com/ [ibmemployee.com] . They have more news on the matter.

The sad part about the whole thing is that I enabled this to happen. I've spent my time there since day one migrating dying backup environments from Veritas Backup Exec and ArcServe IT to TSM and the resulting clean-up work. I am massively disappointed.

Anyone need a Arcserve / Veritas / Tivoli Storage Administrator ?

but... (Score:5, Interesting)

by Junta (36770) on Friday May 04, @04:18PM (#18994129)

That's the publicly announced ~1500 or so, it does not confirm a 40% US workforce layoff. 40% would be a ludicrously desperate move for a company that at worst is described as stagnant, not exactly in trouble. When you aren't announcing any losses, just less-than-awesome gains, it doesn't make sense to just cut out that much in as short a period as a year. IBM is topheavy and I definitely agree that the management is the bulk of the problem (not only *way* too many of them, but they are also more highly paid than the technical people who do real work), and so I wouldn't be surprised if a couple thousand more get screwed over the year, but 40% would be the dumbest thing and I think even shareholders would see it as a detrimental, stupid move.

One problem they do seem to have is startup envy. They see a company come out of nowhere and achieve great fame and a sizable market cap, and wonder why they can't achieve the same percentage growth. The obvious answer (that IBM's market cap is overwhelmingly huge already, nowhere to really go) doesn't seem to occur to them.

Let's be (Score:5, Interesting)

by Daishiman (698845) on Friday May 04, @05:04PM (#18994979)

Let's be honest here. I work in Global Services in South America. A lot of the accounts were way overstaffed and the people there were not exactly the best and brightest yet still getting 80K+ a year. I'm not a senior sysadmin by any stretch of imagination, but it can be seen from all 5000 miles away that my American counterparts are in no way superior to many of the seniors that I work with who have 10+ years of experience managing servers in environments where there's less money and you have to be more inventive to solve problems, and who've had to face even more difficult economic situations

Many accounts are overspecialized and action is held back by massive bureaucracy. Despite everything, my pet theory is that IBM simply can't support its massive managerial structure divided by a million differente criteria -accounts, competencies, etc.- , eventually it had to give way.

Sun did the same trick a few years ago (Score:3, Interesting)

by Anthony (4077) * <adavid@adavid.com.au> on Friday May 04, @07:36PM (#18996917)
(http://adavid.com.au/ | Last Journal: Monday January 01, @06:57PM)

Laid off a large bunch of their Professional Services staff here without informing their customers. The customers pulled out the signed contracts asking who was going to fulfill them. By the time the dust settled, Sun had either lost a lot of people to other companies or had to hire the sacked staff back on at higher contract rates to fulfill the obligations.

Let Me Tell You How it Actually Works (Score:5, Insightful)

by Greyfox (87712) on Friday May 04, @04:30PM (#18994349)
(http://www.flying-rhenquest.net/)

Lets say you've got small project A. Small project A has 5 or 6 guys working on it. They've been working on it for years, wrote a good bit of the underlying system, know everything about it and can generally tell you exactly where the problem is if you call them with a problem.

Now you fire all those guys and hire a bunch of guys from Brazil at 1/4 the original team's salary. Even if the original team hangs around to train the new guys the new guys have to ramp up from scratch. Even if they're excellent programmers it's going to take them 6 months to a year to even get comfortable with the code, even with documentation in place. During that time the overall application design will get slightly worse as they try to implement new features in ways that don't fit in with the original application design.

In the mean time you've got 150 other tech companies realizing that people in Brazil will work for peanuts and they'll all move in to the country. Now your programmers are realizing that they can get more peanuts if they do the same sort of job hopping that we did in the 90s to get more peanuts. So over the course of the next year your team is replaced by new people who you have to pay a lot more money to and who are completely unfamiliar with your code base again. So now you're paying your Brazilians as much as you were paying your original programming team and they have no experience with your code base. Good job!

You can only save money that way if you buy into the fallacy that people are pluggable resources and experience counts for nothing. If you believe that then you can get as much done with a summer intern as you can with someone with 20 years of programming experience. Give it a shot sometime. And you can find a company that doesn't have that philosophy. I wouldn't want to work for a company that thinks I'm just a body taking up space anyway.

[May 8, 2007] SandHill.com Engineering The Case for Back-Shoring by Michael Fields

Jun. 19, 2006 (sandhill.com)

... when I took the reins at KANA last year, I found a company with tremendous assets but many operational challenges. One significant challenge for KANA involved its development operation in India. After a thorough analysis, I chose to end the relationship with our vendor and bring development back to the U.S.

The decision we made to "back-shore" our development was the best move for KANA. Other small to mid-size software companies may be similarly constrained by their offshoring strategy - and they may not have taken the time recently to reevaluate the value of their initiatives.

When I joined KANA as CEO last year, I immediately recognized the company's strengths - a large, loyal customer base, significant technological assets and a great employee team. However, the company seemed to have trouble executing as a sustainable, profitable business.

We set about fine tuning KANA's three core assets.

• People - During the "bubble" days, KANA had been a very large company. Though it had downsized, it had retained the large management infrastructure with the expectation that the company would grow again. Out of 142 employees, we had 22 Vice Presidents. In fact, KANA had only four field sales reps in the U.S. but it had five VPs of strategy.
  
  We restructured the corporate management, including an almost-entirely new executive team. With only one exception, all of these new executives were found inside the company.
• Clients - KANA has 600 clients - everyone from Best Buy to Verizon to IBM. These large firms have utilized our technology to support call centers, email, collaboration and chat. Yet within our client base, we only had 20 percent penetration, a big opportunity for upselling and cross selling.
• Technology - KANA has the only multi-channel, highly-scalable, enterprise-class solution for customer service. Our renewal rate on maintenance was 92 percent - a testament to the fact that customers were getting real value from our product. Yet the core product was being developed offshore with questionable efficiency.

The Decision to Back-shore
KANA was one of the earliest software companies to offshore its engineering and support. The effort began almost four years ago. At one time, KANA had 250 engineers employed in India and China through its vendors.

After analyzing the state of KANA's development operation, we decided to put together a strategy to bring the work back inside the company. There are three main reasons KANA decided to back-shore.

1. Regain Control of Intellectual Property
In my first days as CEO, we made an inventory of our core assets. KANA's intellectual property was at the top of the list.

Yet the company had decided to outsource and offshore core product development. That was a major mistake, in my opinion. It is one thing to outsource porting or localization or special features and another move core intellectual property offshore.

KANA is not Oracle. When a large vendor hires thousands of its own employees offshore, the company can manage human resources activities and ensure protection of these assets very differently than KANA can at its size.

