Doing Business in Real Time
About this Blog:
The global economy has a life of its own, it lives in real-time, and we are all part of it. Hello brave new world.
Welcome to the First World, Now Your Labor Rates are Too High
The United States isn’t the only country where IT careers are being redefined by the realities of the global economy. I spent some time working on a system development project in Ireland this summer and saw IT professionals there starting to go through the same transitions we’ve been going through here in the States for the last six years.
Fifteen years ago Ireland was a destination country for IT outsourcing. Their economy has since prospered; Irish labor rates have risen and now companies are moving their IT operations from Ireland to India, Eastern Europe and elsewhere. We had about 30 boom years for IT in the States; Irish IT had about 15 boom years. I wonder how long the IT boom years will last for India?
The global economy is getting better and better and faster and faster at moving work to places where the greatest value is created at the lowest cost. By the end of this decade standard IT labor rates for a broad range of services will be in effect globally; they’ll be set and constantly updated by the forces of supply and demand in the global economy.
The more you can standardize and commoditize an IT activity or service (as in ITIL for example), the easier it is to outsource it and move it from one country to another to take advantage of lower labor rates. This happened in manufacturing and it’s happening again in IT.
But things can happen with IT services that couldn’t happen with manufacturing. People don’t need to congregate at a specific place called a factory to do most IT work; they can work from anywhere and collaborate in virtual teams. So IT workers won’t become an extinct job category in first world nations the way factory workers became an extinct job category in much of the United States, Western Europe and Japan.
IT jobs can be done from the States, from Ireland, or anywhere with a good broadband network connection. The same high speed global networks that make IT outsourcing possible also enable IT workers to be physically located in any country. So even though it is never easy for some IT workers to see the value of their labor go from $100 an hour to $20 an hour, it doesn’t necessarily mean they have to lose their jobs.
If people go with the flow, twenty dollars an hour is still better than unemployment and people have the option to learn new skills for IT jobs that the global market values at higher rates. What are those better paying IT jobs? They are mostly jobs that require a mix of IT and business skills where practitioners work in an agile way to design and develop new applications and custom support systems.
This is because most opportunities for companies to make a profit now involve being super responsive to specific categories of customers and continuously updating their existing products and innovating new products to meet customers’ changing circumstances and desires (talk about big profits from being super responsive, check out a Spanish retailer named Zara). In the global real-time economy, responsiveness trumps efficiency; business agility is the ticket to success. And business agility is not possible without IT agility.
Companies that learn to use agile IT as a competitive advantage and as a driver for innovation need IT people who can deliver a continuous stream of systems and enhancements as their business conditions and opportunities change from month to month and quarter to quarter. So labor rates
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Fifteen years ago Ireland was a destination country for IT outsourcing. Their economy has since prospered; Irish labor rates have risen and now companies are moving their IT operations from Ireland to India, Eastern Europe and elsewhere. We had about 30 boom years for IT in the States; Irish IT had about 15 boom years. I wonder how long the IT boom years will last for India?
The global economy is getting better and better and faster and faster at moving work to places where the greatest value is created at the lowest cost. By the end of this decade standard IT labor rates for a broad range of services will be in effect globally; they’ll be set and constantly updated by the forces of supply and demand in the global economy.
The more you can standardize and commoditize an IT activity or service (as in ITIL for example), the easier it is to outsource it and move it from one country to another to take advantage of lower labor rates. This happened in manufacturing and it’s happening again in IT.
But things can happen with IT services that couldn’t happen with manufacturing. People don’t need to congregate at a specific place called a factory to do most IT work; they can work from anywhere and collaborate in virtual teams. So IT workers won’t become an extinct job category in first world nations the way factory workers became an extinct job category in much of the United States, Western Europe and Japan.
IT jobs can be done from the States, from Ireland, or anywhere with a good broadband network connection. The same high speed global networks that make IT outsourcing possible also enable IT workers to be physically located in any country. So even though it is never easy for some IT workers to see the value of their labor go from $100 an hour to $20 an hour, it doesn’t necessarily mean they have to lose their jobs.
If people go with the flow, twenty dollars an hour is still better than unemployment and people have the option to learn new skills for IT jobs that the global market values at higher rates. What are those better paying IT jobs? They are mostly jobs that require a mix of IT and business skills where practitioners work in an agile way to design and develop new applications and custom support systems.
This is because most opportunities for companies to make a profit now involve being super responsive to specific categories of customers and continuously updating their existing products and innovating new products to meet customers’ changing circumstances and desires (talk about big profits from being super responsive, check out a Spanish retailer named Zara). In the global real-time economy, responsiveness trumps efficiency; business agility is the ticket to success. And business agility is not possible without IT agility.
Companies that learn to use agile IT as a competitive advantage and as a driver for innovation need IT people who can deliver a continuous stream of systems and enhancements as their business conditions and opportunities change from month to month and quarter to quarter. So labor rates
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