tag:theconversation.com,2011:/us/topics/it-outsourcing-7257/articlesIT outsourcing – The Conversation2021-04-29T18:51:52Ztag:theconversation.com,2011:article/1599382021-04-29T18:51:52Z2021-04-29T18:51:52ZPost Office scandal reveals a hidden world of outsourced IT the government trusts but does not understand<figure><img src="https://images.theconversation.com/files/397777/original/file-20210429-23-tys6rl.jpeg?ixlib=rb-1.1.0&rect=578%2C297%2C4229%2C3122&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/windsor-uk-feb-10-2020-post-1644448651">shawnwil23/Shutterstock</a></span></figcaption></figure><p>The <a href="https://www.theguardian.com/uk-news/2021/apr/23/court-clears-39-post-office-staff-convicted-due-to-corrupt-data">convictions of 39 Post Office workers</a> were quashed on April 23 after the UK’s court of appeal heard that the crimes for which they’d been accused were in fact caused by the organisation’s Horizon IT system.</p>
<p>The system, supplied by Japanese IT services provider Fujitsu, had erroneously registered cash shortfalls in Post Office branches, leading to hundreds of convictions of theft, fraud and false accounting <a href="https://inews.co.uk/news/analysis/post-office-scandal-explained-horizon-sub-postmaster-timeline-events-what-happened-970153">between 2000 and 2014</a>. The scandal is one of the biggest miscarriages of justice in British history. </p>
<p>But the Post Office scandal reveals a wider issue. After decades of outsourcing IT systems, government officials no longer have control over technologies that can ruin people’s lives. To avoid future scandals, we need to take responsibility for the digital systems at the heart of governance – instead of just scapegoating IT firms and their products when things go wrong.</p>
<h2>Computers in government</h2>
<p>Computer systems have been in government for nearly 70 years. The Post Office was actually the first UK department to introduce such a system, developing the world’s first digital programmable computer in 1943, later used for code-breaking at <a href="https://mitpress.mit.edu/books/programmed-inequality">Bletchley Park</a> during the second world war.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-female-enigmas-of-bletchley-park-in-the-1940s-should-encourage-those-of-tomorrow-36640">The female enigmas of Bletchley Park in the 1940s should encourage those of tomorrow</a>
</strong>
</em>
</p>
<hr>
<p>But like most departments, the Post Office outsourced their computer systems to huge global computer services providers in the 1990s. They then seemingly ignored them wherever possible, believing in the huge contract value as a guarantee of trustworthiness and reliability. </p>
<p>That’s despite the fact that Horizon, which was riddled with bugs and errors when it was <a href="https://www.bbc.co.uk/news/business-56718036">implemented in 1999</a>, has been involved in a number of scandals, <a href="https://www.gov.uk/government/news/independent-review-into-the-post-office-ltd-horizon-it-system">errors</a> and <a href="https://www.computerweekly.com/news/252491906/Lack-of-openness-on-Horizon-errors-remains-as-Fujitsu-refuses-to-explain-latest-outage">failures</a> in the following decades.</p>
<p>This latest scandal is a classic case of officials putting blind faith in computer systems as definitive sources of information and truth. And this attitude goes far beyond the Post Office – across the departments of state.</p>
<h2>Outsourcing IT</h2>
<p>Over the years, government departments in the UK stopped innovating with technology, and have started contracting it all out to computer services providers. From the 1990s, the UK became a global leader in the “<a href="https://www.telegraph.co.uk/finance/newsbysector/supportservices/8174715/No-more-mega-IT-contracts-Government-tells-suppliers.html">mega IT contract</a>”.</p>
<p>For instance, <a href="https://oxford.universitypressscholarship.com/view/10.1093/acprof:oso/9780199296194.001.0001/acprof-9780199296194">HMRC’s 1994 outsourcing contract</a> with EDS was, at the time, the largest IT outsourcing contract in the world. The next contract, won by Cap Gemini-Ernst and Young (CGEY) in 2004, had an initial value of £4.3 billion and was so complex that on news of the award, CGEY’s share price went down.</p>
<figure class="align-center ">
<img alt="A phone showing the HMRC logo" src="https://images.theconversation.com/files/397781/original/file-20210429-16-345672.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/397781/original/file-20210429-16-345672.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/397781/original/file-20210429-16-345672.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/397781/original/file-20210429-16-345672.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/397781/original/file-20210429-16-345672.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/397781/original/file-20210429-16-345672.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/397781/original/file-20210429-16-345672.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">HMRC has a history of handing out giant IT contracts to help it manage departmental duties.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/stone-united-kingdom-july-5-2020-1770854978">Ascannio/Shutterstock</a></span>
</figcaption>
</figure>
<p>During this period, the National Audit Office (NAO) produced a stack of <a href="https://www.nao.org.uk/wp-content/uploads/2013/09/10154-001-Managing-the-risk-of-legacy-ICT-Book1.pdf">politely damning reports</a> on government IT outsourcing – about cost overruns, failed projects, error-ridden systems and troubled contract relationships. But these “one more IT disaster” stories bored the mainstream news media to tears.</p>
<p>No one was interested in “legacy systems” like Horizon. They were ignored in public administration scholarship, myself a lonely outlier in writing my PhD and <a href="https://www.routledge.com/Information-Technology-in-Government-Britain-and-America/Margetts/p/book/9780415174824">first book</a> about them. But these complex mega contracts meant that departmental officials knew nothing about the systems on which they relied.</p>
<p>Many of these flawed systems linger on in government. After decades of problems with computerisation, the Department for Work and Pensions struggled for another decade to build its new universal credit system alongside legacy systems. In a <a href="https://www.nao.org.uk/wp-content/uploads/2018/06/Rolling-out-Universal-Credit.pdf">2018 report</a>, the NAO identified nearly £1 billion in additional running costs from operating the systems in parallel, and highlighted new errors and payment delays that also caught the attention of <a href="https://www.hrw.org/report/2020/09/29/automated-hardship/how-tech-driven-overhaul-uks-social-security-system-worsens">Human Rights Watch</a>. </p>
<p>In 2020, another NAO report found that Border Force staff were relying on a <a href="https://www.theguardian.com/politics/2020/dec/09/home-office-failure-to-digitise-border-system-will-cost-extra-173m-says-nao">26-year-old system</a> to check whether suspects and persons of interest were trying to enter the UK. The outdated system was no longer fit for purpose, and delayed updates had cost the taxpayer £173 million.</p>
<h2>Who’s responsible?</h2>
<p>Legacy systems represent an accountability vacuum: whole tranches of government administration for which nobody feels responsible. The implications of this blind trust in the power of computers and the companies that supply them to government are ever more important today. </p>
<p>The Post Office’s Horizon system was not particularly complicated, nor did it affect policymaking. But today’s data-intensive technologies will be used increasingly to inform decisions about people’s lives: <a href="https://ohrh.law.ox.ac.uk/use-of-artificial-intelligence-by-the-judiciary-in-the-face-of-covid-19/">how long prison sentences</a> should be, which people should <a href="https://theconversation.com/refugees-are-at-risk-from-dystopian-smart-border-technology-145500">cross borders</a>, whether children should be <a href="https://www.theguardian.com/society/2019/nov/18/child-protection-ai-predict-prevent-risks">taken into care</a> or what their <a href="https://www.theguardian.com/education/2020/aug/17/uk-exams-debacle-how-did-results-end-up-chaos">examination results</a> should be. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/a-level-results-why-algorithms-get-things-so-wrong-and-what-we-can-do-to-fix-them-142879">A-level results: why algorithms get things so wrong – and what we can do to fix them</a>
</strong>
</em>
</p>
<hr>
<p>Last summer, the Prime Minister himself blamed a “<a href="https://www.bbc.com/news/education-53923279">mutant algorithm</a>” for Ofqual’s exam results fiasco, which saw A-level students assigned lower grades if they lived in disadvantaged areas. The debacle was actually the fault of a rather prosaic statistical method that <a href="https://www.publictechnology.net/articles/news/exam-algorithm-be-reviewed-regulator">was not overseen by experts</a>. Scapegoating unaccountable algorithms is convenient, but it misses the point that without <a href="https://blogs.lse.ac.uk/impactofsocialsciences/2020/08/26/fk-the-algorithm-what-the-world-can-learn-from-the-uks-a-level-grading-fiasco/">accountability and transparency</a>, government IT systems can lead to a multitude of harms.</p>
<p>We tend to let the technological tide wash over us, as if it’s an unstoppable force. But we can build in controls. At The Alan Turing Institute, we have set up the <a href="https://www.turing.ac.uk/research/research-programmes/public-policy">Public Policy Programme</a> to help government realise the potential of the latest generation of data-intensive technologies, and have produced the first official guidance for <a href="https://www.turing.ac.uk/research/publications/understanding-artificial-intelligence-ethics-and-safety">the safe and ethical use of AI</a> in the public sector. </p>