As a small company, IP is a critical part of KANA's asset base - one that deserves full control and protection. Globalization is a powerful force. But I believe it is important to outsource only those things that enhance the success of your product delivery without outsourcing the core product engineering.

2. Achieve a Comparable R&D Total Cost of Ownership (TCO)

When we began the process to bring engineering back to the U.S., I thought it would end up costing KANA more money. What happened, however, is that when we analyzed the costs, we realized that KANA hadn't saved any money by offshoring.

Indian developers have a very high level of skills. It's no wonder that executives become fixated on the fact that you can hire 2-3 Indian programmers for the cost of one U.S. programmer.

However I would be willing to bet that few software vendors have an idea of the TCO of their offshoring operation. For KANA, the competitive labor market in India meant that we had little control over who was working on our projects. There was no way to curb high turnover rates, control labor cost increases or to hold onto key talent.

Another area of added costs involved significant management resources from the U.S. KANA had to employ a program manager for every five engineers in India. These managers typically spent two to three weeks in India every quarter to ensure the development process was moving forward. This added travel, documentation and quality assurance expenses.

A factor which has improved America's competitiveness is the readjustment of engineering salaries. During the "bubble," developers were like "hired guns." They could write their own ticket in terms of compensation - salary plus a demand for hundreds of thousands in equity. It was a seller's market.

That's changed dramatically. I'm not saying finding the right engineer in the Silicon Valley is an easy task, but applicants have a more logical, realistic approach to the job. U.S. developers are simply not pricing themselves out of the market anymore.

Continued...

[Feb 20, 2007] Outsourcing could hit IT jobs in some metro areas, study says

Offshoring may eliminate as many as one in five programming, software engineering and back office jobs such as data-key entry during the next several years in certain metropolitan areas where employment in those fields is the heaviest, according to a study (download PDF)by The Brookings Institution released this week.

Brookings, a Washington-based think tank, has attempted to put job loss numbers around one of the most worrisome issues for IT workers today, while also recommending steps the government can take to slow the trend.

Where this report, The Implications of Service Offshoring for Metropolitan Economies, differs from others that have tried to assess the implications of offshoring is its analysis of how the trend will affect metro areas with high concentrations of IT-related jobs.

Overall, Brookings found that 28 metropolitan areas with 13.5% of the nation's population are likely to lose between 2.6% and 4.3% of their jobs to service offshoring. Those metro areas that could see the highest job losses, above 3.1%,, are Boulder, Col.; Lowell, Mass.; San Francisco; San Jose; and Stamford, Conn.

Several other cities, including New York, Chicago, Philadelphia, Los Angeles, could lose between 2.1% to 2.5% of their service jobs.

Among the areas where workers could fare better are Las Vegas and Riverside, Calif. These two metropolitan areas with more than 1 million people are likely to see no more than than 1.5% of their jobs moved offshore. Indeed, Las Vegas in particular is in need of IT workers.

Although overall "a small share of all U.S. jobs will be lost to service offshoring in the next decade," the report said that some types of service jobs are more likely to go than others, including those that rely heavily on IT and routine or rule-based work.

Some occupations, "especially those in IT or back-office services, could lose up to 24% of their jobs in particular metropolitan areas by 2015 as a result of offshoring," the report said. Breaking its results down by occupation, Brookings found that at least 17% of computer programming, software engineering and data entry jobs are likely to be offshored [from] certain metro areas."

Areas that appear to be particularly susceptible to IT and back office job losses from offshoring, include Bergen-Passaic, N.J.; Boston; Boulder, Col; Danbury, Conn.; Denver; Hartford, Conn.; Minneapolis, Minn.; Nashua, N.H.; Newark, N.J.; Orange County, San Francisco and San Jose, all in Calif.; Stamford, Conn., and Wilmington, Del.

[Jan 18, 2007] There is a considerable danger of abuse of offshore IT personnel due to micromanagement. See

• The Danger of  Micromanagement
• Understanding Micromanagers and Control Freaks
• Fighting Micromanagers
• Enemy at the Gate: Rules of Communication with Corporate Phychopaths

Continued...

Recommended Links

[Feb 8, 2007] Work visas may work against the U.S. - BusinessWeek Online -

Feb 8, 2007, MSNBC.com  America's visa program for temporary workers was originally set up to allow U.S. companies to bring skilled workers who are in short supply to the U.S. Microsoft, IBM, Intel, Oracle, and Sun Microsystems have been active participants in the program, hiring foreign workers for specialized computer programming jobs and positions managing projects with overseas staff.

The visas, known as H-1Bs, are popular enough that President George W. Bush is calling for an increase in the cap on the number of workers who can come to the U.S. under the program. "We've got to expand what's called H-1B visas," he said in a January speech. "It makes no sense to say to a young scientist in India, you can't come to America to help this [country] develop technologies that help us deal with our problems."

But a review of new information from the federal government suggests that the companies benefiting most from the temporary worker program aren't U.S. companies at all. Rather, they appear to be Indian outsourcing firms, which often hire workers from India to train in the U.S. before returning home to work. Data for the fiscal year 2006, which ended last September, show that 7 of the top 10 applicants for H-1B visas are Indian companies. Giants Infosys Technologies and Wipro took the top two spots, with 22,600 and 19,400 applications, respectively. The company with the third most applications is Cognizant Technology Solutions, which is based in Teaneck, N.J., but has most of its operations in India. All three companies provide services to U.S. companies from India, including technology support and back-office processing.

The only other U.S. companies among the top 10 are the accounting and consulting firm Deloitte & Touche and consultancy Accenture. They rank seventh and ninth, with 8,000 and 7,000 applications, respectively.

Outsourcing conduit...
The dominance of Indian outsourcing companies raises public policy questions about the temporary visa program. Some experts say that while the intent of H-1B visas may be to help U.S. companies hire workers with rare skills, the effect in some cases may be to facilitate moving jobs abroad. The issue has also sparked concern among some prominent U.S. tech companies, which worry that outsourcers could abuse the visa program, harming the tech firms' ability to attract foreign talent.

Ron Hira, a public policy professor at the Rochester Institute of Technology, says it appears that Indian firms may be using their H-1Bs to bring in workers from their home countries to make them more effective at outsourcing jobs in India. "The visa program serves a good purpose when it brings in the best and the brightest," says Hira, who is on leave at the nonprofit Economic Policy Institute and crunched the recently released visa data to compile the list of top applicants. He says that as recently as 1998 eight of the top 10 H-1B visa applicants were U.S. companies. "It serves a bad purpose when it's used to facilitate outsourcing."

