Globalization and Offshoring of Software

Education in Light of Offshoring

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7. Education in Light of Offshoring

Offshoring creates major changes in the demand for workers. Some countries need more workers, others fewer. Offshoring also causes the set of skills and knowledge of workers to change. Education is a tool that enables a country to provide the skilled workers that it needs, and thus it can be the centerpiece of a national policy on offshoring. Developing countries that are building up their software service export markets, such as India and China, need to prepare growing numbers of people to work in this industry. The developed countries are facing questions about how to revise their educational systems to prepare their citizens for the jobs that will remain when other jobs have moved to lower-wage countries. These developed countries also have to find ways of making their education system serve to increase the technological innovation that has historically driven productivity gains, new employment, and new wealth for nations.

The United States has a well-established and complex IT educational system. The bachelor’s degree is the primary degree for people entering a computing career. While degree programs appear under many names, five majors cover most of the programs: computer science, computer engineering, software engineering, information systems, and information technology. Although there are some differences among these five types of programs, they are many similarities in providing foundational knowledge related to computer programming, the possibilities and limitations of computers, how computers and computing work in certain real world applications, various skills about communication and teamwork, and other topics.

In addition to the five traditional kinds of departments, a variety of new academic units related to computing and information technology have begun to emerge in US universities. These include schools and colleges of computing that typically include the degree programs in computer science as one component, new schools that are separate from computer science and information science programs that fill an additional need in the computing and information technology space, information schools that in almost all cases evolved from library schools, and campus-wide multidisciplinary information technology institutes aimed at fostering collaboration of faculty and students across departments. While they are not the programs intended to produce ace programmers or deep technical experts, the mix of skills and perspectives is a reasonable educational experiment to try to produce students well suited for higher-value-added jobs. There is also rapid growth in degree programs offered by for-profit universities, which provide a convenient entry to the profession for working adults.

Non-degree programs also play an important role in US IT education. They include certificate programs, non-degree courses offered by traditional colleges and for-profit organizations, training associated with specific technologies, and corporate training programs. These alternative kinds of training programs appear to be growing rapidly, but it is difficult to quantify their extent or growth. There are many different goals being sought through enrollment in these non-traditional programs: training for a specific IT career, career advancement within the IT field, move from a non-professional to professional IT job, continuing education to keep technical skills current, or gaining specific product information or usage skills. There is also training provided by corporate universities for employees, customers, and suppliers, which might include technical training, background information about the company or its industry, or core competencies such as learning skills, communication and collaboration, creative thinking and problem solving, global leadership, or career self-management.

Recent changes in Europe, under the Bologna Declaration, have the goal of unifying the European educational system along the lines of American system of separate bachelor and master degrees. The Bologna process provides a standardized sequencing of degree programs, makes it less time consuming to obtain the first undergraduate degree, and makes the system more open for students who received their baccalaureate degrees in developing nations to enter masters programs without having to repeat some of their earlier training. The Bologna initiative has stimulated new interdisciplinary and specialized studies in computing within European universities, especially those incorporating domain-specific knowledge such as bioinformatics and media-informatics, and has also created separate programs in software engineering and telecommunications. The increasing uniformity of IT education across Europe will provide additional incentive for offshoring work from higher to lower wage countries within Europe; in the long run it may lead to a leveling of IT wages across Europe.

The German model is particularly important since the German-speaking nations represent approximately a quarter of the European population. There are some major voices in Germany in opposition to the Bologna initiative. For example, the T9 initiative, by the nine largest and leading technical universities in Germany, argues that the traditional model of university education leading to a diploma after nine semesters has considerable advantages over the system that leads to separate bachelor’s and master’s degree. It is unclear whether this will lead to modifications in the Bologna model over time.

India, as the largest supplier of exported software services, faces a different set of educational challenges from the United States or Europe, namely to ramp up its higher education system to staff its rapidly expanding software industry. Soon after India achieved its independence in 1947, a decision was made to invest a greater amount in higher education than is typical for a developing nation, even though there was not enough money to finance primary education for all. This decision was taken in part to support the efforts to build an educated workforce for the heavy industry that India’s leaders envisioned would provide an important part of its revenue base. The investment in higher education was advantageous to India when it opened up its markets and began to participate more extensively in global trade in the early 1990s. There have been many competing claims on government funds, and the central government has not been able to keep up with the increasing demand for higher education. Policies were liberalized in the early 1990s, allowing the formation of new private institutions of higher learning, resulting in the rapid development of private postsecondary education. Whereas only 15% of engineering seats in university had been at private institutions in 1960, 86% are private today. The rapid advancement of the private university system has created some problems. Quality varies widely, from clearly substandard to the highest international quality, and the government has not established, much less enforced quality standards. Some Indians also object to the high tuition and fees as being counter to the equal access goals of the nation.