<p>The Post Office scandal shows that the same mechanisms should be applied to elderly legacy systems and unexciting algorithms. Today’s government is completely dependent upon its digital estate. We need to build accountability and transparency into this forgotten, hidden, mystery world to get the kind of digital technology we want. The kind that doesn’t ruin people’s lives.</p><img src="https://counter.theconversation.com/content/159938/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Helen Margetts receives funding from UK Research and Innovation through her position as Programme Director for public policy at The Alan Turing Institute.</span></em></p>Many other public bodies have flawed and outdated computer systems. How long before something else goes wrong?Helen Margetts, Professor of Society and the Internet, Oxford Internet Institute, University of Oxford, University of OxfordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/820512017-09-01T14:32:46Z2017-09-01T14:32:46ZWhat the Industrial Revolution really tells us about the future of automation and work<figure><img src="https://images.theconversation.com/files/184260/original/file-20170831-2020-1l0nrf9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Where are all the people in this factory?</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/California-Economy/6bff05f67d36408ea7f7a752472224e1/23/0">AP Photo/Jeff Chiu</a></span></figcaption></figure><p>As automation and artificial intelligence technologies improve, many people worry about the future of work. If millions of human workers no longer have jobs, <a href="https://www.theguardian.com/technology/2017/jan/11/robots-jobs-employees-artificial-intelligence">the worriers ask</a>, what will people do, how will they provide for themselves and their families, and what <a href="https://theconversation.com/basic-income-after-automation-thats-not-how-capitalism-works-65023">changes might occur</a> (or be needed) in order for society to adjust? </p>
<p>Many economists say there is <a href="https://qz.com/932417/robots-wont-take-your-job-theyll-help-make-room-for-meaningful-work-instead/">no need to worry</a>. They point to how past major transformations in work tasks and labor markets – specifically the Industrial Revolution during the 18th and 19th centuries – did not lead to <a href="https://www.fastcompany.com/3049079/robots-might-take-your-job-but-heres-why-you-shouldnt-worry">major social upheaval or widespread suffering</a>. These economists say that when technology destroys jobs, people find other jobs. As <a href="https://www.project-syndicate.org/commentary/technology-unemployment-jobs-internet-by-kenneth-rogoff">one economist argued</a>:</p>
<blockquote>
<p>“Since the dawn of the industrial age, a recurrent fear has been that technological change will spawn mass unemployment. Neoclassical economists predicted that this would not happen, because people would find other jobs, albeit possibly after a long period of painful adjustment. By and large, that prediction has proven to be correct.” </p>
</blockquote>
<p>They are definitely right about the long period of painful adjustment! The aftermath of the Industrial Revolution involved <a href="https://www.independent.co.uk/arts-entertainment/books/news/maos-great-leap-forward-killed-45-million-in-four-years-2081630.html">two major</a> <a href="http://www.nytimes.com/1989/02/04/world/major-soviet-paper-says-20-million-died-as-victims-of-stalin.html">Communist revolutions</a>, whose <a href="http://necrometrics.com/20c5m.htm">death toll approaches 100 million</a>. The stabilizing influence of the <a href="http://americanhistory.oxfordre.com/view/10.1093/acrefore/9780199329175.001.0001/acrefore-9780199329175-e-276">modern social welfare state</a> emerged only <a href="https://www.theguardian.com/politics/2001/mar/14/past.education">after World War II</a>, nearly 200 years on from the 18th-century beginnings of the Industrial Revolution. </p>
<p>Today, as <a href="https://theconversation.com/are-robots-taking-our-jobs-56537">globalization and automation</a> dramatically boost corporate productivity, many workers have seen their wages stagnate. The increasing power of automation and artificial intelligence technology means more pain may follow. Are these economists minimizing the historical record when projecting the future, essentially telling us not to worry because <a href="https://www.economist.com/news/finance-and-economics/21723403-recent-rise-earnings-skilled-workers-rare-phenomenon-what-history">in a century or two things will get better</a>?</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/184255/original/file-20170831-32045-18h9aci.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/184255/original/file-20170831-32045-18h9aci.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/184255/original/file-20170831-32045-18h9aci.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=391&fit=crop&dpr=1 600w, https://images.theconversation.com/files/184255/original/file-20170831-32045-18h9aci.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=391&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/184255/original/file-20170831-32045-18h9aci.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=391&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/184255/original/file-20170831-32045-18h9aci.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=491&fit=crop&dpr=1 754w, https://images.theconversation.com/files/184255/original/file-20170831-32045-18h9aci.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=491&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/184255/original/file-20170831-32045-18h9aci.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=491&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Upheaval more than a century into the Industrial Revolution, and more than 100 years ago: An International Workers of the World union demonstration in New York City in 1914.</span>
<span class="attribution"><a class="source" href="https://loc.gov/pictures/resource/cph.3a31188/">Library of Congress</a></span>
</figcaption>
</figure>
<h2>Reaching a tipping point</h2>
<p>To learn from the Industrial Revolution, we must put it in the proper historical context. The Industrial Revolution was
<a href="https://www.hachettebookgroup.com/titles/malcolm-gladwell/tipping-point-the/9780316316965/">a tipping point</a>. For many thousands of years before it, economic growth was practically negligible, generally tracking with population growth: Farmers grew a bit more food and blacksmiths made a few more tools, but people from the early agrarian societies of Mesopotamia, Egypt, China and India would have recognized the world of 17th-century Europe.</p>
<p>But when steam power and industrial machinery came along in the 18th century, <a href="https://www.theatlantic.com/business/archive/2012/06/the-economic-history-of-the-last-2-000-years-in-1-little-graph/258676/">economic activity took off</a>. The growth that happened in just a couple hundred years was on a vastly different scale than anything that had happened before. We may be at a similar tipping point now, referred to by some as the “<a href="https://www.weforum.org/about/the-fourth-industrial-revolution-by-klaus-schwab">Fourth Industrial Revolution</a>,” where all that has happened in the past may appear minor compared to the productivity and profitability potential of the future.</p>
<h2>Getting predictions wrong</h2>
<p>It is easy to underestimate in advance the impact of globalization and automation – I have done it myself. In March 2000, the <a href="https://www.cnbc.com/15-years-after-nasdaqs-peak-look-how-its-changed/">NASDAQ Composite Index peaked</a> and then <a href="https://fred.stlouisfed.org/series/NASDAQCOM">crashed</a>, wiping out <a href="https://www.newyorker.com/magazine/2002/11/11/the-next-crash">US$8 trillion in market valuations</a> over the next two years. At the same time, the global spread of the internet enabled <a href="http://www.sfgate.com/business/article/Techies-see-jobs-go-overseas-Opposition-to-2571861.php">offshore outsourcing</a> of software production, leading to <a href="http://www.cnn.com/2004/ALLPOLITICS/02/23/timep.jobs.tm/">fears of information technology jobs</a> <a href="http://archive.boston.com/business/articles/2004/05/25/at_the_center_of_a_culture_shift/">disappearing en masse</a>.</p>
<p>The <a href="http://www.acm.org">Association for Computing Machinery</a> worried what these factors might mean for computer education and employment in the future. Its study group, which I co-chaired, reported in 2006 that there was <a href="http://www.acm.org/globalizationreport">no real reason to believe</a> that computer industry jobs were migrating away from developed countries. The last decade has <a href="https://www.bls.gov/ooh/computer-and-information-technology/software-developers.htm#tab-6">vindicated that conclusion</a>.</p>
<p>Our report conceded, however, that “trade gains may be distributed differentially,” meaning some individuals and regions would gain and others would lose. And it was focused narrowly on the information technology industry. Had we looked at the broader impact of globalization and automation on the economy, we might have seen the much bigger changes that even then were taking hold.</p>
<h2>Spreading to manufacturing</h2>