Or competitive edge?
The Indian outsourcing firms say that's a misinterpretation of the data. They argue that the temporary visa program allows outsourcing firms to help U.S. companies become more flexible and ultimately more competitive in the global economy. Wipro has more than 4,000 employees in the U.S., and roughly 2,500 are on H-1B visas. About 1,000 new temporary workers come to the country each year, while 1,000 rotate back to India, with improved skills to serve clients. "Our goal is to make our customers more competitive," says Laxman Badiga, Wipro's chief information officer. An Infosys spokeswoman said executives from that company were not available for comment.

The government visa data cover only the number of applications for visas, not the number actually awarded. U.S. Citizenship & Immigration Services releases the identities of companies that apply for H-1B visas, not those that receive them. A spokesman for USCIS, which is part of the Homeland Security Dept., says it won't discuss individual companies because of privacy issues.

Still, the number of visas awarded is likely correlated to the number of applications. Efran Hernandez, chief of business and trade services for USCIS, says H-1B visas are awarded on a "first-come, first-serve" basis and there is no preference given to U.S. companies over non-U.S. companies. "You have to be a U.S. employer," says Hernandez. "That doesn't mean you have to be a U.S. company."

In addition, the temporary visa program includes no requirement that companies in the U.S. try to hire American employees before they turn to foreign workers. To obtain a permanent visa, companies must conduct and provide to the government a labor market test, in which they demonstrate that they sought to hire American workers first. But the H-1B temporary visa program mandates no such market test. Instead, companies are required only to pay the prevailing wages and benefits for a certain job in a certain market.

The government, including USCIS, says that the provision means that most companies are going to hire Americans, because there's no financial advantage to choosing a non-U.S. worker. But Hira says Indian companies could choose to hire workers from India for training purposes, rather than financial gain. Government officials acknowledge that companies that want to give preference to workers from other countries could theoretically do so. "There's nothing built into the law to stop that," says Hernandez.

Many U.S. companies are enthusiastic supporters of the H-1B visa program. Tech companies may be the most active participants, but the visas are also used by companies from General Electric and Boeing to Lehman Brothers and Caterpillar. Companies have been lobbying the government to increase the cap on the number of H-1B visas from the current 65,000. (Because there are exceptions for certain kinds of jobs, the number of visas issued regularly exceeds that level.)

Squeeze on temporary visas
Top technology companies would like to see the cap almost twice as high as it is now. The Information Technology Industry Council, whose backers include Apple, Dell, eBay, and Intel, last year asked that the cap be raised to 115,000. The group says that bringing foreign workers with very specialized skills to the U.S.—both temporarily and permanently—is critical to increase innovation and competitiveness. "Visas are a key component of the innovation agenda," says Kara Calvert, director of government relations for the council. "It's really important to grow the economy here rather than overseas."

Yet the ITIC has become concerned in recent months that the temporary visa program is not being used for its original purpose. The council's members may not be able to get the workers they want from abroad because the numerous applications from non-U.S. companies mean fewer H-1B visas are available for U.S. companies. "We hit the cap earlier and earlier," Calvert says. "We think it's important to ensure that the visas are used for the purpose for which they were intended."

One reason for the squeeze may be that Indian outsourcers have boosted their visa applications just as the cap has been lowered. Wipro applied for 3,100 visas in 2001, when the H-1B cap was 195,000 workers, according to Hira's calculations. Wipro applied for six times that many H-1B visas last year, when the cap was a third of the previous total.

No easy answers
Wipro's Badiga says Indian companies are helping to create good jobs in the U.S. and fostering innovation. The jobs that Wipro offers in the U.S. to both Indian and U.S. workers, he says, are more skilled positions for high-level software design or important customer relations. What he calls "rote programming jobs" are done from India. He says that the H-1B visa program allows Wipro workers to get valuable experience in the States and be more effective at serving customers in the U.S. "The key question is whether we can create the best value chain to help our customers be as competitive as possible," says Badiga.

Even critics say that there are no easy solutions for revising the temporary worker program. Restricting the ability of Indian outsourcing companies to use H-1Bs, for example, may not stop them from being used for more effective outsourcing. Accenture, an active participant in the program and one of the top U. S. outsourcing firms, could hypothetically use the visas in exactly the same way that Wipro and Infosys do. A spokeswoman for Accenture did not return calls seeking comment.

U.S. tech companies may push for revisions to the H-1B program. They could ask that Congress limit the number of visas that go to non-U.S. companies or that the identities of the recipients be disclosed fully and speedily. President Bush has said that he wants to work with the Democratic Congress on new immigration and visa policies, although it's unclear what shape those reforms might take. "If companies are abusing those visas, that hurts U.S. companies," says the ITIC's Calvert. "We want to be at the table when the discussions [on H-1Bs] occur."

[Jan 17, 2007] Layoffs hurts staff's mental health - Health - MSNBC.com

LONDON - Workers who survive downsizing measures and hold on to their jobs may consider themselves lucky but they have a higher risk of suffering from mental health problem, Finnish scientists said on Thursday.

After studying the impact of downsizing on municipal employees they found men who kept their jobs were 50 percent more likely to be given a prescription for an antidepressant or sleeping pill than people where there had been no enforced layoffs.

“This quasi-experimental outcome study of 26,653 city employees suggests that downsizing is a mental health risk, not only for employees who lose their jobs, but also for those who remain in employment,” said Professor Mika Kivimaki, of University College London.

Women in the study published in the Journal of Epidemiology and Community Health were 12 times more likely to use a prescription drug after downsizing.

Sleeping pills were the most commonly used drug for men while women were more often prescribed anti-anxiety drugs.

Kivimaki and his team said employers, policy makers and occupational health experts should recognize that downsizing poses mental health problems.

The Future of Outsourcing September 11, 2011 What's Wrong With Outsourcing September 11, 2011

One of the drawbacks of being an IT professional is being experimented on by pointy-haired bosses who have fallen in love with a new management fad. The PHBs have taken us through downsizing, rightsizing, vision statements, mission statements, dead Chinese warriors, SPC, Extreme Programming, Quality Circles, Synchronous Manufacturing, Total Quality Management and (if you were among the really unlucky ones), weeks of butt-numbing meetings on something called Six Sigma. But we can survive such things, for geeks have developed a unique ability to doze off with our eyes open.

The latest PHB craze, however, is far more baleful than any of those dear old nostrums. It's called offshore outsourcing.

Remember back in 1999, when you had a job, what a hard time you had talking the boss into letting you telecommute two days a week? "Look at the savings on office supplies," you said. "Four more hours a week I can spend working instead of plowing the freeway!" Management's counters to your arguments were always the same: "All environments other than the Datawhack Inc cube farm are potentially distracting;" "When you're not there physically, how will anyone know what you're doing?" and that ultimate deal killer, "We can't possibly allow our proprietary software and sensitive client data in the insecure environment of a spare bedroom!"

