Work Flows Downhill

May 30, 2008 at 11:26 am 4 comments

“The Internet ignores both political and geographic boundaries!” To anyone with even a minimal level of technical expertise, this statement is nothing more than a grade level observation. Yet if we use it as a lens to examine the future, it offers a few interesting implications. Especially if we have a minimal level of technical experience, and are living outside of what we refer to as the “third world”.

As a writer with regular columns in computer magazines for the past few decades, I receive many e-mails requesting my view of trends in IT employment opportunities. I repeatedly get asked by people who should have the answer within their reach, if the current down turn in North American IT opportunities will end… and when?

The reasons for the down turn are many: a recession, an oversupply of capability, a recent house cleaning in most IT shops worldwide, the trend to outsourcing and the real threat, the rise of off shore services in the white collar arena.

Will the downturn end? Look back to the opening line of this article… “The Internet is ignorant of both political and geographic boundaries!” now add an additional ingredient. The cost of living in third world countries is significantly less than it is here in North America and Europe.

This results in the following prediction: IT employment opportunities for particular skill sets will continue to plummet. There will be no turn-around. Technology is the great equalizer. Just as heat travels from hotter to colder, and a high pressure zone will equalize with a low pressure zone if given the chance, by eliminating the geographic boundaries, telecommunications allows “work” to seek out the most hospitable climate.

The “work” affected is not restricted to application development, it includes the following categories; Data Entry, Call Centers, Back-Office Operations, Document Imaging etc.

One response to this is… “We’ll do it better! We’ll be more efficient! We’ll use technology!” and the counter strategy is… “Anything you can do, we can do cheaper… because we have an advantage — our standard of living is lower.” Another response is to attempt to legislate a solution, which only serves to create a black market of opportunity.

There is no new force at work here. We’ve seen this happen before. People from China were shipped into NA to build the great railroads because they were cheaper than local labour. This time we’re shipping out the work, instead of shipping in the people. Exactly the same concept, just implemented differently.

The world is filled with economic inequalities; there are the Haves and the Havenots; the “1st World” and the “3rd World”. With the stated goal of working towards some sort of economic balance, we go to great lengths to provide loans to developing companies, and according to many, these loans do little to redress the balance. Meanwhile the global telecommunications network, part of which we know as the “Internet”, is becoming the unexpected solution.

Of course, there isn’t any solution which isn’t seen by some as a new and threatening problem. If you’re someone in North America who is losing, or has already “lost”, their job to a programmer in India, Pakistan, China, Poland etc. (the list is long… but then so was the imbalance) then you’ll have an understandably different view of this rising trend. From your perspective you’re losing your livelihood to an outsider, to someone who doesn’t even live in your country.

There are many who argue that off shore outsourcing is unpatriotic. That work generated in “insert country of your choice” should remain in that country. That argument, while compelling at various levels, ignores the economic reality. While there are many who only “buy” products made in their own country, there are very few who would support a boycott of sales to ALL other countries. Question? MS Windows is developed in the USA… should we stop selling it to other countries, because it has put their O/S programmers out of work?

1st law of economic entropy: Work flows from higher to lower standards of living. The Internet facilitates this process.

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Entry filed under: Change, Communicating, Communications, Ethics, Future, Technology.

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4 Comments Add your own

  • 1. Cathy  |  June 11, 2008 at 1:23 pm

    Your blog entry perfectly illustrates why I think that immigration of information systems workers to my “first world country” (USA) is not a threat to me: I can easily compete with anyone who pays the same price for groceries, the same taxes, the same gasoline price. I cannot compete with those whose expenses are very much less. If that worker is over here and has taken my job, at least I can get a job at the grocery store & sell him/her groceries. If that worker stays in their own country and takes my job, they do not pay taxes in my community, nor do they support the services in my community. It is a total loss.

    Reply
  • 2. kcowan  |  June 16, 2008 at 11:14 am

    The inevitability of the process is the thing that most people do not get. They want to legislate the process out of existence by raising unnatural barriers.

    Please save us from our politicians (and maybe ourselves)!

    Reply
  • 3. Phillip Abbott  |  June 17, 2008 at 6:44 am

    You obviously haven’t tried buying property in Bangalore lately!

    One response to this is… “We’ll do it better! We’ll be more efficient! We’ll use technology!” and the counter strategy is… “Anything you can do, we can do cheaper… because we have an advantage — our standard of living is lower.” Another response is to attempt to legislate a solution, which only serves to create a black market of opportunity.

    Reply
  • 4. Andre  |  June 26, 2008 at 12:37 pm

    In terms of the bigger picture, work outsourced to someone in a country with lower living standards can not be seen as a “total loss”, as Cathy writes. I agree that from a local perspective this is what it looks and feels like, but an important point from Peter’s article is that the grave imbalances in the world are somewhat addressed by such outsourcing, so from an imbalance view, this is a gain. It’s all a matter of perspective.

    One result may be some degree of redress of imbalances, although that will imply a lowering of standards in the “have” countries. Is that necessarily a bad thing? Depends on how much “lowering” occurs, of course, but if new home construction started replacing McMansions with more appropriately-sized homes, for example, I would not mind at all. People might actually be able to afford these homes, and not live in debt for most of their adult lives, or experience foreclosure. Hey, that could even “raise” my standard of living!

    Wish I could see how this pans out 10 years down the line (don’t we all?)

    Reply

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