<p>In both the first Industrial Revolution and today’s, the first effects were in manufacturing in the developed world. By substituting technology for workers, U.S. <a href="https://www.aei.org/publication/phenomenal-gains-in-manufacturing-productivity/print/">manufacturing productivity roughly doubled</a> between 1995 and 2015. As a result, while U.S. manufacturing output today is <a href="https://fred.stlouisfed.org/series/OUTMS">essentially at an all-time high</a>, employment peaked around 1980, and has been <a href="https://fred.stlouisfed.org/series/MANEMP">declining precipitously since 1995</a>.</p>
<iframe src="https://fred.stlouisfed.org/graph/graph-landing.php?g=eUHt&width=670&height=475" scrolling="no" frameborder="0" style="overflow:hidden; width:670px; height:525px;" allowtransparency="true" width="100%" height="400"></iframe>
<p>Unlike in the 19th century, though, the effects of globalization and automation are spreading across the developing world. Economist Branko Milanovic’s “<a href="http://prospect.org/article/worlds-inequality">Elephant Curve</a>” shows how people around the globe, ranked by their income in 1998, saw their incomes increase by 2008. While the income of the very poor was stagnant, <a href="http://www.resolutionfoundation.org/app/uploads/2016/09/Examining-an-elephant.pdf">rising incomes in emerging economies</a> lifted hundreds of millions of people <a href="http://www.gc.cuny.edu/CUNY_GC/media/CUNY-Graduate-Center/LIS%20Center/elephant_debate-4,-reformatted.pdf">out of poverty</a>. People at the very top of the income scale also benefited from globalization and automation. </p>
<p>But the income of working- and middle-class people in the developed world has stagnated. In the U.S., for example, income of production workers today, adjusted for inflation, is essentially <a href="https://fred.stlouisfed.org/graph/?g=eUHS">at the level it was around 1970</a>.</p>
<iframe src="https://fred.stlouisfed.org/graph/graph-landing.php?g=eUHS&width=670&height=475" scrolling="no" frameborder="0" style="overflow:hidden; width:670px; height:525px;" allowtransparency="true" width="100%" height="400"></iframe>
<p>Now automation is also coming to developing-world economies. A recent report from the International Labor Organization found that more than two-thirds of Southeast Asia’s 9.2 million <a href="http://www.ilo.org/public/english/dialogue/actemp/whatwedo/aseanpubs/report2016_r1_techn.htm">textile and footwear jobs are threatened</a> by automation.</p>
<h2>Waking up to the problems</h2>
<p>In addition to spreading across the world, automation and artificial intelligence are beginning to pervade entire economies. <a href="https://www.fastcompany.com/3067279/you-didnt-see-this-coming-10-jobs-that-will-be-replaced-by-robots">Accountants, lawyers, truckers and even construction workers</a> – whose jobs were largely unchanged by the first Industrial Revolution – are about to find their work changing substantially, if not entirely taken over by computers.</p>
<p>Until very recently, the global educated professional class <a href="https://www.psychologytoday.com/blog/theory-knowledge/201406/cultural-bubbles-in-the-era-globalization">didn’t recognize what was happening</a> to working- and middle-class people in developed countries. But now it is about to happen to them.</p>
<p>The results will be startling, disruptive and potentially long-lasting. <a href="http://www.newsweek.com/index-economic-inequality-trump-alt-right-marine-le-pen-populism-542358">Political developments of the past year</a> make it clear that the issue of shared prosperity cannot be ignored. It is now evident that the Brexit vote in the U.K. and the election of President Donald Trump in the U.S. were driven to a major extent by <a href="http://blogs.lse.ac.uk/politicsandpolicy/the-brexit-trump-syndrome/">economic grievances</a>.</p>
<p>Our current economy and society will transform in significant ways, with no simple fixes or adaptations to lessen their effects. But when trying to make economic predictions based on the past, it is worth remembering – and exercising – the caution provided by the distinguished Israeli economist Ariel Rubinstein in his 2012 book, “<a href="https://www.openbookpublishers.com/product/136/economic-fables">Economic Fables</a>”:</p>
<blockquote>
<p>“I am obsessively occupied with denying any interpretation contending that economic models produce conclusions of real value.” </p>
</blockquote>
<p>Rubinstein’s basic assertion, which is that economic theory tells us more about economic models than it tells us about economic reality, is a warning: We should listen not only to economists when it comes to predicting the future of work; we should listen also to <a href="https://www.theguardian.com/technology/2017/may/08/virtual-reality-religion-robots-sapiens-book">historians</a>, who often bring a deeper historical perspective to their predictions. Automation will significantly change many people’s lives in ways that may be painful and enduring.</p><img src="https://counter.theconversation.com/content/82051/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Moshe Y. Vardi does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Industrial Revolution led to centuries of social and economic upheaval. Are economists telling us not to worry about workplace automation because things will be better in a couple hundred years?Moshe Y. Vardi, Professor of Computer Science, Rice UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/601042016-05-30T10:00:19Z2016-05-30T10:00:19ZTelstra Health will hold Australians’ cancer details, so we need to ensure their privacy is protected<figure><img src="https://images.theconversation.com/files/124473/original/image-20160530-7709-cbdlms.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Telstra Health has won the contract to manage the National Bowel Cancer and Cervical Screening Program registries.</span> <span class="attribution"><span class="source">from shutterstock.com</span></span></figcaption></figure><p>The <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/mr-yr16-dept-dept002.htm">Department of Health recently announced</a> that Telstra had won a <a href="http://www.abc.net.au/news/2016-05-26/telstra-wins-contract-for-new-national-cancer-screening-register/7449782">A$220 million contract</a> to manage the register for the <a href="https://www.tenders.gov.au/?event=public.cn.view&CNUUID=66915281-B57C-EAA6-5B01CC6955068808">National Bowel Cancer and Cervical Screening Programs</a>. </p>
<p><a href="https://www.telstra.com.au/telstra-health">Telstra Health</a> – the company’s health arm – will aggregate and manage data currently held by various state registries into one national database. There is potential that other cancer screening registries, such as breast screening, might also be contracted to Telstra Health in the future.</p>
<p>The registries not only contain personally identifying information, such as names and addresses, but also the results of pap smears that allow inferences about a person’s sexual status.</p>
<p>When Telstra Health’s venture into the market place was first foreshadowed in late October 2014, <a href="https://theconversation.com/telstra-gets-serious-about-health-but-will-the-public-trust-it-33360">commentators highlighted</a> potential issues around the privacy of Australians’ personal information. So it was no surprise that this first Australian outsourcing <a href="http://www.theage.com.au/federal-politics/political-news/health-consumer-groups-warn-telstra-could-profit-from-cancer-register-20160526-gp4igz.html">provoked consumer advocates</a> to highlight similar concerns. </p>
<h2>Why outsource?</h2>
<p>In 1993, two American management gurus, David Osborne and Ted Gaebler, proposed a <a href="http://www.gutenberg.org/ebooks/4910">magic pudding recipe</a> for what they termed as <a href="http://www.amazon.com/Reinventing-Government-Entrepreneurial-Spirit-Transforming/dp/0452269423">Reinventing Government</a>. In their model, government could set its objectives and use market-based approaches – including contracting out functions to private companies – to provide services to achieve them. </p>
<p>More than 20 years later, the waters of government contracting out are lapping at the gates of Medicare. The 2014 <a href="http://www.budget.gov.au/2014-15/content/bp2/html/bp2_expense-14.htm">federal budget proposed</a> outsourcing, or “market testing”, the <a href="https://theconversation.com/modernising-medicare-is-a-great-idea-but-needs-a-radical-approach-54477">processing of Medicare payments</a>. And while we wait, the Telstra contract has become the first such outsourcing in Australia. </p>
<p>Private registry operators have been <a href="http://www.registrypartners.com/oncology/cancer-registry-operations/">established in the United States</a> for a number of years and <a href="http://www.prnewswire.com/news-releases/precyse-solutions-wins-contract-to-provide-cancer-registry-services-to-the-state-of-vermont-73940027.html">have won contracts</a> to run cancer registries in some states. So far, no data security breaches have been reported in these. But this doesn’t stop Australian health experts from worrying.</p>
<h2>Privacy concerns</h2>
<p>The Department of Health has taken the unusual step of <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/mr-yr16-dept-dept002.htm">issuing a media release</a> in the middle of an election campaign to assuage concerns. It confirmed that Commonwealth privacy legislation will apply to the cancer registry data managed by Telstra Health and that “any misuse of data could be an offence under the Criminal Code”. </p>
<p>Although that language sounds strong, criminal prosecutions usually require proof of malicious intent, recklessness or negligence – a high standard that isn’t always likely to be obtained. </p>
