Withstanding globalisation's impact on IT

Don't fight it, adapt, says Ephraim Schwartz

A recent survey of enterprise executives has found that — not surprisingly — IT executives are more averse to globalisation than their peers from other departments. The survey, summarised in "The Benefits and Challenges of Globalization," was conducted by EquaTerra, a consulting firm that makes its living advising companies on how to refine their processes, a practice that often relies on some measure of outsourcing. With that in mind, I called Stanley Lepeak, EquaTerra's managing director of research.

Lepeak doesn't pull any punches — a quality I admire. He told me right off that the negative feelings IT executives have toward globalisation and its offspring, outsourcing, are in part attributable to "airline" magazine syndrome. In other words, some non-IT executive sitting in first class reads a business publication that tells them how cheap IT labour is in India. The exec gets back to the office and asks, "Why are we paying developers in New Jersey $90 an hour when we could get the same work for $30 an hour in India?" Strategies are put forth without a true understanding of how it will impact IT, says Lepeak. "Invariably, there is a fixation on costs without consideration of how it impacts performance," says Lepeak. "And if labour is half the cost, it doesn't mean the company will save 50%." Other C-level executives need to understand how outsourcing changes processes, such as managing operations 24/7, dealing with cultural and language barriers, and managing staff discontent, both local and 10,000 miles away.

Long term, IT execs wonder where next-generation leadership will be found among rank-and-file IT staff when rank-and-file work is no longer performed within the organisation. "Where do I get my next head of development when all my development work has been outsourced?," Lepeak asks. Current IT professionals may not like the answer. Lepeak says what is quickly discovered is that IT needs a different kind of manager than it has today — and sometimes it is hard to teach an old dog new tricks. "You may not want your next gen to come up through the ranks. The skill sets are different when managing a service-level-driven contractual relationship," Lepeak says. The skills needed to manage outsourced projects may not have been learned when you were managing a team down the hall for the past 20 years. New skills include managing a third-party relationship, with special skills for cultural differences.

Like all of us, IT executives don't like the feeling that they are losing control. Lepeak says the only way to ameliorate that loss of control — which is real, not just a feeling — is to have a more solid project plan than you may have had in the past. You need a clear set of milestones that can be measured and tracked with a process to discover quickly when something is not going well. "What you used to do informally now has to be done formally with a third party," he says. There may be many IT people who not only resent the way things are going but feel this is not what they signed up for. They don't want to spend their time dealing with outsourcers and global issues around delivery, security, and IP. Well, if you're in that boat, you may not like the answer: "Get used to it." Globalisation is not going away. In fact, it is only now becoming truly global, says Lepeak. Where it used to be simply a US company outsourcing to India, now the Indian outsourcer may be outsourcing part of its work to China — or even to someone back in North America. IT executives will be faced with a myriad of choices for every project, with 30 or 40 geographies and a 100 providers to choose from. How that will be managed is a major challenge, Lepeak says. "It's akin to what globalisation has done to managing the supply chain, only now IT will have to learn to manage the global service chain," he says.

Frank Hayes will return soon

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