The economic reality of the 2010s is that many workers are faced with the prospect of having their work outsourced to a local or foreign company. This is true in various industries and even more so in the Information Technology sector. As training and education becomes more open globally, knowledge workers around the world have the ability to gain skills that were largely concentrated in the United States a few years ago.
Massively Open Online Courses (MOOCs) offer anyone the ability to gain skills in formerly highly competitive fields. The advantage of US-based education is quickly disappearing. So what recourse does a mid-career North American professional have in the face of these challenges and the threat of increasing competition from people who are willing to work for a much lower salary?
First of all, as citizens we have the right to speak out against illegal practices by foreign companies, so one could make one’s voice heard when a local House representative gathers citizen inputs at town halls or other meetings. Democratic Representative (NY) Tim Bishop spoke out about it in Congress in 2011. The National Labour Relations Act protects American workers and should be upheld.
Regardless, anyone may find themselves in a position where outsourcing becomes a threat. There are ways to mitigate the risk and act proactively so that one’s career is still secure well into the future. First one could find a niche area and work hard to build skills in that specific bracket where there is not a lot of competition. Second, one could go with the flow of the river but make sure you have a strong boat – make sure you are the one managing the outsourcing relationship if you are in a leadership position already. Finally some people choose the option of breaking out on their own, by becoming independent consultants (sometimes combined with the first niche option) or to start a business which does local outsourcing, providing required services at a competitive price.
These are all options that one could consider, keeping in mind that we all have control over our response to a challenge, even though we may not have control over the entire set of circumstances.
In the face of stiffening competition from foreign workers, there are still areas where specialist skills are in demand. Find an area where you are highly skilled and where there is not a lot of competition. This might mean attending seminars or doing self-training and a lot of research. There are still areas in the Information Technology field, for example, where there are not many people entering the shark tank.
Two examples are Supply Chain Management Software and Customer Relationship Management. On April 13, 2014, there were 432 US jobs listed on Monster.com in the area of Supply Chain Management Software, and 1000+ US jobs in the area of Customer Relationship Management (CRM) Systems.
The key is being able to run faster than the competition. This sometimes means working longer hours and putting in extra effort, but it also means being creative and working in a smarter way. As workers in North America, we have to pull out all the stops to find creative solutions for our employers and make sure we are highly valuable assets to our companies.
Some senior Software Developers find themselves in a more powerful position than they realize. Someone who is a Technical Lead overseeing software development for a business could position themselves as a leader of a team, even if it is virtual team where some members are contractors from outside the organization.
Usually businesses will enter into a contractual agreement with an outsourcing vendor. Part of managing ‘up’ would be that one stays in touch with one’s leaders and their plans for future contracting agreements. Keep an open and trusted relationship with superiors. If you could be the person managing the outsourcing relationship, you’ve hit the sweet spot.
There would always be a need for someone local to lead the outsourced team or the ad-hoc contractors who back-fill from time to time. In addition to being an excellent technical lead, make sure you learn some management and financial acumen sooner rather than later and make it known to your leaders that you want to take care of the outsourcing needs for your area. This way you work with the outsourcing wave, and practically ride it, securing your job well into the future.
Some take a different tack altogether. They decided to strike out on their own and start their own businesses. Some former software specialists changed fields to a completely new area, going into things as diverse as insurance or financial services. Others decided to join the parade and become an outsource partner themselves. The important factor is to see a business need and fill that need.
After looking at outsourcing as a threat and coming up with strategies to mitigate the risk to one’s career, let’s look at some cases where North American companies have started to move away from outsourcing altogether. Examples are manufacturers such as Caterpillar (CAT), Ford (F), and General Electric (GE). These companies already started to move some production back to the U.S. in 2012. Cheap natural gas in the US also works in favor of manufacturing facilities in the US, according to Matthew Phillips of BusinessWeek and research by Jefferies Global Energy.
A recent article at Cringely.com uses some excellent examples to show why IBM is no longer seen as a reputable outsourcing partner because of extremely negative results on important projects for clients, such as the state of Pennsylvania and the Australian state of Queensland. In an article in The Atlantic, titled “Why We Can All Stop Worrying About Offshoring and Outsourcing” Ben W. Heineman Jr. mentions that cheap labor is now only one of many factors in the decision for companies to locate parts of their business abroad.
Emerging markets have grown internally, and workers in these markets are increasingly demanding higher wages to get on par with their North American counterparts. According to Heineman, since 2013 there have been four major trends shaping the outsourcing debate.
First, there has been a leveling in the labor costs between North America and emerging markets. Labor cost differences are becoming less important while other costs such as materials and energy are bigger factors, as mentioned. Second, companies are starting to realize that co-locating the development, research, manufacturing and assembly of products closer to the target markets, allow for better and more timely responses to market shifts, hence providing higher competitive advantage.
Even companies that outsourced key parts, such as information technology, are deciding to “make” rather than “buy” these services, because they are key to fast-paced innovation and because these services should be integrated. Finally, there is now also a push towards companies taking responsibility for the treatment and even the wage practices in outsourcing countries.
The Apparel industry is an example – it started the Fair Labor Association (FLA). These examples are now also followed by the likes of Apple although not by the entire electronics industry. Fortunately most brand-name iconic multi-national companies now understand that labor and quality standards are not optional, but a requirement if they want their brand to survive.
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