<p>What is more likely is that well-meaning staff might not be scrupulous in rejecting data requests from those who, on first glance, appear to have a legitimate reason for knowing personal details. They might, for instance, release an address to a police officer hunting for a missing person who sought the information without a warrant. Or they might release data by mistake.</p>
<p>Concerns about privacy are exacerbated by the fact that Telstra has breached its customers’ privacy before. In 2011, <a href="http://www.smh.com.au/technology/bigpond-plugs-privacy-leak-20111210-1oox7.html">around 60,000 BigPond</a> users’ passwords were temporarily displayed on the internet, leading to an <a href="http://accan.org.au/our-work/media-releases/404-advice-for-customers-affected-by-latest-telstra-privacy-breach">investigation by the Privacy Commissioner</a> for security breaches. </p>
<p>And in January this year, <a href="http://www.smh.com.au/digital-life/consumer-security/telstra-privacy-breach-leaves-customers-voicemail-exposed-20160122-gmbpjm.html">personal voicemails</a> of one Telstra user were mistakenly sent to another. This may be a small example of a data breach, but everyone is entitled to their privacy.</p>
<h2>Contractual protections</h2>
<p>Beyond legislative threats, privacy concerns can only be assuaged through contractual provisions, whether in the cancer registry contract or with the processing of Medicare payments. Unfortunately, we don’t know how strong the provisions are in the proposed contract and what the renewal provisions are.</p>
<p>Unauthorised release of data <a href="https://www.naaccr.org/LinkClick.aspx?fileticket=FwXMy_n2HMg%3D&tabid=265&mid=742">potentially costs registries</a> in terms of investigations and regulatory compliance, but these costs should be increased to ensure managers have even greater incentives to take strong action to protect patient privacy.</p>
<p>The automatic consequences of release of data – inadvertent or not – must be made so great that any <a href="http://infostore.saiglobal.com/store/Details.aspx?productID=1378670">risk-management matrix</a> will ensure the organisation and its managers always have patient privacy at the forefront of their mind. It will not be good enough to do the standard dance after the data is released, or inappropriately used, where the contracting organisation (in this case, the Department of Health) tut-tuts, and the contractee (in this case Telstra Health) issues a mea culpa.</p>
<p>The contract should prescribe tough financial penalties that have automatic effect after any data release, allowing little discretion for the penalties to be lobbied away with promises of future good behaviour. The contractual penalties need to be strong enough (A$1 million per person identified or data element used, for instance) so management ensures that patients’ rights and privacy are protected. </p>
<p>Consumers might also be given a right to sue for breach of their privacy to further focus management’s mind.</p>
<p>Clearly, the cancer screening registry contract is only the first of the potential outsourcing of health programs. It creates a precedent that needs to be right.</p><img src="https://counter.theconversation.com/content/60104/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Duckett does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The cancer screening registry contract won by Telstra Health is only the first of the potential outsourcing of health programs. It creates a precedent that needs to be right.Stephen Duckett, Director, Health Program, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/541412016-05-19T01:26:29Z2016-05-19T01:26:29ZTrump and Clinton want to bring back millions of outsourced jobs – here’s why they can’t<p>One of the big themes in the current presidential race is how decades of free trade have dealt a heavy blow to the American worker as millions of jobs were shipped overseas to take advantage of cheap labor. </p>
<p><a href="https://theconversation.com/trumps-anti-trade-tirades-recall-gops-protectionist-past-54631">That’s even turned</a> some pro free-trade Republicans into protectionists. As a result, the candidates are promising to <a href="http://www.forbes.com/sites/panosmourdoukoutas/2015/06/17/who-will-bring-overseas-jobs-back-to-america/#35f874bd767c">bring these jobs back to the U.S.</a> – whether by <a href="https://www.donaldjtrump.com/positions/tax-reform">lowering taxes (Donald Trump)</a>, <a href="https://www.hillaryclinton.com/issues/workforce-and-skills/">improving skills (Hillary Clinton)</a> or <a href="https://berniesanders.com/issues/creating-jobs-rebuilding-america/">building infrastructure (Bernie Sanders)</a>. </p>
<p>But can all these manufacturing, service and knowledge-intensive jobs that were outsourced or offshored to China, India and other places <a href="http://money.cnn.com/2016/02/12/news/economy/donald-trump-china-mexico-jobs/">really be “brought back,”</a> as the candidates seem to believe?</p>
<p>In short, no. Our own research suggests that many of those jobs are pretty much gone for good. And it has a lot to do with how the global economy works. Instead of hoping that firms eventually bring jobs back, the focus should be on developing a new type of worker with a skill set that takes advantage of the needs and reality of our increasingly globalized and networked economy.</p>
<h2>History of offshoring</h2>
<p>Offshoring of manufacturing <a href="http://www.dailykos.com/story/2013/6/13/1216104/-U-S-Manufacturing-Off-shoring-1979-to-Re-shoring-2013">took off in the 1980s</a>, followed by offshoring of business services and knowledge work <a href="http://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?article=1520&context=articles">in the 1990s and 2000s</a>. </p>
<p>Labor-cost advantages, increasing availability of qualified personnel abroad and advanced information and communication technology have <a href="http://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?article=1520&context=articles">made it attractive</a> to create more jobs abroad rather than at home. Free trade agreements and the collapse of the Iron Curtain have also played a huge role. For example, estimates suggest that since 2001, <a href="http://www.statisticbrain.com/outsourcing-statistics-by-country/">3.2 million jobs</a> have been offshored from the U.S. to China alone. </p>
<p>Especially larger businesses in the U.S. and Western Europe have <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1287369">shifted a large proportion of their operations</a> – from manufacturing to call centers, tech support, accounting and <a href="http://www.fuqua.duke.edu/ciber/documents/JIBS_paper._active_voice.__1.pdf">even innovation</a> – to emerging economies where labor is still a fraction of the cost at home. In business services, for example, initial labor cost savings are reported to <a href="https://dipot.ulb.ac.be/dspace/bitstream/2013/9039/1/Lewin_Peeters_2006_LRP_Offshoring_business_hype_or_transformation.pdf">average between 20 percent and 40 percent</a>. </p>
<p>Ten years ago, this trend led many U.S. economists, including Princeton’s Alan Blinder, to fear <a href="https://www.princeton.edu/ceps/workingpapers/119blinder.pdf">the loss of millions of jobs</a>, in particular in technology and services, to developing countries. Maybe they were right about that. But is the trend reversible? </p>
<h2>Reason for hope?</h2>
<p>The presidential candidates aren’t the only ones who think it is.</p>
<p>The so-called “<a href="http://www.reshorenow.org/programs/">Reshoring Initiative,</a>” launched in 2010 by entrepreneur and manufacturing expert Harry Moser, aims to encourage American companies to do just that: “reshore” jobs that were offshored – specifically in manufacturing. </p>
<p>And it claims the tide is already turning. About 67,000 manufacturing jobs <a href="http://www.themadeinamericamovement.com/reshoring/reshoring-effort-returning-keeping-jobs-usa-2/">were added</a> in the U.S. in 2015, compared with only 12,000 <a href="http://www.marketwatch.com/story/us-flips-the-script-on-jobs-reshoring-finally-outpaced-offshoring-in-2014-2015-05-01">in 2003</a>, according to the Reshoring Initiative. Of course this is only half of the story, as companies also continue to <a href="http://www.statisticbrain.com/outsourcing-statistics-by-country/">create new jobs outside the U.S.</a> For example, while Apple recently moved up to <a href="https://www.theguardian.com/technology/2013/nov/05/apple-creates-us-jobs-renewable-energy">2,000 jobs back to Arizona</a>, it will keep investing <a href="http://news.xinhuanet.com/english/2015-10/21/c_134737029.htm">“as aggressive as ever”</a> in China.</p>
<p>But still: reshoring appears to be happening. And why? According to the Reshoring Initiative, wages in emerging economies are rising, which reduces cost advantages of going abroad. Plus many U.S. businesses are increasingly caught by <a href="https://hbr.org/2005/12/getting-offshoring-right">serious offshoring challenges</a>. Often, so-called <a href="http://www.industryweek.com/global-economy/reshoring-increasing-or-declining">hidden costs add up</a>, such as unexpected quality problems and delays, language difficulties and coordination costs. For example, having encountered substantial delays and language issues with its Indian offshore tech support centers, Dell Inc. decided in 2003 to <a href="http://www.cnet.com/news/dell-drops-some-tech-calls-to-india/">bring these activities back to the U.S.</a>.</p>
<p>If more companies took account of those hidden costs, <a href="http://www.industryweek.com/global-economy/reshoring-increasing-or-declining">the group argues</a>, a vast number of jobs could be brought back. </p>
