I received a lot of emails about “Crowd-Sourcing” IBM to Cut 3/4 of its Permanent Staff by 2017?. Let’s take a look.

Steve Writes …

Mish,

I’m currently working at Intel and was responsible for outsourcing my test team over the past decade. I’m personally being let go next Monday after 13 years and have experienced what you mentioned about crowd sourcing. I’m currently trying to get an interview with an international company that has a job offering exactly what I’ve done, but as a contractor with no benefits. You would never find this level of experience and knowledge about a job being offered as a contractor ten years ago. This is very clearly deflationary as you mention and will only increase at least for the larger companies involved with manufacturing.

I believe the jobs that can be outsourced either have or will be which means almost everything including all levels of skill and technical acumen. The only reason for keeping someone, a group or a type of job such as accounting locally in the US is because these employees have information that is not easily electronically stored or have information that is needed immediately and can’t wait for one day to receive it from Asia. I don’t believe that the reason for keeping accountants is due to fear that data will fall into the wrong hands as this information can easily be kept away of from any group of employees as necessary.

My feeling is that most of the accountants haven’t been outsourced because the information they have and not necessarily on their computer or have access to, is information that the business needs from time to time in an immediate nature and upper management hasn’t yet figured out how to wean themselves off of this instant access to critical information.

My test team was in this position of having critical information ten years ago but through outsourcing, this critical information moved overseas and hence my group’s demise.

Regards,

Steve

BG writes “The post on IBM is a great one. On my trips back and forth to India, my flights are full of H1 B visa engineers who come here and take work packages back to India. This is bad news for US IT folks.

Klaus from Canada writes …

Hey Mish,

The ‘crowd sourcing’ you described in today’s post is exactly what happened in Alberta, Canada with Infrastructure and Transportation departments in the early/mid 1990’s. These government departments were slashed some huge amount like 80%, basically laying off all construction staff and most engineers, and keeping mainly management.

The construction staff joined or started construction firms, and since then all highway, road, bridge, etc. construction and maintenance is done through public tenders.

Not sure if you’ve heard of Ralph Klein, our premier at the time, but he’s the one who led this and took Alberta down a path of balanced budgets and even debt elimination. There was a lot of pain when it happened, but now, 15 years later, that’s still how it works.

Projects are completed through competitive bidding, and the new P3 system (public private partnership) takes it a step further by spreading the risk. This way if the
construction company screws up, taxpayers aren’t on the hook. The Edmonton Ring Road was built on P3 and it boggles the mind how fast it went up. There were some issues, and the construction company was on the hook for essentially ‘warranty work’.

Crowd sourcing makes sense for public sector for sure since there is a distinct lack of accountability and fiscal prudence. At least private companies are driven by profit, so you would think they could stay efficient.

Klaus

Jeff Howe a writer at Wired who coined the word “Crowd-Sourcing” writes …

My word gets misused a lot, but this is as brazen an abuse as I’ve seen. If the subcontractors are a known quantity, and the employer is purposefully hiring them back on a project to project basis, that has nothing to do with crowdsourcing, which is all about the open call, ie, anyone could apply to fulfill the order.

We already have a word for this, it’s called “freelancing.”

If you can explain to me why this is something other than dumping your workers in order to save on benefit packages, then hiring them back on a project basis, a la what companies have been doing increasingly since the early ‘90s, I’ll send you a homemade cookie, and consider not ravaging this post on Twitter.

Jeff Dear Jeff …

If you want to ravage that post on twitter, be my guest. To be honest, I never heard the term “Crowd-Sourcing” before.

The important thing is what is happening, not what you label it. Please substitute freelancing or another word of your choice if it makes you feel better.

Will it change the meaning of the article or what’s happening? I think not. The job and benefit losses are very real, no matter what term you lose.

Jeff Replies …

Yes! It will totally change the meaning of the article. IBM isn’t saying they’re going to engage in some new fangled business process to save cost, they’re just laying people off and hiring them back sans benefits. Crowdsourcing is the smoke and mirrors, and you, as an analyst-slash-journalist, fell for the con.

Jeff, there is no con. There are many methods, and many reasons why we are losing jobs. Global wage arbitrage is at the top of the list.

The important thing to me (and I believe the important point of the article) is the expected outsourcing of jobs. Clearly, the important thing to you is the purity of the word you coined.

Someone used your term inappropriately as you see it. And I can appreciate that you would want your term used appropriately.

Perhaps you need to do a bit more PR explaining what it is. Then again, (dare I say it) perhaps we really did not need another term to describe a subset or method of outsourcing (giving it a new label) in the first place.

For the sake of argument, let’s assume we need your term.

With that aside, just as someone failed to understand your word, you fail to understand what’s really important to my audience: the loss of jobs and benefits (and to what degree that is likely to continue), not the name we label it.

Having said that, I will try and be more careful in using your term, perhaps avoiding it altogether when in doubt. If everyone else does the same …. well you tell me what happens to your word.

Twitter away.

Mike “Mish” Shedlock
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