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| March 14, 2006 |
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Traffic Myths 1 & 2
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Review the SPECIAL EDITION: Trends In The Changing Workplace.
Reveille and Hyperbole
The Cenek Company, an organization development consultancy based in Cedar Rapids, Iowa, recently launched the Cenek Report. A web publication for the thinking HR professional, Cenek Report covers the most relevant trends and research in the world of work.
Welcome to matchtech.com The most advanced source of specialist recruitment solutions in the technical sectors.
Redmatch, a leading recruitment software company, announced today that premier publisher Lee Enterprises is implementing Redmatch Recruiter for its 58 daily newspaper operations and other publishing and online subsidiaries.
Deck Chairs
Indira Nair has joined Malaysia Airlines to head the national carrier's communications strategy as it attempts to rebound from a period of prolonged struggle. Nair, who had spent five years as Ogilvy Public Relations' regional chief talent officer at the
Asia Pacific region, pointed out that her new role, senior general manager for corporate communications, reflects the importance that both MAS and new chief executive officer Idris Jala are attaching to effective, strategic communications....First
Advantage Corp., a global risk mitigation and business solutions provider has hired Dean Ford to direct and manage its new commercial driver screening product, Employment History Verification. As director of client relations, Ford will be responsible for managing service implementation, ongoing data
expansion and customer service.
You Should Know
Global:
Weirdest job-seeker stunts
Job seekers will do almost anything to stand out among the competition. There is no length a candidate won't go to and no line someone won't cross in order to get a job. (CNN)
Online Classifieds Fall Behind
At a recent conference in Paris, it was reported that US revenues for online classifieds were substantially below those for classified advertising in print. Vin Crosbie of Borrell Associates, one of the speakers at the the World Association of Newspapers' World Newspaper Advertising Conference & Expo held in
Paris in late February, pointed out a substantial discrepancy between online and offline classified advertising revenues. According to Mr. Crosbie, newspapers need to replace every lost reader with between 20 and 100 Web site readers to recover lost income. "We need to make the revenues we earn from online
readers equal or more than what we earned from the people who no longer read us in print," he said. (Emarketer)
Outsourcing Is Misconception
Impression about outsourcing jobs in the computer science profession could be tending to stop some students from walk on the field. But a topical study shows those rumors are false. "The awareness of jobs left could make people less possible to enter computer science fields," said Robert Walker,
associate professor and provisional chair of the Kent State University computer science department. "Really there is a myth that the whole thing is going to China and India." (i-newswire)
Report Predicts Massive Outsourcing Rise
A new report from media research company Screen Digest has highlighted a marked increase in developers outsourcing game development costs to alternative services providers, many located in Eastern Europe and South Asia. The report, named Outsourcing in Next Generation Games Development, estimates that the
market for game outsourcing, largely insignificant just five years ago, will reach $1.1 billion by the end of 2006 and is set to grow to $2.5 billion by 2010, representing around 40 percent of total game development spend. (Gamasutra)
HP aims to be LatAm outsourcing leader in 5 years
US IT giant Hewlett-Packard (NYSE: HPQ) (HP) plans to be the outsourcing leader in Latin America within five years, HP Latin America services and corporate accounts manager Leonardo Mendoza was reported as saying by magazine IDG Now! The company expects a 30% increase in its Latin American business in 2006 so
as to surpass the market leaders, which US consultancy IDC considers are IBM (NYSE: IBM) and EDS (NYSE: EDS). (TMCNet)
Will Apple Outsourcing to India Equal Lost Jobs and Frustrated Customers in America?
