Wednesday, May 12, 2010

How off-shoring work affects economy.

This one is on my mind for a long time now... How off-shoring reduces the capability of the local people. How reduced capabilities of local people affects the economy of our country. How this effect in many countries affects world economy...

I live in a wealthy country. No doubt about that! And I don't regret living here. The Netherlands is a nice country to live in and the climate is OK-ish :) - I noticed on a recent visit to India and Egypt that the weather can be better - but I'm not complaining at all!

Here's the deal: current economic climate in our country sort of dictates that price and time to deliver is what you need to be able to compete. If you are too expensive you won't deliver services to other companies. And the companies want time-to-market to preferably be yesterday. Competitive planning and cost can only be achieved with resources outside of our country - simply because the rates are lower. Because of the lower rates, we can plan for more resources hence reducing the time to deliver. I know that this is a statement from utopia but generally you should get the picture.

Initially one starts off-shoring test work. This would reduce the investments in testing. Still you would need local resources, but less. Next, you figure out that perhaps the build work could be off-shored as well. So you create a reference architecture (don't forget!) and off-shore the build activities. Yes you need local resources but again, less. Other competitors do the same so in order to stay competitive you need to off-shore more. You train the most senior resources in off-shore locations to do the design work for you and let them work locally for a while. In the end you let them go back again and more work is done from off-shore. You have a few local resources to manage the off-shore resources, but far less than initially. Now the issue becomes apparent: the design work is off-shored too. A designer can only do "so much" in splendid isolation before he needs to go back to the delivery organisation and get re-educated on current technology and architectural frameworks. Now this is a lot harder as the resources to learn from are not local. So this will happen less and less. Next step is that the architects see that the effectiveness of the local resources reduces. They cannot rely on them as much as they could when all the resources, from testers, developers and designers were still locally available. Less and less knowledge resides in the heads of local people and more knowledge resides in the heads of remote people.

On large scale, this movement is threatening to our current economic climate. Change is good but I have my doubts about this one. What's the end state? That the local "architect" resources are nothing more but project managers, or perhaps even program managers, when they start off-shoring the local project managers too? Where does this end? Do we still have local jobs? I know that the off-shore resources will become more expensive and a balance will be the result, but before the balance is reached, the more expensive off-shore resources will be replaced by cheaper off-shore resources from another country. And this will most likely be repeated in a wave-like pattern with it ups and downs...

Don't get me wrong - It's not that I begrudge other people having better times but it still feels threatening to me. I guess it is that I'm afraid for what I, or especially my kids will notice: we will become dependent on other countries. And because of that, they will have a harder time living. Now I know that's also what my parents thought and their parents -our kids will live in a much harder world to live in- but I still can't say that I am comfortable with it. One always wishes the best for their kids, and this one is not putting my mind at ease...

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