Your job will go too. But you can do something about it!

Unemployment. You can do something about it

“…the magnitude of the approaching economic trade shock will be much larger than anything in our historical memory.” “Thinking about outsourcing”

This article deals with the realities of outsourcing and robotization today, how they directly affect YOU, and what you can do to be prepared. Later on I explain the consequences of these changes and recommend a set of actions to prevent and take advantage of this situation for each one of us and for policy makers. In order to maximise the reach of this article, plain language is used purposely. This is not an academic paper and shouldn’t be read as such. This is a blog post. Besides, what I express here is my opinion today. I may be wrong in some things (comments welcome!) and I reserve the right to change my mind anytime (are you always right? :). I can’t see the future, just show my perspective and give you my best advice. And don’t complain, you are getting it for free! :)
Oh! If I linked you in this article, I would appreciate a link back!
There is a great link collection throughout the article and a better one at the end of it. But read the article first. You’ll like it:

********Outsourcing, immigration and robotization.********
********How do they affect YOU, and what can you do about it?********

A look into the future

“I was in a building with 500 people,” says Soong. “Then they started to offshore. Nine months later we were down to 50 people.” from No Americans need to apply

“If your name card shows a title “Programmer” and you are not in India or China, it is time to re-evaluate your options.” James Seng blog

What is outsourcing?
Outsourcing occurs where an organisation passes the provision of a service or execution of a task previously undertaken in-house to a third party to perform on its behalf. Offshore outsourcing is…well, basically, the same thing, but taken out of your country and performed/produced somewhere else.

Why do companies outsource?
To make more money. We can talk for hours on the text book reasons for it, but it all comes down to make more money. Cheaper providers = larger profits

Is outsourcing always necessary, in all sectors, and in all countries?
No. But sometimes companies are forced to outsource to stay in business, if competitors have done it and they haven’t been able to differentiate themselves to continue charging customers the same money for their product. Even if a company is forced to outsource, it is a complex decision that has to be taken carefully.

Is outsourcing always a good idea?
No, it is not. Especially if you outsource to the wrong country, or at the wrong time. You may well end up losing money or bankrupt. It happens to around 50% of companies that try.
Besides if a company outsources too much, or too early, it may well lose too much control over operations.
If, in the other hand, a government outsources too much, it may loose too much control over -its=your- privacy and national security.(perhaps already happening “U.S. defence contractors sending classified work to China?”) Moreover, companies may also run into difficulties anytime while trying to manage the whole process effectively:

“One of our tasks in business schools is to train people to manage the virtual, globally distributed corporation. How do you manage employees you can’t even see?” “The Future Of Outsourcing”. Business week

So what does robotics have to do with outsourcing, Javier?
Well, for me, it doesn’t make a difference who your job is outsourced to. Robotization is one more kind of outsourcing. The end result is the same. A worker is replaced, and someone/something else takes its place.
It doesn’t matter to me if the end product is made by machines, or people; if they look human or dress in yellow or pray five times a day. As Buddha used to do, I concentrate on the issue and its consequences. Details are unimportant to me.

So who will take my job, if I may ask, Javier?
Well, it depends where you are and what you do today. Most probably, you’ll be substituted by a machine -that may or may not have human aspect- or by a foreign worker. Perhaps it will be a human looking robot.

“For the future, engineers at Hepworth are looking at other sections of the manufacture of their products using manual labour, with a view to introducing more Kawasaki robots to give a more reliable and efficient production line.” (http://www.kawasakirobot.co.uk/news.htm#2)

Perhaps who takes your current job is one of the million engineers who graduated this year in India. Perhaps an equatorian or African immigrant who sells her baby sitting services for half your hourly rate…
Of course, there are a few jobs that people may keep working for others, but 90% of the current jobs in the Western world can and will be outsourced in one way or another sooner or later.

