Fungible Jobs and other Fallacies

The intellectual, academic, author, analyst Vaclav Smil directs his attention to the big challenges facing society and the world at large. He has addressed (among others) a broad range of topics, from the economics of meat production/consumption, the consequences of the oil/engine economy, the catastrophic potential of anthropogenic biosphere change, and the intrinsic relationship between industrial activity and the production of a middle class. Smil suggests that Globalization's dynamic on labour, the relocation of manufacturing jobs from economies like the U.S.A. to China, Brazil and others, is not balanced by an increase in knowledge work in the U.S. because IT jobs (for example) are fungible.

"Can IT jobs replace the lost manufacturing jobs?  No, of course not. These are totally fungible jobs. You could hire people in Russia or Malaysia - and that’s what companies are doing." (a link to the interview in Wired Magazine)

Fungible is a term in law for goods that can be contracted for without an individual specimen being specified. A fungible good is easily replaced with another identical item; for example: a tonne of wheat, 20 short tons of pork belly, a kilowatt-hr of electricity, a specific software package, a type of computer.
Smil's contention is that IT jobs, and by extension knowledge work generally, are easily moved to lower cost locations, that they are in a sense tradable services or commodities that can be relocated, delivered and changed at the will of the owner or buyer. We can certainly agree that a whole gamut of knowledge work has undergone change in terms of how it is delivered and sourced, from front-line customer engagement, sales and support, through to back office process like medical analysis, product development, service delivery etc. However undergoing the changes and transformations necessitated by outsourcing/offshoring (O/O) entails diverse risks and uncertainties for vendors, clients, end-customers and more. A fungible good or service is easily traded, substitutable, and its value or utility is readily imparted by its purchaser/consumer. We might ask therefore: "Are People and Place fungible matter?"

I assert that utilising O/O is manifestly not like this and furthermore, that O/O as a movement or strategy carries the baggage of a number of such fallacies.

1. That work is fungible
• O/O easily imparts access to new/more skills, knowledge?
• It lets us focus on our core valuable competences?
• O/O lets us utilise new/more people, resources, etc.
2. Cost savings are inevitable
• O/O is cheap?
• It delivers timely realisable returns?
• The upfront investment cost is a known quantity?
• O/O lets us utilise new/more people, resources, etc.
3. It gives more and better control
• O/O is easy to control?
• O/O lets us operate measurable management and governance?
• The performance of O/O centres can be made more transparent than local or in-house operations?
• Problems can be solved in the SLA/contract etc?
• Because control can be centralised although production becomes more dispersed?
• O/O will make us more flexible, nimble
4. Communication is easy
• Problems can be solved in the SLA/contract etc?
• O/O easily imparts access to new/more skills, knowledge?
• Relationships don't need to be personal.
5. Knowledge is transferrable
• The capability to operate O/O is easily acquired?
• Problems can be solved in the SLA/contract etc?
• It lets us focus on our core valuable competences?
• O/O easily imparts access to new/more skills, knowledge?
• Relationships don't need to be personal.
6. Location doesn't matter
• We could be anywhere: Bangalore, Berlin, Boston, Beijing, Baile Átha Cliath, ...
• Distance doesn't matter?
• Inter-corporeality isn't necessary?
• Relationships don't need to be personal.
• You need/get 24/7 global reach.
7. That you have a choice!
• Our competitors are doing it, so must we?
• Or, we don't have to do O/O if we don't want to?
• You need/get 24/7 global reach.

However O/O can be a strength, drawing on new knowledge and capabilities that are multi-lingual, cultural, ethical, and sustainable. The fallacies are assumptions and must be addressed as risks. They can be worked through over time to achieve success however it is defined.

"Anywhere is nowhere if people and place matter."

Additional Reading
Wired.com "This Is the Man Bill Gates Thinks You Absolutely Should Be Reading" 2013 (link)
FT.com "Benefits of outsourcing come under scrutiny" 2013 (link)
Deloitte "The Risk Intelligent Approach to Outsourcing and Offshoring" 2008 (link)
NYT "The Benefits of Outsourcing for Small Business" 2008 (link)