Apple Computer Inc. announced its decision to set up its first massive technical support center in India. It will open as early as May 2006. Apple has officially jumped into the ranks, with Dell and other global technology companies, of those who outsource outside America. Apple fans and employees, in the
United States, have been posting their concerns over the potential loss of employment and the quality of technical support that Indian employees can provide. (AppleMatters)
The truth, backed by data, about offshore outsourcing
Amid all the rhetoric and emotion, very little fact has emerged about outsourcing. A new report from the Association for Computing Machinery, however, changes that, explains David Margulius in
Experts offer fresh perspective on offshoring IT. This "truly great desert island reading," provides a "snapshot of globalization is really working from a non-U.S.-centric perspective." The report emphasizes the importance of
strengthening education, technical training, and R&D investment, while cutting away regulatory barriers to the free flow of talent. Is there an echo coming from the corner offices of IT's biggest companies? (InfoWorld)
India:
Japan's IT outsourcing set for big push
The push towards furthering the momentum of IT outsourcing from Japan may get the assistance in the form of a body for the promotion of investments from Japanese companies into India The Institute for Indian Economic Studies (IIES), to be set up in April, is a major initiative being taken by Professor Eisuke
Sakakibara of Keio University, Japan. He was formerly on the board of Wipro and currently an advisor for Wipro Technologies. The institution's agenda would be to provide an analysis of the Indian economy as well as deal with the regulatory issues for Japanese companies keen on investing in India. Advisors to
this body from the Indian side will also include Wipro Chairman Azim Premji. (IndiaTimes)
Ireland:
Latvia concerned by 'brain drain' loss to Ireland
Latvia's European Commissioner Andris Piebalgs warned yesterday that the brain drain of young qualified people moving to Ireland from Latvia is hurting its economy. He said the huge amount of migration since Latvia joined the EU was "worrying" and a clear wake up call for the Latvian authorities to try to
attract people back from the Republic. "I personally have fears even if it is 15,000 and not 40,000 people, it is still a huge number of people," Mr Piebalgs told The Irish Times. "The difficulty is these are generally people with initiative and it is a significant number of people out of a population of just
2.3 million." (Ireland.com)
New Zealand:
Employers told skills shortage here to stay
Gisborne employers were this morning given a wake-up call on the fact that the skills shortage is here to stay, and likely to intensify as local businesses compete against an ageing population and continuing urban drift. Members of the Employers and Manufacturers Association (EMA) were this morning urged to
take the trend on board and adapt to the new environment if they want their businesses to survive. The skills shortage was on a scale not seen in this country for over 30 years and it was likely to stay around for a long time, EMA central region chief executive Paul Winter told Gisborne employers. The pool of
people employers had always been able to count on for skills was simply no longer there and was unlikely to reappear, he said. (Gisborne Herald)
UK:
Doors Open for Brains and Money
Under a new policy Britain will open its normal immigration channels only to those with money and extraordinary skills. The new policy follows a toughening of asylum rules earlier which has brought a sharp fall in the number of applications. In effect Britain is now closing its doors to almost all the sort of
people who came in so far as immigrants. ''The whole driver behind the system is the needs of the UK economy,'' Immigration Minister Tony McNulty told IPS. (IPSNews)
US:
Employment survey suggests demand is deep
Analysts once again have built up a head of steam in their optimism about the government's monthly jobs report, due Friday morning. Economists expect that about 210,000 jobs were created last month, up from 193,000 in January, according to surveys by several financial news services. Some analysts predict that
the January number will be revised upward. The February number could be larger than the consensus forecast, if the effect of a cold snap early in the month did not curtail hiring as much as feared. But, as was the case a month ago, traders expressed their optimism by selling shares on the day before the
announcement. The Dow Jones industrial average fell 33.46 points, to 10,972.28. A month ago, the Dow lost 102 points on the day before the January jobs report. (ChicagoTribune)
Fewer Americans are working past age 65 Report provides snapshot of age group as Baby Boomers near retirement
Americans are living longer, healthier lives than ever before, but they aren't working into their old age nearly as much as seniors did 50 years ago. A government report released Thursday shows that only 19 percent of men 65 and older were part of the labor force in 2003, down from 46 percent in 1950. Women
are working in much larger numbers earlier in life, but among those 65 and older, their participation in the labor force has remained steady at around 10 percent since 1950. (MSNBC)
US's Snow expects strong job growth for all 2006
U.S. Treasury Secretary John Snow said on Friday that he expected jobs to keep growing at a rate above 200,000 a month for the rest of 2006. "We've been averaging over 200 (thousand jobs a month) since the hurricanes and I think we're going to continue to see job growth in that range going forward," Snow said
in an interview on Bloomberg Television. Hurricanes Katrina and Rita, which struck late last summer and in the early fall in the Gulf Coast region, slowed hiring in September and October but the pace picked up in November. (Reuters)
Survey Sez:
Globalization and Offshoring of Software
Why this Study?