... ... ...

There are a number of other well-known problems with offshore outsourcing. In the interest of brevity I'll breeze through some of the larger objections:

• Project design is a tennis game played between developer and customer: Customer asks you to do X, you respond with a client-level explanation of what it would take to do X, he strokes his beard and asks you if X-prime would be possible, you volley back a revised design, and so on. It goes on for at least a few iterations before you put cursor to code development window. How long does this game take if the developer is halfway around the world, learned the customer's language as a college junior, and is embedded in a totally different culture?
• Offshoring is the ultimate development of the management philosophy that all IT people are as interchangeable as urinal cakes. What happens in the middle of a multi-year implementation when, in their ongoing quest for a country where people will work for free, the PHBs switch to a development team in a different part of the world?
• The ongoing controversy over patent and copyright in America leads us to believe that corporate boards are concerned about protecting their intellectual property. What happens to IP when the work is being done in a country with a radically different legal system? And if a legal dispute were to arise, do you appeal to a tribunal run by a tribal chieftain, or do you burn incense before a multi-armed deity and hope for the best?
• When you outsource, you don't go overseas to hire your own staff. You retain a consulting firm based where the workers are. Of course, you made sure that this firm had expertise in your company's field. So now how do you know how many of your direct competitors the same staff might be working for, right at this moment?
• The first outsourcing operations farmed out programming tasks only. That was, after all, where most of the money went. Everyone promised to audit the hell out of the code being sent back. And of course, it was all going to be rigorously tested. But then you discovered business process outsourcing! Now that you've sent the whole back office overseas, including the auditors and testers... well, let's just say that if I find out who you are, I'm not going to ride on your planes or rely on power from your grid.
• The North American developers who used to work for you had an average of 16 years of experience. But those doddering 28-year-olds demanded three meals a day, medical care and in a few cases, weekends off, so you plugged in offshore replacements with an average of 4 years on the job. What do you think might be the actual depth of their knowledge? How adaptable will they be as new technologies come along?
• Dealing with work located at a great distance requires advanced remote management. Folks, we're talking about people who are not confident of their ability to manage a project on the other side of town.

The PHBs love outsourcing because it saves money. In long-range corporate planning departments, where the B-school elite gaze ahead all the way to the hazy outlines of next quarter, the thinking is that the savings will goose the value of their shares, so that the last eight employees left in the company will someday retire rich.

What these folks are ignoring is the effect of outsourcing on politics. Geeks are not very political, but have until now leaned libertarian. All through the 80s and 90s, the tech vote created the sunny business climate that made the big boom possible. Today the geeks – and office workers in general - are running through their own retirement savings as they vainly look for work. Once they lose their houses, they will turn into another sullen huddle of trailer-dwelling outsiders. Like the Greens, their sole political focus will become vengeance against "the suits." Management, by jumping into one fad too many, will lose the very political world it had hoped to create for its own comfort. Look forward to a nation of fifty Californias where every city is Eugene, Oregon.

Bill Gates Unplugged CNET.com

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

Here is the full quote:

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

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

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

Silicon Taiga Cost focus leads to outsourcing failures Rachel Fielding

The Impact of Offshoring on the U.S. Economy Policy Perspectives - Center for American Progress

An interesting overview:

On Thursday, May 20, the Center for American Progress held an event, "The Impact of Offshoring on the U.S. Economy: Policy Perspectives," on Capitol Hill. The panel was moderated by the Center's director of economic programs, Gene Sperling, and featured Martin Bailey (International Institute of Economics), Lael Brainard (Brookings Institution) and Thea Lee (AFL-CIO). Below are suggestions for how the U.S should deal with offshoring, as well as links to offshoring resources. A transcript of the presenters prepared remarks will be posted here when available.

In recent months, Americans have become increasingly concerned about the impact of offshoring on the United States economy. The practice of offshoring – when U.S. firms relocate their production and service facilities overseas – has increased over the past few years, particularly in white-collar industries that were previously viewed as more stable and less vulnerable to global competition. The phenomenon has raised fears that the U.S. economy may be permanently shedding certain jobs and job categories, which could lead to a hollowing out of the middle class and downward pressure on wages.

Current labor market data show that Americans are justified in worrying about job creation – the economy is still millions of jobs short of where it should be at this point in its recovery. And while the data on offshoring suggest that it is not the primary culprit for our current labor market woes, there is considerable uncertainty as to how large its future impact will be – leaving many unanswered questions about its impact on the U.S. economy. As a country, we need to engage in a serious dialogue on these questions and consider a range of potential public policy responses to address not only the pain and dislocation that offshoring creates, but also the steps necessary to ensure that the American workforce continues to compete and win in the global economy.

• Job creation in the United States is too slow. The U.S. economy has lost more than 2 million jobs since President Bush took office and analysts believe the economy is still significantly lagging in job creation (Morgan Stanley estimates the economic recovery is short 2.4 million jobs from where it should be, while EPI estimates a job shortage of 5.5 million). The Bush administration tax cuts – aimed primarily at the wealthy – have done little to address this concern.
• The pain and suffering of those who have lost their jobs is real. Although many unemployed workers will eventually find new jobs, a substantial number of them will have to work for less pay and fewer benefits. For those that are unemployed, public assistance is woefully inadequate. More out of work Americans are losing their unemployment benefits than ever before (nearly 2 million workers so far this year). Health insurance premiums have skyrocketed and support for job retraining is underfunded.
• Congress should consider specific policy proposals to address the problems created by job loss and offshoring. Congress should immediately strengthen adjustment policies to help dislocated workers. First, Congress should extend the Trade Adjustment Act (TAA) to service workers, who are not currently covered. They should also consider more ambitious wage insurance and temporary health insurance proposals designed to give unemployed workers a cushion of stability and ease the transition between jobs. Finally, Congress should increase support for lifelong learning and retraining programs and consider retraining tax credits or grants to individual workers.
• To compete globally, the United States needs to greatly improve its education and health care systems. Congress needs to focus on improving the U.S. education system so the population is prepared for a new economy. They should increase investment in science and engineering education; ensure that schools focus on math and science at the primary and secondary levels; and increase support to community colleges. We also need a healthcare system that provides for all Americans regardless of their employment status.

 Insiders exploit their legitimate role within an organization to harm it. Their knowledge of and access to the organization pose a substantial threat—probably greater than external threats. In many cases, the only thing preventing insiders from exploiting their privileged access and knowledge is the perception that their interests and the organization’s are aligned. So, if delivering a project on time or making a customer happy is in the insiders’ best interests, you can expect them to contribute and work toward a common goal. However, when individual and corporate goals aren’t so clearly aligned, a certain segment of the workforce will have no qualms about passively or actively pursuing their own interests at their employer’s cost.
 