<h2>Companies are global</h2>
<p>But here’s where the argument runs aground.</p>
<p>While it’s true that <a href="https://www.academia.edu/1907405/Uncovering_the_hidden_costs_of_offshoring_The_interplay_of_complexity_organizational_design_and_experience">many companies do encounter hidden costs</a> when they ship jobs abroad, reshoring has been only one, rather rare <a href="https://www.academia.edu/5064530/Mitigate_Tolerate_or_Relocate_Offshoring_Challenges_Strategic_Imperatives_and_Resource_Constraints">response</a> companies have used to mitigate them. </p>
<p>Instead, we find in our own studies that many businesses take those hidden costs as an opportunity to learn and develop more effective global coordination structures and capabilities that <a href="https://www.academia.edu/1907405/Uncovering_the_hidden_costs_of_offshoring_The_interplay_of_complexity_organizational_design_and_experience">ultimately reduce them</a> and make the companies more nimble as a result. </p>
<p>For example, several U.S. tech companies offshored tech support to Egypt in the 2000s. When the Internet broke down during the Arab Spring in 2008, <a href="https://www.academia.edu/5064530/Mitigate_Tolerate_or_Relocate_Offshoring_Challenges_Strategic_Imperatives_and_Resource_Constraints">these companies experienced serious delays</a>. Clearly this was an unforeseen cost that could seriously hurt the bottom line by worsening customer service and leading to defections to rival businesses. But rather than reacting by reshoring those jobs in the U.S., where such a problem wouldn’t have occurred, these companies invested heavily in cloud technologies and other infrastructures that now allow them to <a href="https://www.academia.edu/5064530/Mitigate_Tolerate_or_Relocate_Offshoring_Challenges_Strategic_Imperatives_and_Resource_Constraints">swiftly move operations to other locations in case of disruptions</a>. </p>
<p>In other words, companies like these doubled down on their global footprint while reducing their dependence on any one location, whether it is Egypt or the U.S., thus increasing their flexibility to deal with unexpected problems. This makes it even less likely they’ll bring those jobs home. </p>
<h2>Global mindset</h2>
<p>And this global mindset means U.S. locations have become less central for the operations of U.S.-based companies. In fact, companies from Cisco to Google now operate multiple global centers with rotating and flexible workforces.</p>
<p>Global outsourcing service providers, such as Accenture, IBM Global Services and Infosys, have been at the forefront of this development. <a href="https://www.academia.edu/11676651/Global_Delivery_Models_The_Role_of_Talent_Speed_and_Time_Zones_in_the_Global_Outsourcing_Industry">In our recent study</a>, we found that these firms have established global networks of operations that not only give them access to talent pools around the world but allow them to process client requests 24/7 by shifting work overnight to operations in a different time zone. </p>
<p>On top of that, face-to-face communication – both inside the firm and with external clients – is needed less and less thanks to advanced communication technology. For example, many firms today use videoconferencing tools such as <a href="https://en.wikipedia.org/wiki/Telepresence">telepresence</a>, which creates virtual meeting rooms with multiple participants who, in reality, sit in offices around the world. </p>
<h2>Jobs of the future</h2>
<p>So what does this all mean for the U.S. and claims that a future president could bring these jobs back? </p>
<p>First, it’s best to accept that most jobs that were once offshored are gone and instead focus energies on preparing the workforce to get ready for the new global economy and take advantage of the jobs that will be up for grabs in the coming years. For example, significant technological advancements in robotics and 3D printing will clearly offer <a href="http://www.techradar.com/news/computing-components/the-3d-printing-boom-is-creating-jobs-1175327">rich opportunities</a> for domestic manufacturing and job growth.</p>
<p>Yet, to reap such opportunities, education and training are key – though in a different way than most people think. In today’s economy, generic STEM skills – in science, technology, engineering and math – can be easily replaced in emerging economies thanks to the <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1753188">increasing standardization of knowledge work and tech jobs around the world</a>. What is needed instead is a more unique blend of qualifications combining local and global expertise, technical and interpersonal skills. </p>
<p>Certainly, U.S. workers need to be technically trained at the highest standard. But this is not enough as emerging economies are catching up fast. Thanks to population growth and improving education, India and China produce more than <a href="http://issues.org/23-3/wadhwa/">10 times as many science and engineering graduates as the U.S.</a> That is why U.S. workers also need to be equipped with strong interpersonal and leadership skills as well as local expertise to remain competitive. </p>
<p>More specifically, they need to learn to work in international and intercultural teams, lead local and remote staff, and become intimately familiar with both local and global client needs and supplier expectations, so they <a href="https://organizationsandsocialchange.wordpress.com/2016/02/29/will-u-s-tech-jobs-turn-all-indian-the-h1b-visa-dilemma/">cannot be so easily replaced</a>. </p>
<p>Therefore, old recipes, such as lowering corporate taxes, investing in infrastructure and technical training, will barely help the U.S. bring back old jobs. Nor will “building new walls” make the U.S. less dependent on foreign talent pools and expertise. </p>
<p>The focus instead needs to be on preparing a U.S. workforce for an economy that is increasingly globally connected.</p><img src="https://counter.theconversation.com/content/54141/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Instead of trying to bring back the old economy jobs that have been lost, the U.S. should focus on training Americans in the new skills that will be needed in tomorrow’s economy.Stephan Manning, Associate Professor of Management, UMass BostonMarcus M. Larsen, Assistant Professor of Strategic Management and Globalization, Copenhagen Business SchoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/554822016-03-01T11:20:58Z2016-03-01T11:20:58ZCandidates’ plans to change controversial H-1B guestworker program highlight need for an overhaul<p>Since its inception in 1990, the <a href="http://www.gao.gov/assets/320/314501.pdf">H-1B guestworker program</a> that allows employers to bring in high-skilled foreign workers on six-year visas has been steeped in controversy. </p>
<p>The program has been the subject of dozens of congressional hearings, including <a href="http://www.judiciary.senate.gov/meetings/the-impact-of-high-skilled-immigration-on-us-workers">one just last week</a> in which I <a href="http://dailycaller.com/2016/02/25/displaced-worker-it-experts-rake-h-1b-over-the-coals-before-congress/">participated</a>, <a href="http://timesofindia.indiatimes.com/tech/tech-news/US-based-Fortune-500-company-accused-of-abusing-H-1B-visa/articleshow/50877436.cms">frequent op-eds</a> from pundits and technology <a href="http://www.businesswire.com/news/home/20160225006020/en/High-Skilled-Immigration-Essential-U.S.-Competitive-Edge-CTA">moguls</a>, <a href="http://articles.baltimoresun.com/2000-02-21/news/0002210331_1_foreign-workers-visa-holders-immigrants">exposés</a> and legislative changes. Critics accuse it of depressing wages and outsourcing American jobs, while advocates call it an essential source of the best and brightest talent.</p>
<p>But this year marks the first time it has risen up to the stage of a presidential campaign. The leading candidates in both parties have staked clear and competing positions about how to change the program, either <a href="http://www.computerworld.com/article/2909983/it-outsourcing/heres-where-clinton-and-rubio-stand-on-the-h-1b-visa-issue.html">greatly expanding</a> it (Marco Rubio, Hillary Clinton) or tightening the eligibility criteria and requiring the recruitment of American workers first (<a href="http://www.computerworld.com/article/2973597/it-outsourcing/why-trump-believes-his-h-1b-plan-is-serious.html">Donald Trump</a>, <a href="http://www.computerworld.com/article/3014365/it-careers/sen-ted-cruz-wants-minimum-h-1b-wage-of-110-000.html">Ted Cruz</a>, <a href="http://www.computerworld.com/article/3008726/it-careers/bernie-sanders-wants-to-raise-wages-of-h-1b-workers.html">Bernie Sanders</a>). </p>
<p>But what exactly is the <a href="https://www.uscis.gov/eir/visa-guide/h-1b-specialty-occupation/understanding-h-1b-requirements">H-1B visa</a> and how does it work? And how would different reforms and changes improve the program? </p>
<p>Since there is much mythology about the program, let’s take a step back and look at what it is intended to achieve to dispel the myths and the confusion. </p>
