IMPACT OF OFFSHORE OUTSOURCING ON CS/IS CURRICULA* Ernest Ferguson Northwest Missouri State University 2280 Colden Hall 800 University Drive Maryville, MO 64468
[email protected]
ABSTRACT Reflection on the year 2003, historians might refer to the offshore outsourcing of information technology jobs as the megatrend of the year. As the IT industry matures, software is coming to be viewed as a commodity and computing as a utility. With custom software failing to deliver strategic advantage, the industry is rushing to seek the lowest labor costs for implementation, maintenance, support, and operations. This paper explores possible changes to computer science and information systems curriculum as a result of the outsourcing phenomenon. Keywords: computer science curriculum, offshore outsourcing, information technology and information systems curriculum. INTRODUCTION Information Technology is undergoing a rapid transformation the likes of which have never been seen before. At the April, 2003 CCSC Central Plains conference, the banquet speaker, Steve Oden, warned that many companies were considering offshore outsourcing as a cost-cutting measure. Since then headlines in the Kansas City Star and other newspapers have detailed the extensive layoffs of Sprint IT employees due to outsourcing [22]. In the May issue of the Harvard Business Review, Nicholas Carr wrote in an article entitled "IT Doesn't Matter" that the core functions of IT by "their very ___________________________________________ *
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CCSC: Central Plains Conference power and presence have begun to transform them from potentially strategic resources into commodity factors of production" [2]. He advocated that since IT does not differentiate one company from another, it is not cost effective to be on the cutting edge of technology. Ellen Ullman in a New York Times op-ed piece stated, "After the dotcom bust software is becoming a detail, ... something that workmen do, not artists" [24]. This transition of software development from craftsmen and engineers to assembly line production should not come as a surprise. As happens to all industries as they mature, software has become commoditized. At its beginning only so called wizards can make a new technology work. For example, it took brilliant minds from six countries to make the first atomic bomb whereas during the past year, people were worried that Saddam Hussein had made one in his basement! Consider the following: •
The first FORTRAN compiler took three years to design and implement. Today, the design and construction of a compiler is routinely assigned as a course project.
•
Ken Thompson won the Turing award for designing UNIX in 1969. Today, an operating system designed by a Finnish college student has an ardent following.
•
Fifteen years ago, establishing an Internet connection was fraught with numerous problems and was considered a nightmare for most. Today, AOL will send anyone a CD offering hundreds of hours of Internet service for free.
In his 1992 book Decline and Fall of the American Programmer, Ed Yourdon prophesied that American programmers would lose their jobs to cheaper Indian professionals [25]. When this failed to happen, Yourdon issued an apology with his 1996 book Rise and Resurrection of the American Programmer [26]. Yet Yourdon's original prediction appears to be coming true after all. And what is most alarming is the pace at which offshore outsourcing of IT is occurring. Perhaps it was only readers in India who took him seriously! This paper attempts to explore the scope of these changes and the skill set for entry-level computer science/information systems hires. Attempts will be made to suggest changes to CS/IS curricula implied by the commoditization of software. SCOPE OF THE PROBLEM During the 1990's companies discovered that workers could telecommute from home. With the abundance of high-speed telecommunication lines communication costs have been reduced to the point that workers can now telecommute from anywhere in the world. Faced with the absolute deadline of the Y2K problem, many companies utilized the foreign talent pool and reaped huge financial savings. The reduction in telecommunication costs combined with the object-oriented benefits of reusable code has caused a migration of jobs in technical support, maintenance, and application development to the cheapest labor source. The widely cited November 2002 Forrester Research report [17] predicted that at least 3.3 million white-collar jobs and $136 billion in wages are expected to shift overseas by 2015, of which nearly one million would be IT-related. Gartner Inc., an information technology research firm, calls the movement of tech-related jobs an "irreversible megatrend" [10]. According to Evans Data Corporation, 4.0% of outsourcing work was 69
