Is Your Job at Risk of Being Outsourced?

Thursday Feb 19th 2004 by George Spafford
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IT professionals need to recognize if their jobs are prime candidates for outsourcing and how to minimize that risk. Our Datamation columnist offers some strategies.

It's almost impossible to pick up an IT trade magazine today without seeing something about job outsourcing. While far from a new phenomenon, outsourcing is generating a huge amount of stress on employees concerned about losing their jobs. For those anxious IT pros, here are some thoughts to consider.

You must be aware of the pressures being placed not just on your firm, but also on the environment in which it operates. This can help you understand both what is going on and what is likely to happen. Firms under extreme pressure to cut costs may act irrationally to meet short-term objectives.

Jobs that can be partitioned off from the rest of the local organization are prime candidates for outsourcing. Of course, the current media fad is to talk about offshore outsourcing, but it can be outsourcing to a firm across town -- either way, you are out of a job. Thus, be aware of what your field of work entails.

For example, if someone else does all of the project management, engineering and then you just get handed a list of requirements to develop/build to, then your position is a candidate for outsourcing because it has already been abstracted from the business.

Mitigating factors include the degree of confidentiality that surrounds what you work on. If your work involves the development of products and/or services that are unique to the firm and create a competitive advantage that the firm dare not abandon or lose control of, then the risk of outsourcing decreases.

With this basic concept of confidentiality and compartmentalization in mind, we can construct four quadrants:

  • High Confidentiality and Low Compartmentalization
    Functions in this category dare not be outsourced. Not only are they proprietary processes that necessitate confidentiality, but the linkages between the function and other areas are poorly defined or even non-existent. Outsourcing this risks project failure and intellectual property leakage.

  • High Confidentiality and High Compartmentalization
    The potential exists to outsource, but extreme caution must be observed. Here, the processes are mature, but the intellectual property in question is very confidential. Thus, the risk of leakage of that property must be the question of the day. Dare the firm risk letting this functionality leave its direct control?

  • Low Confidentiality and Low Compartmentalization
    The risk here involves relatively poor-to-nonexistent linkages between departments. In other words, the issue surrounds the fact that the function cannot be packaged and removed for the locale.

  • Low Confidentiality and High Compartmentalization
    These functions are prime candidates for outsourcing. Not only are the products/services provided relatively commoditized, but the functionality is easily removed from the locale.
  • Want to discuss the issues raised in this column? Take it over to our IT Management Forum.

    Mitigation Strategies for Those At Risk

    If your position is at risk, then there are avenues for you to consider. But you need to plan in advance. People have far more options when planning in advance as opposed to reacting to a change. Consider the following items:

    1. Understand the Business and Add Value
    To position yourself for the future, you must understand the organization, where it is going and how to support it. Being a developer in a corner isn't a very secure hedge against risk. Being able to talk with business people, document requirements, and help shape direction -- those are tasks that will exist because outsourcing necessitates solid project management and software engineering practices.

    2. Do Not Make Yourself a Liability!
    Be extremely cautious of making yourself a risk -- whether real or perceived. The knee-jerk reaction of many technology people is to hoard information and make themselves seem indispensable.

    The problem with this is that many organizations, especially large ones, must identify this as a risk and take appropriate action. Even if the person has no intent of leaving, the danger is that if he/she becomes sick, then the organization will be impacted. As a result, information hoarding can have the exact opposite effect today -- rather than making a person indispensable, it forces the organization to mitigate the risk and that may entail dismissing the person.

    3. Never Stop Learning
    Never stop learning. Even if your employer doesn't pay for training, find a way to get it. If you are in the unfortunate position of being with a company that doesn't develop its people, realize that should whatever unfortunate situation happen, you could wind up on the job market with an obsolete skill set. Taking the more optimistic route, think of it this way: It is better to be prepared for an opportunity and not have the opportunity materialize than it is to have an opportunity and not be prepared to take advantage of the opportunity.

    4. Switch Functional Areas
    This one may seem obvious, but if your current position is ripe for outsourcing, then consider bidding on positions that are not so easily outsourced. To do so may require an investment in education on your part, a cut in pay, etc. It is up to you to decide what it is worth to stay with your present employer and then act accordingly.

    5. Develop your own list!
    As mentioned earlier, it is better to plan in advance. Literally write down all of your options and investigate them. Identify the options using some kind of priority system that allows you to identify which are the best to pursue. If you have trusted friends, consider comparing notes -- but only do this if you know everyone is talking about being outsourced. You don't want to start a panic if nothing is happening. However, it is a good thing to track your options and be prepared.

    Summary

    There are many issues surrounding outsourcing -- whether local or offshore. If you are with a firm that is considering outsourcing or the industry trend is toward outsourcing, there are risks that need to be managed. The important task for you is to not only be aware of the environment that your firm faces and the way your management team reacts to those types of risks, but also to understand what you must do to compensate for the risks you face. As mentioned earlier, it is far better to be prepared than not to be.

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