<p>I have been exploring issues surrounding high-skill immigration and offshoring for more than 15 years and believe a better understanding of the program will help us assess the candidates’ positions. And my view is that the program is being widely abused by companies and needs to be reformed to ensure it is meeting its intent while providing adequate protection to American and foreign workers alike. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/113319/original/image-20160301-4110-ugyxfr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/113319/original/image-20160301-4110-ugyxfr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=387&fit=crop&dpr=1 600w, https://images.theconversation.com/files/113319/original/image-20160301-4110-ugyxfr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=387&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/113319/original/image-20160301-4110-ugyxfr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=387&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/113319/original/image-20160301-4110-ugyxfr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=486&fit=crop&dpr=1 754w, https://images.theconversation.com/files/113319/original/image-20160301-4110-ugyxfr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=486&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/113319/original/image-20160301-4110-ugyxfr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=486&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">H-1Bs were meant for specialized workers but often are used for jobs that can easily be filled by Americans.</span>
<span class="attribution"><span class="source">Exasperated accountant via www.shutterstock.com</span></span>
</figcaption>
</figure>
<h2>What’s so ‘special’ about it?</h2>
<p>The program has its <a href="http://www.gao.gov/assets/320/314501.pdf">roots</a> in the 1952 Immigration and Nationality Act as a way to bring in foreign workers “to perform temporary service of an exceptional nature requiring such merit and ability.”</p>
<p>The <a href="https://migrationfiles.ucdavis.edu/uploads/wcpsew/files/crs_5=23=07pdf.pdf">1990 Immigration Act</a> formally created the H-1B visa and made two significant changes to the original program: 1) allowing “dual-intent” so that H-1B workers could pursue permanent residency and 2) setting an annual cap of 65,000 people.</p>
<p>The statutory cap <a href="http://www.gao.gov/assets/320/314501.pdf">has changed</a> multiple times over the years, rising as high as 195,000 at the peak of the dot-com bubble in the early 2000s and settling at 85,000 since 2005. In 2000, Congress made certain employers such as universities and research institutions exempt from the cap, meaning in reality about <a href="https://www.uscis.gov/sites/default/files/USCIS/Resources/Reports%20and%20Studies/H-1B/h-1B-characteristics-report-14.pdf">120,000 new H-1B</a> workers are approved each year.</p>
<p>The “dual intent” provision made the H-1B an important conduit for skilled workers to permanently immigrate, while the program’s intent remained to fill skills gaps in the labor market and provide a way to bring in workers in occupations for which Americans were hard to find. </p>
<h2>‘Best and brightest’</h2>
<p>The main problem with the H-1B currently is that it’s focused on “specialty occupations,” but there really isn’t anything special about most of the H-1B workers being hired. Rather than filling specialized skills gaps in the U.S. labor market, most H-1B workers have no more than ordinary skills, ones that are abundantly available from the available American talent pool. </p>
<p>While industry advocates such as <a href="http://www.npr.org/templates/story/story.php?storyId=88154016">Bill Gates</a>, <a href="https://www.washingtonpost.com/opinions/mark-zuckerberg-immigrants-are-the-key-to-a-knowledge-economy/2013/04/10/aba05554-a20b-11e2-82bc-511538ae90a4_story.html">Mark Zuckerberg</a>, <a href="http://www.cfr.org/united-states/future-us-immigration-policy-next-steps/p35037">Michael Bloomberg</a> and the <a href="http://www.fwd.us">lobbying groups</a> they support argue that H-1Bs help the U.S. lure the “best and brightest” from abroad, the <a href="https://www.uscis.gov/eir/visa-guide/h-1b-specialty-occupation/understanding-h-1b-requirements">reality</a> is that the educational threshold for an H-1B is only a bachelor’s degree. And in fact, the majority of technology industry H-1Bs hold no more than that. </p>
<iframe src="https://datawrapper.dwcdn.net/XNvXO/2/" frameborder="0" allowtransparency="true" allowfullscreen="allowfullscreen" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" oallowfullscreen="oallowfullscreen" msallowfullscreen="msallowfullscreen" width="100%" height="500"></iframe>
<p>In practice, the program can – and is – used to fill <a href="https://www.foreignlaborcert.doleta.gov/docs/py2015q4/H-1B_Disclosure_Data_FY15_Q4.xlsx">any occupation</a> that typically requires a simple undergraduate degree, such as journalism, accounting and marketing. </p>
<p>H-1B workers can be brought in even in occupations where there’s an abundance of American workers, such as the legal and sales professions. Employers <a href="https://www.judiciary.senate.gov/imo/media/doc/02-25-16%20Hira%20Testimony.pdf">need not show</a> that there are shortages of U.S. workers, <a href="http://www.nytimes.com/2015/06/04/us/last-task-after-layoff-at-disney-train-foreign-replacements.html">do not need</a> to seek local hires first and can even <a href="http://www.latimes.com/business/hiltzik/la-fi-hiltzik-20150222-column.html">replace Americans with H-1Bs</a>.</p>
<p>Further, the intent is that H-1Bs be paid market wages, but the reality is that the “prevailing wage” rules for H-1Bs are flimsy and it’s <a href="http://www.epi.org/people/ron-hira/">extraordinarily easy to pay an H-1B worker much less than an American worker</a>. </p>
<h2>Replacing American jobs</h2>
<p>Those advocating for reform of the program, like myself, have argued that it has mostly been used to replace, and substitute, Americans with cheaper labor, <a href="http://www.epi.org/people/ron-hira/">which as I’ve shown is extraordinarily easy and profitable</a>.</p>
<p>And that’s why, in a campaign season that has highlighted immigration and middle-class pain in the U.S., the H-1B has received such unusual prominence. </p>
<p>Should there be any doubt that employers have a self-interest in finding the cheapest workers available, one need only to look at the wage-fixing scandal in which the CEOs of the two most valuable and profitable firms in the world – Apple and Google – <a href="https://pando.com/2014/01/23/the-techtopus-how-silicon-valleys-most-celebrated-ceos-conspired-to-drive-down-100000-tech-engineers-wages/">conspired</a> to keep their workers from getting fair wages. </p>
<p>Last year, Southern California Edison, the state’s largest utility, <a href="http://www.latimes.com/business/hiltzik/la-fi-hiltzik-20150222-column.html">replaced</a> 400 American IT professionals with H-1B workers from India and then required those getting fired to train their replacements. </p>
<p>Why did Edison do it? The reason was simple: the H-1B workers were cheaper. The <a href="http://www.epi.org/blog/new-data-infosys-tata-abuse-h-1b-program/">cost savings</a> were US$40,000 to $50,000 per worker, or 40 percent to 50 percent less than an American. The Department of Labor recently <a href="http://www.scpr.org/news/2015/10/22/55178/feds-conclude-investigation-into-firm-that-provide/">completed its investigation</a> of Edison and its contractors and found no violation of H-1B rules. In other words, the department affirmed that it is <em>legal</em> to pay H-1B workers substantially less than Americans and to even replace Americans with H-1Bs. </p>
<p>Edison’s case was not unique. Over the past year, <a href="http://www.orlandoweekly.com/Blogs/archives/2016/02/24/congress-to-hear-testimony-from-disney-workers-fired-to-make-way-for-h-1b-visa-holders">Disney</a>, <a href="http://www.dallasnews.com/business/columnists/mitchell-schnurman/20150516-schnurman-fossil-sells-out-its-tech-workers.ece">The Fossil Group</a>, <a href="http://www.nytimes.com/2015/09/30/us/toys-r-us-brings-temporary-foreign-workers-to-us-to-move-jobs-overseas.html?_r=0">New York Life</a>, <a href="http://www.durbin.senate.gov/newsroom/press-releases/durbin-calls-on-chicago-based-abbott-labs-to-explain-180-layoffs-plan-to-outsource-jobs">Abbott Labs</a>, <a href="http://www.orlandosentinel.com/business/brinkmann-on-business/os-disney-visa-probe-20150630-post.html">Catalina Marketing</a> and <a href="http://www.nytimes.com/2015/09/30/us/toys-r-us-brings-temporary-foreign-workers-to-us-to-move-jobs-overseas.html?_r=0">Toys R Us</a> have all replaced – or are in the process of replacing – American workers with H-1Bs. The <a href="http://nieman.harvard.edu/wp-content/uploads/pod-assets/Image/microsites/immigration2013/resources/Hira%20TFSC%20Article%20Final.pdf">business model of using the H-1B program to facilitate permanent offshoring</a> is a <a href="http://www.epi.org/publication/congressional-testimony-the-impact-of-high-skilled-immigration-on-u-s-workers/">well-known</a> and widespread practice. The <a href="http://www.epi.org/blog/top-10-h1b-guestworker-offshore-outsourcing/">top 10 H-1B employers</a> are all offshore outsourcing firms that use the program to facilitate shipping American jobs to low-cost countries such as India. </p>
<iframe src="https://datawrapper.dwcdn.net/xjffs/1/" frameborder="0" allowtransparency="true" allowfullscreen="allowfullscreen" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" oallowfullscreen="oallowfullscreen" msallowfullscreen="msallowfullscreen" width="100%" height="450"></iframe>
<p>If a company like Disney, which received great scrutiny in a series of front-page <a href="http://www.nytimes.com/2015/06/04/us/last-task-after-layoff-at-disney-train-foreign-replacements.html"><em>New York Times</em> articles</a>, will exploit the H-1B program while under the spotlight, what company wouldn’t? </p>
<p>Another criticism of the H-1B program is that it upends the normal employer-employee power relationship. Since it’s intended as a nonimmigrant guestworker visa – most H-1Bs are not sponsored for permanent residence – it <a href="https://beta.cironline.org/investigations/techsploitation">invites abuse and exploitation</a>. These conditions – lower wages, offshoring of the jobs and an imbalance in the employer-employee relationship – lead to depressed wages and working conditions for all American workers in these fields. </p>
