More conventional, long-established companies present an opportunity for outsourced IT service providers.
By Patrick Burnson
June 14, 2017
In February, President Trump may have dealt emerging markets a blow by telling chief executives of major U.S. companies he plans to bring millions of factory jobs back to America through new tax and regulatory policies giving rise to the rebirth of domestic manufacturing.
The strategy is deeply flawed, according to some trade analysts, who point to the fact that there may not be enough qualified IT professionals here to maintain manufacturing momentum.
Murray Horwitz, senior vice president, SenecaGlobal, a global technology services company, maintains that on-shoring U.S. manufacturing requires the offshoring of IT support. The “skills gap,” which has been heightened by changes to the H1-B Visa program, is driving manufacturers to look overseas for tech support, he adds.
In this interview with Logistics Management, he explains why special care must be made when human resources investment in emerging markets.
Logistics Management: What particular emerging markets offer the best opportunity for outsourcing IT?
Murray Horwitz: More conventional, long-established companies present an opportunity for outsourced IT service providers. These companies tend to have a harder time acquiring and retaining younger IT workers who generally see them as outdated.
LM: So what’s the solution?
Horwitz: We’ve seen a large number of older companies try to contend with newer companies for skilled IT professionals. This can be through competing on salary, increasing budget for training, updating the physical environment to make it look “cool.”
LM: So does that work?
Horwitz: The short answer is no. After putting in all this effort and expense, many of these companies then go on to lose these professionals when the next hot company recruits them. Because of this, it can pay huge dividends for more traditional companies to establish an outsource capability. Outsourcing companies provide a dedicated, leading-edge team of IT experts that aren’t subject to being poached by seemingly more exciting firms. This allows older companies to level the playing field with newer competitors.
LM: What are the worst? Why?
Horwitz: Any market and/or company that is still rapidly evolving is usually a poor fit for outsourcing. In general, outsourcing works best when there is stability of technology so that the work of establishing the team and integrating it within the company can pay-off without too much turmoil.
LM: How should supply chain managers measure productivity and achievement?
Horwitz: Application software is clearly a key component of today’s supply chain management environment. The goals of engaging an outsourced IT software firm are to create a stable, cost-effective, team of software engineers. That team should work closely with the client team within an “agile” software development environment.
LM: Can you give us a better description and examples of Agile software development?
Horwitz: Yes, certainly. This is now a well-established methodology and there are recognized ways to measure the team’s productivity and achievement:
Sprint burndown – Sprint teams are composed of IT and logistics personnel. These teams organize software development into time-boxed sprints, covering needed functionality. At the outset of the sprint, the team forecasts how much work they can complete during a sprint. A sprint burndown report then tracks the completion of work throughout the sprint. The goal is to have all the forecasted work completed by the end of the sprint.
Release burndown – A group of sprints constitutes a release, where a release is substantial update of the software. Each release needs to be well-defined business update of the software, and it needs to meet its planned budget and timeframe.
Defects - How many defects are found? During development? After release to customers? By people outside of the team?
LM: Do you see more investment being made in IT networks and infrastructure to support emerging market outsourcing?
Horwitz: At this point, most organizations aren’t making direct investments in their own IT networks and infrastructure. Rather, all the action is directed towards taking advantage of cloud computing.
LM: How so?
Horwitz: Cloud computing allows companies to focus on the business aspects and development of their software. While the cloud computing vendor covers things such as: backups, variable deployment of extra computing power as needed, improved security, and a number of other benefits.
About the author
Patrick Burnson is executive editor for Logistics Management
and Supply Chain Management Review
magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]