Sarbanes-Oxley, Offshore Outsourcing, and Entitlement

by Mary Lou Roberts

Preparing my recent articles for The Four Hundred on the regulatory compliance hog that is fast consuming the resources of all sizes and shapes of IT shops has really piqued my own interest and curiosity in the seemingly endless reach of this porker.

On July 14, the Pittsburgh Post-Gazette ran a story, "A Cost of Sarbanes-Oxley: Outsourcing to India", which reports: "A growing number of companies are looking to India's information-technology outsourcing firms to cut the cost and time needed to comply with the law, say analysts, consultants, and Indian entrepreneurs. . . . Public companies in the U.S. spent about $5.5 billion last year to comply with the new law, and are likely to spend an additional $5.8 billion this year, according to AMR Research, a technology firm in Boston. While most of the spending will go to internal and external auditors at large U.S. accounting firms, more than a quarter of outlays will pay for new technology and systems, analysts say, and it is this slice for which the Indian companies are competing."

So now it's not just call centers and software development; apparently U.S. companies now are going overseas to help them find solutions to develop and implement our own corporate internal best practices. Reportedly, offshore companies are assisting with virtually every phase of the compliance process. "They design and manage huge databases . . . . They write the internal audit reports needed to explain how the systems work. They upgrade their clients' systems and test them."

Scary, but I suppose not unexpected. The name of the business game is "delivering shareholder value," and few and far between are the companies that look past next quarter's earnings report to determine exactly what it is that shareholders value. In fact, the real game would more aptly be called, "delivering Wall Street expectations." Most of us "little guys" who don't play the stock market daily are looking for long-term stability and growth in our investments. While the Enrons of the world--who brought about the lion's share of these regulations in the first place--might offer a fun ride on the way up (and I didn't hear many people complaining about that part of the ride), we don't want to bet our retirement money or our kids' college tuitions on them.

If you want a terrific read for the beach or the patio this summer, grab Kurt Eichenwald's Conspiracy of Fools in which he lays out (no pun intended) the gory details of the Enron debacle. It's hard to believe that the story is true. But the most difficult part for me to grasp was not that human beings did bad or greedy things (the human propensity to act in this way has been documented from the beginning of time), but that most of it happened simply because people--the highly paid managers--looked the other way. They developed a culture that dictated that only success (that is, meeting or beating the street each quarter) was acceptable. They rewarded the messengers who delivered the "good" news. And they refused to examine the numbers to find the truth. The board of directors, the management, the auditors, the investment firms that rated them--even the stockholders themselves--were on a magical rise to the top. Not a Sisyphus among them.

In hindsight, the collapse was inevitable. In fact, it should have been (and maybe it was) obvious to just about everyone with even an inkling of insight as to what was going on. Now, after much wringing of hands and gnashing of teeth, we have regulations like Sarbanes-Oxley that will try to protect us from others like the Enron crew. (An amusing aside here. Eichenwald reports in his book that Ken Lay retained a "pricey" New York consulting firm to name his new company. The name they first proposed was "Enteron," and a new logo was developed and launched. Apparently, however, no one had bothered to check Webster's dictionary, which defines enteron as "a word for the digestive tube running from the mouth to the anus." This was especially unfortunate, the author notes, "given that Lay's company produced natural gas.")

We must learn--if we learn nothing else--to believe what is (or should be) right in front of our eyes, even when what we see is not pretty. And that brings us back to outsourcing. It's real. It's happening. And in a global economy, there's not much that's going to stop it.

Many of us in the iSeries world have had some protection from the onslaught. Most of the big outsourcers are the big players. To date, the largest companies in India (and elsewhere to be sure) are playing for the biggest dollars. And RPG programming isn't a hot skill set in Jodhpar any more than it is in Boise. Even better, iSeries ISVs have made it to the market with a plethora of tools and services to help smaller companies achieve compliance. But we should not be lulled into complacency. If offshore outsourcing hasn't affected you yet, it will, sooner or later. And if by some stroke of luck you escape, it will get your kids or your grandkids.

This has, of course, become a politically charged subject, with groups and individuals raging at the loss of American jobs. Companies that outsource jobs to foreign countries are deemed greedy and un-American-sometimes by the very same people who own stock in those companies and expect them to deliver increasing profits each quarter.

