ACS to Present Offshoring Study to Minister

ACS to Present Offshoring Study to Minister

With much of its membership increasingly angry about offshoring, an expert group of the Australian Computer Society (ACS) is developing guidelines for responsible offshoring for both government and business.

The ACS aims to present the guidelines, along with the results of the first in-depth study into the extent and impact of offshoring in Australia, to its National Council Meeting in late May. The expert group is being mentored by Professor Kerryn Phelps, ACS adviser and mentor and former president of the Australian Medical Association, while Access Economics is currently verifying the study.

ACS National President Edward Mandla says the group last week gave Federal Communications, Information Technology and the Arts Minister Daryl Williams “a high level walk through” of the guidelines, and was told he found it a “mature and responsible approach.”

“What we’re arguing is (that) if you make a short term knee-jerk decision, on short term cost savings, you might be setting up your board for potential negative publicity, and you may also be setting up your organisation for unpredictable customer service levels,” Mandla says.

“What we’re saying with offshoring is that you really need to consider the medium and long term implications. So you need to consider whether the savings are real. An offshoring decision would require analysis whether you can sustain those savings.”

Mandla believes offshoring is the new ICT panacea, and that most of those who jump on the offshoring bandwagon will not be making a considered decision, but will simply be following the leader. And he says as with other bandwagons of the past, there will be an inevitable correction as organisations start to make considered return on investment calculations based on facts and data.

“I believe it is irresponsible to offshore any ICT project without pilot programs, benchmarking and an analysis of medium and long term business impacts,” Mandla writes in the May/June 2004 issue of CIO Government.

“ . . . Our interim position is that any decision to offshore Australian jobs needs to be made in the boardroom, with full awareness by C-level executives of the economic and social implications of such a move.

“Organisations that make these choices on the basis of short-term savings alone may be setting themselves up potential negative publicity and unpredictable customer service levels.”

Mandla maintains any decision to offshore should be based on analysis and an understanding of whether short-term savings can be sustained. The organisation should also realise any cost saving alternative runs the risk that it may cost more than expected in the medium and long term, take longer to deliver any benefits and may be delivered with less customer satisfaction.

The society’s interim position is that any decision to offshore Australian jobs needs to be made in the boardroom, with full awareness by C-level executives of the economic and social implications of such a move.

Meanwhile a just released study: The Impact of Offshore IT Software and Services Outsourcing on the U.S. Economy and the IT Industry, sponsored by the Information Technology Association of America, found that although “lower cost” is the most commonly cited reason for offshore outsourcing, intense global competition in an environment of slower growth and low inflation demands constant vigilance over costs.

However it concluded that due to the low costs and high quality, using offshore resources in selected countries makes good economic sense. The Global Insight study found the cost savings and use of offshore resources lower inflation, increase productivity, and lower interest rates, boosting business and consumer spending and increasing economic activity.

It also concluded the benefits of global sourcing contributed significantly to real Gross Domestic Product in the United States, adding $US33.6 billion in 2003. And it claims while global IT software and service outsourcing displaces some IT workers, total employment in the United States increases as the benefits ripple through the economy.

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