January 16, 2013

When Outsourcing Works Both Ways: Employee Subcontracts to China


The stories of outsourcing are many in number and commonly sad. Hearing about good people losing their jobs, some after having been with a company for years or even decades, isn't exactly good press for the company, and has a massive human toll to boot.

But for one software developer, turnabout proved to be fair play as he actually outsourced his own job to China, and took advantage of the market conditions himself.

The software developer, a man in his 40s, reportedly took advantage of the huge wage disparity between China and the United States by sending his own job overseas. He was said to have paid a software developer in Shenyang just one fifth of his six-figure salary to do his work for him.

Since that was the kind of thing that could commonly get a person fired, he still attended work every day, where he spent most of his time on Reddit and YouTube, enjoying cat videos and funny articles while his work got done for him every day at, basically, a 20-percent pay cut.

The move was discovered when the firm of the software developer asked Verizon for an audit of its virtual private network (VPN) logs. It discovered that there was an open and active VPN connection running back to Shenyang for several months.

The employee physically sent, via FedEx, an RSA (security) token to the Chinese firm so they could access the network under his name and do his work for him. With a little extra work, it could even look like he was working a standard nine-to-five business day.

Moreover, his code always came back clean and on time, leading to several commendations and performance reviews calling him the best developer the company had.

He had even reportedly done something similar across several other companies, earning several hundred thousand dollars a year, while paying the Chinese firm about $50,000 a year to do all his work for him at several companies.

As many would likely expect, at least one of the companies in question fired him – likely because they figured why pay this guy six figures to do what a Chinese company is already doing for 20 percent of that – but as yet it doesn't seem like the companies have any plans to pursue litigation.

This example simply serves to underscore, in a very unusual fashion, the issues facing businesses in the United States and Europe. Globalization is opening up some major new possibilities, yes, but it's also making for some very disturbing issues. Companies have a right – and a duty – to save money and maximize profits where they can, but outsourcing, especially in overuse, has the potential to ultimately slit the throat of business.

Consider Henry Ford, who raised employees' salaries despite the fact that they were doing much easier work when the automation of the assembly line came into play. It was widely expressed that employees would be able to afford the cars they were building, establishing a future market and improving the likelihood of sales not only today, but into the future.

Outsourcing has great potential for value if done correctly, allowing companies to focus on core competencies and improve efficiency. But it must be a tool carefully used to get the best effect now and later.




Edited by Braden Becker



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