Offshoring and the New World Order

Rudy Hirschheim

November 1, 2009

Outsourcing as a means of meeting organizational information technology (IT) needs is a commonly accepted and growing practice; one that is continually evolving to include a much wider set of business functions: logistics, accounting, human resources, legal, and risk assessment.³ Today firms of all sizes are rushing overseas to have their IT work performed by offshore vendors. Such change — the pundits argue — is merely the natural progression of first moving blue-collar work overseas followed by whitecollar work. IT jobs are most visible to us in the IT field, but the same is happening to other business functions/processes. With labor costs in India well below the U.S. and technical skills equal or better, the argument for offshoring is compelling. (Offshoring refers to the migration of all or a significant part of the development, maintenance and delivery of IT services to a vendor located in another country, typically in the developing world like India and China. The service provider hires, trains and manages the personnel. Alternatively, an organization might set up IT operations offshore but still controlled by the organization's management²). Here, I seek to analyze some of the arguments underlying the notion of offshoring and implications for the IT field from a U.S. perspective. While I am aware that such an undertaking is unquestionably a thorny proposition, I feel that too little 'serious' thought has been given to this issue. Currently, we are plagued by hype (both positive and negative) but little critical reflection. Hopefully, this paper can begin to reverse this trend and shed light on the challenges we face.