Sending IT Offshore

When it comes to information-technology (IT) jobs, the world really is flat, in author Thomas Friedman’s phrase. The question of whether to send IT work overseas is no longer a thorny concern for most American companies. The issues that organizations confront today are more often practical than philosophical: Not should we farm out IT tasks, but how do we go about it?

A number of IT consulting firms in the Twin Cities now act as intermediaries to help companies send software-development projects and ongoing systems-maintenance operations to Asia or Eastern Europe. These consultants say they rarely encounter a client anymore with qualms about sending high-tech American jobs overseas. The stigma has lost its sting, at least from the middleman’s point of view.

For one thing, consultants say that the projects they send offshore rarely result in the direct loss of American jobs. “We’re usually not displacing any local IT people; more often it’s about adding incremental stuff,” says Bob Keller, chief technology officer for Ambient Consulting, Inc., in Minneapolis, which sends software-development work to a partner firm in Vietnam.

For instance, he says, companies that need to “ramp up” quickly for a project often find it easiest to go offshore simply because that’s where they can find enough temporary help. “An average mid-market company in Minnesota might have an IT staff of 10 or 20 people,” Keller says. “Suppose the company suddenly needs 10 more to migrate a legacy system to new technology.” Given what consultants agree is a genuine global scarcity of IT talent, those 10 project workers probably are easier to locate outside the United States—in India, for example, which reportedly boasts well over 1 million software engineers.

The fact that Asians also work for less money is a powerful inducement, but not always the primary driver, consultants say. Even if they were indifferent to wage scales, American companies couldn’t keep all of their IT work in the United States because there aren’t enough qualified Americans to do it. But companies do care about the money, of course, especially when their competitors already are using cheaper offshore labor.