Thursday, January 17, 2013

Admonish or Applaud Employee Outsourcing?

'Bob' found a way to get his job done, and done quite well, at no additional cost to his employer. According to The Register, 'Bob' was a "star developer" for a "a US critical infrastructure company." He was able to perform so well and still have time to goof off because he had outsourced his job to China. It cost him only one-fifth of his six figure salary. His scheme was only uncovered from a security audit. The story concludes that "Bob is no longer employed by the firm."

Was this an offense for which he should be fired* or is this an example of 'working smarter, not harder?' On the one hand, he was able to deliver to his employers superlative work at no additional cost. On the other hand, he was withholding from his employer a way to further reduce costs - either by replacing him or replacing others' jobs. This episode reminds me of David Friedman's beautiful essay on free trade entitled "Iowa Car Crop" reprinted in Steven Landsburg's "Armchair Economist."

*He may have violated security protocols or some other procedures. I am focusing on getting solely on the outsourcing one's job part.


  1. As an innovator, I applaud the employee's creativity in completing the work to his employer's standards. As a manager, I understand that you would likely view the employee as an unnecessary cost when analyzing how the work actually got done. But if the employer hadn't specifically outlawed such a process for completing one's own work, then the company is to blame for creating a suboptimal system. I wonder if the company adopted more outsourcing after firing the employee?

  2. As someone that manages outsouced IT projects the most difficult aspect is finding client managers that understand the best way to communicate with offshore developers. Bob should have been retained and given the task of managing multiple offshore resources!

  3. It is certainly inventive that Bob was able to outsource his work for a fraction of the cost it took to complete. He identified a loophole and exploited it, one that many companies are now pursuing. Now, outsourcing common tasks is extremely common due to the repetitiveness of performing the tasks and the ability to have them done at a much cheaper rate. With emerging markets performing many of these outsourcing tasks today, I will be curious to see what happens when these markets continue to develop and are capable of performing higher-valued tasks for organizations at a fraction of the costs.