United States Secret Service National Threat Assessment Center (NTAC) Insider Threat Study

The first report focuses on the people who have had access to and have perpetrated harm using information systems in the banking and finance sector, which includes credit unions and financial institutions. This study, made possible by significant financial support from the Department of Homeland Security's Science and Technology Directorate, is the first of its kind to provide a comprehensive analysis of insider actions by analyzing both the behavioral and technical aspects of the threats.

The findings underscore the importance of organizations' technology, policies and procedures in securing their networks against insider threats, as most of the cases showcased in the report were perpetrated by insiders with minimal technical skills. Various proactive practices are among the suggestions offered by the report.

The definition of an insider for this study includes current, former, or contract employees of an organization. The cases analyzed in the Insider Threat Study involve incidents in which an insider intentionally exceeded or misused an authorized level of system access in a manner that affected the organization's data, daily business operations, or system security, or involved other harm perpetrated via a computer.

For the Insider Threat Study, researchers from the Secret Service CERT/CC have focused on identifying the physical and online behaviors and communications that insiders engaged in before the incidents, as well as how the incidents were eventually executed, detected, and the insider identified. This approach addresses a broader phenomenon than previous studies on the topic of insider activity.

Insider Threat to Information Systems

UE News Feature Outsourcing Goes Inside

There is a convergence of two trends here: subcontracting and what’s been described as "lean, mean supply-chain management."

An early example of subcontractors working inside the plant because of the corporate outsourcing craze has been General Electric’s use of outside maintenance personnel — a practice contested by UE from the shop floor to national negotiations.

It’s becoming a common practice for companies to rent each other’s employees.

And as example of supply-chain management, look at how GE Transportation Systems in Erie, Pa. (the employer of Locals 506 and 618 members) has built a close relationship with suppliers like Dominion Castings, a Canadian division of Chicago-based NACO. Beginning with a long-term contract for truck castings in 1993, GE’s relationship with its supplier deepened when NACO became involved in the design and production of its steerable locomotive truck. "The NACO tie-up fits into a larger GE strategy that targets just-in-time delivery from suppliers and significant inventory reductions.

In another variation, IBM, Hewlett-Packard and Compaq have begun sending bare-bones machines to distributors; the distributors finish assembling the computers when the orders come in. One Hewlett-Packard executive was quoted saying, "Putting parts together? Others can do that." Another HP executive recalled for Fortune magazine how 20 years ago, H-P workers made screws and steel, and wound motors. Now production is quickly farmed out.

Nike and Dell are extreme examples of "hollow corporations" — all of their goods are produced by subcontractors.

CORPORATE WORLD

Visionaries say that if manufacturing has a future, this is it. Inventories all but disappear as product designers, manufacturers and distributors are linked electronically. Goods will be produced based on retailers’ daily needs; even cars will be assembled according to customer specifications.

Promoters of insourcing say the new partnerships allow companies to cut costs, use their resources more efficiently, focus on specific goals, gain access to other’s production expertise, gain economies of scale and get product to market quicker.

For example, management at VW’s Resende plant claims it can concentrate better on logistics, product engineering, process and quality assurance and customer service.

"Observers in Brazil believe that this type of closer manufacturer-supplier relationship represents a trend that is here to stay—and not just in the automotive industry," reports Industry Week. "It may be more easily implemented in a greenfield plant, they acknowledge, but if the right strategy is followed regarding unions, it might be possible to introduce it in existing plants as well."

THE ‘RIGHT’ LABOR STRATEGY

The "right" labor strategy would presumably require neutralizing, if not eliminating, and certainly avoiding union organization. If organized, workers would have a way of objecting to the seamy side of this flexibility — layoffs, deskilling and smaller paychecks.

This institutionalization of a two-tier employment strategy gives the bosses a powerful weapon against unions. Not surprisingly, last November union members at GM and VW plants in Sâo Paulo, Brazil accepted management’s first offer on a new contract.

In Resende, Brazil, local union leaders hope to organize the VW plant eventually but admit the web of employers poses a challenge.

OUTSOURCING IS ‘IN’

The insourcing phenomenon is bad news to those American workers who are already under threat from outsourcing — and should be of concern to those who work for suppliers. In the new "flexible" and "lean" global economy, subcontractor jobs can be outsourced.

In 1994, U.S. companies subcontracted about $16 billion worth of work — a figure expected to grow to $37 billion in 1998. A 1997 study by the OI saw companies planning projects that would double their outsourcing of all types, including services as well as production of parts. Last year, companies covered by a Dun & Bradstreet survey said they would increase manufacturing outsourcing alone by 25 percent. Manufacturers account for nearly two-thirds of all outsourcing

The electronics industry’s subcontracting manufacturing sector is growing faster than overall electronics sales. Nestlé Corp. may own 495 plants world-wide, but subcontractors produce more than half its production and almost half its packaging. Big pharmaceutical firms are relying on small specialized biotech production companies.

GM outsources about 55 percent of its work, Ford 62 percent and Chrysler 67 percent, compared to 75 percent for Japanese automakers. Four out of five auto-parts plants are non-union.

"The restructuring that has swept the automobile industry for the last several years seems pointed toward a two-tier industry: one union, one non-union; one more or less well-paid; one, not; both with super-stressed workplaces," writes Kim Moody in Labor Notes.

SERVICE AND PUBLIC SECTORS

Of course, not only manufacturing workers are affected. Information services is a growth industry for subcontractors. For example, a subcontractor in India handles the medical records for a hospital in suburban Washington, D.C. Companies from the Philippines to Ireland are vying for U.S. office jobs.

Postal workers unions have been protesting plans by the nation’s ninth-largest firm — the U.S. Postal Service — to subcontract work. Public sector employees — federal, state, county and municipal — face severe threats from subcontracting. School districts contract for services like cleaning.

Then again, UE Local 792 members at Wright State University are employed by the university’s food-service subcontractor.

While many UE members are fearful of — and have been fighting against — the threat of outsourcing, a growing number of UE members work in manufacturing plants that supply parts to factories owned by major auto and electrical manufacturing companies. They have benefited from the 1990s growth in outsourcing, but their jobs, too, may be in danger.

OURSOURCING OUTSOURCED

"One change in outsourcing is that the suppliers of outsourcing services themselves are beginning to outsource non-core functions and form alliances with other providers to offer end-to-end services," says The Outsourcing Institute. Sub-suppliers are providing hundreds of individual parts to main suppliers.

