IT Depart(ment)s Offshore?

Steven Pearlstein's article Economy of Scale Might Inspire Companies to Ditch IT Departments poses a very poignant question at the end.

"I suspect, however, that Carr is on to something, and that there will be an important place in business history -- and the Forbes 500 list -- for whoever figures out how to become the Insull of computing. An equally intriguing question is whether he'll be a Sam or a Sanjay."[1]

The questions of outsourcing, to what degree and where continues to be asked and addressed by businesses all over the world. Although Pearlstein’s article focuses on Carr’s infamous article in HBR and the implications of Carr’s contentions, he leaves the reader hanging at the precipice of the true implications and consequences for Americans.

Outsourcing … and … Offshoring …

Some types of outsourcing are very evident, from displaced workers to closing of domestic companies; while other types of outsourcing are less evident, from Google to PayPal. One we decry as tragedy while the other we applaud for the convenience it affords.

The fact that computing is becoming more like a utility is of no surprise, but to generalize that all computing will become a utility is both fallacious and shortsighted in terms of strategic planning and implementation. Although computing may one day be centralized and homogenized to a large degree, corporate competitive and strategic advantage does not have to be sacrificed because of computing. Though businesses such as Google and PayPal are definitely leveling forces within the business communities, they can also become part of a business’ competitive and strategic arsenal when properly leveraged and implemented.

Regardless of who does the computing, successful IT initiatives are a part of, and maybe key to, successful business initiatives and strategies. In smaller companies, it (often) simply is not cost effective to run IT departments, hence, the need to outsource. However, many larger companies may be able (and willing) to run IT departments yet many will choose to outsource fundamental IT functions to trim the bottom line. As Thomas Friedman puts it:

“The cold, hard truth is that management, shareholders, and investors are largely indifferent to where their profits come from or even where the employment is created. But they do want sustainable companies. Politicians, though, are compelled to stimulate the creation of jobs in a certain place. And residents –whether they are Americans, Europeans, or Indians – want to know that the good jobs are going to stay close to home.”[2]

Though this quote is taken out of its original context, it is still applicable. Computing enhances the ability and accelerates the process to trim the bottom line – regardless if it is treated as (called) a utility (a commodity) or not it still can be outsourced, offshored.
As outsourcing's footprint grows and steps on the more affluent workforce, the more vocal workforce, there will continue to be roiling controversy and confusion (i.e., political, economic, displaced workforce, etc.) All the while our counterparts all over the world are ramping up their skills and resources not just to compete with us but to overtake us.

Are you running recklessly down the road in pursuit of quick profits or are you following a planned path of sustainable profits? (short-term strategy vs. long-term strategy) That is my question to you.

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[1] Pearlstein, Steven. “Economy of Scale Might Inspire Companies to Ditch IT Departments,” The Washington Post, 30 November 2005, 30 November 2005 <http://www.washingtonpost.com/wp-dyn/content/article/2005/11/29/
AR2005112901096.html>.

[2] Thomas L. Friedman, The World Is Flat: A Brief History of the Twenty-First Century, (New York: Farrar, Straus, Giroux, 2005) 211.