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.

“Charlie’s Angels” in five minutes for the attention-span-challenged.

In a previous post, I talked about the loss of separation of work and life, the fact that we are now able, and do, work at all times from all places.

Another related effect of information technology is that of the shortening attention span. IT increases our efficiency, not by enhancing our brains (that’s still in the works), but by complementing them. Our brains haven’t changed. We still can only store 7 plus or minus 2 items on our short term memory. But technology can do all of the low-level information processing for us, allowing us to be a lot more productive while still using our slow-as-an-abacus brains to do only higher-level information processing.

Being human, however, we still constantly want to do more in less time. The result has been that our attention span has become shorter and shorter. The act of leaning back and allowing ourselves to be immersed in a slow and long experience (whether it’s reading a book, watching a movie or a speech, or listening to music) is giving way to accessing quick and short snippets of information for entertainment, education, work, or anything else.

Hence, the rise of the 2-minute clip on YouTube or the “elevator pitch” of the entrepreneur. The latter, a pitch of an idea in the time it takes to ride an elevator, became famous during the dotcom boom when there was an entrepreneur around every corner and venture capitalists had very little time to devote to each one of them.

Today, there’s an article in the NY Times about Sony is shrinking down entire episodes of classic shows like “Charlie’s Angels” and “Starsky and Hutch” to 3.5-5 minute “minisodes.” They will be part of a new service called the Minisode Network which will be a dedicated online channel, though the minisodes will first air on MySpace.

I, for one, am all for conciseness and brevity. In fact, in my e-business class, I insist on presentations of my students’ business plans that are no longer than 15 minutes, and written plans that are 15 pages or less. As I tell my students, the people who will read them or hear you talk will quickly move to the next thing if you go too long. But my need for quick information pieces goes beyong business presentations. There is a hilarious show on the Cartoon Network’s Adult Swim called “Robot Chicken.” It’s a bunch of stop animation shorts, some of which are just one or two seconds long. They are some of the funniest stuff on TV. And it’s just the right pace and length for my attention-span-challenged brain.

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.

The loss of separation between work and life.

In the e-business class I teach, we talk about how technology in the last 10-15 years has reversed many of the effects of the Industrial Revolution. This was an idea that was proposed by Jacob Nielsen in his article “Undoing the Industrial Revolution.”

One of those effects that has been reversed is the separation of work and life. Before the Industrial Revolution, work and life were mostly together. People worked where they lived and vice versa. The farmers, blacksmiths, bakers, and so on didn’t leave home in the morning to go to the office or factory and work a fixed schedule before they returned home. Instead, they lived in the same place they worked and had no fixed work schedule that was separate from the rest of their lives.

The Industrial Revolution brought the factories and then later the office buildings with their fixed time schedules. People lived in a space and time that was separate from that of their work.

Today, for many, that effect of the Industrial Revolution is being reversed. As a Yahoo! HotJobs survey confirmed, devices like Blackberries, laptop, and smart cellphones have eliminated the separation of work and life. People work without a fixed schedule and without having to be in a specific place, like an office.

The upside is of course more flexibility and availability. The downside is that people can literally work all day and everywhere. 67% of the respondents to the survey said they connected to work using a wireless device of some kind while on a vacation. That’s a huge percentage but not a surprising one.

This radical change in the idea of what a work schedule should be has gone beyond the service and professional sectors, where wireless devices can enable work at any time. Best Buy for example, an electronics retailer, has shifted to what they call ROWE (results-only work environment). In other words, they judge performance of employees only by output and not by hours put into it. Why is that possible? Well, because of technology which allows the monitoring and attribution of output more accurately. Since this was not possible before, companies relied on what they could monitor accurately, and that was time.

Best Buy is actually so confident about this change, that they have formed a consulting organization called CultureRx to help other companies with making similar changes. If you want to read more about Best Buy and other companies that have eliminated the traditional time-based schedule, check out this excellent article on Business Week.

Service Science joins the research field.

The NY Times reports today that a group of large technology companies, universities and professional associations are working together to create a new area of research which they call “service science.” Basically, they are trying to understand how technology affects the service sector in terms of productivity, innovation, and so on.

Why they feel the need to create a new field and call it service science is a mystery to me. This is something that Information Systems researchers have looked into for years. Not to mention others in Operations Research, Management Science, Economics, and even some in Marketing.

As I wrote previously in this blog, the issue of IT and productivity is complex and important. But splitting up its study even more than it already is, may only make things worse. On the other hand, if the SS (those Service Science researchers will have to find a better acronym) people are able to integrate all the fractured research on IT productivity out there into something more coherent, some good might come of this after all.

It’s all about information: The wireless application and service innovators.

Business Week has a special section on wireless technologies this week and as a part of it, they showcase what they call “The New M-Commerce Barons.” They are the new innovators in wireless applications and services. Going over this impressive list of innovations is illuminating in the sense that one can identify the types of opportunities that are available today for creating business value using technology. Some examples:

1. Use information technology to reduce even the slightest time delays in a person’s daily life. Check out Mobo, for example, which allows you to pre-order food using a text message so it’s ready when you get there. For a busy New Yorker, the ability to save 10 minutes of waiting for lunch to be prepared is worth a lot.