JCSC 19, 4 (April 2004) done offshore a year ago while 9.6% of outsourcing work is done offshore today [1]. The U.S. Bureau of Labor Statistics reported that 2.1% of U.S. computer and math workers were unemployed as of July 2000. That number had risen to 5.6% by July 2003 [1]. According to Gartner, "by 2004 more than 80% of all U.S. companies will have considered shifting U.S. IT jobs overseas, while 40% of all U.S. organizations will have completed some type of pilot or will source IT services from non-U.S.-based service providers" [15]. Businesses are currently outsourcing the following jobs: maintenance/repair, training, applications development, consulting and reengineering, and mainframe data centers; and executives are considering outsourcing: client/server development, networks, desktop systems, end-user support, and full IT departments [7]. The primary reason for outsourcing appears to be the desire to cut costs and increase productivity. IT skills are a global commodity. And they are vastly cheaper in other parts of the world. See Table 1 for a comparison of annual salaries for programmers in several countries. Ed Yourdon projects that the least productive U.S. software professionals, which account for 20 percent of the American IT workforce, will vanish because of their consistent failure to update their skills and raise their efficiency [6]. Projected Programmer Annual Salaries 2003
2015
% change
United States
$74,486
$85,000
14%
Japan
$30,338
$35,000
15%
Malaysia
$6,930
$9,000
30%
Philippines
$6,549
$9,000
37%
Germany
$39,879
$65,000
63%
China
$5,852
$10,000
71%
England
$38,450
$67,000
74%
France
$37,250
$65,000
74%
India
$6,350
$20,000
215%
Russia
$7,540
$25,000
232%
Thailand
$1,760
$8,000
355%
Poland
$8,990
$45,000
401%
Table 1 Projected Programmer Annual Salaries [1] Some companies find it helpful to have a 24-hour workforce during implementation. Code written on the far side of the globe can be tested during the day and sent back for revisions during the night. Many of the offshore outsourcing companies also emphasize 70
CCSC: Central Plains Conference the quality of work produced by their highly certified and proficient programmers. Many of these companies are certified in the Capability Maturity Model (CMM and CMMI) and/or ISO 900x. Businesses are starting to move their research and development operations offshore, too, "not just because labor costs less, but because these countries are beginning to produce an international brain trust which is beginning to rival the United States'' [3]. This should not be surprising as U.S. colleges and universities have been educating many of the world's best and brightest for years. In 2001 - 2002 there were 582,996 foreign students attending U.S. institutes of higher learning and of these, 66,836 were from India many of whom were studying in IT programs [1]. Successful outsourcing necessitates a significant on-site contingent as well as those off-site. Travel costs can be decreased by contracting with what are known as near-shore companies in either Canada or Mexico. Offshore countries with significant IT contracts include India, China, Malaysia, Philippines, Israel, Russia, and Ireland. But with 415,000 IT pros and 70,000 newbies entering the workforce each year, India is the dominant offshore player [15]. For detailed information concerning the type of programming workforce available for the major offshore players the reader is referred to Leung's article [15]. The jury is still out concerning the ultimate impact of offshore outsourcing on the American economy. By utilizing cheaper labor for portions of software implementation, it may mean that some American companies will be able to survive that would have declared bankruptcy or moved out of the country. Thus offshore outsourcing might even be saving a significant number of IT jobs. Some even see offshore outsourcing as the only way to fill the positions of the aging workforce while others use it as a way of freeing up employees to work on more strategic projects. Not all offshore outsourcing efforts are successful. If a project doesn't fit the mold of "throw the specs over the wall, see you again in six months," it will almost always take longer to develop. Costs are only reduced if the extra time to market doesn't impact strategy and cheaper labor rates make up for the additional effort. There are a plethora of risks associated with outsourcing. These risks include political instability of the country, differences in or lack of intellectual property rights laws, and introduction of back-doors into the resultant software. Risk mitigation and cost reduction efforts have motivated some companies to develop in-house worksites in foreign countries. Pointing to market research by Giga Information Group Inc. and others, Jason Schroedl, director of corporate marketing at newScale Inc., claims that more than 50% of IT outsourcing agreements fail for lack of comparative information [8]. Many companies discover that expected savings are offset by the cost of managing the outsourcing relationship. More than 70% of all outsourcing contracts are either renegotiated or terminated prematurely. Clearly, outsourcing isn't the panacea portrayed by the press and outsourcing companies. For example, Dell has recently brought corporate technical support work back to the U.S. after customers complained about the quality of service received from workers in other countries [14]. However, if applied correctly, there is no doubt that outsourcing can be cost-effective. 71
