Posted on: Sunday, February 29, 2004
Students flock to class on outsourcing
By Justin Pope
Associated Press
CAMBRIDGE, Mass. — In a crowded MIT classroom, 55 aspiring executives grill a veteran consultant on the hot topic of outsourcing.
Their first questions are economic ones, about the cost-benefit analysis the students may be doing next year for real companies. How do you decide what operations can be moved offshore? What are the hidden costs? How much can you really save?
But eventually, the human factor comes up. One student, who is studying how business teams work together, questions whether software engineers can really collaborate as easily across continents as across cubicles.
"I don't know how software companies work," says the student, Mira Sahney. "But don't they talk to each other?"
Later, a radiologist at a local hospital that sends images to be read in India is asked how cultural differences have affected the program.
The class at MIT's Sloan School of Management is devoted to teaching business students about outsourcing — one of the first such classes in the country.
It is also testimony to the complexity of the topic, which taxes the very different tools of dispassionate economic analysis and human management that are supposed to be the heart of a business school education.
In a way, outsourcing isn't a new topic at business schools. For years, schools have been trying to give students the analytical tools they need to decide whether it's worthwhile to hire other companies to do work for them. One of those tools has always been not having a deaf ear to grayer areas like company morale and community reputation that can factor into those choices.
But in the past, those decisions have been about manufacturing jobs students like these might oversee. Now, technology has brought outsourcing to the white-collar world. In a now-famous report, Forrester Research has predicted at least 3.3 million white-collar jobs and $136 billion in wages will leave the United States by 2015 for lower-cost countries.
In short, these students could someday find themselves outsourced. The issue has already become a hot-button issue politically as Democrats blame President Bush for the loss of jobs in America.
"In the 1970s the people whose jobs were taken away were outsourced, but not the people making the decisions," said Amar Gupta, the MIT professor who is co-teaching the course. "That's not the case today."
It was students who pushed for the class, and rushed it into service this year ahead of schedule. At Wednesday's first session, they filled the seats and aisles. A few visiting students from Harvard Business School, which has no comparable course, also showed up, hoping the professors would let them sit in.
"As we leave here we'll be running into a lot of these kinds of issues, and it hasn't really been incorporated in the curriculum," said student Ryan Morrisey.
Gupta said one of his goals is to help students understand how, even in an outsourced world, they can add value to their companies that can't be acquired in the developing world.
But how successfully business schools can prepare students for this new world remains to be seen. Gupta and his co-teacher, former Sloan dean Lester Thurow, acknowledge there's very little solid, unbiased academic material to assign for class readings. Mostly, they're bringing in guest speakers who have experience with outsourcing and hoping students will at least get a snapshot of what's taking place.
The McCombs School of Business at the University of Texas is trying to explore off-shoring in the computer simulations students play. In one last fall, each student team chose to outsource work to Indonesia to save money, said Steven Tomlinson, the business school's director of MBA professional development.
But when the game threw the teams a wild card — a threat against American companies by a local terrorist organization — they chose different courses. One pulled out, another increased plant security, and a third evacuated American employees to Singapore.
The plant of the third team was bombed, and 200 workers were killed.
"The students were stunned," Tomlinson said. "The young man who was actually responsible said ... 'I used to work for Enron, and I vowed I would never treat people in the way I was treated."'
The team that lost 200 workers had the most money at the end of the game, and expected to win. But the executives judging the contest said they had not best exhibited "executive perspective" and awarded victory to another team.
The lesson: "It's in the moment of crisis, when you're under pressure, that you're going to rely on the reflexes you've developed," Tomlinson said.
Teaching those reflexes, Tomlinson said, is a way in which business schools can provide value for students. But schools will have to provide something, or they could find their work shipped overseas as well.
"In principle," said Thurow, the MIT professor, with only a half-joking laugh, "my job is outsourceable."
