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XI.4 July + August 2004
Page: 12
Digital Citation

Insights on outsourcing


Authors:
Aaron Marcus

We are living in historic times. Some might say we are living in interesting times, as in the well-known curse, "May you live in interesting times," but I’d like to think that the rapid international changes of the past decades and those currently underway portend global improvements, not degradations. Who but a few could have imagined fifty years ago a dismantled Soviet Union, a unified Germany, Chinese astronauts, Indian technology growth, and a European Community of some 450 million people and growing? Some of these large-scale global developments may seem like distant rumblings to the local interests of individual CHI communities in North America and Europe, but, for some researchers and practitioners, they have serious and immediate consequences.

A topic of considerable interest and concern to many of us is the outsourcing of professional jobs from the West to India, China, and elsewhere in Asia and South America. Articles in almost every major news publication—Business Week, The Financial Times, Forbes, Fortune, The New York Times, Time Magazine, The Wall Street Journal, and Wired—have commented on the trend in depth. What is happening? How do we understand it? And what can we expect in the future?

Having had an opportunity to lecture at the Asia-Pacific CHI conference (APCHI 2002) in Beijing, China, and recently at the Fourth Annual South-India CHI conference (Easy4 2004) in Bangalore, India, it seems appropriate to reflect on what I have learned and to share my thoughts. They focus to a large extent on my more recent experience in India and my observations on outsourcing as it relates to our professional concerns.

The Current Situation

Newspapers, magazines, television, and the Internet have been buzzing about the significant numbers of high-technology jobs going off-shore. One estimate is that the U.S. lost 400-500,000 jobs (out of 130 million) to foreign markets in 2003 [5]. In early 2004, the top U.S. employers in India were General Electric (17,800 employees), Hewlett-Packard (11,000), IBM (6,000), American Express (4,000), and Dell (3,800) [11]. These numbers are expected to grow. Currently, the number of information technology (IT) professionals in India is somewhere between 140,000 and 500,000 according to varying estimates, and these figures could double within a few years. The trend is not new, but the attention is. As early as the 1980s, software centers in Singapore provided products to western PC manufacturers, and made software development a matter of national priority. Now analysts predict that by 2050 the economies of China and perhaps India will outgrow the U.S. economy [12].

In the past few decades call centers and software development centers employing thousands have sprung up across India. By early 2004, the Indian economy was expanding at a rate of eight percent, second only to China, with the largest of these companies, Infosys Technologies, Wipro, and Tata Consultancy Services continuing to absorb smaller ones. The situation has become more complex recently because companies like IBM are now buying Indian companies like Daksh eServices, the third-largest Indian call center and back-office service provider, while more U.S. companies are expected to follow suit.

Much of the news about Indian high-tech development has focused on Bangalore. Already the population of Bangalore, the pre-eminent "Silicon Valley" city of South India, has doubled in two years to about seven million people. The last period of doubling took 40 years. Increased business and consequent population have brought the predictable traffic jams and pollution to what was once a quieter, lovelier city with many tree-lined streets, and a pleasant climate. Now, job-hopping young professionals who inhabit cubicles—much like their counterparts in Santa Clara, California, or other high-technology centers in North America or Europe—consider the latest announcements for positions where 200 new-hires per day per company are advertised.

The orientation to outsourcing business processes seems to continue unabated, even though some companies have expressed concerns about some problems of quality and have actually taken back call centers to the U.S. These Indian call centers face attrition forces that require them to hire more people than needed, investing in repeated training and recruitment, with consequent dips in productivity, efficiency, and quality. Keep an eye on this phenomenon as the kind of jobs migrating involves more than call centers and back-end software development and maintenance.

Most of the focus on IT development has centered on custom software development, software maintenance, IT documentation, IT telephone support, remote network monitoring, software re-engineering, systems management, and IT administration and operations. What is significant to the CHI community, from my experience in both China and India, is the push not only for these "back-end" tasks, but also for higher-value "front-end" tasks that are considered by many Western professionals to be secure because they are the more "creative" parts of product and service development. These include such CHI-oriented "user-experience development" tasks such as the associated technology research, usability analysis and evaluation, including testing, conceptual design, and even detailed visual design.