Not only cheaper, but better? We are the weakest link. Robots are here
So you think that robots still have a long way to go (decades?) to take your job? Think twice.
I am not sure if you know, but there are already fully automated 24 h convenience stores and post offices (do you work in one of these?)

In any case, there are machines and robots today that can autonomously drive trains, cars and airplanes, cook food, clean, catch you speeding, provide guidance for and escort guests, assist the elderly, disabled, or ill, transport objects and people, mow your lawn, play with your kids, wage wars, entertain you, move parcels around, be your receptionist, a fireman and a teacher, do security patrolling, , and much more…
Nowadays some robots even look human, can talk, hold limited conversations with you, and learn.

Some of these machines are already substituting workers around the globe. Examples are already around us in retail, airline check-in desks, automatic answering systems and others.
At an astonishing pace, their price, abilities and autonomy are improving every day.
At the time of writing this article you can get a fully automated vacuum cleaner for around 200 dollars, and there are already more than 100 robotic commercialisation projects in the global public arena.

Ok. Maybe. But what is the rush, anyway, Javier?
What you are saying will take decades!
If I have so far conveyed to you a slight feeling of anxiety in you… if you are already thinking on the implications that all what I am saying have for you, I am doing well. Your next question would be: “ok Javier, say it happens, but…when?”

Well, the answer is: now. All this is happening right now, at your doorstep. How come?
Well, in my opinion, the most critical factor that is accelerating change today is the same one letting you read these words: the internet. “Everyone” in the developed world is getting connected nowadays. And thus, the speed of change increases exponentially. We can’t compare it to any other previous time in history.
For example: say that a few years ago, you had several teams of scientists working on a project to build robot parts in different parts of the world, right? Some of them were doing robotic hands, others heads, others eyes, etc…each one of them specializing in one particular thing. Unfortunately, and due to a lack of communication between the people working in these projects at that time, a lot of research would sometimes duplicate, “re-inventing the wheel”, or just trying to make something that you didn’t know someone else was doing much better that yourself, perhaps on the other side of the world.

Today that wouldn’t happen. Or at least not that much. Today, the knowledge and advances made by the brightest human minds in many different areas -from software to biotechnology, from management to baby sitting, from robotics to catering- are pooled and published in a few key places over the internet and all these bright minds have immediate access to it. Don’t believe me? Have a look at androidworld.com

Today an increased number of people are aware of these advances, and projects don’t duplicate that much anymore.
Thus, when everybody knows what the others are doing and can contact them and work in partnership with them in real time-”you’ll do the hand and I’ll do the eyes of the robot”- the pace of progress increases dramatically. The latest advances in robotics are an example of this trend.

Of course, we could try to ignore the problem in the hope that it will go away…
A few years ago I set out to do something that no company was doing in Spain, at least at the middle-sized business sector.

Through the old Artwater we offered ourselves as a consulting, web Design and translation hub to Spanish companies interested in learning more and acting upon outsourcing opportunities. We specialized in Eastern European countries, where we had some key contacts and critical market information.

It turned out to be my first business failure. Some say we were ahead of our time. There just weren’t any companies that we could afford to attract within our marketing budget, and the Spanish business sector and government chose to turn their back to this problem, hoping it would go away somehow.

This was a typical case of corporate blindness. I think the Spanish loss of competitiveness arising from these and other critical missed opportunities will be almost impossible to revert in the near future.

As Spain lost its chance, would you like to lose your personal chance by ignoring the realities around you? Would this be a wise decision for you and your family? Ignoring things won’t change reality. Actions change reality. So I propose you to take action today. I invite you to think of your life, your job and your career in a completely different way, turning the tables in your favour.

Or we could try to profit the new opportunities that these changes bring us!
Oh. And before you oversimplify and blame others for stealing you job, learn that Indians and others may not like so much this modern kind of slavery.

“…this business has given birth to an entirely new generation of this Urban Yuppie Kid who, instead of having his sights on his career, his future, has his sights firmly transfixed on the computer screen, answering queries for a citizen in the West.”