<h2>The candidates and the H-1B</h2>
<p>So where do the presidential candidates stand? </p>
<p>Republican frontrunner Trump is <a href="https://www.donaldjtrump.com/positions/immigration-reform">targeting</a> the wage issue directly, calling for an increase in the minimum salaries paid to H-1B workers in order to prevent the program from being used for cheaper labor. He would also require that employers recruit American workers before they could hire someone under an H-1B visa. </p>
<p>These are both steps in the right direction, though details remain lacking. It’s worth noting that Trump has been <a href="http://www.nationalreview.com/article/431978/donald-trump-h-2b-guest-workers-mar-lago-club">attacked by his rivals</a> for hiring large numbers of H-2B unskilled seasonal guestworkers for his resorts. </p>
<p>Senator Rubio is an <a href="http://www.rubio.senate.gov/public/index.cfm/get-the-facts1">original</a> cosponsor of the so-called <a href="https://www.congress.gov/bill/114th-congress/senate-bill/153/">I-Squared Act</a>, which would <a href="http://www.ibtimes.com/gop-debate-2015-marco-rubio-defends-h1b-visas-amid-criticism-questions-microsoft-2160512">more than triple</a> the number of H-1Bs issued. </p>
<p>When the topic arose in one of the first <a href="http://www.presidency.ucsb.edu/ws/index.php?pid=110906">Republican debates</a>, he claimed the act would also help curb the program’s abuses by requiring employees to seek Americans first and higher wages for H-1Bs – which both <em><a href="http://www.nytimes.com/live/republican-debate-cnbc-boulder/fact-check-marco-rubio-bill-did-not-address-visa-issues-he-highlighted">The New York Times</a></em> and I have refuted. </p>
<p>Like Trump, Senator Cruz has expressed concern about the program. He has proposed an even bolder reform plan that involves a 180-day moratorium to investigate program abuse, lifting minimum wage and educational requirements and making it <a href="http://www.breitbart.com/big-government/2015/12/11/ted-cruz-jeff-sessions-roll-out-antidote-to-broken-h-1b-program-american-jobs-first-act/">harder to use the program</a> if a company is laying off Americans. That’s a significant <a href="http://talkingpointsmemo.com/livewire/cruz-admits-immigration-flip">reversal</a> from his earlier position on the H-1B. During the 2013 debate, he introduced a failed amendment to the immigration reform bill that would have <a href="http://www.bloomberg.com/politics/articles/2015-08-20/where-donald-trump-and-ted-cruz-completely-disagree-on-immigration">increased</a> the H-1B cap five-fold, with no additional protections. </p>
<p>On the Democratic side, the H-1B visa – like immigration generally – hasn’t been as hot a topic, though the two contenders are on opposite sides of the issue. </p>
<p>Former Secretary of State Clinton has <a href="https://www.youtube.com/watch?v=AOW0cUaGWZU">long advocated increasing the H-1B visa cap</a>, yet has been silent about whether she would clean up any abuse. Senator Sanders, on the other hand, has advocated reform of the program and has <a href="https://www.congress.gov/bill/113th-congress/senate-bill/600/cosponsors">cosponsored bipartisan legislation</a> in prior Congresses crafted by long-time reform advocates Senators Charles Grassley and Dick Durbin. </p>
<p>These bills would raise minimum-wage levels, give American workers a first and legitimate shot at jobs before they are offered to H-1Bs, prevent a Disney-like replacement of American workers and institute random audits to ensure compliance (the current compliance system relies solely on whistle-blowers). </p>
<iframe src="https://datawrapper.dwcdn.net/j9m5f/3/" frameborder="0" allowtransparency="true" allowfullscreen="allowfullscreen" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" oallowfullscreen="oallowfullscreen" msallowfullscreen="msallowfullscreen" width="100%" height="400"></iframe>
<h2>Where reform begins</h2>
<p>As someone who has researched this program for more than 15 years, and advocated for its reform, I’m glad to see that the issue is finally getting some recognition at the highest levels of politics. </p>
<p>To me and many others, the solutions are obvious, and variations of them are already available to lawmakers in <a href="https://www.congress.gov/bill/114th-congress/senate-bill/2394">three</a> <a href="https://www.congress.gov/bill/114th-congress/senate-bill/2365">recent</a> <a href="https://www.congress.gov/bill/114th-congress/senate-bill/2266">bills</a> introduced in the Senate. The majority of H-1B workers are being hired because they are cheaper than Americans. We believe that the solution is to raise wages – and raise them substantially – and ensure that American workers have a first and legitimate opportunity for these jobs. </p>
<p>The H-1B program is an important program that serves as a bridge to permanent immigration for talented foreign workers. It should be used to recruit truly specialized workers from abroad when the labor conditions are tight and a qualified American can’t be found. But no American worker should ever be displaced by an H-1B worker – that was never the program’s intent – and this practice should be ended.</p><img src="https://counter.theconversation.com/content/55482/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ron Hira receives funding from National Science Foundation, Alfred P. Sloan Foundation, Economic Policy Institute.
Ron Hira is a senior member of IEEE and is a past board member of IEEE-USA.
Ron Hira is a research associate with the Economic Policy Institute.
He has testified numerous times before the U.S. Congress about high-skilled immigration policy.</span></em></p>The H-1B visa, created in 1990 to bring in specialized foreign workers, is in desperate need of reform. Where do the candidates stand?Ron Hira, Associate Professor of Political Science, Howard UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/322612014-09-30T12:47:37Z2014-09-30T12:47:37ZSmall firms and open-source software put Spine back into NHS after IT fiasco<figure><img src="https://images.theconversation.com/files/60352/original/zcf92832-1412015844.jpg?ixlib=rb-1.1.0&rect=0%2C469%2C1605%2C1252&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">But they might also cost £12 billion and arrive, non-functional, 10 years late.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/fdaphotos/8249708093/">US FDA</a></span></figcaption></figure><p>Without the fuss and delays that have <a href="http://www.theguardian.com/technology/2014/aug/19/costly-trail-british-government-it-disasters-universal-credit">plagued so many</a> large government IT projects, a key part of the NHS digital infrastructure was recently <a href="http://www.computerweekly.com/news/2240230941/How-the-HSCIC-rebuilt-NHS-Spine">migrated and updated</a> in a single weekend.</p>
<p>The collection of applications and directory services known as the <a href="http://systems.hscic.gov.uk/spine">Spine</a> connects clinicians, patients and local services to core NHS services such as the <a href="http://systems.hscic.gov.uk/gp2gp">GP2GP</a> patient record transfer, the <a href="http://systems.hscic.gov.uk/eps">Electronic Prescription Service</a>, patients’ <a href="http://www.nhscarerecords.nhs.uk/">Summary Care Records</a>, and the <a href="http://www.chooseandbook.nhs.uk/patients">Choose and Book</a> service. More than 250,000 health service staff connect to it every day, sending more than 400m messages each month.</p>
<p>After the original contract with <a href="http://www.globalservices.bt.com/uk/en/casestudy/nhs_spine">BT</a> expired, the NHS Health and Social Care Information Centre (<a href="http://www.hscic.gov.uk/">HSCIC</a>) decided to move from a proprietary system to one <a href="http://www.theregister.co.uk/2013/10/10/nhs_drops_oracle_for_riak/">based on open-source software</a>, using Leeds-based company <a href="http://www.bjss.com/news/bjss-and-hscic-work-together-develop-new-spine-nhs/">BJSS</a>. </p>
<h2>Avoiding a top-down disaster</h2>
<p>This is a major departure from the approach taken during the ill-fated NHS National Programme for IT (NPfIT), of which the Spine was a part. Seven years late, this was largely cancelled in 2011 as costs spiralled from £3 billion to more than £12 billion. Major parts of the programme had never been completed, and the parliamentary Public Accounts Committee <a href="http://www.parliament.uk/business/committees/committees-a-z/commons-select/public-accounts-committee/news/npfit-report/">described</a> it as: “One of the worst and most expensive contracting fiascos in the history of the public sector.”</p>
<p>The prescriptive, top-down design of the NPfIT was left to the contracting companies to implement, with little oversight from above and even less input from NHS staff. This proved to be a recipe for disaster – incompatible software, massive delays, poor adoption and legal wranglings. It is a poor reflection on a project when its contracts prove to be more robust than the software delivered.</p>
<h2>Future savings</h2>
<p>The decision to rely on <a href="http://opensource.org/osd-annotated">open-source technology</a> for Spine 2 has important ramifications. With the majority of the code freely available, there is much reduced dependency on the original provider which has opened the door to greater competition and better value for subsequent support and development contracts. Similarly, problems are easier to track, meaning some issues can be dealt with by local NHS IT teams.</p>
