Monday, April 26, 2010

One way of looking at outsourcing

Initially, I was totally against outsourcing. It seems so unAmerican.

Then I had a student write a paper advocating it. He raised several good points.

Later, I watched a great 30 Days episode on outsourcing where a computer programmer spends 30 days living in India with the people who had outsourced his job.

Initially, the American computer programmer is outraged - rightfully so - at having his job outsourced to the lowest bidder in Bangalore India. However, his father - at dinner the night before he flies out - lays down some very good reasons for outsourcing.

Now, I just read an interesting letter in The World is Flat from David Schlesinger, the global managing editor for Reuters news service, that illustrated for me that maybe outsourcing really isn't so unAmerican after all. In fact, it might be very American!

Off-Shoring with Obligation

I grew up in New London, Connecticut, which in the 19th century was a major whaling center. In the 1960's and 1970's the whales were long gone and the major employers in the region were connected with the military -- not a surprise during the Vietnam era. My classmates' parents worked at Electric Boat, the Navy and the Coast Guard. The peace dividend changed the region once again, and now it is best known for the great gambling casinos of Mohegan Sun and Foxwoods and for the pharmaceutical researchers of Pfizer. Jobs went; jobs were created. Skills went out of use; new skills were required. The region changed; people changed. New London, of course, was not unique. How many mill towns saw their mills close; how many shoe towns saw the shoe industry move elsewhere; how many towns that were once textile powerhouses now buy all their lines from China? Change is hard. Change is hardest on those caught by surprise. Change is hardest on those who have difficulty changing too. But change is natural; change is not new; change is important. The current debate about off-shoring is dangerously hot. But the debate about work going to India, China and Mexico is actually no different from the debate once held about submarine work leaving new London or shoe work leaving Massachusetts or textile work leaving North Carolina. Work gets done where it can be done most effectively and efficiently. That ultimately helps the New Londons, New Bedfords and New Yorks of this world even more than it helps the Bangalores and Shenzhens. It helps because it frees up people and capital to do different, more sophisticated work, and it helps because it gives an opportunity to produce the end product more cheaply, benefiting customers even as it helps the corporation. It's certainly difficult for individuals to think about 'their' work going away, being done thousands of miles away by someone earning thousands of dollars less per year. But it's time to think about the opportunity as well as the pain, just as it's time to think about the obligations of off-shoring as well as the opportunities . . . Every person, just as every corporation, must tend to his or her own economic destiny, just as our parents and grandparents in the mills, shoe shops and factories did.

Since we are going to be reading Upton Sinclair's The Jungle in a week, this letter reminded me that our country has always faced economic upheavals and despair. I dare anyone to brave that novel and not come away with a sense of dread for Jurgis and his family and the system that chews them up and spits them up just as the meatpacking industry does to the livestock in consumes at a hellish pace. I think of this as outsourcing in reverse. The jobs in Packingtown of Chicago are so vile and dangerous that there are few Americans willing to do the work. So we import millions of people to do it for the lowest wages possible.

Sound familiar? The only difference is that today we take some of the least desirable jobs (telemarketing comes to mind), and we ship it off to India for people to do it for the lowest wages possible. The key difference here is that technology allows the people to stay in their own countries instead of braving the oceans to get here.

Outsourcing is just another bump in the road for the American worker. Now, I know it's callous as hell to refer to millions of workers being out of work as 'a bump in the road.' That is not my intention.

History proves that this has always happened. From an early age I remember Mom and Dad worrying about my father's employer, Stordahl Trucking, going under. It did. Dad, though, caught on with Hartz Trucking. He was able to adapt and move on with the market.

But millions of Americans are trapped and can't move on, or the jobs for which they were trained or educated have simply evaporated. That's where those who are able to will adapt; those who can't will suffer.

And it's a damn shame.

But that's the economic reality of the 21st century. Better be at your sharpest. For, as Alan Winder notes, we can expect in the next 30 years close to 40 millions jobs to be outsourced.

What can you do or go into for a career that won't be outsourced? Or what can you do or go into for a career that we will outsource jobs to America when India and China find it cheaper to do what America is doing now (and outsource jobs)? Maybe it will never come to that.