So who is the winner? No one. We are all in the same boat. Nobody is guilty. We have to look after ourselves first and then work all together for a better world, in which conditions improve for all of us. It is the only way forward in the long term. (and no, the winners are not the “implementers” of the change, or the richest people, because a badly implemented robotic society will replace absolutely all of us, humans, including the creators/founders. We are creating superior beings to us)

The eternal circle: rising wages and loss of competitiveness of one country, make the industries move to the next cheaper country.
Another point to bear in mind for China India and other “low cost economies” is what I have seen this in several countries where I lived: as a country develops, it becomes costlier to produce goods there, and the capital moves overseas. Examples are Spanish automotive plants that close down to move operations to Poland or Slovakia, Irish software ventures that leave for China…

“…in India are growing rapidly (around 7% a year). India is thinking of accepting the VAT laws that would also raise the prices. The amount of IT specialists India produces each year is scaring and the quality seems to drop a LOT.”

In the Eastern European countries, this process has meant “watching the train pass by without stopping at our station” The changes have been so swift and powerful, that these countries have become to expensive even before experiencing “the eternal circle”

The psychological and personal cost of outsourcing in society

Outsourcing accelerates creative destruction, which can be good for innovative and market-based economies overall, but terribly difficult for displaced communities and individuals in the process. from “Offshore Outsourcing and the future of American competitiveness”

The psychological repercussions of outsourcing are also showing to be potentially devastating and are material for another post. But suffice to think: if you lost your job now, how would you pay your bills, the house, the clothing for the kids, let alone the little luxuries we are all accustomed to have when we are at work? How does the human brain react to this loss and the stress that follows? How would this affect your self esteem and how long would it take you to feel down and enter the immobilizing spiral of depression?
And let’s also remember that outsourcing sooner or later affects us all -stock brokers, cameramen, engineers, middle managers- , not only blue collar workers:

This new set of potentially tradable jobs are in many cases held by people who are not “accustomed” to layoffs. Often they are high paying, clean, good jobs. Some are the best jobs. The people who hold them are quite convinced that they are on top–that they have these jobs and that these jobs are well paying–because they are the best people who deserve to have them: they are smart and industrious. In school they worked, while others screwed around. Sacrifices were made in order for them to attend college. They worked hard in college.
“Thinking about outsourcing” linked above

Nearly one third of US workers who lose their jobs will not find other jobs within a year, and in Germany the redeployment rate might only be 40%

(…) In India there are more than 18 million graduates per year, more than a million of them in engineering, and a further 16 million people obtaining engineering diplomas. This entire workforce is English speaking.
(…) he believes that off-shoring could save 11 million pounds in the public sector

Things people don’t know or forget when talking about outsourcing, but you should know
The end goal in the capitalist system, is to search for continuous productivity improvements.

By its very nature, this economic system will always move production to wherever resources can be found at a minimum cost, as fast as possible. It will also tend to get rid of any element of production (yes, that includes people) that performs below the standards expected in comparison with other elements, doing the same amount of work in a chain as short as possible from raw material to end product/service.

“They are building a multimillion-dollar plant in Mexico and they are going to build the Freightliners down there. They came in and videotaped us at work so they could train the Mexican workers,” said Zimmer, 55, who had worked at Freightliner since 1994.