Already in the auto industry, companies are supplied by subcontractors who in turn outsource work.

The ultimate so far, reports Fortune magazine: "A ‘rolling chassis’ being delivered by Dana Corp. to Chrysler’s new $315 million Dodge Dakota pickup-truck plant in Campo Largo, Brazil. The chassis arrives on inflated tires complete with brakes, steering components, gas tank, and other parts supplied by 70 companies, including ITT, TRW, Eaton, and Bosch."

OMINOUSLY REMINISCENT

U.S. industry’s love affair with outsourcing and new fling with insourcing is ominously reminiscent of Japan’s reliance on subcontracted labor. Each big company employs 100 subcontractors, which in turn contracts out to hundreds more companies, some with only a few employees. The wages and conditions of workers employed by subcontractors are inferior to those employed by the major corporations.

The big Japanese corporations like this system because the work of the tiny subcontractors can be of very high quality; if minor changes are needed they are easy to make, allowing the corporations to remain highly competitive.

The bottom layers of the Japanese workforce are made up of subcontract employees, "temporary" employees, "extra-workers," day laborers and casual workers, employed by the subcontractors and myriad of small employers dependent on big capital.

INSOURCING’S PROBLEMS

Despite the hype, insourcing has already exhibited real-life problems for big corporations — like finding reliable suppliers and maintaining good relations with subcontractors. When Daimler entered into a joint venture with a Swiss firm to produce a micro-car plant in France last year, quality problems delayed the car’s introduction by six months. Daimler says modular assembly works but will not entrust suppliers with production of its high-price Mercedes luxury sedans.

As the boundaries of U.S. manufacturing become blurred, all the way from parts to distribution, accountability becomes more difficult — a problem potentially for business and labor. A subcontractor intricately involved in production is not so easily fired. And who do unions bargain with — or strike against?

As vertical integration gives way to "virtual integration," the danger for business is that the insourcing model will simply shift labor costs without cutting costs.

For workers, the danger is that business will succeed — at the expense of their wages, benefits and jobs.

The union must get on top of insourcing — or any subcontracting — before it becomes a reality in their workplace, counsels UE Genl. Pres. Hovis.

"We must be more vigilant about bargaining over subcontracting while we still have bargaining power, before work is moved out or in," says Hovis.

The Business Models Of Subcontracting

The "Virtual Company"

Business theorists like to develop fancy names for their theories. One of the latest is the "virtual company." According to this theory companies should subcontract ALL their manufacturing and only do product development, sales, or maybe provide engineering expertise to companies that use their products. As crazy as this sounds many big US corporations are falling for this. One model that is held up as an example is Nike Corporation, which owns no manufacturing facilities. Nike only designs and markets the sneakers. Of course the people who boast about Nike usually fail to mention that Nike has been condemned for subcontracting to companies that use child labor or pay workers 10 cents per hour.

The Japanese Model — Almost every management fad of the last 20 years has claimed to be based upon the Japanese miracle and the subcontracting fad is no different. Following the defeat of Japanese fascism in World War 2, business was restructured with the help of "experts" from the United States. What came out of this restructuring was bigger monopolies and a system of subcontracting that was legislated and enforced by big corporations. Small companies could only work for one big company, thus they and the workers were and are totally dependent on the big company.

When business slowdowns occur it is the workers in the small companies that are laid off first, and naturally wages and benefits are much lower than in the big companies. Since the Japanese economy has been in a slowdown for the last several years not as many "experts" boast about the Japanese model.

"Modular consortium" — This is a fancy name for one of the latest trends in subcontracting, that is just beginning to start in the US. Volkswagen opened its newest Brazilian auto factory in late 1996. In this factory Volkswagen gathered together 6 of its major parts suppliers and had them set up production right inside the Volkswagen factory! They supply and assemble all the major components (engines, chassis, painting, transmissions, etc,) while Volkswagen just oversees final assembly and testing. Since then other auto companies like General Motors and Renault have followed this example in Brazil. In the US, some companies (including some UE employers) are beginning to experiment with this form of subcontracted production.

(See: UE News, "Outsourcing Goes Inside")

Top of Page • Information for Workers Contents

Maryfran Johnson on IT outsourcing

Roll Your Own Future - Computerworld Opinion by Maryfran Johnson

AUGUST 09, 2004 (COMPUTERWORLD) - Now here's a real classic on the comeback trail: developing your own applications. Sounds so retro, doesn't it? The kind of thing start-ups do when the CEO doubles as the chief product engineer and surrounds himself with a cabal of MIT grads writing code. So what's going on when large pharmaceutical companies, insurers, hotel chains, health care providers and online powerhouses like travel firm Orbitz are found, in this day and age, productively rolling their own?

Computerworld reporter Gary H. Anthes answered that question last week in his cover story about the many sensible, cost-saving and even surprising reasons why companies build their own applications rather than buying into more packaged software ["Roll Your Own," QuickLink 47884]. What he uncovered flies in the face of conventional wisdom that buying is better than building -- a belief assiduously promoted by software vendors of all sizes.

And no wonder. The lifeblood of so many software companies increasingly flows directly from their maintenance and support fees, which have risen to nosebleed levels of 18% to 25% annually to offset the economic drag of lower sales in recent years.

Take Oracle as Exhibit A. When the database maker posted its financial results in mid-June, the single biggest factor cited as offsetting its slow-moving application sales was rapidly growing revenue from those fat fees for software maintenance. That revenue is increasing nearly twice as fast as new license revenue, CEO Larry Ellison said.

But it's not just the high cost of applications and their hefty annual fees that are driving development of homegrown applications. Ranking high as reasons for this approach are dissatisfaction with complacent vendors that don't respond quickly enough to user needs, and dismay over software suites overloaded with features and fiendish complexity. At Reinsurance Group of America, for example, a $35 million global enterprise administration system that was developed in-house not only fueled a competitive leap past the company's rivals but also was vastly preferable to the nightmare alternative of integrating more than a half-dozen commercial packages to provide similar capabilities.

Yet the greatest reason of all to roll your own is the ability to tailor IT to your business, to control the fate of applications too vital to trust to outside developers. It's about enabling (may Nicholas Carr forgive us here) a competitive edge that really does matter.

At Reliant Pharmaceuticals, for example, CIO Ron Calderone wisely heeded user resistance to complicated sales force automation tools and built a relatively simple system using speech recognition technology for the field agents. A packaged SFA system would have cost $4 million to $6 million, Calderone reckoned, but he delivered just what his business comrades needed for about 15% of that.

"Simple and inexpensive" are often the magic words associated with the best in-house application projects. We're hearing that mantra more often these days, particularly as open-source software carves inroads at the enterprise level. As Orbitz CTO Chris Hjelm put it in our story, "We are largely an open-source shop, so when we think about buying software, there's a general aversion to it."

