OffshoringDebateWithGraham (ThoughtStorms)

A post refactoried from my weblog http://blahsploitation.blogspot.com/2003_11_08_blahsploitation_archive.html#106830575055646425 here


Original Post

Graham is thinking about "off-shoring" work to the third world here (http://describe.blogspot.com/2003_11_01_describe_archive.html#106829852210049088))

His conclusion, unskilled jobs are going abroad. This creates a big gulf between the skilled worker and the unskilled welfare recipient. And civilized countries probably want to do something about it.

As welfare is expensive and unpopular with rich voters, the only solution is education, education, education to get everyone into those lovely, high paying, skilled jobs.

There are several problems with this view :

: The only things that prevent the mass-exodus of skilled jobs overseas are :

** language barriers

** trust barriers (how do I know them furriners ain't dishonest or plain stupid?)

** er ... that's it.

: Now India has millions of cheap English speakers. And a sufficiently large proportion are as smart and well educated as British or American folks. Cheap travel means our managers and investors can go there and meet them and build-up trust.

Actually this race to higher skills suddenly reminds me of Clayton Christiansen's InnovatorsDilemma. Basically the jobs are being eaten up by automation and more competative markets abroad. The rich "Western" country (like the market leader for Christiansen) is forced higher and higher up the value chain, tailoring a service to only the most wealthy and specialist customers ... until one day, it finds it's hit the top. The manufacturing goes abroad, the design and planning goes abroad. And then you suddenly realize that the wealth has gone abroad too. The dollar / pound / euro collapses relative to the Yuan, the Chinese stop learning English to service English-speaking customers. The few enclaves of wealth in the "West" are no longer a priority compared to the home market.

How do you stop this? Who knows, but here are my suggestions for civilized governments : WhatCivilizedGovernmentsShouldDoAboutOffShoring)


Graham Responds

I'm not sure the following are problems per se, but perhaps a more in-depth look at the point I was hastily trying to get across...

1. "off-shoring isn't just a problem for unskilled labour. It's increasingly happening to skilled work too."

Indeed, although this is obviously a longer-term view. So far, progress has been quite predictable. We have seen the fall of cheap labour to developing countries, e.g. the sweatshops and the cramped production lines. Whilst a modicum of skill is required for this, the knowledge is common and many people can pick it up given the materials (which are also easy to find/provide). We are now seeing this slide further up the hierarchy, as production and manufacturing technology becomes a). easier to understand and to use, and b). more widely distributed, and available in those places that can offer cheaper labour. This, relative to the tradiitonal off-shore jobs, is "skilled" work in a sense, but also isn't if you look at it in terms of how globally (or indeed, locally) available the potential workforce is.

2. "the internet makes it really easy to move "knowledge work" abroad. I've teleworked for Runtime from Brazil, with few real problems."

"The only things that prevent the mass-exodus of skilled jobs overseas are language barriers and trust barriers (how do I know them furriners ain't dishonest or plain stupid?)"

There are also practical problems (timezones, for instance), political problems (transborder legalities, et al, which tend to be easy to circum vent from a business PoV), plus it's probably necessary to factor in other social influences such as nepotism, favouriteness... However, in terms of pure cost and ROI, we are now on (ok, near) the point where the cost of technical and industrial investment balances nicely against that of labour cost/quality. It's cheap to set up an office in India, but what do you get for your money? How quickly it progresses, though, remains to be seen...

3. "Skill is continuously eroded by automation"

...and locality is continuously eroded by globality, the ability of other people to know what you know, a shrinking number of jobs versus an increasing potential workforce.

"(And it's only a matter of time before Graham's skilled job writing Enterprise Java is creatively destroyed and he's replaced by less skilled Python or Ruby coder ;-)"

;) "Many a true word said in jest"... Whilst it may not be a swing towards Python or Ruby (or even Perl 6? ;), there's definitely a lot of tension in the IT industry about work going out to "codemills" in India, etc. That we have established solid, rigid software design and development techniques and the tools/languages to fulfil them, an "assembly line" (ahhhahaha, I'm so funny) is just like setting up a new franchise.

4. "It's not very clear what 'skills' aren't either automatable and / or offshorable."

"The best candidates seem to be really personal contact services"

I'd say that, yes, it's more about what becomes important to people on a local scale - in a way, I see this as a good thing, as it reconstructs the localised trader approach and interaction that tends to be lacking from a lot of business. However, as its in a globalised, higher-end (and getting higher), isolated environment, I have large doubts over that :)

The other thing that seems to be important is creativity and development. You need fresh ideas to compete with, not just an efficient factory.

On a personal level, being able to think intelligently about situations sets you aside from the rest that simply "do a job". On the other hand, from a business perspective, you could say that these are necessary, but a relative minority in terms of workforce (increasingly so as your workforce gets larger, decreasingly if it gets smaller due to automation). Hmm, could go all off-topic there, so I'll leave it at that...

5. The most money of all is, of course, to be made not by working at all. But by investing.

Naturally ;) The only reason I don't is because I'm not sure it's as much fun...

-- GrahamLally


Responses ...

1) I don't see that it couldn't happen very fast. In the US they're talking about a million jobs having gone abroad since 2001. It probably takes someone in the "third-world" between 6 months to 3 years to learn sufficient English. And it's cheaper for poor third world countries to set up schools and telecenters than factories.

Right now the West still has an advantage in terms of educated population, but I think that the flow of skilled knowledge jobs to the third-world is going to be one of the defining trends of the next 10 years.

2) Timezones? A good government salary here is 10000 pounds a year. People will stay up late for a couple of thousand more.

4) I'm not sure it's such a good thing. When the economy shifts towards personal services, it also signifies a shift from things which were being done outside the economy, within families and communities and among friends into the payed economy : parenting becomes child-care. Friendship becomes counseling and therapy and life-coaching. (Compare TheAgeOfAccess)

BTW : Brazil is an amazing "therapy" culture. Everyone does some variety of therapy. People think I'm weird because I don't.


OK, so some of the main points (for me) coming out of this are...

(*) Perhaps efficiency is supposed to lead to lower prices in a utopian market, but I don't tend to see much evidence of that. I think it's countered by a requirement to keep profits up, the desire for investment in research and futures, et al, but somebody else would be able to put this better.

On the privatised therapy thing - hasn't this has always been the case? The religion of our time and culture is that of control and exploitation, not of "real" therapy. From the selling of faked artifacts to the extremely top-heavy hierarchy (and associated power struggles therein) exerting itself on the masses that chose to indulge in it. "God is dead", and his passing on has given way to two things - a love of money, and a gulf in spiritual fulfilment. It's only natural now that people will offer - and others will pay for - services that give people want they want: some attempt at comfort. Factor in the idea that much of it relies upon very personal intervention and a sense of "wisdom" from one person to another (see the Tarot Card Reader, the Astrologist, the Masseuse, the Priest) which is very much "non-offshorable", and it's almost plausible that "profit for our wellbeing" is the Next Big Thing for the downsized and overseased masses. But a digression. New thread? ;)

-- GrahamLally