Bearing in mind these realities, this is a list of what outsourcing means for YOU, and other things you should know:

* Outsourcing and the migration of work can happen to most industries, and countries, as long as there is a cheaper option somewhere else. It is not “if”, but “when”. Today it is China. Tomorrow will be Africa. From Spain to Hungary, from the US to India, the jobs will go.
* Your job will disappear without notice. It is a common policy not to let people know who will be fired, and when. The reason behind this is simple: if you know you’ll be fired, you won’t produce as much, and you are more prone to information theft, and sabotage of company property.
* No matter how high you are in your organisation’s ranking, your job can and will most probably be outsourced at some point. This includes managerial positions.
* The outsourcing process is gradual. It doesn’t happen all at once. So even if you still have your job and feel secure, you should be distributing and following the action suggested in this article NOW, among other things, because…
* If you are made redundant at the same time as everyone else in your company/sector, you’ll be in a pretty bad position, as all that people will be looking for work in the same place, at the same time than you do.
* In case the there is still an untouched industry in your area after the outsourcing process and you can get work, hourly wages will always be equal or less than those of the country where the cheapest labour is. If this is not legally possible in your country, the industry of business sector will just disappear, so you won’t have a job at all. Not even badly paid.
* Unskilled labour force will have no work whatsoever. Trains won’t need drivers. Houses will be built differently, by machines, probably with pre fabricated elements, etc
* Education is the only thing that can make the difference between having a job or not having one. However, unlike in the past, having an education will not be an “automatic passport” to employment. As the systems become more complex to program and manage -as long as they need human input- the requirements to find a job will be higher, and more technical.

In most western societies, as the cost of living increases and the wages decrease at the same time that the jobs disappear, there will be mainly three ways of living: 1/you are self employed in a skilled business sector. 2/You have one of the few jobs around, probably on a temporary basis, without any kind of benefits, and at the low end of the pay scale. 3/You are very close to, if not in, homelessness. As the time passes by, option 2 tends to disappear.

* If you are unemployed, unemployment benefits will run out at some point, and you’ll be homeless. Many people would say that this is impossible, since the government would provide “some kind of solution”. This is a good point. But bear in mind that that would only happen if the job loss IS NOT massive and happens over a very short period of time. This kind of job loss where millions of people claim unemployment benefits at once is fairly possible today. As computing power increases, jobs are less dependent on labour force, scientists work together developing amazing technological solutions in shorter periods of time, communication channels improve or reduce their price notoriously (think Skype) and customers and companies get used to new ways of buying/selling/communicating, simplifying processes and streamlining whole industries. Thus the speed of the outsourcing process increases exponentially.

Just think on this simple example: if you wanted to move a chocolate cookie factory with 100 employees that produced 1 million dollars a year profit fifty years ago, it would have taken you, say, 1 year minimum. Today, moving a whole business offshore can be done much quicker by finding reliable partners -or buying their companies outright- and transferring data between servers. What would have taken years before, can be done in three months. (think Consulting, Financial, Technological, E-commerce services and others)
The new business wouldn’t lose the old clients and would be producing millions of dollars in profits a year. And existing clients may not even know that you have moved… (Javier Marti)

Have a cool new telecom or medical device but lack market researchers? For about $5,000, analytics outfits such as New Delhi-based Evalueserve Inc. will, within a day, assemble a team of Indian patent attorneys, engineers, and business analysts, start mining global databases, and call dozens of U.S. experts and wholesalers to provide an independent appraisal. (”The future of outsourcing” Business week)

* the Public sector is equally vulnerable to outsourcing as the private sector, so… no; your job as a civil servant is not immune to outsourcing.

“…he believes that off-shoring could save 11 million pounds in the public sector.”
From “Off-shoring: process, pain or profit”

“Going forward, the quality and intensity of global competition are likely to increase. Foreign nations will continue to work to make their business climate and infrastructure more attractive (…) and many will retain a labour cost advantage for the foreseeable future.” from “Offshore Outsourcing and the future of American competitiveness”

So what is the solution, Javier?

