“You can always count on Americans to do the right thing – after they’ve tried everything else.” – Winston Churchill.
It’s now October and things have changed quickly and dramatically since my last post in May. The time has finally come, the tide is slowly turning back. The days of moving high level jobs overseas for the sake of moving them is officially coming to an end. I’m not saying this to be protectionist, as I’m not a believer in protectionist policies. They never work. I do believe in the market, and that markets can and will adjust accordingly. I also believe that American business is waking up to the reality of what is occurring: the promise of the value proposition of I.T. offshore outsourcing isn’t always a slam dunk. (On that note, you may want to check out this article in CIO Magazine October 3, 2008: Offshore Outsourcing: What Role Will The Recession Play?)
We are in the middle stages of what will probably be a deeper than normal recession. As we look around the economic landscape, we can clearly see the devaluation of assets (stocks, real estate, commodities), as well as the inevitable salary destruction that is already happening.
While these cycles can be painful, they often sow the seeds of change that may in the long run benefit our much maligned I.T work force. Arising from the ashes of downsizing, layoffs and outright closings, I see hope for our knowledge workers and workers from other fields who have had their livelihoods impacted from the offshore trend.
In my recent daily discussions with I.T. executives, the theme has been very consistent. They’re really not saving much money using offshore resources. When the hidden cost are actually accounted for, the real savings, if any, is very disappointing.
The fact offshore outsourcing really isn’t the silver bullet everyone thought it would be shouldn’t really shock anyone. The hidden costs were just to great. The good news is, given technology and changing attitudes about remote work, the U.S. Knowledge worker is now in a much better position to compete with overseas resources.
Pun Intended
So this is my message: It’s time to Higher America
By Hiring America you will be elevating America. We know these jobs are coming back. The new administration and rising unemployment will see to that. However, the hiring that will be done will be completely different then the traditional hiring that we’re all accustomed. Like all recessions, this one will leave a permanent mark on the hiring landscape, and may forever change management’s view of where a worker has to be located to be productive. Soon, executives will come to the realization that if they were willing to let some one they didn’t know work half a world a way, then maybe it’s okay to let some one they in their own country work remotely. Of course, there will be give and take on both sides. For the employer, this will manifest in lower salary, real estate and infrastructure costs. Employers will also be able to take advantage of lower cost jurisdictions that exist throughout the U.S. For example, a financial institution in New York may be able to enlist the services of a mainframe programmer in Montana. Obviously, the cost of living in Montana is a lot less then New York. However, this still creates a winning situation for both sides. The financial institution gets a lower cost resource without all the hidden costs, and the knowledge worker in Montana works from home, earning a good living in a lower cost area.
I’m very happy to report that we’ve already deployed this model with our clients, and it’s working out amazing well. We call it the “Homeland Onshore Model” or HOM. For example, we’ve been able to provide domestic mainframe resources with over 15 years of experience at rates which represent over a 50% savings versus their FTE cost structure.
In a future post, we’ll discuss the structural changes that may take place and why the time has come for this model to be implemented on a much larger scale.
If you’d like to know more about HOM, please see our web site at: www.ITOnshore.com.
