One of the classic IT jobs in the United States may be slowly disappearing.
According to a May 2007 report by Datamonitor, “There will be considerable investment in contact center outsourcing across Western countries over the coming five months.”
The report — titled “The Future of Vertical Investment in Contact Center Outsourcing” — also states that new industries, including health care and tourism, are starting to outsource their help-desk functions to other countries.
The changing economy will lead industries to seek ways to cut costs and improve efficiency. Companies can save money and provide their workers with top-notch, level-1 IT support by offshoring their help-desk functions. Many companies are going for it.
Accounting and consulting firm BDO Seidman LLP recently conducted a telephone survey of 100 chief financial officers at U.S. technology companies with annual revenues of $100 million to $15 billion. Forty-nine percent of respondents stated that they do some type of outsourcing of manufacturing or services outside the U.S.
Another 2008 study by Forrester Research — “Outsourcing Fever Reaches Legal Departments” — concluded that between 2003 and 2015, 79,000 legal jobs would be outsourced to other countries. Companies specializing in outsourcing are cropping up in many different industries, so the trend is becoming increasingly popular on many fronts.
Reasons for Outsourcing
There are several reasons why companies outsource jobs overseas. The first and foremost is cost savings. Labor in other countries costs much less than in the U.S. Rising costs of salaries, health care and insurance make the U.S. worker more expensive. Also, there is a huge workforce in India with a lot of talent.
One of the reasons foreign employees are willing to work for less money is because there are so many of them, and at that point, it’s simple supply-and-demand economics. As U.S. companies look to cut costs, having fewer employees on hand directly lowers the cost of doing business. It’s more cost-effective to pay a fixed cost and outsource the positions.
As a corporation grows, it sometimes loses its ability to focus on strategy and future plans. This is another reason companies outsource. Many companies become reactive in their day-to-day operations. The help-desk workers and other first-line positions spend a lot of time putting out fires and less time planning and strategizing for the future. By having another company handle these everyday tasks, current staff is able to concentrate on higher-level IT issues.
Quality and Language Barriers Are Risks
As beneficial as it can be, there are downsides of outsourcing. Quality control may become an issue if there are no policies or regulations to keep standards of service in check. The outsource company must be able to solve the problems it is faced with so it does not frustrate users into giving up or seeking help elsewhere.
Outsourcing companies usually are focused and knowledgeable about what they are doing and do it quite well. A company should ensure the function being outsourced is done better than what could be provided in-house. A cost savings is not going to help if clients are dissatisfied with the service they are receiving from an outsourcing company.
The outsource company also must provide tangible numbers and statistics on what they are accomplishing. Surveys on customer-service satisfaction must be in place to ensure the proper results. Language barriers have been a classic problem with outsourcing to companies outside the U.S. Time differences also have come into play when dealing with support technicians in other time zones across the world. Several companies have outsourced to Mexico to try and balance out these time issues.
“Companies aren’t considering only the cheapest places, but are looking at location for other reasons, like being closer to customer bases,” said Lee Duran of BDO Seidman in a recent Information Week interview.
There are some cases in which outsourcing has gone bad. Revelex Corp., which offers an Internet platform of technology tools to the real estate industry, had problems finding enough workers in south Florida to support its 50 percent a year growth as it approached 12,000 clients. It decided to try outsourcing and found it difficult to work with the time constraints and culture of the time difference. It eventually brought the operation back to Boca Raton.
So what does all this mean for the average IT guy? A lot of IT folks got their start on a help desk; it was either a good or bad experience that you may have enjoyed or may just want to forget about. Where does this leave the entry-level guy trying to get a job out of a trade school or college? Where are we going to start and work up from?
We can’t start in the middle, missing the help-desk experience that every seasoned IT pro has under his or her belt. It was a rite of passage for most of us: Get an entry-level help-desk job, get certification or two and move up in the organization to bigger and better roles.
However, movement toward offshoring of IT support presents new opportunities for IT pros to work for U.S. companies that specialize in providing help-desk services to corporations.
In several different target markets, such as health care, it is possible to build a business that performs IT support and help-desk functions. But the company would have to provide top-notch support and unprecedented customer service at a competitive price.
Getting It Right
One example of a company built around this newfound demand for outsourced IT support is Perot Systems. Perot Systems provides IT services to health care facilities that want to save money by outsourcing to a U.S.-based company. It signed a contract with Jewish Hospital and St. Mary’s Health Care System Inc. to take over the IT services that were formerly provided in-house. This affected 110 workers, who became employees of Perot Systems. These workers are guaranteed a job for a year, and Jewish Hospital decided to keep seven workers on staff to perform its higher-end IT planning and analysis.
This is considered an IT outsourcing success story because the work went to a U.S.-based company and no U.S. jobs were lost. The overall concern is how much work will eventually wind up overseas. “Estimates of the number of service jobs potentially at risk, by economists and research organizations, range widely from a few million to more than 40 million, which is about a third of the total employment in services,” said a July 2007 New York Times report.
A company that can provide both technical support and a business process will be ahead of the game. According to an April 2005 article in the Houston Business Journal, “By combining the two cost-saving strategies of IT outsourcing and business process outsourcing, companies of all sizes can realize improvements in both the bottom line and in a synergistic relationship between the technology users and technology providers — whether inside or outside the company.” The benefits of providing both give a company a competitive advantage over others.
To try and combat the offshoring problem, IBM is focusing on shifting technology services to become more couched in business knowledge than software technology. By positioning itself as a higher-end outsource corporation, it is able to retain many of its clients and prevent them from going overseas to get a better price.
So what will become of the great outsourcing dilemma that many companies in the U.S. face every day? There are definite advantages and disadvantages to outsourcing. Many take a negative view that it takes jobs away from U.S. workers. Others see outsourcing as an opportunity for growth and a positive impact on their businesses.
Patrick D. Turner is president of Little Pond Consulting LLC. He can be reached at editor (at) certmag (dot) com.
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