The HIRE Act – a clarion call to upgrade US IT service management skills

IT outsourcing – specifically the offshoring of IT support by Western organizations to providers, for example, in India – goes back some 30 years.

As industry publication, Computer Weekly, highlighted in a reflective article almost a decade ago, organizations seeking to outsource IT “started to see value from the Indian companies in terms of their capability, capacity and cost difference”.

At the time of writing, chief reporter Karl Flinders described the idea of businesses onshoring IT or keeping IT services in-house as “almost eccentric” – no doubt driven by the fact that top technology firms in India had “scaled up their operations and service lines, hired more people and increased investment in training”.

However, the era of offshoring IT services may soon reach an end point. In the US, proposed new legislation known as the HIRE Act would make it financially punitive for organisations to procure services from overseas suppliers. And what would that mean for the skills and capabilities needed thereafter within US-based firms?

The HIRE Act – a disincentive to offshoring

According to a report on the National Immigration Forum website (an organization that “promotes responsible federal immigration policies” in the USA) the Halting International Relocation of Employment (HIRE) Act – if it becomes law – would “impose a 25% excise tax on outsourcing payments made to foreign workers for services ultimately benefiting US consumers”.

The idea is to address offshoring of US jobs and any income collected via the HIRE Act would feed into a new Domestic Workforce Fund to “finance apprenticeship programs, workforce development initiatives, industry partnerships and grants to states and communities disproportionately impacted by outsourcing”.

The Forum’s commentary notes that: “labor shortages in critical industries across the United States have been a major driver of offshoring…addressing these shortages through domestic workforce development and expanding labor mobility alternatives to the US will be critical in ensuring the bill’s objectives can be fully realized.”

Andrew Leahy, tax and technology attorney and columnist for Bloomberg Tax said: “Without an immediate source of fully-trained domestic workers, the tax would drive up information technology costs, set back modernization efforts and hurt corporate balance sheets” and that “domestic training must precede any attempt to penalize global hiring”.

The onshored IT solution in the US and elsewhere

The contemporary Indian IT outsourcing success story has different dimensions elsewhere in the western world. For example, Computer Weekly has recently reported on the investment by Tata Consultancy Services of 5,000 jobs in the UK; adding to its existing onshore supply of technology staff working in engineering and data analytics. At the same time, Indian IT company Infosys has obtained a contract with the UK’s National Health Service to replace its current payroll system.

But despite the offshoring trend that has typified IT services for decades, some US organizations had no choice but to develop and retain the necessary knowledge, skills and capabilities within the country.

Eric Sorbo - ITIL 4 Master and Ambassador who works for a major technology company with government contracts - explains how having a US-based IT team makes a difference: “Having IT in-house – hiring and developing your own people – means we have full control of the user experience. “And adopting ITIL best practice means we have a tried-and-true way of doing service management.”

Consultant, Inas Taha, noted how the wide pool of skills historically available to US companies through offshoring – and the high level of compliance with ITIL concepts, leading to better results – would be essential to replicate if the HIRE Act is enacted.

“The first among the four dimensions of service management in ITIL is organizations and people. That means having a culture that aligns with business objectives and the right level of capacity and competency in the workforce. Take that away and it doesn’t work,” she said.

Future-proofing business – an incentive to invest in service management skills?

While the HIRE Act – at this point – remains proposed rather than actual legislation, should this nonetheless prompt US companies to reconsider the value of onshoring IT skills and capabilities?

Sorbo thinks so: “If some US companies start to reshore their IT, they could start to win work from those that don’t. So, that means investing in talent and skills or losing out.”

He acknowledges that this comes at a cost, but that smart managers will do it without hesitation once they see the business case for it. “US companies should get on board as it will pay dividends and give them control over everything,” he added.

Taha believes that onshored teams will need to have the foundational skills of service management, whether employees are working in IT or not; reaching the right level of knowledge and skills, however, is not an overnight journey and needs investment:

“Enabling people with the proper knowledge is the best way to ensure they’re ready to jump seamlessly on what might be a ‘moving train’. That means understanding business processes and developing soft skills like empathy, listening and being able to relay information,” she said.

Weathering the storm

Among the knowledge and skills that more organisations could be considering as part of an onshoring process, Sorbo highlights ITIL:

“It’s a modern method that evolves with input from subject matter experts worldwide and which provides a bedrock of expertise. It has broad application, from the smallest to the largest service management requirement. And the chances of succeeding are higher when teaching your people about and following best practice.”

But above all, the key emphasis he sees in ITIL is its focus on business value: “It’s all about what matters to the business, including the customer experience.”

A migration plan, including training and development, should be at the core of any organisation’s transition from offshoring to onshoring IT service management, Taha added. That would include instances where enterprises are not taking ITSM in-house but outsourcing to a US-based provider – therefore demanding continual monitoring of the outsourced service to ensure efficiency and cost-effectiveness.

“ITIL’s guiding principles are, in my view, a key mindset for people to have, for example, monitoring and progressing iteratively with feedback while switching from an offshore to an onshore service. And that also means having a focus on value and continual improvement.”

The potential move from offshoring to onshoring IT service management that organisations may need to make is, Sorbo said, about “weathering the storm” and ensuring that the organisation is better prepared for when the next storm arrives.

As organizations wait to see whether the HIRE Act is enshrined in law, the time would be well spent reviewing their level of home-grown skills in IT service management; looking to trusted frameworks like ITIL to shore up their capabilities, if and when the offshoring “faucet” must be turned off.