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Houston, we’ve had a problem…… offshoring, IS employment and the IS discipline: perception is not reality

  • Debates and Perspectives
  • Published:
Journal of Information Technology

Abstract

We believe that the information system (IS) discipline has a major and urgent problem to contend with: the general public appears to believe that there are ‘no jobs in IS’ because of offshoring. They see the offshoring of IS jobs as an inevitable consequence of economic and competitive pressures to drive down labor costs, which leads them to conclude that there is no future in IS. In particular, the discipline is suffering from the erosion of its student base and in this article we explore some of the reasons as to why this is occurring; focussing specifically on the role offshoring may be playing on the perception that there are no jobs in IS. Despite fairly robust figures showing that there are virtually as many IS jobs now as ever before, the public's perception appears to be at odds with this. We thus examine where these beliefs may have come from and in our stakeholder action plan we suggest some radical solutions to align perception with reality.

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Notes

  1. This paper expands on Hirschheim et al. (2007). We are grateful to Claudia Loebbecke and Joesp Valor for their input on the original development of this work. We also want to thank Matt Levy for his assistance on this latest version.

  2. We use the term ‘discipline’ and ‘field’ interchangeably in this paper. We also use the terms IT and IS interchangeably.

  3. The perspective taken in this paper is predominantly a US-centric one as this is the one we are most familiar with. Having said that, we believe this perspective is mostly consistent with what is occurring in countries such as Canada, Australia, New Zealand and much of the EU.

  4. When we speak of the ‘developed world’, we are referring to the US, Canada, Western Europe, Israel, Australia and New Zealand. When we refer to the ‘developing world’, we are including India, China, parts of Eastern Europe, South and Central America, and the Far East in general. We adopt the developed world perspective throughout this article while recognizing that other perspectives may come to different conclusions.

  5. It also included one in Australia.

  6. Indeed, as noted by Ives et al. (2002) many US universities were removing the ‘core’ IS course from the MBA program.

  7. http://www.cio.com/article/447091/Obama_Speaks_Out_Against_Offshore_Outsourcing.

  8. However, these forecasts were made before the 2008 economic downturn and the current banking crisis. The new Democratic government in the US is considering various protectionist measures to prevent job losses from, among other things, offshoring (see previous footnote).

  9. Concomitantly, there is no shortage of articles, blog entries, and so on, thus offering a contrary view. As an example, a recent Newsweek blog entry entitled ‘Europe's About-Face on Offshoring’ claims that many European companies are rethinking offshoring, choosing instead to keep jobs internal, and in a number of cases, bringing previously offshored jobs back in-house (Theil, 2010).

  10. In addition to the low labor-cost advantage we also have to consider the social costs of employment in the West, especially in Western Europe. Although this is rarely mentioned, the attraction of major corporations to what amounts to a flexible labor force with little or no social costs (i.e., no health and pension benefits, and no tenure), should not be overlooked in analyzing why offshoring is significant.

  11. Even if demand for Indian software workers drives up the cost of labor in that market (Joshi and Mudigonda, 2008), there are other countries that retain a cost advantage such as China and the Philippines (Mankiw and Swagel, 2006; Kotlarsky and Oshri, 2008).

  12. Employment data may not be useful even if we could obtain it. Small changes in total employment may have large effects on recruiting new IS graduates.

  13. An interesting twist on the way offshoring is perceived is reported in Lacity and Rudramuniyaiah (2009), who in analyzing offshoring cartoons note that offshoring is portrayed negatively in US cartoons but positively in Indian cartoons.

  14. Nicholson and Sahay (2004) give a vivid illustration of the lack of domain knowledge. The UK-based client was a local government requiring a social security system to be written. The programmers in the offshoring company in India struggled with understanding the concept of social payments to the poor and unemployed written in the system specifications.

  15. This has occurred already in business schools, where very few IS programs teach coding skills. These skills are more likely to be emphasized where IS programs are embedded in computing schools.

  16. And even if these jobs are offshored, would it not still be necessary for students to have some knowledge of these areas so that they may interface with the vendors and manage these activities? How can one manage something that one knows little about? Indeed, it can be argued that students need more technology knowledge, not less. This also suggests that the key will be to instill an attitude and desire for life-long learning and to ensure the discipline possesses the capability to support this. Technology and the need to teach technology skills are not going away. It is inconceivable to have a society in which technology skills are not valued or perceived as unnecessary.

  17. Indeed, some believe that in the longer term as offshore companies move up the value chain and actually execute many/most of the activities on the value chain themselves, they will take on previously non-offshorable tasks. See also the discussions in Gopal et al. (2002) and Shao and David (2007).

  18. A yet to be determined issue is where will IS research be located? There are already indications that organizations that have gone to offshore locations established their own research and development centers there (which often operate at higher quality assurance ratings (e.g., capability maturity model (CMM)) than their centers in the home country, Mohnot, 2003). They have also sponsored research at leading educational institutions in these countries. For example, Intel is funding research at the Indian Institute of Technology in Chennai, to discover appropriate applications and usage models for wireless Internet in rural environments. IBM's India Research Laboratory has set up a technology centre at the Indian Institute of Technology in Delhi, which focuses on advanced IS applications in the areas of bio-informatics, grid computing and knowledge management. Similarly, the Indian Institute of Technology – Kharagpur, is doing collaborative research with multinationals like Motorola, HP, Oracle and GE Capital. The same is also happening in China, although they are not quite as far along (Time Magazine, 2005).

  19. The IAOP has recently begun offering ‘institutional memberships’ – at essentially no cost – to universities who wish to work with them, thereby facilitating the educating of students about sourcing.

  20. In the case of offshore outsourcing, Beena George's course syllabus won the 2004 Award for Excellence in Innovation in Information Systems Education granted by AIS (http://www.aisnet.org/award/awards.asp).

  21. And even if they could find them how do they keep them? This is an issue explored in Weitzel et al. (2009) where the authors develop strategies for recruitment and retention.

  22. At a more general level, there is concern not just with the potential shortage of IS talent, but with the broad science, technology, engineering and mathematics (STEM) areas as well.

  23. Paradoxically, although IS employment is near an all-time high, the same also appears to be true with respect to IS unemployment.

  24. Anecdotally, there does appear to be an increase in IS majors and students enrolled in MSc in IS programs of late. Similarly, computer science has also seen an increase in student numbers (Marsan, 2010).

  25. Sadly, we are aware of a few universities (and not just in the US) where such redundancies are occurring.

  26. One might sensibly wonder ‘where is state funding going if not to education?’ The answer: to state prisons! A recent article in Newsweek (28th June 2010) entitled ‘Classrooms or Prison Cells?’ notes that in California, higher education now accounts for 7.5% of the state budget, whereas prisons account for 11%. This is a significant change from 1980 when higher education's share was 10% and prisons, 3%.

  27. Creating what is frequently called a self-fulfilling prophecy.

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  1. Ourso College of Business, Louisiana State University, Baton Rouge, LA, USA

    Rudy Hirschheim

  2. Manchester Business School, University of Manchester, UK & Norwegian School of Economics and Business Administration, Bergen, Norway

    Mike Newman

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Hirschheim, R., Newman, M. Houston, we’ve had a problem…… offshoring, IS employment and the IS discipline: perception is not reality. J Inf Technol 25, 358–372 (2010). https://doi.org/10.1057/jit.2010.23

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