The Long View

The Long View

The prospect of outsourcing—particularly moving jobs or work offshore at a time when the U.S. economy continues to sputter—is controversial, despite the reputed cost savings. Al McConnell, managing director of the Information Management Forum, a members-only, peer-driven knowledge-sharing organization for senior IT executives, says the group had a meeting on the topic in June at which representatives of 30 companies sometimes were divided.

Among the reasons for the division was the question about how all of these forces—outsourcing, utility computing, autonomic computing—are changing the very nature of IT work. "The fundamental challenge was asking these workers to transition from a master craftsman to a factory model," McConnell said. "In a lot of companies developing software is like a craft. An employee is an analyst part of the time and a developer and business process expert other parts of the time. All of this is wrapped up in single individuals. If the development function is taken away, that changes their value proposition and what their fundamental job role is. Peeling those functions out may meet with organizational resistance."

The challenge, said McConnell, is to take the displaced developers and turn them into business analysts and architects and vendor relations managers—which some may not want to do. Workers get angry when they believe they will be replaced or forced to make a job change they didn't choose. If a decision to outsource is handled poorly inside a company, morale can plummet among the workers who remain, as everyone from human resources to accounting wonder whether they will be next. P&G started retraining tech workers, and encouraging them to earn external IT certifications, more than a year before they entered into the IT outsourcing agreement with H-P. There were company meetings. A Web site was set up on the company intranet so that employees could be kept up to date on the status of negotiations. Managers who have navigated a successful transition to an outsourcing relationship say the key to keeping the troops happy at home is to communicate honestly and respectfully. That can work to keep productivity high and defuse natural employee anger and concern.

P&G's new post-outsourcing IT schema provides a glimpse of what lies ahead. Two-thirds of the company's IT workers now work for H-P. P&G's global business services officer has taken over responsibility for IT infrastructure, desktop support, systems architecture and the backbone—as well as the relationship with H-P. Worldwide, the company has standardized on one common platform. In addition to outsourcing to H-P, P&G now operates three shared-services centers abroad—in Newcastle, U.K.; San Jose, Costa Rica; and Manila, in the Philippines—as well as application development centers in Singapore and Warsaw. About 1,000 IT workers remain on staff at P&G, mostly in the business units that manage research and development, sales, advertising and the like. Meanwhile, CIO Steve David, who spent nearly 30 years at P&G on the sales side before coming to IT, focuses on "breakthrough ideas," developing new technology concepts that will enable the business to be more competitive.

Like P&G, many U.S. businesses are at the beginning of a decade-long transition from IT developed on a company-by-company basis to a future where IT resources are shared and provided on demand as a utility. Most corporations don't have a separate electricity department; they buy their services monthly from a supplier and when they need to fix problems, they call an electrician. Yet there is still a role for the CIO, and for other IT workers, who will be needed to figure out how best to apply technology to further business goals. "We will end up with something for business automation that looks more like the way we provide electricity or water or other utility services," says Parkinson. "As that progresses, all the smarts go from running the infrastructure to what we should do with it."

"2003 Workforce Study," Information Technology Association of America"
www.itaa.org/work force/studies/ 03execsumm.pdf

"Uncertain Futures: The Real Impact of the High-Tech Boom and Bust on Seattle's IT Workers"
Center for Urban Economic Development, U. of Ill., Sept. 1, 2003
www.washtech.org/wt/research/Uncertain Futures.pdf

"Education and Training for the Information Technology Workforce"
U.S. Department of Commerce
www.technology.gov/ reports/ITWorkForce/ ITWF2003.pdf

Elizabeth Wasserman is a Washington, D.C.-based writer. Formerly, she was Washington Bureau Chief for The Industry Standard. Please send comments on this story to editors@cioinsight.com.

This article was originally published on 10-01-2003
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