Career Strategies for the Age of Global Outsourcing
February 2005 – Martin Bean & Michelle Meyer
In today’s world of Information Technology, there is one topic that invokes emotion, opinion and impassioned discussion like no other. That topic is global outsourcing. In fact, this topic is so important to Americans that it gained a great deal of attention in the recent presidential campaign.
When the trend of global outsourcing first emerged, much of the discussion in the IT world centered on the negative effects on the U.S. IT industry and what could be done to stop it. Since then, we have all come to realize that this trend has not only continued, it has grown. About two years ago, Forrester Research issued a report calculating that nearly 3.3 million U.S. services industry jobs will move offshore within the next 15 years. This would equal annual job losses of about 300,000 over the next decade. In May 2004, Forrester updated its figures, projecting that a cumulative total of 830,000 positions will have moved offshore by 2005. It is no wonder that this trend is growing when you consider that between 2003 and 2008, the total savings from global outsourcing is expected to climb from $6.7 billion to $20.9 billion (source: ITAA 2004 survey.)
While savings to U.S. companies are seen as a positive outcome for the U.S economy, it provides little consolation to American workers who have already lost or will lose their jobs due to global outsourcing. It has made many of us question: Does cheaper, skilled labor available overseas mean the end for the American IT worker? The answer is that it definitely does not. In fact, many believe that global outsourcing will create new opportunities for American IT workers. According to the Information Technology Association of America (ITAA), “while offshore IT software and servicing outsourcing has displaced and will continue to displace workers, increased economic activity has created a wide range of new jobs.” More specifically, the ITAA predicts that due to this increased economic activity, more than 500,000 new IT jobs will be created between 2003 and 2008, and 250,000 of those jobs will be located in the United States. So, what jobs are likely to stay here in the United States? According to the American Electronics Association (AEA), there are indications that the jobs most likely to remain will be higher-end technology jobs, while lower-end technology jobs will continue to be lost to global outsourcing.
When companies look to outsource IT functions, they evaluate which jobs can be moved overseas without risking operational breakdowns or security breaches. They also are careful to ensure that intellectual property will not be compromised. Basically, this means that the IT worker with advanced knowledge of his company’s internal business processes is far more protected than the call-center or help-desk IT worker. The bottom line is that due to global economics, some of the lower-level IT jobs are going to leave the United States. The only way to keep jobs in the United States is to increase the capabilities and knowledge of the American IT workforce. We must increase our focus on the education of our workers to do what we have always done best—innovate and stay on the leading edge of technology.
Clearly, cost is always a factor when hiring, but there is something to be said for unmatched skill. The challenge for American IT workers is how to obtain unmatched skill in order to not only keep their jobs, but also to take advantage of new opportunities and grow their IT careers.
What You Can Do as an IT Professional
We find ourselves in the position of global outsourcing for a variety of reasons, not the least being that we have failed to keep pace with the continually increasing demand for IT literacy skills. For the individual IT professional, the only ways to maintain career security are to retrain, develop skills and focus on what is hot in the IT industry. According to the ITAA, “If the U.S. is to remain a leader in information technology, IT workers must remain at the vanguard of their profession. U.S. IT workers must be the best to build the best. That means education, training and professional development.”
Clearly, education and training are essential to expand skill sets, not only to qualify for the positions most likely to remain at a company’s U.S. headquarters, but also to qualify for the new positions created due to global outsourcing. According to The McKinsey Quarterly (July 2004), “Corporate savings (from global sourcing) can be invested in new business opportunities, and this investment will boost productivity and create new jobs. Experience suggests that these jobs will on average be higher value added.”
When deciding how to best position yourself for these newly created positions, be sure to choose the training and certification programs that teach the skills least vulnerable to global outsourcing. The key to survival is to prove your value to the organization. For example, highly skilled IT security professionals are in great demand and are also more likely to keep their jobs on U.S. soil. American companies are looking to protect their critical infrastructure and are more confident when handing the keys to their network to workers close at hand. When asked to identify the most sought-after specialties within their IT departments, executives responding to the Robert Half Technology “2004 IT Hiring Index and Skills Report” indicated that businesses are investing heavily in network security and need skilled IT professionals to assess system vulnerabilities and develop strategies to overcome them. Companies that have survived the onslaught of security attacks over the past few years have done so because their IT departments have stayed current with the solutions that would protect their infrastructure. For IT professionals, this means that you must constantly build on your knowledge in order to stay ahead and to ensure that your expertise remains valuable to you and your employer.
Along with proving value, you also must differentiate yourself. You cannot rely solely on your technology skills anymore. You must have the project management and business skills to prove the value of technology inside the organization. The ITAA said, “…for the IT worker interested in moving a career forward, problem-solving (and value creation) must be considered both a matter of having up-to-date technical skills, but also being able to step back and see the organization’s bigger business picture. Soft skills round out the technical worker and give the individual a sharper competitive advantage.”
The bottom line is that the only way to maintain career security is to move rapidly beyond foundational skills and begin building advanced skills. Where does this leave the entry-level IT worker? It is the age-old conundrum of the chicken and the egg: How do entry-level workers get the experience they need to build their skill sets when so many of the entry-level positions are sent overseas?
One unique program designed to address the challenges of the entry-level IT worker is the National IT Apprenticeship System (NITAS). CompTIA, the Computing Technology Industry Association, has partnered with the Department of Labor to develop this nationwide IT workforce development program to address the need for a better IT training model that incorporates on-the-job training.
NITAS provides the apprenticeship tools and infrastructure that ensure:
New IT workers entering the organization become productive quickly with minimal startup periods and with little or no re-work.
