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When 2004 goes down in the books, it might mark the year companies spent deciding where to invest next. An oversupply of worldwide IT talent led many executives to move programming and other tasks offshore, but underselling their own staffs' ability could make the cost savings short lived. More companies adopted open-source software, but the trend could be undermined by lawsuits that threaten those who use it. Among tech companies, the Google guys were overexposed, but most people underestimated Larry Ellison's ability to snare PeopleSoft.
Overrated Adversary: OFFSHORE OUTSOURCING
Underrated Adversary: SHORTSIGHTED EXECUTIVES
As hot-button IT issues go, offshore outsourcing probably gets top honors for 2004. While companies hoped to embrace the advantages of shipping IT work to low-cost countries such as India and China, the public reacted with legitimate questions about the relationship between U.S. layoffs and the use of foreign workers, and politicos parlayed the angst into election-year rhetoric.
But the smoke generated by the offshoring debate obscured the big picture, which has to do with an increasingly global economy and the changing nature of technology work. And short-sighted executives, bent on offshore outsourcing for bottom-line reasons only, may risk trading innovation and competitive advantage for short-term gains. Wal-Mart Stores Inc., the world's biggest retailer--and arguably the most tech-savvy company in any industry--does all software development in-house. "We'd be nuts to outsource," says CIO Linda Dillman (see "Wal-Mart's Way," Sept. 27, 2004). Outsourcing in general, including offshoring, is a valuable business-technology strategy. But it needs to be employed for the right reasons.
--John Soat ([email protected])
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