JCSC 19, 4 (April 2004) The current impact of offshore outsourcing appears to be focused on maintenance, support, implementation, and operations. While planning, IT education and training will remain relatively resilient against the offshore trend. "The activities that will migrate offshore are those that can be viewed as requiring low skill. Innovation and deep business expertise will continue to be delivered predominantly from onshore" concludes market research firm IDC [11]. The dramatic shift offshore may not necessarily translate into a doomed outlook for U.S. information technology service jobs. As U.S. firms continue to move some jobs offshore, the upper-echelon IT jobs will remain U.S. based. Most predict that there will always be a place for highly skilled IT works but they may require significant retooling to redirect their skills to do high-end consulting and business strategy work. George Tillman, CIO at Booz Allen Hamilton says "Programming is like sailing, it's even useful for powerboat sailors. Being a programmer isn't a bad place to start a career, but few in the future will find it a career destination. That role now shifts to business analysts and project managers" [19]. In summary, while the decrease in jobs in maintenance, support, implementation, and operations is inevitable, it may be somewhat balanced by openings for project managers and the like as U.S. IT positions clamber up the value chain to avoid extinction. The Forrester report suggests as much noting "there's already a shortage of staff that can manage projects internally, let alone halfway across the globe"[4]. Allan Hoffman with Monster.com advises IT professionals "to avoid being sidelined by offshoring [they] must be top-notch technologists and stellar communicators, adept at maneuvering in the world of business and willing to work with offshore personnel" [9]. IMPACT ON CS/IS CURRICULUM The movement of implementation, technical support, and maintenance jobs offshore does not mean that graduates of computer science and information systems departments do not need technical skills. Graduates of computer science and information systems must be technically competent. The changing job market does necessitate that a greater emphasis must be placed on the business and communication support areas. Students will need more business savvy, project management skills, inter-personal skills and actual work experience in information technology as new job skill sets include relationship management [13]. The lack of responsiveness of higher education to the needs of the rapidly changing IT job market is evidenced by the declining enrollment in undergraduate United States computer science programs. Colleges and universities that had caps on computer science enrollments may not have experienced a decrease in majors, but most institutions have. In 2000, 3.7% of entering freshmen indicated they planned to study computer science; in 2001 it was 3.3%; in 2002, 2.2%[5]. That is a drop of 40% in only two years! There will always be the need for graduates of computer science departments who are innovative and can advance the discipline through research. Some professors see a need for a shift towards the production of analysts and project managers. Still others such as James Morris, dean of Carnegie Mellon University's school of computer science, compare computer science for science-focused students to an English major for the liberal-arts minded; he advocates that computer science is a foundation to pursue any 72
CCSC: Central Plains Conference career, from science or medicine to business or public policy. Morris says "We'll teach [students] enough to get a summer job in programming, but our deeper purpose is to teach you everything you need to know about digital technology"[20]. Against this backdrop, it is apparent that computer science and information systems departments are confronted with two urgent needs. Departments not only need to be better equipping majors for a rapidly changing work world, but also conducting research to better understand the outsourcing process. The following suggestions are a first attempt to enumerate necessary changes in the computer science / information systems curricula as a response to the outsourcing trend. They are delineated here as a starting point for discussion and as a focal point for further research and make no claims that they are either complete or will fit every institution. The suggested curriculum modifications assume that most of the technical content of the major remains intact. These proposed topical additions are described throughout the remainder of the paper: •
•
•
• • • •