The "buy vs. build" debate will no doubt go on forever. But the combination of open-source software with sophisticated development tools and standardized Web services is dramatically changing the face of that argument. When companies go looking for technical creativity, innovation and a competitive edge, they won't be buying that off anybody's shelf but their own.

[Jul 12, 2004] Bracing for Backlash - Computerworld

One day, the political windstorm around offshore outsourcing will blow over. One day, the inflated numbers on both sides of the debate will be debunked. One day, the last angry letter from a displaced American IT worker will be published.

Unfortunately for IT managers everywhere, that day is not today.

The emotional backlash against any plans to outsource technology jobs overseas -- regardless of how economically or competitively driven -- is a force to be reckoned with in today's IT workplace. It dampens the morale of even the most valuable, talented employees, as we saw recently in our Best Places to Work in IT survey [QuickLink a4610]. One reader sent us a note last week suggesting that we include "foreign outsourcing statistics" in future Best Places reports, thereby revealing how many U.S. citizens are part of the IT head count of the companies on our list.

Negative reactions can blast back from customers as well as from affected employees, as Dell and Lehman Brothers discovered when they had to pull customer service operations out of India. Despite a few other widely publicized retreats, the majority of Fortune 1,000 companies are forging relentlessly ahead with offshoring plans -- albeit with greater stealth, in hopes of avoiding bad publicity.

The bottom line driving what Gartner calls an "irreversible megatrend" is always the same: cost savings too compelling to ignore in an open, interconnected global marketplace. "To outsource offshore is not a political decision on the part of the company. It's an economic decision with political ramifications," says Mike Hoyt, CEO of Paradigm Works. He's one of our sources in "Damage Control" [QuickLink 47609], a story about how IT managers can cope with the offshore backlash.

One impressive example of a company dealing effectively with the backlash problem is Union Bank of California, which created a "sourcing management office" to handle any concerns that might harm its reputation with customers. The office's duties include handling all communications about the bank's offshore plans.

The preventive measures we discuss in our story basically boil down to having honest, frequent, candid communication with everyone involved. CFO magazine gave similar advice last month in its cover story about offshoring, noting that the majority of the 275 financial executives surveyed had no intention of canceling their offshoring plans, despite the backlash. Some 42% of those CFOs said they were realizing net savings of more than 20% from their offshore projects, and 64% were planning to increase offshoring levels.

So where do companies go wrong in communicating their outsourcing plans? Let us count the ways. They overlook a basic communications plan for internal or external consumption (the offshoring version of a "don't ask, don't tell" policy). They fail to explain why a given project is going overseas or how such decisions are made. They try to downplay the negatives about workforce changes. They hide their plans for as long as possible, then look guilty and act defensive when the news leaks.

Some analysts are predicting that the backlash will fade away by next year, and I hope they're right. But in the meantime, IT managers must brace for the backlash and deal with it decisively.

"You don't want rumor to overtake reality," says Michael Treacy, co-founder of Gen3 Partners, an outsourcing consultancy. "In the end, you can only politicize so long, and then the facts will prevail."

Maryfran Johnson is editor in chief of Computerworld. You can contact her at maryfran_johnson@computerworld.com.

Price of loss of speed

What price procrastination By Jack M. Keen

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

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

Five ways to slay the delay dragon   1. Vocalize time's tyranny 2. Find the real drivers of delay 3. Speak the right language 4. Expand your "clever reasons" repertoire 5. Dramatize the delay cost

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

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

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

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

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

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

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

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

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

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

Humor

Job Cuts Comments

Comment 05/11/07: "We seek a newspaper journalist based in India to report on the city government and political scene of Pasadena, California, U.S.A."
http://www.signonsandiego.com/news/state/20070510-1408-outsourcingthenews.html -Sad State of Journalism-

Slashdot IBM to Lay Off Half of Global Services Division

Re:What the hell *is* IBM Global Services? (Score:5, Funny) by bynary (827120) on Friday May 04, @04:29PM (#18994319) Moving forward, they leverage their intellectual capital in conjunction with the synergistic core competencies of a highly mobile workforce of motivated resources to manage global diversification, decentralize initiatives, and reduce inventory turnover in an increasingly risk averse marketplace. They operate on the principles of a paradigm shift away from participative management towards actionable strategic alliances. Quite intuitive, really...

SatireWire AT&T TO CUT BACK 120 PERCENT

NEW YORK, N.Y. (SatireWire.com) — AT&T will reduce its workforce by an unprecedented 120 percent by the end of 2001, believed to be the first time a major corporation has laid off more employees than it actually has.

AT&T stock soared more than 12 points on the news.

The reduction decision, announced Wednesday, came after a year-long internal review of cost-cutting procedures, said AT&T Chairman C. Michael Armstrong. The initial report concluded the company would save $1.2 billion by eliminating 20 percent of its 108,000 employees.

From there, said Armstrong, "it didn't take a genius to figure out that if we cut 40 percent of our workforce, we'd save $2.4 billion, and if we cut 100 percent of our workforce, we'd save $6 billion. But then we thought, why stop there? Let's cut another 20 percent and save $7 billion.

"We believe in increasing shareholder value, and we believe that by decreasing expenditures, we enhance our competitive cost position and our bottom line," he added.

AT&T plans to achieve the 100 percent internal reduction through layoffs, attrition and early retirement packages. To achieve the 20 percent in external reductions, the company plans to involuntarily downsize 22,000 non-AT&T employees who presently work for other companies.

"We pretty much picked them out of a hat," said Armstrong.

Among firms AT&T has picked as "External Reduction Targets," or ERTs, are Quaker Oats, AMR Corporation, parent of American Airlines, Callaway Golf, and Charles Schwab & Co. AT&T's plan presents a "win-win" for the company and ERTs, said Armstrong, as any savings by ERTs would be passed on to AT&T, while the ERTs themselves would benefit by the increase in stock price that usually accompanies personnel cutback announcements.

"We're also hoping that since, over the years, we've been really helpful to a lot of companies, they'll do this for us kind of as a favor," said Armstrong.

Legally, pink slips sent out by AT&T would have no standing at ERTs unless those companies agreed. While executives at ERTs declined to comment, employees at those companies said they were not inclined to cooperate.

"This is ridiculous. I don't work for AT&T. They can't fire me," said Kaili Blackburn, a flight attendant with American Airlines.

Reactions like that, replied Armstrong, "are not very sporting."

