Outsourcing destroys good IT jobs. Oh, wait…

Eduardo Porter‘s report in today’s New York Times reinforces what I said in Foreign Affairs about outsourcing and the tech sector — that while more low-skill jobs will undoubtedly be created overseas, the complex tasks are going to stay in the United States. The good parts:

As more companies in the United States rush to take advantage of India’s ample supply of cheap yet highly trained workers, even some of the most motivated American companies — ones set up or run by executives born and trained in India — are concluding that the cost advantage does not always justify the effort. For many of the most crucial technology tasks, they find that a work force operating within the American business environment better suits their needs. “Only certain kinds of tasks can be outsourced — what can be set down as a set of rules,” said Nariman Behravesh, chief economist of Global Insight, a forecasting and consulting firm based in Waltham, Mass. “That which requires more creativity is more difficult to manage at a distance.” Another Indian executive in the United States who has soured on outsourcing is Dev Ittycheria, the chief executive of Bladelogic, a designer of network management software with 70 workers, also in Waltham. Bladelogic, whose client list includes General Electric and Sprint, outsourced work to India within months of going into business in 2001. But it concluded that projects it farmed out — one to install an operating system across a network, another to keep tabs on changes done to the system — could be done faster and at a lower cost in the United States. That was true even though programmers in India cost Bladelogic $3,500 a month versus a monthly cost of $10,000 for programmers in the United States. “The cost savings in India were three to one,” Mr. Ittycheria said . “But the difference in productivity was six to one.” Bladelogic’s chief technology officer, Vijay Manwani, born and educated in India, predicts that once the “hype cycle” about Indian outsourcing runs its course, projects will come back to the United States “when people find that their productivity goals have not been met.” The upshot is that high-technology corporations are likely to ship more and more business functions to India to take advantage of its well-trained work force. However, even as they do so they will keep many essential tasks here…. In the end, many say the advantages of keeping some of the most sophisticated work in the United States are related to the factors that draw technology entrepreneurs from India and elsewhere to this country in the first place: Indian engineers and software designers in this country know that the businesses whose needs are driving technological innovation are mostly in the United States. It comes down to being where the customers are. (emphasis added)

Read the whole thing.