The outsourcing of traditional IT jobs such as systems administration, help desk support, programming and testing to lower cost countries with skilled workforces like India, China, Russia, the Philippines, Vietnam, and others is a fact of life that is unlikely to change. Now the spread of cloud computing and software-as-a-service (SaaS) further reduces the need for traditional in-house IT groups whose people primarily do system administration, help desk and programming. These trends cannot be resisted; the economic forces that drive them are too powerful. So what will company in-house IT groups in North America and Europe look like in the next several years? And what new skills will they develop?
IT professionals in developed countries will find ways to leverage these trends in outsourcing, cloud computing and SaaS and use them to enhance the value they themselves deliver to the companies they work for. That is the reason they won’t be outsourced. Achieving enhanced value calls for three things from IT professionals: 1) they must do more than just cut costs and save money; 2) they need to develop skills and become experts in “IT-and” (as in IT and finance, IT and sales, IT and marketing, IT and fill-in-the-blank); and 3) they need to use IT agility to drive business agility.
The first imperative for company in-house IT professionals in developed countries is to do more than cut costs. If all a company IT group does is cut costs, then they will soon cut themselves out of a job. Cost cutting alone inevitably leads to the conclusion that the most money can be saved by simply outsourcing the entire IT group. So IT professionals in high cost labor markets like North America and Europe need to find ways to increase the value they deliver and that means using IT to make money for the companies they work for.
This second imperative - using IT to make money means IT professionals need expertise in what I'm calling IT-and. IT-and requires people to have solid grounding in traditional IT skills (like system development and operations) and they must stay current with evolving technologies. And then they combine those skills with subject matter expertise in different areas of business. That combination enables them to establish close working relationships with non-IT people so they can use IT to make money.
And this is where the third imperative arises. This imperative is to use IT agility to get things done in a timely and cost effective manner. Using their skills in IT-and, IT professionals spot value creation opportunities in their business areas of expertise and work with people in those areas to realize that value. Because IT is now so integral a part of every product and service, companies need IT agility to deliver the systems they need to launch new products and enhance existing ones. IT agility is essential if companies are going to respond to rapid change in their markets and customer desires.
Using agile development, IT professionals can leverage outsourced programming and combine it with smart use of cloud computing and software-as-a-service and social media and consumer IT devices (like iPhones and Androids and iPads etc.). This makes it possible to quickly deliver systems at low cost and enable companies to try out lots of new product ideas and explore lots of new markets. Constantly trying out new products and exploring new markets is the best way for companies
The value provided by in-house IT professionals who respond to these three imperatives is to a large degree something that cannot be obtained from an outside provider. Delivering this value is a full time activity and it must be performed by people who can tailor their approach to fit a company and its strengths and weaknesses. IT professionals that can go beyond just cost reduction, who use IT-and skills to spot opportunities and then employ IT agility to respond to those opportunities are exactly the people needed by companies in their in-house IT groups.
In addition to this type of new in-house IT professional, there are also lots of IT professionals in the US and Europe with traditional IT skills who need to find ways to compete and earn a living. The reality is that a global IT services market now exists and it sets prices for basic IT skills and services just as global markets set prices for stocks and bonds and other commodities and products from fuel oil to blue jeans. Fighting these global markets is a losing proposition. So don’t fight it – go with it. What would happen if IT professionals in developed countries let their rates fluctuate with the market while continuing to add value to their services to attract customers?
Offshore outsourcing firms in developing countries are currently charging rates between $15 to $55 per hour for various skills ranging from programming and QA to more advanced system design and development. Yes it is hard for IT workers in developed countries to see rates for their skills go from $100 an hour to $25 an hour. But $25 or even $15 an hour is still more than the pay rates for many service sector jobs, and they are also more than what a laid off IT worker gets from unemployment benefits.
What would happen if programmers and system administrators and help desk workers who no longer work for in-house IT groups were to band together in guilds or networks with other talented programmers and DBAs and web designers (social media like Facebook and LinkedIn make this very possible) and go after the same outsourcing contracts that IT services firms in India or China or Russia go after?
Nothing stays the same; everything changes. As developing countries become more developed, their costs start to rise too – look at what is happening in India. The best approach is to get into the game and stay in the game. We cannot let the pace of change and market fluctuations defeat us. As long as we stay in the game we can figure out how to win, and the longer we're in the game the more we learn and the better we perform.
In the words of Winston Churchill, “Never, never, never, never give up.”