Salaries in India for programmers might be $8,000 per year while skilled visual designers might earn $4,000 per year. (The call center staff members start at $200-$300 per month or $2400-$3600 per year [6], which is itself a better salary than other non-IT possibilities). If the pay rates for usability professionals in India are one-tenth to one-half those in the U.S., this difference poses a serious challenge to Western professionals. Will CHI/UPA-type jobs disappear to offshore locations, too?

The Story Becomes More Complex

What I learned both in China and India is that the user-interface design and usability analysis/evaluation professions are also growing.

At APCHI 2002 in Beijing hundreds of Chinese professionals from many of the Western companies located in a half-dozen locations throughout China who knew of and/or were comfortable with SIGCHI/UPA, convened at the conference, as well as at smaller independent usability and design offices. The numbers are small now, but they will inevitably grow. Already, savvy professionals and academics like Zhengjie Liu, at Dalian Maritime University in China, are offering to partner with foreign companies for mutual benefit. The local offices of companies such as Microsoft or Siemens in Beijing are small and serve their parent companies, yet it seems likely that entrepreneurial employees will soon set up their own independent services and seek other corporate clients. The same pattern appeared in Japan and Korea in previous decades. Twenty years ago our firm arranged for a Ricoh employee to spend a month working at our site on a user-interface design manual for office products, a new development at the time. Shortly after, he left Ricoh and started his own firm which competed with ours for Ricoh’s business. His approach was somewhat bold and unusual in the corporate culture of Japan at the time, but it was a harbinger of current entrepreneurial spirit among user-interface designers and analysts in these countries.

In India, the CHI-South India conference attracted 120 people; the attendance was already 50 percent larger than last year, and I fully expect it to attract many more attendees in the future. Keep in mind that this conference brought together professionals primarily from South India, i.e., Bangalore and Chennai (formerly Madras), two of the major centers in South India. Other centers will probably offer their own gatherings. In addition, suburban centers around New Delhi (Noida and Gurgaon), as well as centers in Mumbai (formerly Bombay), Kolkata (formerly Calcutta), and other locations have sprung up. According to Reena Choudhary [3], the most IT-inclined city is the northern city of Hyderabad, which has the largest budget allocation for IT in India, followed by Mumbai. All of these centers will be growing professionals in user-interface design and analysis, as well as software engineering. In fact, even though the country has only 3.7 million personal computers, it has the largest number of software professionals outside of California in the world and exports software worth about $8 billion in 2003-4, much of it to the U.S. [13].

A steady stream of professionals is being produced at India’s universities, including the famous Indian Institutes of Technology, which are located in several major cities throughout India. I am told that students consider Harvard University a second choice if they cannot enter the IITs, for which competition is intense. Many design schools also exist in India, with the National Institute of Design in Ahmedabad being one of the best known internationally. Coupled with Indian Institutes of Management, it seems likely that there will be no lack of professionals in business, engineering, marketing, and design to enable India to continue its advancement of full-service provision.

Discussions in the press have focused on software and call centers, but what is of interest to the CHI/UPA community is the demonstrated ability of Indian firms to take on the new development of products and services. While I was in Bangalore, I visited one software development firm that was currently engaged in new product development of mobile telecommunications applications for a world leader in mobile devices. What I witnessed was not only back-office software development, but also state-of-the-art new-product development for demanding consumer-oriented global markets. In two other cases, I interviewed members of high profile usability and design groups, one from the Indian R+D office of a major U.S. corporation, another, a local Indian software firm that had achieved significant growth. To my surprise, I saw in their analysis and design portfolios, for two very different product categories, examples of work that my own firm had failed to win. It seemed clear that these Indian firms had already presented formidable competition for the kind of analysis and design work that outside consultants, analysts, and designers, like us, might provide. What might there be left to do if many of these tasks go offshore?

