IT Outsourcing

Whether you think it's the key to your company's future or the curse of the IT workforce, one thing's for sure: Outsourcing is a hot topic in the IT industry. Almost everyone has a strong—and we mean strong—opinion about the practice. The Windows IT Pro Industry Survey asked you to tell us whether your company outsources or plans to outsource IT jobs, who makes that decision, what type of jobs are being outsourced, where (geographically) the work is going, whether you're worried about your job or the job of someone you know—and what you think about the whole thing. Is outsourcing a passing fad—or does it make you want to throw in the towel and change professions?

Reality Check: Is Outsourcing Friend or Foe?
According to our survey, 35.9 percent of you work for companies that currently outsource IT jobs; 9.4 percent work for companies that plan to outsource. That's a fairly high percentage. Before you reach for the whiskey, though, consider this: These figures don't necessarily equate to lost jobs, simply to subcontracted jobs. Although some companies do replace in-house workers with contracted employees, other companies use outsourcing to expand operations or to free up overburdened IT staffers.

Katie Sullivan is an MCSA and an IT specialist with Landmark National Bank in California. As she notes, "I am the entire IT department for this small community bank. I wear a variety of hats (e.g., network security, hardware, software, IT policies, telecommunications) but don't presume to be able to do everything. My ability to do my job is definitely enhanced by the ability to hire expert outside help. My company is very responsive to my suggestions regarding the outsourced IT staff with whom we deal, and my experience with outsourcing at this company has been generally positive. Because there's so much competition for outsourcing companies, I usually find that they're quite willing to deal with me in a positive manner."

Still, there's no denying that outsourcing does mean downsizing for some companies. Several of you told us that you'd lost work because of outsourcing, or that you knew someone who had. One network administrator told us that she ended up at her current job because "my last company outsourced 90 percent of its IT jobs to India, Canada, and some US states. Lots of people lost their jobs; no huge severance packages where given. I lost my home, and my children had to leave their schools—my family was almost devastated by my loss of employment. I had to take a $12,000 salary cut and I'm still struggling to keep afloat." A senior analyst with a major US oil and gas company is facing a similar experience. He told us, "In 1998 there were more than 2000 [IT employees] in my building. By this time next year, there will be less than 200 left. All jobs are going offshore."

These stories show two sides of outsourcing. Is it a benefit or the bane of today's IT pro? Don't go to the experts for definitive answers. Industry studies and research firms report contradicting figures. For example, on the pro side, a recent study conducted by the economics consulting firm Global Insight (and commissioned by the Information Technology Association of America—ITAA) suggests that offshoring of IT jobs actually increases productivity, consequently increasing corporate profits and leading to corporate expansion and the creation of new jobs. On the con side, not all those new jobs will be in the IT industry (and other experts have expressed doubt as to the study's conclusions). Pro: The US Bureau of Labor Statistics (BLS) reports that offshoring of US jobs during first quarter 2004 accounted for only 2 percent of the jobs lost during that quarter. (Most of you clearly looked upon offshoring as a bigger threat than local outsourcing, but the BLS report claims that local outsourcing was responsible for twice as many lost positions as offshoring. See the sidebar "When is Outsourcing not Outsourcing?" for a discussion of the difference between these two types of outsourcing.) Con: Forrester Research concludes that about 3.3 million US business services jobs will be offshored during the next 10 years.

Still other researchers claim that it's difficult to get a clear picture of whether IT job and wage losses over the past several years are the results of increased outsourcing or simply a hangover from the IT slump. And the strange state of the US economy, which continues to report growth—but without showing a correlating increase in employment—doesn't help to settle anyone's nerves. In fact, some sources blame offshoring for the discrepancy. (Interestingly, a Business Week special report pointed out that "The real culprit in this jobless recovery is productivity, not offshoring"—which, if the Global Insight study is to be believed, might be the same thing.)

One thing that observers do agree about is that outsourcing "will clearly be a powerful source of structural change in labor market dynamics over the next decade" (Business Week). Unsurprisingly, the majority of your comments expressed concern with outsourcing (and especially offshoring). But it wasn't top on your list of concerns.