This study reports on the findings of a Task Force established by The Association for Computing Machinery (ACM) to look at the issues surrounding the migration of jobs worldwide within the computing and information technology field and industry. ACM initiated this study to provide a deeper understanding of
the trends in, and the forces behind, the globalization and offshoring of software. Because ACM is an international educational and scientific computing society, the study approached the issue of offshoring of software from an international as opposed to a United States-centric perspective. Moreover, the task
force that conducted the study comprised not only computer scientists (ACM's traditional constituency) but also labor economists and social scientists from around the world. We believe that this approach, and this perspective, are unique. Most reports on globalization and offshoring are produced either by
governments or national organizations, and thus provide an inherently national perspective, or by consulting firms in pursuit of their own or their clients' business interests.
The primary purpose of the study is to provide ACM's 83,000 members, the computing field, the IT profession, and the public an objective perspective on current and future trends in the globalization of the software industry so that ACM members can better prepare themselves for a successful future in the
system, software, and services portion of the global information technology field. We also believe this extensive study will be of value to those shaping the policies, priorities, and investments any country must make if it desires to remain or become a part of the global software-systems-services industry.
Findings and Recommendations
In reviewing many existing reports, data, theories, and perspectives, a number of key findings and recommendations emerged.
1. Globalization of, and offshoring within, the software industry are deeply connected and both will continue to grow. Key enablers of this growth are information technology itself, the evolution of work and business processes, education, and national policies.
The world has changed. Information technology is largely now a global field, business, and industry. There are many factors contributing to this change, and much of this change has occurred within the past five years. Offshoring is a symptom of the globalization of the
software-systems-services industry.
This rapid shift to a global software-systems-services industry in which offshoring is a reality has been driven by advances and changes in four major areas:
1.Technology-including the wide availability of low-cost, high-bandwidth telecommunications and the standardization of software platforms and business software applications.
2.Work processes-including the digitalization of work and the reorganization of work processes so that routine or commodity components can be outsourced.
3.Business models-including early-adopter champions of offshoring, venture capital companies that insist the companies they finance use offshoring strategies to reduce capital burn rate, and the rise of intermediary companies that help firms to offshore their work.
4.Other drivers-including worldwide improvements in technical education, increased movement of students and workers across national borders, lowering of national trade barriers, and the end of the Cold War and the concomitant increase in the number of countries participating in the world
market.
2. Both anecdotal evidence and economic theory indicate that offshoring between developed and developing countries can, as a whole, benefit both, but competition is intensifying.
The economic theory of comparative advantage argues that if countries specialize in areas where they have a comparative advantage and they freely trade goods and services over the long run, all nations involved will gain greater wealth. As an example, the US and India have deeply
interconnected software industries. India benefits from generating new revenue and creating high-value jobs; the US benefits from having US-based corporations achieve better financial performance as a result of the cost savings associated with offshoring some jobs and investing increased profits in
growing business opportunities that create new jobs. This theory is supported to some extent by data from the US Bureau of Labor Statistics (BLS). According to BLS reports, despite a significant increase in offshoring over the past five years, more IT jobs are available today in the US than at the height
of the dot.com boom. Moreover, IT jobs are predicted to be among the fastest-growing occupations over the next decade.
3. While offshoring will increase, determining the specifics of this increase is difficult given the current quantity, quality, and objectivity of data available. Skepticism is warranted regarding claims about the number of jobs to be offshored and the projected growth of software
industries in developing nations.
Data for making good decisions about offshoring are difficult to obtain. Government data as collected are not very helpful and do not adequately address the specific issue of offshoring. The objectivity and quality of other data sources, especially the data in reports from consulting
firms and trade associations, is open to question, as these organizations may be serving their own agendas. Projections are always more suspect than data on current employment levels.