Enhanced communication skills both oral and written: o Require a technical writing course o Writing culturally neutral requirement specifications o Encourage students to take foreign language courses Project management integrated throughout program: o Capstone project o Shadowing experience early in program o Internship/apprenticeship o Five-year program Expanded business background to include: o Intellectual property laws o Accounting o Managerial economics o International management Expanded risk assessment Expanded computer/network security coverage Expanded CMM or Six Sigma content Addition of multicultural component
Many of our graduates will be involved as the onshore project coordinators either working for the U.S. company or as the onshore workforce for foreign outsourcing companies. Therefore communication skills will be a premium. CTO's found poor communication to be the most common reason work sent offshore failed to meet project specifications [16]. Teaching students to write detailed, unambiguous, requirement specifications has always been a challenge. Now we must consider cultural nuances, non face-to-face communication, language familiarity, and other such issues. Perhaps it is time for departments to consider a technical writing course to augment the project management and software engineering/systems analysis and design coursework. This technical writing course should have a component specifically targeting the writing of tight specifications in culturally neutral language. In a recent article in the New York Times Eric Johnson, Dartmouth College, stated that, "Low-skill jobs like coding are moving offshore and what's left in their place are 73
JCSC 19, 4 (April 2004) more advanced project management jobs" [12]. Many educators have argued that project management skills cannot be developed until students have exposure to the real-world environment. Al Biland, CIO at Snap-on Tools, offers the following counsel to prospective computer science and MIS majors: "The traditional computer-science and MIS programs at most universities still provide a good grounding in the basics. However, seek out universities with commitments to partnering with industry to get real-world experience as soon as possible" [19]. Perhaps early in their undergraduate experience, computer science and information systems majors should be required to shadow a practitioner in their discipline. Departments might also consider implementing five-year programs that involve a significant apprenticeship component. This would be similar to what has happened to programs in accounting and education is some states. A capstone project should be incorporated into the program that is of sufficient scope for honing project management skills. It would probably not be feasible to have a foreign component to this capstone project but the project management courses must include a segment dealing with management of projects in which a significant portion of the workforce is geographically dispersed. IT professionals work in a business environment. Graduates need to understand how technical decisions impact the corporate bottom line. As programming jobs move offshore, computer science and information systems graduates will be expected to better understand business and have more of a role in management. They will need to apply accounting, economic and management principles coupled with an understanding of business laws. The exact courses are not as important in this area as the development of business savvy. The software industry may be at the same crossroad that the manufacturing industry faced in the 60's and the 70's. Japanese manufacturers used the best quality practices to develop manufacturing processes that were cheaper while at the same time being more reliable. Many of the foreign software developers are utilizing the Capability Maturity Model developed by Carnegie Mellon's Software Engineering Institute and Six Sigma processes [21]. Computer science and information systems departments need to ascertain if expanded coverage in these areas is warranted. Outsourcing increases risks to a company. Students need greater coverage of risk assessment, which includes social and political risks. Intellectual property laws vary greatly between countries. Students need to learn the impact of these laws as they relate to outsourcing of IT work. Since the attack on the World Trade Center, corporations have a heightened awareness of the need for better security of computer and information networks. Due to the inherit risks of outsourcing work, security jobs are unlikely to be exported resulting in an increased demand which is not currently being met. Courses in security are critically lacking in most programs. Departments should consider inclusion of a multicultural component to their majors if not already a general education requirement. Students also need experience working on culturally diverse teams. Computer science and information systems students could be encouraged to take foreign language courses in such languages as Russian, Chinese, Hindi or another language spoken in countries doing significant IT outsourcing work. A 74
