Thoughts On Outsourcing
On my drive to work some time ago, I listened to a story on NPR about an animation studio farming out their Alvin & The Chipmunks to a firm in India. The image in my mind aside, I had to wonder what this culture must think of America when they are in essence helping to construct this somewhat iconic image cell by painful cell. I felt somewhat violated, like one country saw another country’s skivvies. (I would much rather the story were about story work seen on The Incredibles, Tomb Raider or some Disney animation…but Alvin, Simon and Theodore??)
While the story was celebrating the advancement in virtual meetings and time zone enabled 24 hour work schedules, I compared it to my own experience working on outsourced projects and have to claim that when all is said and done, I fail to see the real cost savings. Virtual communication advances aside (which do save time and money if used appropriately) I added up the hours it took me to complete the project, the phone calls, the additional meetings, the travel, the language and cultural issues…it’s quite expensive and in the end, the quality of the work suffered. I read the rather alarmist The World Is Flat by Thomas Friedman and have to say, agree with most of his observations which basically boil down to: when it comes time for the next generation to apply for a job, a B student from Poughkeepsie will no longer beat out a PhD from China.
Tom Brokaw – Seattle: Leaving some important topics on the cutting room floor
Last night I stood in line for 45 minutes of uncharacteristically cold Seattle weather to hear Tom Brokaw speak at Town Hall.
In short:
- He was a straight talker with a sharp point of view, I enjoyed hearing him speak; I bought his latest book, “Boom.”
- The conversation with the lecturer was like watching a rather unchallenging series of softball throws, each question easier than the next. It showed that the interviewer felt he didn’t have much to add to prior interviews or even a strong opinion about the book. Brokaw was gracious and gave solid answers.
- Seattle never fails to disappoint, giving floor time to unscreened questions on conspiracy theories.
Brokaw must have left confirmed in his opinion of the Radical West. One thing bothered me though: my own lack of gumption in getting up to ask a question I felt strongly about–how the 50s and 60s laid the groundwork for an unspoken epidemic of white collar layoffs the Boomers are now suffering through.
The Boomers grew up being catered to in marketing, dreamt big, lived through a war, questioned hard and took the opportunity to break the rules in the 60s, made it through a tough recession in the 70s, some would argue that many went from hippies to yuppies and reaped the benefits of the 80s. As a demographic, they are hard pressed to make it unscathed through the massive economic restructurings of the 90’s and early decades of 2000.
How then, can a book focused on “what happened in the 60s” not lay the groundwork for what is happening now in our workforce? According to a March 1996 series of articles in the New York Times, “The Downsizing of America,” 43 Million jobs have been lost since 1979 affecting nearly one-third of all households.
I patiently waited my turn for him to sign my copy while the person ahead of me wasted our collective time berating Brokaw for “not personalizing.” Brokaw briefly commented: “Layoffs, it’s a big topic, we’re going through that at NBC.” Gone was my opportunity for a more thoughtful response from someone with such a meaningful vantage point. Never again will I miss my chance on the platform.
Downsizing in America makes the case that….(excerpt from Amazon book review)
“the media tends to favor the dramatic figures from large, well-known manufacturers. Manufacturing in America has been in long-term decline since 1967 and manufacturers have steadily shed jobs. However, agriculture and manufacturing only provide employment for 15% of the population, so this segment is not a good proxy for the entire economy.”
“Downsizing”, it turns out, is corporate-speak for upsizing. Firms laid off one set of workers – disproportionately less-educated, older, female or parents of young children – and hired on another set, by implication younger, male and single. Was the resulting workforce more productive? No, there was no change in employee productivity. Moreover, non-managerial employees bore the brunt of the layoffs, so that claims to be ridding the company of “fat” actually increased the management-to-staff ratio.
Did investors reward companies for their action? Perception says that downsizing is followed by an increase in the stock price. The reality is that stock prices remain steady or decline after downsizing announcements.
So what were the benefits of downsizing? The authors come to a surprising, but authoritative conclusion. Downsizing announcements force down staff wages so that the firm retains more profit. Simple really, isn’t it?
The Wall Street Journal had a series of stories on the then epidemic of white collar layoffs, starting with the Kodak layoffs in the early 90s. They committed early on to print a story a week until someone stood up to do something, but after about 3 months, you just didn’t read about it anymore. It became the norm. The Dot Com Bubble made an art of such bolemic practices, bringing people in and letting them go, looking at this sort of hefty decision making as a growth opportunity for its management.
Other links on Brokaw:
- Interview with KUOW
- Interview with TVGuide
News articles on the downsizing of America:
- The Downsizing of America
- The Downsizing and Demoralizing of the American Workforce
- Benchmarking Study Report