The First Thing We Do: Let's Offshore the Managers

By CIOinsight  |  Posted 06-03-2005
This is going to be reader-participation week at CIOInsight.com. We're asking your opinion on a revolutionary, if completely logical idea.

The best "pro" and "con" answers will receive a prize (a copy of my new book, "Management by Baseball — A Pocket Reader").

First, some background: The Vesuvian eruption of mail we received about the last column, Why Offshoring Will Always Be a Novelty, Never a Valuable Strategy, surprised me. I expected it to be a divisive issue. It wasn't.

Not one correspondent took issue with the underlying assertions—that the problems offshoring was meant to address can't be addressed by offshoring.

The problem is not lack of trained programmers in North America nor cost-effective methods for cranking out successful projects here; the problem is sloppy or incompetent or lazy management.

There were some super, insightful letters, which set me to thinking about globalization of high-tech work in general.

While no single correspondent directly suggested it, the uniformity of opinion led me to the following idea:

If the basic problem in American application development is American management, we should in-source developers located here in North America (where their proximity to the users enriches software quality), and outsource executive and other layers of management to offshore companies.

As unprecedented as this idea might sound, the common arguments for offshoring hold at least as well for exporting management as they do developers or call center agents.

Which arguments? How about:

Offshoring is most cost-effective when the work involved is a commodity. Since the problem seems to be (for whatever reason) that American executives don't function cost-effectively, the value-add of using American executives is very low. Projects run by these domestically-located individuals uniformly cost too much, take too long, and fall short of basic usability and quality standards.

Since the consistent lack of excellence in the work produced defines it as a commodity, and commodities are outsource-bait, perhaps it makes sense to offshore this type of work.

There's more money to be saved outsourcing technology management work than technology line work. If you can replace a $74K-per-year U.S.-based programmer with a $23K-per-year offshore contractor, you can replace a $149K-per-year application-development manager with a $32K-per-year offshore contractor; you can also replace a $275K-per-year CIO or CTO with $45K-per-year offshore contractor with the same title (unless you are the CIO, then self interest tends to settle in). As you move up the salary chain, the savings you reap skyrocket.

The social impact of outsourcing managers is lower than outsourcing programmers. Each manager you outsource saves a significantly higher dollar amount than the equivalent number of programmers. That drastically reduces the number of jobs you have to ship offshore, minimizing the social and political impact that comes from each job lost in the U.S.

Time-zone differences between the manager and the managed are an issue, but not a major one. Offshore advocates have argued persuasively that the overhead associated with managing people in a different time zone or even continent, is not significant enough to be a deal-breaker if the cost difference is solid.

If one accepts the argument that one can manage people with whom one doesn't share a location or culture, offshoring managers presents no obstacles not already overcome by offshoring other job functions.

Reducing the number of managers reduces non-productive activity in the home office. A large part of the process of managing is retaining or increasing the demesnes that you, individually, manage.

When many managers share the same location, that generates a significant amount of politicking over who pays for what and whose headcount is affected by any changes. Some of that activity is even defensible, because managers have a responsibility to make sure their budgets aren't cut so far they can no longer perform important functions.

Replacing an on-site manager with one in a separate country removes much of the overhead of personal politics and leaves contract managers to take on only the actual management work.

It puts decision-making power in the hands of a single manager—the one who remains at home to oversee the outsourcing arrangement.

These are some arguments in favor that derive from reader comments, none of which presented any opposing arguments. In part, that's where you can help us out.

We're going to ask you to tell us what you think by starting your argument with an e-mail to editors@cioinsight-ziffdavis.comwith the word "Pro" or "Con" in the Subject line.

Write 111-words or less on a proposition. We'll publish the most insightful arguments on both sides, and send the best "Pro" and best "Con" response a small prize.

The proposition for you to write either a pro or con argument on is:

Resolved: That offshoring technology executive and/or development management will benefit project effectiveness and organizational competitiveness.

If you choose the "Pro" side, you can use the arguments we presented above, mutate or add to them. Your chances of winning improve if you come up with one(s) of your own.

If you take the "Con" side but believe offshoring development or call center line staff makes sense, it will help your chances of winning if you explain why it works for line staff but not for management.

We can't wait to hear your thoughts.

Jeff Angus is a management consultant and has been working with IT since 1974. He has held IT management positions in user interface design, marketing, operations and testing/analysis. Look for his book, "Management by Baseball: A Pocket Reader." Jeff's columns have appeared in The New York Times, The Washington Post, the St. Louis Post-Dispatch and the Baltimore Sun.