4. Standardized jobs are more easily moved from developed to developing countries than are higher-skill jobs. These standardized jobs were the initial focus of offshoring. Today, global competition in higher-end skills, such as research, is increasing. These trends have implications for
individuals, companies, and countries.
The report considers several case studies of firms and how they are addressing offshoring, including software service firms in low-wage nations and four types of firms in high-wage nations: packaged software firms, software service firms, entrepreneurial start-up firms, and established
firms outside the IT sector. These cases show that the amount and diversity of work being offshored is increasing; and companies, including start-ups, are learning how to access and use higher skill levels in developing countries.
5. Offshoring magnifies existing risks and creates new and often poorly understood or addressed threats to national security, business property and processes, and individuals' privacy. While it is unlikely these risks will deter the growth of offshoring, businesses and nations should
employ strategies to mitigate them.
When businesses offshore work, they increase not only their own business-related risks (e.g., intellectual property theft, failures in longer supply chains, or complexity arising from conflicting legal environments) they also increase risks to national security and individuals' privacy. Businesses
have a clear incentive to manage these new risks to suit their own interests, but nations and individuals often have little awareness of the exposures created. For example, many nations have adopted commercial off-the-shelf (COTS) software and Internet Protocol technologies in IT-based military systems
and critical infrastructure systems. Many COTS systems are developed, in part or whole, offshore, making it extremely difficult for buyers to understand all source and application code. This creates the possibility that a hostile nation or non-governmental hostile agents (terrorist/criminal) can
compromise these systems. Individuals often are exposed to loss of privacy or identity theft. Bank records, transaction records, call center traffic, and service centers all are being offshored today. Voluminous medical records are being transferred offshore, read by clinicians elsewhere, stored and
manipulated in foreign repositories, and managed under much less restrictive laws about privacy and security than in most developed countries.
6. To stay competitive in a global IT environment and industry, countries must adopt policies that foster innovation. To this end, policies that improve a country's ability to attract, educate, and retain the best IT talent are critical. Educational policy and investment is at the core.
Building a foundation to foster the next generation of innovation and invention requires
- Sustaining or strengthening technical training and education systems,
- Sustaining or increasing investment in research and development, and
- Establishing governmental policies that eliminate barriers to the free flow of talent.
Developed nations can use education as a response to offshoring in order to protect national interests. It can, however, be complex for a nation to address offshoring through education for several reasons: educational systems are complex, with multiple degrees and multiple majors preparing one for an IT
career; the nature of the software work that is being offshored is changing rapidly; it is difficult to forecast national supply and demand needs for software workers; governments can only indirectly affect supply and demand in many nations; and it is difficult to translate an educational response to
offshoring into practical curriculum reform. For example, the United States educational system is still trying to understand how to change its curriculum to address application domain knowledge, a global workplace, and maintaining its innovative edge. In addition, the United States faces long-term challenges
from falling interest and skills in math and science programs in its primary education system. The European Union is struggling with the implementation of the Bologna Directive to achieve a single European educational framework.
There are some general principles that all countries can follow to mount an effective educational response to offshoring:
1. Evolve computing curriculum at a pace and in a way that better embraces the changing nature of IT.
2. Ensure computing curriculum prepare students for the global economy.
3. Teach students to be innovative and creative.
4. Evolve curriculum to achieve a better balance between foundational knowledge of computing on the one hand, and business and application domain knowledge on the other.
5. Invest to ensure the educational system has good technology, good curriculum, and good teachers.
Conclusion
Globalization of, and offshoring within, the software industry will continue and, in fact, increase. This increase will be fueled by information technology itself as well as government action and economic factors and will result in more global competition in both lower-end software skills and higher-end
endeavors such as research. Current data and economic theory suggest that despite offshoring, career opportunities in IT will remain strong in the countries where they have been strong in the past even as they grow in the countries that are targets of offshoring. The future, however, is one in which the
individual will be situated in a more global competition. The brightness of the future for individuals, companies, or countries is centered on their ability to invest in building the foundations that foster innovation and invention.
Read the entire study
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