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Parkin Space: Training for the Outsourcing Decade


Being British, I tend to see things differently from my local training colleagues here in the US. And I am stunned that no one else in the training profession seems to care about the Indo-China syndrome. I am not talking about Vietnam, but about the outsourcing trend that is sucking up all of the jobs that Americans and Europeans once thought of as inviolable. The impact on training and trainers may be dramatic.

Lest I be accused of being a paranoid Sinophobe, let me say that I am delighted that this scale of development is happening, and that it is happening so unimaginably quickly. But ordinary American employees are suddenly finding themselves both overpaid and under-qualified for their own jobs, and the trend is picking up in Europe too. There was a time, till rather recently, when Americans talked about becoming the hub of a booming knowledge economy. Lower-paid menial jobs would go to sweatshops offshore, and Americans would upgrade to higher-paid “knowledge jobs”. But many of those losing jobs to offshore companies are already knowledge workers: graduate engineers, PhDs in computer science, e-marketing gurus, journalists, and stock-market analysts.

Manufacturers are hurting, at least the smaller ones are. That was predictable. You can’t compete when your customers can get Chinese manufacturers to turn out high-quality goods at a fifth of your cost. IT companies are also hurting, though many were smart enough to establish facilities offshore ahead of the ebb tide. And retailers currently benefit from sourcing cheap goods. As an indication of how rapidly the changes are happening, WalMart (owners of Asda) get 70% of their inventory from China, and, at $18 billion this year, are a bigger trading partner for China than Russia or Canada. All in the space of three years. Of course it may be short-lived: when a few Chinese entrepreneurs wake up to e-commerce, nobody will want to buy from a local store when the same item from the same factory can be had online at 80% off. There goes the service economy, the only sector in the US that is showing any real employment growth. And it could happen overnight.

Many corporations, and most of the training professionals, that I speak to are in denial about the trend and are making no changes in their training strategies. Disbelief in its own vulnerability is one of America’s biggest failings. Short-term profiteering is another. In the interests of achieving quarterly profit targets and pumping up the immediate value of our investments, we are off-shoring everything to an Indian-Chinese hemisphere.

The American “knowledge” base is weakening dramatically. Applications to US graduate schools from people in China and India — the countries where the majority of international students come from — dropped 45% and 28% respectively from last year to this year. US enrolments in computer science degree programs are apparently down 30-40% on 1999. The 21st Century knowledge economy is not going to be in this hemisphere. India already graduates 70% more technical people than the US every year, and they will go to work for 20% of the starting salary that their American equivalent expects.

If we are not producing or importing the critical mass of brilliant minds that we need to sustain economic evolution, how do corporations stay competitive? You can train people to be more productive, but not five times more. Is the only route left to off-shore as much work as possible and to exploit the blossoming middle classes in cultures that we have never before dealt with as a mass market? And if that is the case, how do trainers survive? What new skills will be essential to sustain the organisation once its money, designers, R&D, manufacturing, management, business partners, suppliers, and major markets are all in Asia?

Corporate America apparently no longer places a high value on having brain-power or talent on the domestic payroll – the notion of human capital as an investment is being replaced with the notion of human ingenuity as an expense. You can’t fight it, and if it is not already happening in the UK and Europe, it will do very soon. So what can trainers do to help their companies manage the upheaval – and how can trainers position themselves to survive the coming shake-up?

* Read all of Godfrey Parkin's columns at his TrainingZONE Parkin Space.


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