Inspiration for AT&T's plan came from previous cutback initiatives, said company officials. In January of 1998, for instance, the company announced it would trim 18,000 jobs over two years. However, just a year later, AT&T said it had already reached its quota. "We were quite surprised at the number of employees willing to leave AT&T in such a hurry, and we decided to build on that," Armstrong said.

Analysts credited Armstrong's short-term vision, noting that the announcement had the desired effect of immediately increasing AT&T share value. However, the long-term ramifications could be detrimental, said Bear Stearns analyst Beldon McInty.

"It's a little early to tell, but by eliminating all its employees, AT&T may jeopardize its market position and could, at least theoretically, cease to exist," said McInty.

Armstrong, however, urged patience: "To my knowledge, this hasn't been done before, so let's just wait and see what happens."

1,500 Dead In AT&T Cost-Cutting Measure The Onion - America's Finest News Source

NEW YORK—Seeking to reduce costs and streamline internal operations, AT&T eliminated 1,500 mid-level employees Tuesday.

"The telecommunications industry is an incredibly competitive one and, unfortunately, it is sometimes necessary to make cuts in order to ensure longterm fiscal viability," said AT&T chief executive C. Michael Armstrong, standing among 10-foot-high piles of former employees. "It's a shame that these people are no longer with us, but the end result should be a leaner, stronger AT&T."

More employee liquidation is planned in the near future, with over $23 million in staff cuts over the next 18 months through buyouts, early-retirement incentive packages and pneumatic bolt guns.

Addressing stockholders at a meeting yesterday, Armstrong said he is "extremely excited about the positive impact these changes will make." The company's stock jumped from 62 1/4 to 72 following the announcement of the personnel cuts, the second-largest terminal layoff in AT&T history.

"After a 15 percent drop in profits over the last two quarters, we knew we had to shake things up," said AT&T vice-president of human resources Harold W. Burlingame. "Once we made the decision to eliminate some personnel, our priority was to do so in the most quick and painless way possible. I believe we accomplished this.''

Burlingame expressed regret that AT&T was unable to provide the employees greater advance notice of their liquidation.

"Whenever we let employees go, we try to let them know well in advance, so they have ample time to say goodbye to co-workers, supervisors and loved ones," Burlingame said. "But in this case, we unfortunately couldn't, because we really needed to have them working hard right up to the minute we assembled them in the cafeteria."

Burlingame said AT&T has no plans to offer the 1,500 departed employees severance pay, claiming it would be "of little use to them." He thanked the employees for their many years of loyal service to AT&T and expressed hope that they ultimately find themselves in an even better place.

The Future of Outsourcing September 11, 2011 What's Wrong With Outsourcing September 11, 2011

September 11, 2011

Nobody expected this to be an ordinary Sunday. Airport security was especially tight on this significant anniversary. The random-pluck programs were turned off today. Every passenger was required to step into the X-ray booth, undress, and place all clothing into the gamma box before being allowed to proceed.

No one will ever know why Austin was the first to be affected, that morning. Perhaps it had something to do with the city having one of the last "Bushvilles," tin shanties clustered near the airport. With the exception of Austin, most of the nation's geeks had been resettled in huge public dormitories on farms run by the National Forfeiture Administration. There (living on land once owned by some farmer accused of smoking a joint, downloading music, violating the new .03 blood-alcohol DUI limit, visiting a prostitute, or returning DVDs late), a computer person could compete for regular contracts on the global market, sustaining himself on a world-average annual income by growing his own food and sharing camp chores with bunkmates.

But Austin still had a cell of active Republicans, with the ear of one recalcitrant state appeals judge. The Austin resettlement colony had been held up on one technicality after another. If you wanted to find a computer maven in this city, you'd do the pretend-you-don't-see-them stroll past the beggars at the Bushville perimeter wire, then prowl the rows of shacks until you found the ragged person whose battered solar-powered laptop produced the E-mail message that had looked so good on your watchtablet. If there was going to be any repeat of the Cupertino food riot of 2005, it was highly likely to happen right here.

A hotel executive from Hearst Dreamland Resort happened to be the first. After stepping off her flight from San Luis Obispo, she pushed her card into the Bank of India ATM near Baggage Claim, and keyed in her PIN. Instead of the usual flood of tiny aluminum dollar coins, the machine flashed ACCOUNT DECLINED. She was too busy to pick up the Help Line receiver and wait the twenty minutes it took to get a fuzzy, accented voice that might or might not have been able to diagnose her problem. After all, California had only just emerged from Chapter 9 reorganization after six years, and was still under martial law. Public resentment simmered over the mass sale of state assets in bankruptcy, even after Gov. Boxer mandated that eBay hire local temps to run the sale servers. When the Soros/Tiger Balm partnership snapped up Hearst on the third day of bidding, the Silicon Valley Geek-Green Alliance had posted anonymized threats to burn the Castle down. A wall of military security kept the GGA out, but all the execs had seen hacker attacks in one form or another. Since the lynching of the Advistron board in 2007, most upper-level corporate folk had found it prudent to stay in their gated compounds and let Trav-L-Temp proxies in stiff white Kevlar suits run all their out-of-town errands.

Up one level in the Austin terminal, there was a commotion at the Southwest Delta United counter. The reservation system seemed to be running, but at 0800 sharp it had stopped accepting locator codes. Every ticket in the system had, apparently, electronically vanished. Passengers were waving e-ticket confirmation printouts that no longer corresponded to reservations.

High above the waiting area, the CNN monitor carried first reports from the airline's check-in counters in New York, Chicago, Zurich, Beijing, Sydney, and Dubai: every ticket query was coming up Not Found. Twenty-three minutes later, a corporate rep at the Guangzhou datacenter came on the air to report an "intrusion" that would require a "software rollback and restore." The airline would be down the rest of the day.

At the same moment in Los Angeles, every one of the electronic signs on the Spielberg Freeway began flashing EMERGENCY! EXIT NOW! Five minutes later, the signs on the Caltrans public freeways followed suit. Traffic surged onto surface streets to form a puzzled mass of weekend drivers wondering where to go, just as tourists shopping for souvenirs at the Chinese Chinese Theater became the first in the nation to discover that their credit cards had just electronically left home without them.

At the "Summer White House" in upstate New York, President Clinton was finishing up a working vacation, polishing her Homecoming Week speech for Wellesley College. Late in her administration, she was looking forward to summing up the country's years of strife and triumph: the California bankruptcy, the National Health Plan, the scandal over the Chinese invasion of Taiwan, and her landmark solution to the outsourcing crisis: the Labor Resettlement Act.

The Labor Resettlement Act had allowed Americans to get back into competition with the Third World -- not by imposing tariffs and embargos, but by competing directly on standard of living. It had almost worked, too: with the American technical wage brought down to