What’s Unfair about Competition?
Posted: December 16th, 2009 | Author: Jim Cramer | Filed under: Economy, Global practice, Professional practice, Strategy | Tags: BIM, India, outsourcing, work ethic |
Lunch at the Hyatt Regency Dehli, New Dehli, India
A few weeks ago I was in New Delhi, India, where architectural services cost about a fourth as much as they do in North America. This low-cost option has been perceived as the driving reason for the outsourcing phenomenon of the past decade. Some view this as unfair competition.
North American firms have contracted for parts of their technology services to be accomplished overseas. This has created an around-the-clock service model. China and India have become the global leaders and the preferred choice for outsourcing services. Today, some North American and European professional practices have their own captive “insourcing” operations in India and Asia to support their other offices where labor and overhead are often much more expensive.
There are parallels in other professional practice areas. In the management consulting and technology field, U.S.-based management consultancy Accenture says that its firm in India will grow by more than 5,000 staff this year and will surpass 55,000 in India alone. And it predicts continuing growth that will not only serve the growing needs of India but significant parts of the developing world and developed world as well.
There is much more to this story than low cost/high quality talent, however. And this difference is not just about low cost. It is the high level of diligence and work ethic among professionals in India. Little waste in process, focused attention, lean overhead, very latest technology, and speed. Executives travel to client offices via coach class, even for a 15-hour flight. When they book their hotels, it is two to four people per room. They are eager to please, and their enthusiasm for the future of the design professions is contagious. This lean overhead, high work ethic culture has redefined outsourcing of architectural services. We believe it will continue to do so.
While the building information modeling skill levels in India have become legendary in just a few short years, the innovative nature of Indian professional practices is not just a story of technologically advanced practitioners in architecture and engineering.
Indian professionals have catalyzed fundamental change during the world’s recession. They have found new ways of meeting client needs, including meeting those that clients didn’t even know they had. They are eager imagineers of the future of professional practice.
Global innovators see opportunities that others are missing. They find service niches that are changing the face of the architectural and engineering business. Furthermore, they are matching their capabilities and quickly adapting to the world’s changing markets.
There exists no confusion about the impact of outsourcing jobs on the american worker. Every job we outsource to nations with a large number of individuals who work for minimum wage or less, hurts the American people who work for a living.
Paying less seems like a good deal. Please consider that in the United States getting the education is expensive. Getting a license is expensive. Starting a private practice is expensive.
Not being able to recover that expense with good wages eventually renders the entire profession of Architecture helpless. We struggle now to find clients who can engage our services. The working class is locked into a competition with overseas labor rates that simply cannot be won and results in less buying power embodied in the wage each successive year. There are fewer clients each year who can hire Architects for services as the value of their labor falls.
China alone is a huge impact on Architects in the United States. There is almost no economic justification for any private architectural practice to hire interns to do AutoCAD drawings or anything else.
The truth is that outsourcing is the destruction of career potential for every graduating architect candidate seeking an internship. The simple reality is that this ideology is not effective at the bank for Americans and their children. We trade away our future when we outsource jobs. We loose the capacity to replace the professionals we have now. What is the point of the education if it falls victim to a price war no one in America can win?