For Tech, a Choice Between Outsourcing and Automating

There was a time when outsourcing jobs overseas to China, India and other countries was a common practice in the tech industry. Roughly 62 percent of tech companies were relying on outsourcing in 2009, and it’s still a relatively common practice with larger companies. It’s not hard to see why, either. Outsourcing jobs overseas allows companies to save money by hiring workers whose salary demands aren’t nearly as high as those of workers in the US, and delegating easier and less essential jobs overseas frees in-house employees to work on a company’s core products.

Outsourcing definitely seems beneficial to medium-sized and large tech companies, but it’s slowly falling by the wayside for smaller businesses. Part of this is because coordinating teams on opposite sides of the world is a logistical nightmare for companies that aren’t equipped to handle it, while another factor is the stigma associated with sending jobs overseas when the unemployment rate is so high in the United States. There may be another factor in play as well: as traditional outsourcing is becoming more expensive, it is slowly being replaced by automated systems.

Outsourcing and Automation

Although labor in India and China is still far cheaper than it is in the United States, those costs have been steadily rising over the last few years. Wages in India have gone up 10 percent every year for the last five years, so sending work to other countries is no longer the obvious financial solution that it once was. Meanwhile, it’s gotten much easier to automate simple jobs within the tech industry. Workers all over the world could conceivably be replaced by robots, which are getting more sophisticated all the time.

For some larger companies, switching to automated systems makes about as much sense as outsourcing. The right software can do almost all the work that a flesh-and-blood human being can do, and since a machine doesn’t need to be paid a living wage and can work around the clock, it can save a company hundreds of thousands of dollars.

Of course, this is bad news for those workers who could lose their jobs to these automated systems. Companies such as IBM and Yahoo are already talking about cutting hundreds or even thousands of outsourced jobs that may no longer be needed. The changes that automation will make to the workforce may not be felt right away, but they will certainly be felt.

A Human Touch

Automation may look more advantageous than outsourcing in some respects, but robots are unlikely to completely replace human workers entirely. There are simply too many things that a human is capable of that a machine cannot do. Machines do what they are programmed to do; as sophisticated as they have become, they still cannot think on the fly and make split-second decisions like a person can. There will also need to be people troubleshooting automated systems and making sure that they are working as well as they’re supposed to. In the end, automated systems just aren’t capable of the kinds of judgment calls that human workers often make.

Despite what many people believe, automation will probably never completely replace outsourced jobs. Overseas workers will definitely feel the impact that these systems will make in the job market, but human workers will never be totally obsolete. Perhaps the tech industry will see a combination of automation and outsourcing in the future, especially since there are so many services offering business solutions that make both possibilities easier than ever. It’s difficult to say where things are headed, but hopefully they will change in a way that benefits both workers and business owners.

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Osho is Tech blogger. He contributes to the Blogging, Gadgets, Social Media and Tech News section on TecheHow.