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American SAP professionals and offshore competition

You missed a very important point on your HR response. The slow macro-economy we're entrenched in currently has also been infused with "offshores." These firms have taken advantage of our down economy and have firmly planted themselves in the US. Jon, this is a very real problem especially with many Americans out of work! Too many people in the media are not bringing this problematic area to the forefront. So, in order to get a job, whether full time or contract, Americans are finding themselves dropping their rates to almost ridiculous levels!

You missed a very important point on your HR response. The slow macro-economy we're entrenched in currently has...

also been infused with "offshores." These firms have taken advantage of our down economy and have firmly planted themselves in the US. Jon, this is a very real problem especially with many Americans out of work! Too many people in the media are not bringing this problematic area to the forefront. So, in order to get a job, whether full time or contract, Americans are finding themselves dropping their rates to almost ridiculous levels! The other extremely troubling fact is... everyone knows this is a humongous problem, but no one is doing anything about it!


Thanks for your honest response. There's no question that the economic downturn has created major challenges for SAP professionals. But it's a mistake to attribute the current problems we are facing to offshore entities. In fact, the real issue here is the globalization of the economy, which is starting to have a real impact on the IT space, the way it once had (and continues to have) on manufacturing. So-called "offshore" groups have been a part of the IT staffing world for a pretty long time now. Traditionally, these firms offered on-site foreign nationals with H-1 Visas to U.S. employers at reduced rates. However, in recent years, we have seen a trend towards more off-site overseas development and project outsourcing. These trends are a concern to all consultants, but it's a misconception to assume that non-American companies will be the major players here. I will be shocked if the IBMs, Hewlett Packards, and EDS-type companies don't eventually establish major overseas development shops to offer cheaper IT options for American companies. These "economies of scale" are far more complicated than the simplistic "H-1-versus-American jobs" debate that many folks are taking sides on. After all, if a company outsources a major piece of its IT department overseas, then all of those jobs are lost, whether they were being filled by Americans or H-1 Visa holders. It's going to be very hard to fight these trends - after all, look at all the manufacturing jobs that have moved permanently overseas for the same economic reasons - but let's start by not resenting the H-1 folks working alongside us. To me, all IT consultants who enjoy working on site are all threatened by the same global trends. There's no way even the cheapest on site H-1 consultant is cheaper than a programmer working in a basement lab in Russia or Ireland or India.

I think there are two possible ways to respond to these issues: One is to support political action to "protect American jobs." However, for the reasons I've described, I think that's going to be a tough battle, and supporting political action doesn't solve immediate employment issues in any case. I think the key to protecting our own IT careers is to make sure that our work is not just technical, but business-oriented. The more "mission-critical" our jobs are, the less likely they are to be outsourced. The key to long-term prosperity is combining solid technical skills with strong business process knowledge. When you're indispensable to the training of end-users, and savvy in your role as a liaison with upper management, then you can't be easily "outsourced."

Finally, while current rates are nothing to be happy about, rates are going to have to fall a lot farther before I start feeling sorry for the average SAP professional who is currently employed. True, with the kind of rates out there now, we have to know how to make that money count - but that just puts us in the mix with the rest of working Americans. SAP folks were flying high for a while, and now we're working for a living. It's truly terrible that there aren't enough jobs to go around, but the economic slowdown is the primary reason for the challenging situation we're in. The other factor that has kept companies from spending on IT and getting the SAP market moving again is the corporate accountability issue, which has kept stock prices down and capital spending in check. I believe that's posing a much bigger short-term problem than anything the offshore firms have cooked up. It's very important to debate the issue of offshore companies and H-1 Visa limits, but blaming them for the current situation takes us away from the constructive actions we need to take to move forward. The good news is that SAP is entrenched in major American companies - our job is to make sure we're a part of the action in the years ahead. I'll continue to offer the best ideas I have on how consultants can do that.


This was last published in November 2002

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