This shift is not limited to India. In China, I encountered companies like Legend, now renamed Lenovo, which has been a primary supplier of software to IBM. The company’s white, gleaming, steel and glass headquarters in Beijing looks like any high-tech development center. At APCHI 2002, Legend/Lenovo hosted a one-day usability workshop where participants exchanged reports on their profession in China, Japan, Europe, and North America. Legend/Lenovo reported on the company’s growth and its plans to become a significant force in product development—not merely a back-end engine. Clearly it will have to focus on usability for its offerings to flourish.

The Future

At least one usability firm has taken the bold step to make a significant effort to grow its own service-engine in India. Human Factors International, based in the U.S., now has 60 people in Mumbai and expects to hire many more in the coming year. Their services will be primarily oriented to servicing clients in North America and Europe.

Discussions about the effects of outsourcing on the future of our professional lives seem to be binary. Some dismiss the likelihood that offshore design and usability professionals will loosen North American and European professionals’ hold on product and service development. Others seem anxious and pessimistic about the impending collapse of jobs and markets for their services. Both speak of "core competencies" in Western businesses. But what are these exactly? Of the basic user-interface development tasks, which ones are impervious to cheaper overseas labor: planning, research, analysis, design, implementation, evaluation, documentation, training, or maintenance?

It seems risky to think that Indian, Chinese, and other distant service centers will not be able to compete for more of the "creative" tasks of product and service development. Already one country, Singapore, has made commitments to becoming a "design center," not just a center for software programming and technical excellence. Of course, it remains to be seen how quickly these transformations will occur. Nevertheless, many Asian countries have demonstrated remarkable progress in acquiring Western usability-oriented design and analysis skills.

The challenge of competition for jobs from abroad, and user-interface development in particular, gives us the opportunity to reflect on what exactly are our core competencies. For some, it is having particular knowledge of our own culture and our own customer market, whether it is general consumers or specialized operators of equipment. Consequently, one of the areas in which we might expect to maintain a hold is in planning and in detailed evaluation and design for our own "local" markets. (Keep in mind that in the future some North American businesses may be smaller, local branches of companies headquartered in China, just the opposite of today.)

Another potential position is in mentoring, training, and relating to the off-shore providers of services. Many professionals know how much this kind of project management is required for large, complex, multi-location projects, in which teams of people must be coordinated to maintain close attention to client and user needs. Given the great geographic and cultural differences involved, this task will be all the more important.

Finally, providing in the West a local face to project teams and contact with key corporate customers is an important role that is unlikely to disappear. Local customers in the West want to have people on-site who understand their context and objectives, as well as their language and culture.

All of these developments seem to indicate a continuing role for Western professionals while more and more positions are outsourced in an inevitable search by business executives for lower-cost resources.

One other development seems likely: Asian centers may develop local solutions to their own needs for technology that are better suited to their countries and their own diverse cultures. This thought was raised explicitly at the South-India CHI 2004 conference. Remember, although India possesses the world’s largest democracy, it also has the world’s largest middle class. In a land with 110 languages, 14 national languages, at least two major religions (Hinduism and Islam) and birthplace of a third (Buddhism), the country is a vast, complex web of cultures and should not be thought of as a monolithic group. The same applies to China. Both are sometimes erroneously viewed by Westerners as "single-culture" entities. Viewing Europeans as a single entity-cultural group would be a similar mistake.

Seeking local product and service solutions focused on inherent cultural orientations is already underway. In 2002 Sony-Ericsson developed a prototype for a PDA based on Chinese Confucian principles, or Wukong, which prefers context and relationship over application and folder organization. This project benefited from LiAnne Yu, a Chinese-American anthropologist, being part of the development team.

Another example of a culturally oriented solution is the recent announcement of an "Indian" handheld computing device. The availability of a $200, simple, easy-to-use "Simputer" is intended to solve specific challenges for use in rural India, though the device may have a significant market elsewhere in the world. It remains to be seen what local professionals will discover for their own communities by taking the best of Western usability principles and merging them with their own interests and needs to produce innovative solutions.

