Offshoring Schadenfreude

Dictionary.com defines schadenfreude as satisfaction or pleasure felt at someone else’s misfortune.  That pretty much describes what I felt today when I read on CNN that an undersea cable break had crippled telecommunications and internet connections in areas of the Middle East and Asia.  Now I love my internet connection so I wasn’t feeling pleasure at the pain of the people overseas that lost their connectivity.  What I was enjoying (and still am) was the frantic handwringing on the part of American companies that had decided to send their jobs overseas to save money. 

Let me state for the record, I’m pretty liberal in most of my views.  However, global free trade certainly isn’t on of them.  When US companies began shipping our manufacturing overseas to cut costs (How’d that work out, Mattel?), we were told that it was nothing to fret about.  After all, America was retooling as an information economy now.  People who lost their jobs in manufacturing would just retrain for the new information economy.  In some ways, that seemed reasonable.  Then they began shipping our call center and IT jobs overseas to cut costs.  So what are we all going to retrain to do now?  Is America building a great fast food economy? 

I’ve always believed that offshoring was a huge IT movement that was based on extremely short sighted and poor analysis of the real costs involved.  I’ve seen a number of offshored projects that went poorly or experienced excessive delays.  When these additional costs are factored in, I highly doubt that offshoring is saving the money some MBA types would have us believe.  I also maintain that exporting American jobs is one of the primary reasons for our current economic slowdowns in this country.  Now that the infrastructure to that area of the world has been disrupted, companies are finding some of their critical operations disrupted.   With repair estimates that range for 1 to several weeks, this will certainly cost companies that have heavily invested in offshoring.

While I freely admit to a touch of schadenfreude at these company’s expense, this situation highlights just how shortsighted much of the analysis and planning involved in offshoring has been.  Many of these companies have no backup plans for the functions that they’ve offshored.  Offshoring seems to have been something that’s largely been done in a haphazard way without adhering to IT (and business really) best practices in regards to backup and disaster recovery.  I think Dan Farber and Larry Dignan of ZDNet summarized it quite nicely in their blog when they said:

Postscript: I’ve conducted a few searches for information on contingency plans for offshore operations and didn’t find a lot of information (whitepapers, stories and otherwise). The lack of information that turned up was a bit stunning given that one cable could sever access to your call center. Reading between the lines it could be that disaster recovery isn’t given much thought before making a decision to go offshore.

I couldn’t agree more.  In my opinion, disaster recovery, long-term effects on the economy, security, and real costs aren’t given much thought before making a decision to go offshore.

Tags: costs analysis, disaster recovery, economic impacts, offshoring