Offshoring goes both ways.

There has been a lot of debate in the U.S. about the advantages and disadvantages of offshoring. Proponents say that companies should be able to tap the global talent pool and take advantage of lower production costs in other countries. Opponents claim that offshoring takes jobs away from Americans and allows companies to take advantage or even abuse lower paid workers in other countries. Something that doesn’t get talked about as much here in the U.S. is reverse-offshorting (from a U.S. point of view): foreign companies hiring Americans to work for them remotely.

The NY Times published exceprts from an interview with Henning Kagermannm, CEO of SAP, arguably the largest enterprise software producer in the world. SAP is a German company. Kagermannm talks about how they do about a third of their engineering work offshore, i.e. outside Germany. One of the places where they offshore from is Palo Alto, CA (India, China, and Israel are the other three). The other interesting thing he talks about is how they specialize their offshoring activities depending on the talent pool and capabilities at each location:

Q. How does the global division of labor work? For example, what stays in Germany?

A. If it comes to deep application integration, we go to Germany. It’s where we have many people with deep knowledge of finance, manufacturing, human relations — those kinds of things, and knowledge of those functions in specific industries, the domain specific knowledge. That kind of deep knowledge is essential to platform work, designing the basic architecture of the core product.

Q. How about Silicon Valley?

A. In Palo Alto, we leverage the kind of innovation and creativity that is in Silicon Valley. It’s a place where a lot of new companies and technologies pop up and you can more easily integrate those new things into your thinking and your products. A lot of the Internet work has been done there, the technologies that open our products to others.

Q. And India?

A. India is mixed. But we do a lot of implementation of the design work in India. Our intent was to go there for the large talent pool. But we’ve been in Bangalore for seven years and we’ve grown somewhat gradually there. You cannot go in and hire 2,000 in a year and believe they are going to be ready to develop high-quality integrated software applications.

I think that offshoring can have its own problems but overall, it’s a practice that no company that dares call itself global can avoid. The fact that offshoring happens in and by many countries means that the U.S. shouldn’t be pursuing an isolationist policy of discouragin U.S. companies from offshoring. Instead, it should be competing by providing the best talent in the world, enticing foreign companies to offshore their operations here.

Which of course brings us to education and training which is another huge topic for another time.

CS is dead! Long live IS! Part 2 (Or why Information Systems is currently the most undervalued career path)

I just read a very interesting article that talks about how fears of IT-related jobs being offshored have led to a huge decline in students majoring in IT-related subjects. I know this first-hand. The number of IS majors has dropped significantly at my school since the dot-com bust around 2001. In 2000-2001, I had 120 students and a waiting list for my graduate e-business class. Now, I barely make it to 30 students.

What the article also mentions and which I also know first-hand is that companies are dying to hire more individuals with IT-related skills and education, but there’s nobody to take the jobs, something I’ve also seen first-hand here at Baruch College where I work:

On Tuesday, Martha Pollack, chairwoman of the computer science and engineering department at the University of Michigan, said her department is down to about 350 students today from nearly 700 several years ago.

What perplexes Chari [the head of an information technology department at the University of South Florida] and other academics is that there are more IT-related jobs available today than ever before. For example, the federal Bureau of Labor Statistics lists IT-related jobs as some of the most in-demand professions. Computer-related professions occupy three of the top 10 fastest-growing occupations between 2004 and 2014, according to BLS projections.

The combination of low student enrollment and high business demand is having a profound effect on business, university professors say. On a recent weekday, JPMorgan Chase Vice President Jim Meinen visited one of Chari’s MIS classes to drum up interest in his company.

He related a story about how JPMorgan Chase recently sought applicants for 10 technology interns in Tampa, but only four students applied. That’s despite the “serious money” that the bank was offering interns, Meinen said. He wouldn’t be more specific on intern pay.

Even more interesting to me is the following excerpt from the article:

Businesses are telling Chari that they need fewer basic programmers and more IT-professionals with management skills.

Where basic programming can be done anywhere in the world, Chari says, businesses can’t easily offshore jobs in “project management,” in which an IT worker coordinates IT projects, Chari says.

As I said before on this blog, it’s the people who have the knowledge and skill to manage the technology that will always be in demand. As the article says, a lot of programming and other computer science or engineering related activities could be offshored (though I know many companies who rue the day they decided to do that) but management of the technology needs to be done in-house and locally.

I hope that eventually the students will realize how big the demand for IS professionals is and the number of IS majors will increase. In the meantime, I think all of us in the IS field need to learn a little from our colleagues in Marketing and advertise our product better.