The future will certainly see dislocations in the services industry for design and analysis, but there will emerge opportunities for the curious, eager, innovation-oriented professionals to contribute to a revolution, or at least to an inevitable evolution in the industry of computer-human interaction and communication.

References

1. Baker, Stephen and Manjeet Kripalani (2004). "Software: Will Outsourcing Hurt America’s Supremacy?" Business Week, 1 March 2004, pp. 84-90.

2. Chavan, Apala (2004). "The Usability Scene in India," User Experience, Vol. 3, No. 6, Summer 2004, in press.

3. Choudhary, Reena (2004). IT’s Everywhere & More’s On The Way," The ET CIO Survey, The Economic Times Bangalore (India), 30 March 2004, p. 5.

4. Clark, Don (2004). "Another Lure of Outsourcing: Job Expertise," The Wall Street Journal, 12 April 2004, p. B1.

5. Dolan, Kerry A., and Meredith, Robyn (2004). "A Tale of Two Cities," Forbes 2000/Offshoring, 12 April 2004, pp. 94-98ff.

6. Friedman, Thomas L. "30 Little Turtles," New York Times, 29 February 2004, pp. Op-Ed, Weekend 12.

7. Henderson, Carol E. (2004). Culture and Customs of India. Westport, CT, USA: Greenwood Press.

8. Luce, Edward and Khozern Merchant (2004). "Outsourcing: ‘The logic is inescapable’: Why India believes commercial imperatives will help it beat the offshoring backlash." Financial Times. 28 January 2004, p. 13.

9. Liu, Zhengjie, (2003) "Where East Beats West," User Experience, Vol. 2, No. 4, Spring 2003, pp. 8-13.

10. Marcus, Aaron (2004) "On the Ins and Outs of Outsourcing," User Experience, Vol. 3, No. 6, Summer 2004, in press.

11. Pink, Daniel H. (2004). "The New Face of the Silicon Age: How India became the Capital of the Computing Revolution," Wired, February 2004, pp. 94-103ff.

12. Sachs, Jeffrey(2004). "Welcome to the Asian century," Fortune, January 2004, pp. 53-54.

13. Sood, Aditya Dev (2004). "Guide to ICTs for Development" The Center for Knowledge Societies, Bangalore, India, info@ict4d.info, www.ict4d.info.

14. Thottam, Jyoti (2004). "Is Your Job Going Abroad?" Time, 1 March 2004, pp. 26-31ff.

Author

Aaron Marcus, President
Aaron Marcus and Associates, Inc.
www.AmandA.com

Sidebar: URLs and email contacts

The following URLs and email contacts, among others, are relevant to this topic:

  • Center for Knowledge Societies: Amit S. Pande, amit_s_pande@yahoo.co.in, www.ict4d.info
  • CHI South India: Pradeep Henry, HPradeep@chn.cognizant.com, www.acm.org/sigchi
  • Chinese Center of the European Union’s UsabilityNet: Zhengjie Liu, Dalian Maritime University, China; liuzhj@dlmu.edu.cn; http://usabil-ity. dlmu.edu.cn
  • Human Factors International, Mumbai Office: Dr. Eric Schaeffer, CEO, eric@humanfactors.com, www.humanfactors.com
  • Media Lab Asia (originally a partnership with MIT’s Media Laboratory): Venkatesh Hariharan, Assistant General Manager; Mumbai, India; www.medialabasia.org
  • National Institute of Design in Ahmedabad: Prof. Darlie O. Koshy, koshy@nid.edu, www.nid.edu.
  • Simputer: Simple computer for under $200: Vinay L. Deshpande, Director, Encore Software, Ltd., Bangalore, India; vinay@ncoretech.com; http:www.ncoretch.com
  • Srishti Schoolf of Art, Design, and Technology: Geeta Narayanan, Director, Bangalore, India; srishtischool@vsnl.net; artdesign@vsnl.com; www.srishtiblr.org

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