Between the Lines
Larry Dignan, Sam Diaz, Andrew NuscaOffshoring's toll: IT departments to endure jobless recovery through 2014
By Larry Dignan | November 17, 2010, 7:28am PST
Summary
Offshore outsourcing in information technology, finance and other back office functions such as human resources has nixed 1.1 million jobs since 2008 and will result in another 1.3 million positions lost by 2014, according to research from the Hackett Group.
Topics
Talent, Job, Skill, Recovery, Information Technology, Offshore Outsourcing, Finance, Offshoring, Hackett Group, Outsourcing, Recruitment & Staffing, Human Capital Management, Labor Relations, Workforce Management, Strategy, It Operations, Business Operations, Outsourcing & Subcontracting, Human Resources, Management, Larry DignanBlogger Info
Larry Dignan
Biography
Larry Dignan
Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CNET News.com. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism and the University of Delaware.
For daily updates, follow Larry on Twitter.
Sam Diaz
Biography
Sam Diaz
Sam Diaz is a senior editor at ZDNet. He has been a technology and business blogger, reporter and editor at the Washington Post, San Jose Mercury News and Fresno Bee for more than 18 years. He's a member of the National Association of Hispanic Journalists and a graduate of California State University, Fresno.
Andrew Nusca
Biography
Andrew Nusca
Associate Editor
Andrew J. Nusca is an associate editor for ZDNet and SmartPlanet. As a journalist based in New York City, he has written for Popular Mechanics and Men's Vogue and his byline has appeared in New York magazine, The Huffington Post, New York Daily News, Editor & Publisher, New York Press and many others. He also writes The Editorialiste, a media criticism blog.
He is a New York University graduate and former news editor and columnist of the Washington Square News. He is a graduate of the Columbia University Graduate School of Journalism. He has been named "Howard Kurtz, Jr." by film critic John Lichman despite having no relation to him. A native of Philadelphia, he lives in New York with his fiancee and his cat, Spats.
Offshore outsourcing in information technology, finance and other back office functions such as human resources has nixed 1.1 million jobs since 2008 and will result in another 1.3 million positions lost by 2014, according to research from the Hackett Group.
According to the Hackett report the job loss rate due to offshore outsourcing has accelerated each year.
Among the sectors taking the hit, IT is taking the brunt of the offshore hits. The good news for domestic technology workers is that growth in offshore IT outsourcing is leveling off. Now offshore outsourcing will hit corporate finance at a compound annual job loss rate of 20 percent. Hackett estimated that by 2014, the annual number of finance jobs lost due to offshore outsourcing will eclipse IT for the first time.
Hackett’s report is notable since it shows how career moves need to adapt. While some positions and skills will move offshore, other areas will have shortages and high demand. Hackett noted in its summary:
On top of 2.8 million jobs lost from 2000 to 2010 in finance, IT, HR and procurement, The Hackett Group projects that another 1.0 million will disappear by 2014 in North America and Europe, representing a total reduction of 46% of jobs in these functions since 2000. While the reductions were accelerated by the recession, they were driven largely by a structural, longer-term trend of ongoing innovation in companies’ Service Delivery Models, maturation of offshoring options, and increasing levels of automation. Nonetheless, looking ahead we see that several types of skill sets will be in high demand, including those in transformation, global management and relationship management. As a result, critical shortages and demand for skills in some areas will go hand in hand with large surpluses in others, putting a premium on companies’ talent management capabilities.
Here’s the job loss picture, according to Hackett:
The big question is what roles are least likely to get whacked by offshore outsourcing. Hackett analysts said change management, project management and global management skills will be in high demand. Commodity skills such as business support will either go to areas with lower labor costs or automated.
Hackett said:
Our experience in the trenches of strategic transformation in finance, IT, HR and procurement is entirely consistent with the picture of a jobless recovery painted in this research. Demand for onshore “commodity skills” will shrink as a result of innovation in the delivery model for business support services, offshoring and automation. Nonetheless, along with specialist roles, several additional skill sets will be needed to enable the scenario described in this research, providing possible new avenues for white-collar workers whose current jobs may be eliminated. First are “transformation” skills, including change management, along with program and project management. Also, management skills appropriate for globally distributed, multicultural and virtually integrated organizations will be in high demand. Finally, emerging service-oriented organizations will drive significant demand for skills in customer relationship management and service level management. This situation may be described as a talent paradox of the age of globalization: the existence of high demand for scarce skills in some areas, and low demand and large surpluses of skills in others.
Kick off your day with ZDNet's daily e-mail newsletter. It's the freshest tech news and opinion, served hot. Get it.
Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic.
Disclosure
Larry Dignan
Larry Dignan has nothing to disclose. He doesn̢۪t hold investments in the technology companies he covers.
Biography
Larry Dignan
Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CNET News.com. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism and the University of Delaware.
For daily updates, follow Larry on Twitter.
More from “Between the Lines”
Talkback Most Recent of 7 Talkback(s)
- Follow via:
- RSS
- Email Alert
RE: Offshoring's toll: IT departments to endure jobless recovery through 2014
That's all fine and dandy, but companies aren't going to create 2 million management jobs to make up for these outsourced jobs.
RE: Offshoring's toll: IT departments to endure jobless recovery through 2014
Of those 2 million that are jobless, most will not find employment at the salaries they made before their position was outsourced. That's a lot of money leaving a seriously ailing US economy and bolstering Indian and Chinese economies. The people responsible for IT outsourcing are directly responsible for causing harm to the US.
Most US programmers aren't even given the chance
@keith.r.benedict@...What chaps me is that most companies who outsource to India don't really give US resources a chance to compete against offshore, the assumption is that US resources will always cost more even if their quality of work is higher.
RE: Offshoring's toll: IT departments to endure jobless recovery through 2014
@terry floresThe reality today is us against them and not US vs India. An American will deal with an Indian if it causes benefit to an American and vice versa. It is about a globalized economy where cost matters no matter where you get it. Tomorrow if India becomes expensive jobs will move out of India as well.
Only way out is to be unique, be the best and outperform others in all departments. Nationality and fellow countrymen do not matter.
ashish.mumbai11/17/2010 10:16 AMTip of the iceberg
There are millions of other lost jobs that will be tied to these, farther down the food chain. Just like what happened in manufacturing, each lost IT job will cause a downstream ripple of job losses. Money that is sent to India for wages does not really "make it back" to the US. Most of their foreign exchange goes for commodities like oil and heavy industry goods from Korea and Japan.I don't expect anybody in Congress to do anything about this. Even the Tea Partiers are more likely to give the megacorps what they want than listen to the taxpayers about unemployment and protecting American jobs.
RE: Offshoring's toll: IT departments to endure jobless recovery through 2014
USAID's chief Rajiv Shah, a former Bill Gates employee is outsourcing 3,000 IT jobs to Sri Lanka. Since the Sri Lankans lack the necessary skills the US will train them. Cheaper labor for Microsoft.
Other causes for concern
Offshoring is definitely a concern, although I'd raise commodification of IT (cloud services), growing savviness of end-users, PC imaging (automation) and cheap (and auto-patching/repairing) PCs as a greater cause for concern. These factors could very well largely eliminate what we consider today to be entry level helpdesk/IT positions.
Talkback - Tell Us What You Think
Wednesday, November 17, 2010
Offshoring's toll: IT departments to endure jobless recovery through 2014 | ZDNet
via zdnet.com
Subscribe to:
Post Comments (Atom)
Posts
No comments:
Post a Comment