As an individual:

* Get an education RIGHT NOW (but don’t count on it as a guarantee for lifetime employment). Learn to interact with computers. As my father would say, “I am not sure what your chances of success will be if you pursue higher education, but I know what they’ll be like if you don’t” (in this case will be homelessness) Even if you choose to work in the trades, the days of unskilled labour force in the western world are numbered. As a window cleaner, a carpenter or a travelling salesman, you’ll still need to interact, at least, with handheld computers, several times a day, in order to report to your base.
* Learn all what you can about business, marketing and selling.
* Prepare to keep learning throughout your life
* If you are not computer literate, enrol in a course as soon as possible.
* Learn to write and express yourself properly in your language
* If you are a self trader on the trades or some high demand, semi low skilled profession, set up a company, make a good website where people can learn about, book and pay for your services, take on apprentices and expand your operations as fast as possible. Take a good position in your niche before a bigger, lean, automated, internet-based company breaks into your niche market.
* If you are in any other self employed position, follow the steps to expand operations outlined above and make sure you are properly networked with good contacts you can use in the case that 1) demand exceeds your capacity (read my article about Social Bookmarking) or 2) you run out of business.
* Set up your business in a sector that will take longer to be affected by these changes (high level of skill or creativity needed) such as being a writer, designer, musician, inventor, marketing strategist, or film actor. You can also specialize on a trade or skill that requires hands on presence such as a carpenter, nurse, physician, dental hygienist, or hair stylist. Other industries careers or business sectors likely to take longer to be affected: residential care, marketing and sales workers & supervisors, social services, top executives, personnel supply services, special education services, psychologists and security services.
Some of these business sectors will be affected by automation and robotization (namely security and health services) but there will also be increased demand for them in the future.
* If you are an artist, don’t ever think that you could live out of your art in the future. Robots can also make music pleasant enough for humans, play it (see also wasubot, and videos), dance to it, act virtually, perform for theatre, paint, and even create movies. And they’ll get better at it.
Of course, in a world of robots, the richest people will still buy art made by humans. (as long as it is fashionable. Remember: humans are gregarious individuals). But this will be a tiny proportion of a tiny market sector.
* Learn about and apply for any subsidies your government provides to small business. Depending on your country, some of these schemes can be quite useful.

Immigration and entrepreneurship
You may have noticed that I have a bias towards self entrepreneurship, uh? So why is it so, Javier?
Well, the reason is that I have realized that no matter how well you do your job, if you work for others you can always be replaced by lower cost labour coming across your countries borders: illegal, or semi-legal immigrants. As the poor countries get even poorer, the current inbound immigration pressure will continue towards the developed world.

But why would governments continue to allow the existence of a black economy?
Because having a good pool of foreign workers within the country increases productivity. You see, a foreign labour force pool with little rights helps to keep the nationals in check and thus keeps wages down. That way, the country is more competitive internationally. (I know I am simplifying a lot here…) Examples are Mexicans in USA, Ukrainians in Czech Republic, and Ecuadorians in Spain. If you work for others, even if your work cannot easily be outsourced or automated, there will always be someone willing to do it for less money, and he’ll be competing with you in the job market.

If, in the other hand, you are a business, you are “on the other side of the fence”, employing this cheaper labour pool. (yes, I know it is not ethically correct. Sorry. I didn’t invent market forces. I am trying to help YOU here, not to save the whole world)

As a business owner, you choose who you employ, and you cannot be sacked.
You “just” have to make sure that your business continues to attract. See why I told you to learn about business as much as you can?
Oh, yes, one more reason to become a business: your other option may be unemployment. Which one do you prefer?

“There is now an inequality in the distribution of work, and for an increasing number of young people, only part-time or casual work is available.
There is a paradigm shift towards part-time, casual and contract work. Australia is
moving from a low skill base to a high skill base required in an information society.
This in turn relates to the unequal distribution of resources and the ability to
participate in paid employment and leisure activities.” http://hsc.csu.edu.au/pta/scansw/work.html

And what can you do, as a policy maker?
(Wowwww…this is a tricky one!)