Today the higher education system in India is extensive and rapidly expanding. It currently includes more than 300 universities, 15,000 colleges, and 5,000 training institutions. Nevertheless, only 6% of the college-age (18-23 year old) population is enrolled in college or university. Some of the schools, such as the Indian Institutes of Technology and the Indian Institutes of Management are world-class; but the quality falls off rapidly after the top 15 schools. Total bachelor and master degree production in the computing and electronics fields is approximately 75,000 per year. There are also some 350,000 students in other science and engineering fields at universities and polytechnics receiving degrees each year, and many of them enter the IT industry upon graduation.

Training in the latest technology, English-language skills, and other work-oriented topics are also important to the Indian software industry. This training is offered both by many independent training organizations and some of the large IT companies such as Infosys and Wipro, which run their own training operations.

China faces the same educational issue as India in building a trained workforce for its software industry, but its approach is different, through centralized planning. When the Communist Party came to power, it was committed ideologically to education and the use of science and technology for economic development. Upon the establishment of the People's Republic of China in 1949, the Western powers pursued a policy of isolating China; a by-product of this was China’s adoption of the Soviet Union’s model of comprehensive and specialized universities and a large network of research institutes. In 1978, the Chinese university model was reformed to one that more resembled that of the United States and emphasized comprehensive universities. In the 1980s, China began sending many of its brightest science and engineering students to the West, especially to the United States, for graduate education. Nevertheless, the government research institutes within China are still enormous and play an important role in graduate education. Until recently, only a very few universities undertook research; their highest priority was pedagogy.

As in the case of India, Chinese universities graduate an enormous number of students every year. In 2001, 567,000 students received their first degree, including 219,000 in engineering and 120,000 in science. The quality of these graduates varies dramatically, but the sheer volume means that China has a large reservoir of technically trained individuals.

Until 2001, Chinese universities neglected software studies as an academic discipline. At the end of the 1990s, the Chinese government recognized that it had a shortage of trained software personnel and called for improvement in Chinese software capabilities as part of its central planning efforts. In response, 51 Chinese universities established masters degrees in software engineering. These degree programs quickly attracted students. Including all the different kinds of curricula, China is now training about 100,000 people per year for the software industry. There are internal criticisms of the education, including overemphasis on theoretical education, insufficient attention to practice, and lack of familiarity with international standards.

There are many challenges to implementing an educational response to offshoring. Consider the challenges in the United States. IT work encompasses many different occupations, each with its own skill and knowledge requirements. There are five major types of undergraduate degree programs in IT, and each would require revision in order to address offshoring. There are similarly four different degree levels (associate, bachelors, masters, and doctorate) to revise. Non-degree programs, such as certificate programs, corporate training, and non-traditional universities all also play an important role in preparing the IT workforce. There are multiple career paths in IT to take into consideration, not just the traditional one from a college degree to a career in the same field. Universities are slow to make changes in their employees and their course offerings. It is hard for national bodies to predict and match supply and demand for the IT workforce, so it is hard for the higher education system to know how to set its production levels. The mission of a university is not only to prepare tomorrow’s workers; there are other goals such as research, preparing tomorrow’s teachers, giving students a liberal education, and teaching them to think critically that must be considered when revising a university’s program to address workforce needs. Offshoring itself is rapidly changing (from bodyshopping, to call centers, to business process outsourcing, to knowledge process outsourcing and other higher value added tasks), so how is a higher education system to know what occupations to prepare its students for? These challenges mean that educational systems will have to continually adapt to serve well their students and countries in the face of increased globalization.

Although the educational needs and issues may look different from different national or individual perspectives, this study has identified six overarching principles that should apply in developing as well as developed countries wishing to participate in the global software industry.

1. There is a need to consider the levels of IT work that are predominant in the national or multinational economy being served by the educational institution, and which are likely to be predominant in the coming years. Software and IT work can be thought of as consisting of a spectrum from the more routine (e.g. system and computer maintenance and support, basic programming) through the more advanced (e.g. application programming that requires knowledge of IT and specific applications, whether business, science, media or otherwise, or sophisticated systems programming and IT architecture development) to the advanced strategic (development of approaches that utilize IT to advance the organization strategically and provide it with a competitive advantage). As computer science and IT curricula are developed, particularly at the national level, it is important to consider the levels of workforce preparation to which the curriculum is addressed. In nations that are current recipients of offshored work consisting of programming and routine software testing and maintenance, for example, it may be desirable to focus the curriculum more heavily on the lower levels. This may change, however, as the roles played by IT professionals in these countries evolve and the offshoring providers aim to perform higher level work. In countries that are seeing their commodity IT work being offshored, it will be desirable for the curriculum to prepare students for the middle and upper levels of IT work, where the ability to merge computer science and IT with applications and strategy are important. This is likely to lead to an increased emphasis on application knowledge and a reduced emphasis on programming skills. It should be stressed that in all cases, however, the predominance of a certain level of IT work in a certain nation or region is just a generalization; all levels will exist in all countries, and students will be needed to move into all of these levels. It is the statistical distribution that will vary.

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