The New Panacea

The New Panacea

Seeking a responsible attitude to offshoring

Take a quick look at the Letters to the Editor section of almost any IT publication and it’s easy to see that the issue of offshoring has galvanized public opinion. From ICT workers who’ve been sidelined as their jobs shift overseas, to employers defending their rights to run their company as they see fit, it seems everyone has something to say.

According to research firm, Gartner, only around 2.4 percent of Australian ICT spending has been offshored to date, but that figure is expected to rise as more companies explore the potential cost savings. Unfortunately, the human cost of these lost jobs represents a personal tragedy for those affected.

Faced with mounting anger over offshoring from within our membership, but very little solid data, the ACS decided last year to commission the first in-depth study into the extent and impact of offshoring.

This report, which is currently being considered within the ACS, will be released by the Society, along with a considered policy on the issue of offshoring, after our National Council meets in late May.

While our final position on this controversial issue is still the subject of intensive discussion by an expert working group specifically established to develop an ACS offshoring policy, the Society will continue to take a leadership role in this debate.

Of course, many believe the trend towards offshoring is inevitable; a symptom of the economic realities of globalization and the need for organizations to reduce their costs to remain competitive.

While I agree that companies must have the right to determine their own destiny, I am concerned at the number of instances where it appears that projects have been offshored as a knee-jerk reaction without proper costings or benchmarking.

Offshoring is the new ICT panacea. We have seen in the past that any ICT panacea initially gets hyped up and takes off, with inevitable corrections when market reality comes into play.

At the point of reality, adoption is based on board decisions with return on investment calculations based on fact 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.

As part of our leadership position on this issue, the ACS is developing guidelines for responsible offshoring.

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.

Organizations 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.

An offshoring investment decision requires analysis and an understanding of whether short-term savings can be sustained. Any cost saving alternative has a risk that in the medium and long term it may cost more than expected, take longer to deliver any benefits and may be delivered with less customer satisfaction.

Therefore, such a decision should only be made with pilot programs, benchmarking and an analysis of medium- and long-term business impacts.

I am tremendously concerned about a corporate culture that pays enormous bonuses to executives who reduce costs by sending the jobs of their colleagues and staff offshore.

Considering the lack of due process and benchmarking we have seen in this area to date, individuals are being rewarded for decisions that could well have negative implications for both the organization itself, and for Australia as a whole. This is morally and ethically wrong and cannot be allowed to continue.

Edward Mandla is national president of the Australian Computer Society

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