Last week, Victor Rozek wrote an article in The Four Hundred entitled, "As I See It: In Defense of Entitlement". In that story, he argues that: "The 'entitlement' to a living wage is the essence of why people work . . . " He contends that the desire to earn a sufficient salary and benefits to cover expenses and discretionary spending is an "expectation that has been earned over many lifetimes by those who worked to eat and ate to work." And he claims that "the essence of human progress" is "that our children are entitled to begin their journey from a baseline of what we have collectively achieved," implying that they are automatically entitled to have more, get more, do more, without working harder or better than their ancestors.

This is, in my opinion, dangerous--albeit common--thinking. I would argue that a big part of the essence of human progress is a combination of our increasing ability to adapt well to changing situations--environmental, political, and social--and to improve the general state of the human condition in the process. This cannot be accomplished by instilling a sense of entitlement in our youth; rather, it will be achieved by passing on to them a desire to work hard against the odds and the difficulties that life, often unfairly, poses.

Yes, I'm a Boomer (and on the old side of that generation to boot). I am also a university professor who sees the products of entitlement thinking almost daily. Many of my students believe that they are entitled to a good grade just because they come to class. ("Why did I get a C? I didn't miss any classes.") The same students who complain about not having enough money to purchase the texts at the beginning of the semester ("That's why I couldn't turn in my essay on time, Professor Roberts") spend the break talking non-stop on their expensive cell phones in the hall. I've had entire classes of students argue that downloading (read "pirating") music is justified, despite the fact that it's illegal. ("I couldn't afford to buy the whole album, and I only wanted one song anyway.")

Two years ago, I was the advisor for students doing their internships in English. Most of them didn't want to do internships at all. They saw no value in getting into an organization at the ground level and learning the ropes from experienced professionals; they wanted to jump right into positions that would immediately allow them to realize their long-term objectives: writing copy for advertisements, editing manuscripts, or publishing novels. When I discussed with one student the difficulties of getting a novel published today, explaining some of the business and financial dynamics of the publishing world, she responded, "But that's not fair. I'm a good writer. I have a right to be published."

In one recent class in Communications, I engaged the class in a discussion about free speech (of which I'm an avid proponent). Student opinion was unanimous that "everyone has a right to be heard," failing to make any distinction between the right to speak and the right to be heard.

Our rights and entitlements are not to a better, easier life, but the right to make choices. Many of our parents' generation made different choices than we make. They only owned one car, or one TV set, or one telephone so that they didn't have to work that extra job and could be at home with the kids. They limited and scheduled their children's activities so that the family could have dinner together (what a concept!). Most skimped and saved most of their lives, forgoing many of the luxuries that today we view as "necessities" so that they would have some security in retirement.

Previous generations knew the wisdom of writer and historian Bruce Catton's words: "To learn to get along without, to realize that what the world is going to demand of us may be a good deal more important than what we are entitled to demand of it--this is a hard lesson." There's nothing wrong with today's families making different choices, but we should recognize that they are choices.

Today's workers have some tough choices to make, and the fact is that the global marketplace is changing the nature of those choices. None of us is entitled to continue in the job we have, with increasing salaries and benefits to boot as the years go by, just because that's where our initial training landed us. We need to be wise and innovative in reinventing ourselves as evolving conditions demand.

Innovation in technology has made it possible for companies to hire highly qualified call center operators in the Philippines for peanuts compared to U.S. workers. Doctors in foreign lands will read our CAT scans for a fraction of the price of U.S. doctors, keeping medical costs lower. Workers in Ireland process insurance claims more quickly and cheaply than workers in this country can. And, yes, Indian consultants and programmers will be vying for the task of implementing our security and regulatory compliance processes.

Don't get me wrong. I don't like sending jobs offshore, and would under any set of circumstances try my darndest to hire American workers first. But if my choice is staying competitive and keeping my business afloat with offshore outsourcing, or going under, I'll opt for the former. Employees and stockholders of companies are entitled to no less.

The message, then, for IT workers in this country is to retrain and gain skills. If you are in a position that is or can in the future be taken offshore, take note. Regardless of any feelings of entitlement you may have, it's probably going to happen. Equip yourselves with leading-edge skills that will make you invaluable to your company. If you have to go back to school, do it.

William Ralph Inge (1860-1954) once said, "There is no law of progress. Out future is in our hands, to make or to mar. It will be an uphill fight to the end, and would be have it otherwise? Let no one suppose that evolution will ever exempt us from struggles. 'You forget,' said the Devil, with a chuckle, 'that I have been evolving, too.'"

Mary Lou Roberts, a 35-year veteran of the information systems industry, is a new contributor to IT Jungle. In addition to her work as a reporter in the iSeries space, she has spent her career as a marketing and communications professional working exclusively with information technology publications and companies. She can be reached at WriterNewf@aol.com.