Small World

July 6, 2006 By Steve Towns, Editor

Few issues we cover in this magazine stir up as much response as outsourcing does, particularly when you throw in the prospect of offshoring. That's why the World Congress on Information Technology (WCIT) -- a weeklong international IT conference held in Austin, Texas, in May -- was an eye opener.

The conference offered a snapshot of an IT industry in flux, illustrating changes that may challenge government's stance on the use of foreign labor to perform various IT-related tasks.

In attendance were representatives from a long list of countries looking to replicate India's success in becoming an international center for outsourced software development. Guatemalan officials, for instance, pitched their nation as a "near-shore" software development option that's just a three-hour flight from Houston or four hours from Los Angeles. The country touts a series of investments designed to support its software industry, such as creating a technology hub near one of its major universities and deploying redundant fiber-optic rings for reliable, high-speed communications.

Guatemala isn't the only nation looking to secure its place in the global economy. Brazil set a target of $2 billion in software exports by 2007, according to Brazilian officials. Mexico aims to become a world leader in developing Spanish-language software and content.

These actions -- and similar moves by a host of other countries attending the WCIT -- play out against a backdrop of widespread globalization in the IT industry.

Mark Mayo, managing director of Global Advisory Services for TPI, a Texas-based sourcing advisory firm, said most private-sector outsourcing contracts now include an element of offshoring. Mayo, speaking at a Texas Digital Forum event held in conjunction with the conference, said global sourcing simply is a routine part of the business model for major IT services companies.

What does this mean to state and local governments in the United States? It could become increasingly expensive to hold out against global market forces that are pushing software development activities to lower-cost markets.

When Government Technology explored this issue a little more than two years ago, nearly 30 states were considering legislation to restrict the use of offshore labor in government outsourcing contracts (see The New Taboo, April 2004). As the IT industry increasingly taps a global pool of resources and labor, policymakers will confront tough choices about balancing the cost of critical IT solutions and the desire to protect local workers.

I certainly don't downplay the impact of these shifts on IT professionals and communities facing the potential loss of high-paying technology jobs. In fact, the trend underscores the need for communities of all sizes to invest in innovation that creates new opportunities to replace jobs that could disappear.

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