India - threat or promise?

• Tags:
• Business Processes,
• Outsourcing To India,
• Cost Cutting

Peter Judge ZDNet.co.uk

Published: 31 Jan 2003 12:11 GMT

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Even with the rate of redundancies we are currently seeing, outsourcing to other countries could add to the gloom for some people in IT departments over here. If this affects you, and your job is one of the ones that might get outsourced, you may respond with outrage. Which is why the discussion at the conference focused on how to sell this idea to the companies involved.

The management strategy will be to make it "non-threatening". First take functions that are already outsourced and move them to India, as this does not affect people within the company. Then move functions which are distinct, and which are likely to be able to stand alone.

Senior management have to be convinced, of course, and this will be done through visits to India, where they outsourcer will show them that the Indian staff are just as knowledgeable and skilled as their western counterparts. "Once you take the leaders to India, they will agree," said Sid Khanna, a senior partner at Accenture.

And where possible, the Western employees will be kept on -- reducing by natural wastage, and moved to "customer facing" jobs.

But if this is about cutting costs in the West, or even if it is about shifting jobs to India for better quality, then it will impact jobs here. And how should we respond to that?

If the costs are as good as we were told at the conference, then surely the workers out there are exploited, you may say. Well maybe, but probably they are earning far more than the average wage, and have a career. Big outsourcers are unlikely to operate the kind of sweatshop for which some clothing manufacturers are justly criticised.

But it is certainly true that they are operating in the same kind of economic gravity-well that makes those sweatshops so lucrative. People there get paid less, so are prepared to do work for less than people here would want for it. This is an almost physical force pushing IT work in the direction of the developing world. Given better communications, it is just inevitable that much of "our" work will be done out there.

In the process, one would hope that the inequalities get ironed out a little. For sure, the global companies won't pay their employees in the developing world any more than they have to. But even big multinational outsourcers can't keep all the money in their pockets, and the outsourcing process inevitably leads to more money in the developing country, which is good.

The sour part of this, for IT pros in the West, is that it means less money in our pockets. But, taking the longest view, this may be inevitable anyway.

Overall, it would take many more planets than we've got to give everyone in the world the lifestyle we enjoy in the West. By cutting out waste, we could still all live comfortable lives, say the development experts. But moving to a fairer world is a process which must have an effect on the West.

Outsourcing to India is being driven by hardnosed business people wanting to stay in business, not by idealists wanting to make the world fairer. But on balance, the end results may well be positive for the world as a whole.

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