2. Provide information, using a simple interface, that is otherwise unavailable or hard to get. Loopt, the brainchild of 21-year-old student, provides the location of your friends with GPS-enabled devices. 4info allows users to send text messages with questions on news, sports, movies and so on. Google also does this very successfully for all kinds of information.

3. Allow people to share information. Call it community building, call it social networking, call it whatever you want. People have always loved to share information, from showing off vacation photos to giving recommendations on restaurants. Eyeka allows users to share photos and video and even sell them to those who want to buy.

4. Piggyback on someone who’s already successful. iSkoot allows users to make Skype phone calls using their cell phones and voice networks. (Jajah already does this without using Skype, by the way)

So, it’s all about information. How you create it, manipulate it, interpret it, distribute it. Find a way to add value to at least one of those processes and you may have an idea for a successful business.

Interestingly enough, Business Week also showcases the latest trends in wireless devices, but compared to the innovations in wireless applications and services, the devices just look downright boring.

Web 2.1: Business 2.0’s Next Net 25

Business 2.0 has identified their first Next Net 25: 25 Web 2.0 companies that they think will make it big in the near future (months, not years). I call them Web 2.1. They are cool, smart, useful, and in many cases, profitable (or at least able to become so). Check them out here.

Some of my favorites: Joost, Turn, Vitrue, Fon, SuccessFactors

Wikis: They’re not just for encyclopedias anymore.

Business Week has a great special section on Wikis this week. For the uninitiated, Wikis are basically online collaboration tools that allow multiple users to collaboratively create and edit documents. It’s how Wikipedia works. But Wikis have made huge inroads within companies. The possibilities are endless. For example, a software development company can allow its developers to develop and test code through a wiki. It can also allow its team of remotely based technical writers to write the software documentation. One article in BW’s special section talks about many other examples of large corporations implementing Wikis for internal purposes.

But why stop with employees? Why not let the customers do the work? This is nothing new. Companies like Microsoft have successfully used forums and bulletin boards to allow their customers to help each other with all technical issues. Personally, I have always had better luck getting help from such online forums than any company’s technical support team. So, a Wiki can allow the customers to basically build and edit a knowledge base, one that isn’t organized in the form of questions and answers in long complicated threads, but in the form of self-contained articles. eBay has been trying this with eBay Wiki. The beauty of Wikis is that all the information created is never static. It’s constantly alive and changing to (hopefully) reflect the changes in the world it describes. To borrow a metaphor from biology, the information becomes the organism and the users who create and edit it become its adaptive cells.

Of course there are those who say it’s not going to work. That there’s too much room for vandalism and unscrupuplous misuse. But the same can be said for email or even the telephone. As a technology becomes well integrated with the social norms, regulations, and culture of an organization, it becomes less and less misused. Maybe it’s the fact that employees realize that everyone is collectively better off if the technology is used appropriately. Maybe it’s because organizations develop clearer guidelines and sanctions for misuse. Whatever the reason(s), the result is the same. So, let Wikis grow and use them as much as possible. Soon, there will come a time we won’t remember how we worked without them.

CS is dead! Long live IS!

There is a new study out on the productivity gains from information technology. The “does it or doesn’t it” debate on IT productivity is as frustrating and as seemingly futile as the similar debates on the health benefits or risk of various foods. Back in the early nineties there was a plethora of academic articles on the so called “Productivity Paradox.” Using mostly secondary data, they claimed to show that the huge IT investements of the 80s resulted in no productivity gains. As a doctoral student in the mid-to-late 90s, I remember many discussions on the flaws of those studies, ranging from too-simple measurements to outrageous assumptions.

So, I will not add to that debate here. As far as I’m concerned, IT can and does increase productivity, if it’s applied and used appropriately. End of story.

What I found more interesting in this new report is the following, as summarized in a NY Times article about the report:

“Going forward,” the report states, “it is unlikely that the I.T. industry will be producing jobs gains out of line with its size. In part this is because productivity in the I.T. industry itself has been strong, allowing it to produce more output with fewer workers.”
Instead, the report contends, job gains will more and more come from industries that use information technology intelligently, just as in the 19th century employment in the railroad industry leveled off but development of a transportation network led to the rise of national retailers and other new industries.

The services sector, which employs 80 percent of the American work force, is expected to generate most of the new jobs in the future.

So, basically, what the report says is that if you want to have more job choices in the near future, you shouldn’t be studying Computer Science or Engineering. You should be studying Information Systems. At a time when many business schools are dropping IS from the core curriculum, or even disbanding IS departments altogether, this is sobering news.

What I said above about IT productivity gains being realized only if the technology is applied and used appropriately is the key here. The computer scientists and engineers can produce the most amazing IT ever imagined. If there are no information science professionals to carefully integrate it into the fabric of a business (or society overall), it may never realize its full potential in productivity gains. In fact, it may result in loss of productivity.