But the factory worker and laborer is a dying a breed. I'm not saying that they aren't talented and necessary. That's not it at all. Rather, the economic reality has changed. We don't need as many people to work on an assembly line as we used to. Machines can do the work more efficiently or we can outsource the whole damn plant to a third world country.

What I'm saying is that the workers of today need to be knowledge workers. They have to adapt like no other employees in our country's history. Gone are the days when you could intern at a company, sweeping floors and running errands and over the course of one's life - given a great work ethic and amount of sacrifice - one could work their way to the top.

That's not how our companies work anymore. You can strive and work and sacrifice all you want at Digi Key, but you'll never have the office next to the CEO's.

But you can go through training or earn degrees that make you flexible enough to adapt and benefit the company as it grows and changes.

I think of my brother. He has worked for the beat plant in Crookston all of his adult life. He began as a season laborer, but he soon saw that machines and computers would replace him. He got on full-time and took training courses (I remember him going to Colorado State one summer to take math and science classes) to move up. In other words, to make him more flexible to adapt to the changes in the company. He has been doing this routinely for the past 15 years. Now he is in management. That is how one adapts in the 21st century.

Otherwise, you get left behind.

Here are the ten fields that Thomas Friedman believes will be relevant in the flatworld (and likely to not be outsourced).

* The butcher, baker, and candlestick maker. Some jobs simply cannot be outsourced. Even Winder - the economist from Princeton - asks the question, will you be better off 10 years from now as a carpenter or accountant or lawyer? Many of the accounting and lawyering work will be outsourced. But you might still find a job building homes here (so much for knowledge workers then, right? Well, not so fast. Who is going to get more jobs - the handyman who puts up a home made sign along the side of the road (as I saw on the way to the cities last month) or the carpenter who develops a great website with examples of his or her work and testimonies from others?).

* Anything green. Go into science. This is the next revolution. You invent how to fix global warming or how to power a car on water or how to clean up the oceans or purify the air, and you'll be in business.

* Passionate Personalizers. Those people who just connect with their customers and ooze personality. Those who build relationships with their customers. Friedman talks about a guy who sells lemonade at one of the major league ballparks. It doesn't get much easier than lemonade, right? Anyone could do it. Hell, machines do this in most ballparks. But this guy sings, dances, jokes, and makes himself all part of the experience at the ball park. And Friedman noticed that at the end of each ballgame, this guy has a wad of cash in tips twice as thick as anyone else. You can't outsource personality and enthusiasm.

* Math lovers. Lord, how we love our data. And who is going to analyze all that data? Math lovers.

* Explainers. Here's where I come in - teachers and professors and those who can take something complex and (hopefully) simplify it and explain/teach it to others.

* Localizers. Small businesses. You need your groceries, supplies, insurance, and gasoline from your home town.

* Leverages (technology). This means those people who can use technology in their businesses or ways of life to adapt to the flat world. Friedman gives an example - while in Budapest at a conference, he met his chauffeur. The chauffeur asked Friedman if he'd mention his name to some of his friends if they were ever in town and needed someone to show him around. Friedman said sure, just give him his card. The chauffeur said he'd go one step further and gave Friedman his website. A chauffeur with a website. So when Friedman got home, he googled the website and was wowed by it. Not only did it have pictures and video, but it also had music and came in three languages. That's using technology to your advantage.

I also think of UPS vs. the Post Office. One is thriving because they use technology to handle internal logistics of large corporations (such as Digi Key) while the Post Office is struggling just to stay open on Saturdays (not to mention the monthly hike in stamps).

* Collaborators. Team work. Those who can take an idea and build on it. Think of the search engine, firefox. It was created by two kids who lived in two different countries and, in fact, never met. They just collaborated on line. And they were sick of Apple and Microsoft cornering the search engine market.

* Specialists. Those who are experts in their fields. Not just that, but also those who have opposing expertise's. When speaking at MIT on behalf of the New York Times, he said that they needed engineers in the worst way. But they need engineers who actually read the New York Times - or better yet- an engineer who reads at least three papers a day. The reason being that the Times could outsource their engineering needs in a split second if all they needed were designing done. But they want done what they can't imagine yet. Hence, they need an engineer who is an expert in journalism. That way she or he can take those two apparently opposite expertise's and mash them together to form something no one has ever thought of.

Exciting, isn't it?

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