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Mani Subramani

Mani Subramani developed the two-week outsourcing seminar abroad to help students be better prepared in a global economy.

Outsourcing: Is sending jobs overseas a good or bad thing?

Is sending jobs overseas a good or bad thing? And how do you decide?

By Jamie Proulx

Published on February 12, 2005

Name three things that come to mind when you read "offshore outsourcing."

Did you say job loss? A changing global economy? Essential?

In the wake of the 2004 presidential election, several buzzwords are fresh in our minds and one of them is the hot-button issue of outsourcing--the practice of sending jobs that have traditionally been done by Americans to other countries.

To explore all sides of the controversial issue, 20 MBA students from the Carlson School of Management studied offshoring and outsourcing, then traveled to Bangalore--India's silicon valley--for an up-close education on what offshore outsourcing looks like, what it does for a company, and what it means for the local community.

"...after doctors see a patient, they typically pick up a tape recorder and dictate their notes. Local workers pick up the tapes, transcribe the notes, and return them within one to two days. Instead, that doctor could send his notes as a digital file when he leaves work at 5 p.m. to an Indian worker who, in that part of the world, is just coming into work. By the time the doctor returns the next morning his notes are transcribed."

Mani Subramani, Carlson School of Management information technology associate professor, developed the two-week-abroad seminar. He realized how critical it was for his students to understand this issue and be prepared to deal with it in our increasingly global economy.

"I was teaching a master's course on managing and IT (information technology), and over the last couple years, I kept getting the idea that students didn't appreciate the complexities of the changing economy--specifically IT," Subramani says.

Much of the work being done through offshore outsourcing is in IT, and that is what most of the general public is familiar with. The media has extensively covered the fact that oftentimes a company's 24-hour help lines or 411 operators are actually working in a country on the other side of the world. But there is a wide range of activities that can benefit from this practice, says Subramani, and that is what he wants his students to realize.

"There are labor advantages, yes, but there are other advantages--huge advantages to rethinking how businesses execute their processes given the technology that's available," he says. "It's not just IT. This is important for a wide range of areas including the medical industry."

Subramani talks about the 24-hour clock in today's business world and how important it is for companies to take advantage of the complementary time zones that exist. "For example, after doctors see a patient, they typically pick up a tape recorder and take notes. Local workers pick up the tapes, transcribe the notes, and return them within one to two days. Instead, that doctor could send his notes as a digital file when he leaves work at 5 p.m. to an Indian worker who, in that part of the world, is just coming into work. By the time the doctor returns the next morning his notes are transcribed."

Subramani's example raises a point about outsourcing that is often at the crux of this issue. If someone in India is transcribing the doctor's notes, doesn't that take away a job from someone in the United States?

It's hard to say how many jobs have gone overseas because United States companies are not required to maintain such statistics. Forrester Research estimates that the current number ranges anywhere from 12,000 to 20,000 jobs a month. Add that to the 2 million jobs that have already gone overseas since 1983 and it sounds pretty significant.

But in a global economy, U.S. businesses must remain competitive. Some argue that if these businesses did not outsource some jobs to a less expensive talent pool, they would not be able to remain competitive, experience growth, and create new jobs in the United States.

And according to Subramani, it is not always about relocating jobs. It is creating new opportunities in technically creative ways to help everyone. He gives this example. Imagine being in a vehicle accident in the middle of the night in a small Minnesota town. You are taken to a hospital whose resources are not suited to analyze your injuries. You need a radiologist and that hospital cannot afford to have one on call at 2 a.m. Luckily, they are able to send your X rays to someone overseas who is on call for that very purpose. They are board certified for Minnesota, look at your injuries, and make the necessary medical recommendations. This is the 24-hour way of doing business and providing service that Subramani envisions with outsourcing.

"I'm a computer programmer and I'm worried about my job going overseas," says Helle-Morrissey. "So I was surprised when we were in India to hear a lot of people talking about China. A lot of Indian workers were worried about their job going over to China because that could be a better option for some companies."

The students who traveled abroad were exposed to the heart of the outsourcing industry in Bangalore. They each had a partner MBA student from IM Bangalore, India's second-ranked management school, and together they toured several American businesses outsourcing in Bangalore, including Hewlett Packard and Honeywell.

Sarah Larson, a part-time MBA student from Iowa, enjoyed her experience and was struck by how similar things were in India. "The business setting was surprising," she says. "For some reason I envisioned it differently, but it's a mirror image of what you see in the United States. They had cubicles, conference rooms, offices. The only real difference in the office was their clothing. The women were dressed traditionally but the men were dressed in business casual."

Mitch Helle-Morrissey, a part-time MBA student who currently works for Reuters as a computer programmer, also noticed the similarities, but not just in the buildings and the computers. He discovered that people have the same fears about outsourcing everywhere you go. "I'm a computer programmer and I'm worried about my job going overseas," says Helle-Morrissey. "So I was surprised when we were in India to hear a lot of people talking about China. A lot of Indian workers were worried about their job going over to China because that could be a better option for some companies."

Both Helle-Morrissey and Subramami acknowledge that one of the toughest parts of outsourcing is the short-term pain felt by those who do lose their jobs. Their concern echoes those raised by people on both sides of the debate. If this practice is here to stay, what must people do to prepare themselves?

"Given all of these capabilities that are becoming available in other parts of the world, I am urging my students to consider the global economy when they are planning their future," Subramami says. Classes like the Carlson School seminar are offered for just that reason, he says. It is important for students to understand the issue for their own employment and for their advancement as a manager someday.

"I want them to recognize the minute you go offshore it's not like being in Kansas anymore," Subramami says. "You're going to have people with different accents that understand things differently from the kind of folks you're used to being around in the U.S. There are certain challenges to managing globally, and unless you go and see [an outsourced workplace] and become sensitive to [the difficulties], it's hard to grasp [those challenges]."

For more information on the Carlson School seminar and other study abroad opportunities, visit Carlson International Programs.

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