Offshoring: A professional perspective

In effect, we offshored to US companies over the last 20 years without any complaint, so having multinationals slug it out can only be to our advantage.



commentary Rather than knee-jerk emotional or doctrinaire responses to offshoring, the ICT industry needs to consider how technology fits in with the business world.

When I took over the ACS Presidency this year, I was handed endless reports and told we were facing a crisis. Offshoring would destroy our industry by putting mature professionals out on the street. This would ensure parents directed their children to avoid the ICT industry. Our sector would be wiped out in 10 years and Australian living standards -- which are intrinsically linked to how well we use and produce ICT -- would plummet.

I never understood dotcom. All my friends were making money by investing in or creating these companies. I just couldn't see myself using electronic greeting cards, booking in a pet to a kennel, or burying a loved one via the Net. I also didn't get Y2K because I couldn't see my fridge, toaster or car ceasing to function at midnight 2000. I asked myself if offshoring was yet another ICT hoax.

In effect, we offshored to US companies over the last 20 years without any complaint, so having multinationals slug it out can only be to our advantage.
Everything changed when Telstra announced 450 job losses via IBM GSA early this year. Suddenly it was real. Union officials were calling the ACS, asking would we march in front of Telstra?

I quickly learned there are two camps in offshoring, both equally unpopular. The first wants to protect the local industry and the second shrugs its shoulders and says offshoring is inevitable. I've met ACS members who work for offshorers, members who are considering offshoring for their organisations, members who are unemployed and fear they won't find another job, and members who've been offshored. I've read consultants' reports written in a patronising textbook tone explaining how globalisation is great and in the long term we'll all be better off.

I decided the way forward was charting a course to manage the impact of something that was already happening. I wanted rigour and a policy of substance. So I recommended getting economists involved -- a first for the ACS. Access Economics won the job and was quick to point out our industry was hampered by poor decision-making in boardrooms.

We heard that boards pressure CIOs for hyped cost reductions, and that offshore companies target directors, saying their CIO is narrow minded, spends too much, and is not interested in genuine cost savings. It was also clear that offshore companies are growing because there is fundamental demand for their services, and they do good work.

The ACS Offshoring Policy and Cost Benefit Checklist have won praise from both sides of government. But this debate has broadened beyond offshoring to the need for ICT leaders to join corporate boards to improve ICT decision making. For most organisations, ICT is the largest capital expense after labour and represents the key to productivity gains and competitive advantage. Poor ICT decisions can cost millions in project overruns, unscheduled downtime and poor integration. This also highlights the need for ICT committees at board level, along with existing audit and remuneration committees.

We must understand that ICT decisions underpin competitive advantage, security, compliance, and governance. How can boards develop a nose for ICT risk if ICT people are not part of the debate?

Today, offshore companies are winning business, but they are focused on pushing IBM, EDS, CSC, and the big consultants out. In effect, we offshored to US companies over the last 20 years without any complaint, so having multinationals slug it out can only be to our advantage.

Our industry is in transition and fortunately, after nine consecutive months of good news, worker displacement is minimal and the pie is growing. It will take an announcement of substantial job losses by a popular Australian public company or federal government department to reignite this debate. The next time will be ugly if the board and/or minister doesn't support that decision with a rigorous long-term analysis. The industry is unlikely to sit on its hands.

To mitigate this risk, I have been working with the previous and new Minister to develop re-skilling options. Whether an ICT professional loses work from offshoring or any other reason, we need a system that will quickly convert a LAN professional into a WAN professional, an ERP expert into a BI expert, or a programmer into a new technology wiz.

Edward Mandla is National President of the Australian Computer Society (ACS, www.acs .org.au). The ACS attracts a membership (over 16,000) from all levels of the IT industry and provides a wide range of services. The Society can be contacted on 02 9299 3666, or email info@acs.org.au.

This article was first published in Technology & Business magazine.
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