CCSC: Central Plains Conference foreign language would also help students better understand cultural differences in a global society. Professional organization's model curriculum committees need to be standing committees. As changes to careers in IT take place at 'Internet speed,' printed model curricula are outdated before they can be produced and distributed. Rather than printed documents, professional organizations should consider dynamic documents such as web resources. These committees need to: a.) Keep in contact with industry, b.) Maintain an Internet discussion forum for both industry and academia that is focused the changing business needs, and c.) Have the ability to distill from their surveys and contacts the fundamental and essential skills necessary for starting careers in IT. The changing landscape of computer science and information systems necessitates that departments adjust curriculum to better prepare students for the job market and adjust course work to include how to successfully outsource work. Readers are encouraged to consult the many outsourcing reference areas established by several trade publications as shown in Table 2. Publication
URL
CIO
http://www.cio.com/research/outsourcing/
Computer World
http://www.computerworld.com/managementtopics/outsourcing?from=kcnav http://www.computerworld.com/managementtopics/outsourcing/report
Internet Week
http://www.internetweek.com/ASP/
Network World
http://www.nwfusion.com/topics/outsourcing.html
Outsourcing Magazine
http://www.outsourcingcentral.com/
ZD Net
http://itpapers.zdnet.com/search.aspx?scid=99
Table 2 Trade Publication Web Sites Of Outsourcing Resources SUMMARY The IT industry is experiencing maturation of technology, commoditization of software and globalization of business. Computer science and information systems departments need to conduct reseach so the United States can maintain its leadership in innovation. As technical support, maintenance, and implementation move offshore to a cheaper workforce, computer science and information systems departments must adjust their curriculum to better prepare their students for the rapidly changing IT job market. The importance of digital technology in all areas of society needs to be emphasized. The importance of understanding this technology regardless of a specific career needs to 75
JCSC 19, 4 (April 2004) be stressed. As John Morris, dean of Carnegie Mellon University's school of computer science, so ably stated: As programmed digital devices continue to shrink in size and cost, many of us predict that the computer per se will disappear just as the electric motor disappeared into hundreds of niches in our home and automobiles. Then we will have a science named after an artifact no one sees. But the essence of the science will still be there, and those who study it will be rewarded not just with riches but with understanding [18]. REFERENCES 1.
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2.
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3.
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4.
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CCSC: Central Plains Conference 13. Kishore, Rajiv; Rao, H.R.; Nam, K.; Rajagopalan, S.; & Chaudhury, A. "A Relationship Perspective on IT Outsourcing," Communications of the ACM, 46(12), 2003, pp. 86-92. 14. Krazit, Tom. "Dell Shifts Some Support Calls To U.S. After Complaints," Network World, November 24, 2003. http://www.nwfusion.com /news/2003/1124dellshift.html. 15. Leung, Linda. "Taking IT Offshore: Where Are The Hot Spots For Offshore Outsourcing?" Network World, August 25, 2003. http://www.nwfusion.com/careers/2003/0825man.html. 16. McCarthy, Jack. "Redefining Offshore Outsourcing: CTO's Increasingly Look To Outsourcers To Improve Management Practices And Mitigate Project And Geopolitical Risks" InfoWorld, November 29, 2002, http://www.infoworld.com/article/02/11/29/021202ctoutsource2_1.html. 17. McManes, Chris. "H-1B And L-1 Visas Accelerate Offshore Outsourcing," http://www.ieeeusa.org/newspubs/features/070703.htm, July 7, 2003. 18. Morris, James H. "Computer Science Is More Than Programming," Information Week, Nov. 17, 2003, http://www.informationweek.com/story /showArticle.jhtml?articleID=16100733. 19. Murphy, Chris & Chabrow, Eric. "Free Advice: Would You Tell A Kid To Study Programming?" Information Week, Nov. 17, 2003 , http://www.informationweek.com/story/showArticle.jhtml?articleID=16100719. 20. Murphy, Chris & Chabrow, Eric. "The Programmer's Future," Information Week, Nov. 17, 2003, http://www.informationweek.com/story /showArticle.jhtml?articleID=16100697. 21. Saxena, Surendra. "CMM - What Is It And How Important Is It?" http://www.outsourcemethods.com/document/CMM.pdf. 22. "Sprint Will Outsource Tech Jobs, Local Work May Head Overseas," Kansas City Star, September 16, 2003, pp. A1. 23. St. John, Don, "Inside Outsourcing" http://www.techweb.com/tech/ebiz/20031204_ebiz.
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24. Ullman, Ellen. "The Orphans Of Invention," The New York Times, May 22, 2003, pp. A 33. 25. Yourdon, Ed. Decline and Fall of the American Programmer, Prentice Hall, 1992. 26. Yourdon, Ed. Rise & Resurrection of the American Programmer, Prentice Hall, 1996.
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