There was a huge amount of discussion generated by bonddad's take on globalization. Today I ran across an interesting article in Business Week called The Myth of High-Tech Outsourcing. This is an area I'm familar with and have been in the midst of since the dot-bomb bust.
I remember in the 90's how many companies were hiring lots of IT types whether they had the skill sets or not. Lots of money was being thrown to any business plan that had .com associated with it. This included online pet stores, grocery delivery, furniture stores and many others. Even the successfully ones you still see today, like Amazon, consumed vast amounts of capital.
There basic cause for failure was that the huge amounts of capital that it takes to create these businesses just couldn't generate the revenues to sustain them. The Great Eyeball Race: From Dot.com to Dot.bomb and Beyond has a nice discussion about these companies.
I was involved with a company that used a 'hosted service' with a subscription model to provide our customers with our product. What this means is simply we provide the customers/users access to our application via a website. At the time we were ahead of the pack but now it is becoming fairly common. The benefit was our customers didn't have to buy a license to use our product nor did they have to buy computers to run it on. All they needed was a computer with a browser. They paid a monthly fee to use the service and we had a predictable revenue stream that Wall Street loves.
The unfortunate part was our IPO never materialized and we were eventually bought by our competitor. There were around 150 employees in the company and about 30 of us were gobbled up in the merger. The ones of us that survived all had a similar thread. We were the top producers in our area of IT. The ones that ran the computers and dealt with any down time or upgrades. The developers that created and designed all of the code. The support engineers that understood all of the ins and outs of the application. In other words, the ones with the highest skill sets and the most knowledge.
There were attempts to outsource development but it never really worked out for us. The biggest reason was the difficulty to work with outsourcing developers. In my opinion we were dealing with either brand new developers fresh out of school or 'seasoned' developers who's skill sets were questionable.
What did work for outsourcing was testing. The reason this was successful was each day the developers would go home and each morning the application would be tested and the bugs found when we came in to start the day. The downside was that a lot of infrastructure had to be in place for the code to be built and delivered to the testers. Full-time employees had to be dedicated to making and keeping this infrastructure working.
A couple of years ago the outsourcing companies started coming under pressure because many of the engineers were jumping to other companies. Back in the 90's one way to get a raise was to take a position at another company. In my case I left a company that was paying me around $40,000/year to a consulting company where I was earning $100,000/year. Many of the Indian engineers started doing the same thing. Once you develop your skills working for some company you are stuck getting small incremental raises. But by shopping your skills around you can get huge jumps in pay. What you know really does count.
About a year ago it began to come full circle: Offshoring to America. I have had many discussion with my peers that it won't surprise us to someday be working for an Indian company.
Globalization is going to continue and we are going to lose jobs here to overseas companies. Many of the international companies are going to find ways to reduce costs (and increase profits) by moving work to other parts of the world. It will not do us good to fight this.
What will help us is to support a real 'No child left behind' educational system. Common sense shows us how important a good education is to the future of our children. We need to develop a more sophisticated understanding of the technology. I refer to people who exhibit this characteristic as 'power users'.
One of the things I'm always saying is in my line of work I'm never out of school. I spend many hours learning new skills and honing the skills I have. In the IT world we live in things change and they change fast. What you knew yesterday is already on its way out. We all love our iPods, cell phones, HD televisions but how many of us even know the basics of how these things work. I know I'm 'tech support' for most of my friends (not my peers) and all of my family.
We need to learn about other cultures. The lack of understanding puts us at a disadvantage. Learning to communicate even to your co-workers and developing good teamwork is similar to learning and understanding different cultures.
What we need to do is develop careers that don't get automated or sent to countries that pay lower wages. I was a fireman before I got into the IT world. Fireman jobs will never be outsourced but there is a limited number of them. There are other jobs that will fall into this category. Look to the future and you can see that some of the coming innovations will be created here in America. Embrace these opportunities and develop the skills you need to succeed in them.
Globalization will not be America's downfall. Sitting back and fighting the changes will. Americans have had a 'can do' attitude. Now is not the time to change it. Don't expect something for nothing. If you try and put in the time you can succeed.