Outsourcing, Offshoring, what will be the long term result?

by Frank 23. February 2015 06:00

I have written previously about the downside of outsourcing in two previous papers:

Outsourcing doesn’t save, it costs; and

Outsourcing will destroy the West.

From the above you may conclude that I am not a big fan of outsourcing and you would be correct. I have previously declared my bias and whereas my comments are largely directed at the IT industry where I work, they also apply to all industries.

Outsourcing exports jobs, exports wealth and demonstrably and significantly lowers the quality and reliability of our products, software applications and business websites. It also removes employment, training and experience opportunities for our young people.

In addition, another result of the IT outsourcing disease that began with the great fraud of Y2K is that the IT industry has been dumbed-down to such an extent that we now accept mediocrity as normal.

Let’s review that last statement; we now all accept mediocrity in IT projects as normal and, even more scarily, as totally acceptable.

For example, we all seem to accept that business websites, even of our big banks, are buggy and frustratingly difficult to navigate, especially if we want to do something even a little unusual.

Most big companies, especially airlines and travel sites and government departments tell us to do everything online but then present us with badly designed, buggy and frustratingly difficult to use websites.

How often have you had to search the website for a phone number because you weren’t able to do what you needed to do on the website or because you weren’t sure whether the transaction completed or not? How depressed and further frustrated were you when you discovered that the phone number took you to an offshore call centre?

As an IT professional responsible for major systems how frustrated are you having to ‘repair’ the buggy and carelessly tested (if tested at all) code that arrives from the outsourced developer? How many long hours do you and your staff have to spend trying to install the new code and stabilize it? How annoying is it having to support a sub-standard product that you would never put your name to? Have you given up trying to understand the objectives and motives of your senior executives who just don’t seem to care about anything but lowering costs and bigger bonuses (for them, not you)?

Another follow-on of this insidious dumbing-down process is that we now accept lower standards from our local staff. The ‘new normal’ established by outsourced work now means that we seem to accept faulty applications and faulty websites as a matter of course even when developed with local staff. What an awful trend.

We remove employment opportunities from our young people and export them to far away counties where the standards are far lower than ours. We accept the resulting poor quality workmanship as an acceptable trade-off for lowered costs and higher profits. Some executives even have the audacity to call this improved productivity.

Does any senior executive really think that the foreign nationals working on your projects really care a hoot about quality or your company or your customers or especially, your local employees? Do foreign workers really have the same pride in your products as local employees? Do foreign workers have any loyalty whatsoever to your company?

What is wrong with this picture?

Don’t we want our employees to be loyal and to take pride in their work and to care about our reputation and to care about our customers? Shouldn’t employers in turn be loyal to their employees? It doesn’t seem to be the case for many of our larger corporations.

Can we draw a long bow and generalize and say that executives that habitually outsource don’t care about product quality or staff loyalty or their company’s future or their employees or their customers? It certainly seems so to me.

Let’s talk about the economic impact. Outsourced staff spend their salaries in their home country, not here. In addition, every job outsourced means one less job here and that means less spent here to fund our economy and less taxes here to run our country. It also means less capital for local companies and entrepreneurs.

Do I think that a senior executive will read this blog and then say, “Good thinking Frank, I will review that decision I made to outsource those 30 jobs to India/Philippines/Thailand.” No I don’t; I think that the situation is now so bad that it is irreversible.

Depressingly, I think that the trend will accelerate and that in only a few years’ time we won’t make anything in this country. It won’t affect me too much because I am at the end of my career after 40 plus years in IT. But boy, do I worry about the future for my grandchildren and their children. The bureaucrats tell us we will all have to work in the services industry (does that mean working at McDonalds or at a hotel or resort or even in IT or financial services?).

My generation has already seen our manufacturing industry destroyed. We no longer make tyres or shoes or clothes and will shortly no longer make cars. It won’t be too much longer before we are totally dependent upon the outside world, especially the so-called third-world, for everything we consume. How secure a future is that?

Your generation dear reader, will most likely see most services, including IT and financial services, outsourced in the next few years.  The world is now so interconnected there is no reason to do anything in a high cost country like Australia including IT and financial services. All we will have to sell in the future is stuff we can dig up like iron ore and blind Freddy can already see how vulnerable that makes our economy.

What are we going to be left with in 10 or 20 years’ time? What are these ‘service industries’ we are all going to be working in? What will be our national Balance of Payments when everything we consume has to be imported? How independent can we be as a nation when we are massively indebted to foreign countries? What happens if they call in the loans?

How secure will this country be when we are dependent upon the third-world for everything? How vulnerable is our future security and prosperity?

Where will your grandchildren work?

Aren’t you just a little bit concerned?

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