Existing IT workers learn new jobs, roles and skills as quickly as possible with minimal errors made during the training period.
Existing IT workers adapt to new technology and innovation more quickly and leverage those opportunities to secure competitive advantage for the organization.
All IT workers understand and appreciate the business dimension of their work and are able to effectively integrate IT as a strategic business driver.
Perhaps most importantly, the combination of classroom instruction, industry certification and on-the-job training provided by this program benefits IT workers by offering a method to achieve mastery in their profession, define a career path and gain a competitive edge over workers overseas.
Both entry-level and experienced IT professionals also need to look at emerging and growing industries to find new opportunities instead of concentrating solely on the career ladder in traditional IT industries. According to the ITAA 2004 survey, non-IT companies added the overwhelming majority of IT workers. Of the jobs created in 2004, almost 89 percent were added by non-IT companies.
One example of a fast-emerging and very innovative field requiring specialized IT skills is the geospatial industry. Simply defined, geospatial technology is the science and technology of gathering, analyzing, interpreting, distributing and using geographic information. This field has seen enormous growth, mainly due to its integral role in homeland security and national defense. This rapid growth has resulted in a significant lack of professionals and trained specialists to support the industry. According to Emily Stover DeRocco, assistant secretary for employment and training at the U.S. Department of Labor, “The geospatial technology industry has a current worldwide market of about $5 billion and is growing by 10 percent to 13 percent per year, a growth rate that is expected to continue throughout this decade. A survey of geospatial product and service providers revealed that 87 percent of respondents said they had difficulty filling positions requiring geospatial technology skills.” This clearly represents a huge opportunity for IT professionals willing to invest in acquiring these specialized skills.
Another example of an industry with expansive opportunities for IT professionals who understand the specific technology used is the health-care industry. A modern health-care study conducted by PricewaterhouseCoopers with R. Marreal and Associates concluded that improving patient-care capabilities through IT is the number-one priority of 63 percent of the health-care industry’s CEOs, CFOs and CIOs who responded. Information technology touches almost every function within the health-care industry today, from ensuring the right drugs are delivered to the right patients, to accessing patient records and ensuring the security of those records. According to the U.S Department of Labor, the field of health care information management is expected to grow 28 percent by 2010. Clinics, hospitals, insurance companies, HMOs, health-data organizations, government agencies, IT consulting firms and more are actively recruiting skilled professionals who have an understanding of both health care and information technology environments.
Opportunities do exist for every American IT worker, but in order to not only survive global outsourcing, but also actually grow your career, you must understand the current direction shaping technology and the needs of today’s employers. “Because the U.S IT industry is a value-added industry, it will only maintain its lead in global IT services if it is able to draw on a large, diverse and richly talented domestic IT workforce,” said Bruce Hahn, director of public affairs and grassroots for CompTIA.
What We Can Do as an Industry and a Nation
To focus on a solution, you have to understand the problem: Why is global outsourcing happening? Other countries have caught up in education and skills. U.S. performance in math, science and engineering is falling behind other countries, and the belief that the United States holds the most talented and highly educated IT professionals is waning. On a macro level, we must continue to innovate. Having a prepared and competitive workforce is an absolute necessity in today’s global economy. The IT industry must provide workers with the tools necessary to prepare them to adapt to new technologies, lifelong learning and global competition.
As a nation, we must continue to support legislation that addresses IT workforce issues. For example, the Technology Retraining and Investment Now Act of 2004, better known as the TRAIN Act, addresses an important component of the international competitiveness of U.S. workers. In the United States, it is largely left to companies and/or workers themselves to continually upgrade the IT skills they need to compete with their growing number of international counterparts. In addition, the ongoing cost of training is a substantial expense for U.S. companies facing building economic pressures to outsource jobs. The creators of the TRAIN Act have confronted these issues by proposing legislation that creates a public/private partnership through federal education and training tax credits to stimulate lifelong learning in information technology.
In addition, the Workforce Investment Act (WIA) is poised to help the nation’s workers gain the skills they need to succeed in today’s global economy. The WIA helps incumbent and displaced workers find new jobs through, among other things, access to training opportunities. Sadly, WIA has not kept pace with the IT skills needed to compete globally. As Congress works to reauthorize WIA, it must “harmonize” the act with the realities of the new economy, measure the success of IT training through achievement of industry-recognized certifications, help state and local workforce investment boards understand the role IT plays in our economy, as well as the need for IT-skilled workers across all economic sectors, and promote more on-the-job training.
Another piece of legislation that, if reauthorized, would further support IT industry workers is the Perkins Act, which provides federal assistance for secondary and postsecondary vocational education programs at the high-school, technical and community-college levels. For many IT professionals, Perkins Act funding has proven integral to career development and advancement. For the act to be more effective, it must redirect funding to more IT training earlier in the process, work to emphasize innovative training initiatives that further promote secondary and postsecondary education, and reinforce and enhance vocational-technical education programs for the workforce in general.
Lastly, we need to make sure that we as a country preserve an emphasis on math and science in our K-12 schools and in higher education to ensure that we have a ready supply of people with the foundational skills to move rapidly into new and different technologies. We must understand that technology underpins a lot of fast-growing, innovative industries. We must do a better job of connecting the dots so that we are training and educating people to get jobs in high-growth, innovative industries.
The solution to global outsourcing does not lie in protection, but in innovation. We must do what America has always done best, which is ensure that there is a ready supply of qualified IT professionals to fill innovative roles in the American economy.
Martin Bean is the chief operating officer for New Horizons Computer Learning Centers, the world’s largest independent IT training company. Michelle Meyer is the communications manager for New Horizons Computer Learning Centers. For more information, see www.newhorizons.com