* Make sure you differentiate your products/country of the competition, always on quality, never on price
* Concentrate your marketing and production efforts on the 20% of clients having the purchasing power to buy your services (Pareto rule)
* Promote the utilization of the latest technologies in every business sector and industry
* Tax and fine heavily enterprises not complying with the national economic plan (yeah, yeah, I can hear you, free markets and all that… But I am talking here about countries that are not in a state to take any risk anymore, and need a shock treatment to get back as big players in the global economy, you see?)
* Create a panel of “Change-watchers” whose sole purpose is to keep up with advances in all areas in order to legislate accordingly, and notify early the appropriate government planning agencies
* Simplify. Don’t waste resources in lost battles. Close down industries that need to be closed down, NOW. The harm will be in the short term, but it is the right thing to do in the long term (I know this point sounds idealistic, is complex and goes against politicians ambitions, I know…)
* Specialize your country in something and be the best at it. Have a maximum of 3 main industries. Never more. Seriously strive to be the best in at least one of them.
* Take advantage of indigenous factors that other countries lack
* Ensure the industries you are concentrating in have a future, and that your country has the skills in its people to deal with the next “state of things”. Prepare people for change since elementary school.
* Retrain people in a continuous basis.
* Make business studies an embedded part of your education system starting at elementary school.
* Ensure a consistent, aggressive and dynamic image of your country is received by every potential partner at all times in all places.
* Use technology to promote your countries products. Embrace change keeping your identity.
* Bring the best foreign talent you can, as soon as possible, and reward them appropriately and consistently for their efforts. They’ll bring in more quality people later on.

“Whatever industry you’re in, planning for your future should be done carefully and cautiously.”

—————————————————–

Have I forgotten anything? any more bullet points you think I should add to my conclusions? Let me know and I’ll add them, duly quoting you, of course!!

Well…This is the best stuff I have learnt in 30 years in this world, and this article and its links took me two weeks of work. I hope it helped you somehow.

If you liked this article, please ADD IT TO DELICIOUS, Digg, and other social bookmarking sites, link to it, leave your comment and share it, so we all learn more through each other. You can also quote the whole or part of this article anywhere, as long as you keep the link back here in a visible place, and mention me, Javier Marti, as the author. Thanks!

If you think that I know the stuff I talk about here, please let this material reach the people who can contract my services. I don’t ask for donations, but I want to work in what I love.

ABOUT THE AUTHOR: Javier Marti is a Business Consultant, digital artist, speaker and trainer. Founder of Trendirama.com
Born in Uruguay in 1975, he has lived in Spain, Ireland and the UK
Javier lives today in Bristol, England. You can see his blog at
http://niquel757.blogspot.com
He is also available for speaking engagements overseas.
You can see Javier’s blog at http://niquel757.blogspot.com


Bibliography - An interesting collection of links about robotics and offshore outsourcing
http://www.workinfo.com/free/Downloads/89.htm
http://www2.cio.com/ask/expert/2005/questions/question2123.html
http://www.employment-studies.co.uk/summary/summary.php?id=320
http://www.globalchange.com/outsourcing.htm
http://www.informit.com/articles/article.asp?p=101365&rl=1
http://www.a1technology.com/blog/2005/10/future-of-offshore-outsourcing.htm
http://www.russoft.org/docs/?doc=705
http://www.businessweek.com/magazine/content/06_05/b3969401.htm
http://news.com.com/Will+China+dominate+outsourcings+future/2008-1022_3-5668199.html
http://www.careerplanner.com/Career-Articles/Top_Jobs.htm
http://www.dol.govt.nz/futureofwork/hotjobs.asp
http://www.ncbi.nlm.nih.gov/entrez/query.fcgi?cmd=Retrieve&db=PubMed&list_uids=10136559&dopt=Abstract
http://www.collegerecruiter.com/pages/articles/article30.htm
http://www.readersdigest.ca/mag/2000/06/living_job.html
http://www.ugobe.com
http://www.marshallbrain.blogspot.com
http://hsc.csu.edu.au/pta/scansw/work.html

April 25, 2007 · Filed Under Technology

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