<p>One of the biggest problems previously was the disconnect between the contracting firms’ developers and staff using the system. It’s encouraging that HSCIC foresees in-house NHS IT teams taking more control of their own systems.</p>
<p>Finally, BJSS executed the entire project using <a href="http://agilemethodology.org/">agile development techniques</a>, proven to work better in overworked environments with complex software ecosystems and changing requirements. In contrast to traditional software development methods, it’s considered crucial to ensure that users’ needs are known and understood from the early stages and that a usable version of the software in maintained throughout.</p>
<h2>High availability</h2>
<p>The cornerstone of Spine 2 is <a href="http://basho.com/riak/">Basho’s Riak database</a>, a non-relational database which focuses on high availability of data in a distributed environment, without insisting on always delivering the very latest data. This makes sense for the NHS, whose network spans thousands of sites, but which does not need data updated in real time. </p>
<p>For example, imagine that a prescription request is sent from a GP’s surgery to a database somewhere when a server along the way crashes. It is far more important that the rest of the patient’s record is still available to staff system-wide than it is for that particular prescription update to be made available everywhere immediately.</p>
<p>The Spine 2 contract was awarded under the Cabinet Office’s <a href="http://govstore.service.gov.uk/cloudstore/">G-Cloud framework</a>. G-Cloud makes it easier for the public sector to buy from small providers such as Basho and BJSS rather than huge IT consultancies that have provided such poor value in the past. Other open-source software used in Spine 2 include the <a href="http://redis.io/topics/faq">Redis database engine</a>, <a href="http://wiki.nginx.org/Main">Nginx</a> and <a href="http://www.tornadoweb.org/en/latest/">Tornado</a> web servers, and <a href="http://www.rabbitmq.com/">RabbitMQ</a> messaging middleware.</p>
<h2>Towards a healthier IT future</h2>
<p>It’s early days yet to pass any judgement on the new system. But it is refreshing to see how this key IT project has been handled. This could herald a new era for government IT projects in Britain – executed well, it could even help deliver the vision of data-driven healthcare that began almost 15 years ago.</p>
<p>The future of health IT lies in what is dubbed a <a href="http://www.nap.edu/catalog.php?record_id=11903">Learning Healthcare System</a>: a network of interacting agents that produce and consume knowledge in real-time, with information routed to the point where it is needed. Such a system cannot be delivered in a top-down fashion – it must be grown organically, bottom-up, from the needs of its users, focusing on open standards and protocols so that each component and those of future additions can communicate with each other. Spine 2 seems to be a step – along overdue step – in the right direction.</p><img src="https://counter.theconversation.com/content/32261/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Vasa Curcin has previously received funding from European Commission, National Institute for Health Research, and Engineering and Physical Sciences Research Council.</span></em></p>Without the fuss and delays that have plagued so many large government IT projects, a key part of the NHS digital infrastructure was recently migrated and updated in a single weekend. The collection of…Vasa Curcin, Lecturer in Health Informatics, King's College LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/182212013-09-19T14:05:53Z2013-09-19T14:05:53ZJust another few billion down the drain in government IT<figure><img src="https://images.theconversation.com/files/31644/original/ggxx2586-1379590093.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Computer says "not on your nelly, mate".</span> <span class="attribution"><span class="source">quinn.anya</span></span></figcaption></figure><p>A <a href="http://www.publications.parliament.uk/pa/cm201314/cmselect/cmpubacc/294/29402.htm">report</a> from the Public Accounts Committee has revealed that the National Programme for IT in the NHS has cost the taxpayer close to £10 billion, despite having been abandoned.</p>
<p>The committee’s chairman, Conservative MP Richard Bacon, has described the project as “one of the worst and most expensive contracting fiascos in the history of the public sector”. However, it will almost certainly not be the last fiasco of its kind, unless serious changes are made in the way the government handles its IT ambitions.</p>
<p>The NHS digitisation saga dates back to 2002, when an IT project aimed at revolutionising the NHS was born. In 2003, a contract was signed with outsourcing company CSC to develop Lorenzo, a system for patient care records. Although the overall National Programme for IT was eventually axed, parts of it continued as separate projects. But a decade on, the Public Accounts Committee says not a single NHS trust has a fully functioning Lorenzo system. It concludes that the public continues to pay the price for the mistakes made by the Department of Health and its contractors along the way.</p>
<p>Just a few weeks ago, another <a href="http://www.nao.org.uk/press-releases/universal-credit-early-progress/">report</a> on a failing government IT-enabled project made for equally depressing reading. In this case, the National Audit Office documented the remarkably unmitigated lack of progress made by the Department of Work and Pensions as it implements a Universal Credit system, simplifying six benefits into one. </p>
<p>The government planned to spend £2.4 billion from 2011 to 2023 to implement Universal Credit. Most spending so far - £303 million - has gone towards contracting for designing and developing IT systems. Yet there still appears to be no agreed design or IT architecture.</p>
<p>Referring to this latest saga, the Public Accounts Committee has warned that the government is still a long way off learning lessons from its past mistakes in IT contracting projects such as Lorenzo.</p>
<p>Far from having reflected on the disasters of the past, the DWP ploughs on with a project that so far looks unable to support a national roll-out without much further work and investment. The current IT system is unable to deal with fraudulent claims and there has been a £34 million write-off of IT systems already, with more anticipated.</p>
<p>These cases reflect a longstanding problem with IT projects across government. Recall the <a href="http://eprints.lse.ac.uk/47969/">chequered history</a> of IT and outsourcing at the Department of Social Security, the Ministry of Defence, the Home Office, and HM Customs and Excise, and you get the sense that something is rotten in the state of Denmark.</p>
<p>What needs to be done, then? On this, the NAO provides a good report, sound advice, but is unlikely to make a material difference. Focusing on one project, it can only hint at five deeper more intractable issues at the heart of government.</p>
<p>First, politicians regularly treat IT not only as an administrative tool, but also, as a “fire-and-forget missile”. IT in government can be transformational; in practice it is perceived by politicians as a relatively easy-to-implement cost saving device that reduces headcount. However, they often cost huge amounts of money, spread over many years. There are perverse incentives at work here: all the benefits for ministers are upfront, with the price paid after they’ve gone.</p>
<p>Then there has been the dismantling of the public service ethos through an often ideological, all too frequently misplaced faith amongst the political class, encouraged by advisers, consultants and suppliers, in the superiority of “marketisation”, and “businessisation”. A related issue is the strangely strong belief in the ease with which private sector practices can be applied to distinctive and very different public sector contexts and issues.</p>
<p>A further factor has been the long-term erosion of project management and IT retained capabilities within departments. For years, there has been a desperate need to bring in more public service managers who are able to understand the technical and process architecture of their departmental domains, and are able to manage external suppliers. The Department of Work and Pensions, for example, agreed to use an unfamiliar <a href="http://www.allaboutagile.com/what-is-agile-10-key-principles/">agile methodology</a> in developing the benefits system, while the implementation team grew to a less than agile 1,000. Planned savings are already down by £500 million. All post-2015 milestones are “under review”. You get the idea.</p>
<p>Then there is the remarkable faith in large-scale, long-term outsourcing with big suppliers. Companies like Fujitsu are not the only option for IT projects and are in fact probably not the best strategic choice for under-resourced government departments. Recently, there has been talk of trying to get smaller businesses involved in these projects but little progress has been made so far.</p>
<p>Finally, there is the blame game. In the larger context, all involved parties have become highly adept at setting up major projects so that blame can always be allocated elsewhere, but no one is ultimately responsible. This tacit conspiracy has been exacerbated by the rapid growth in outsourcing, use of consultants, deregulation, and privatisation. It makes for plenty of hiding places and indicates a serious lack of leadership at the heart of government IT. Until these factors change, we can certainly expect more horror stories like Lorenzo.</p><img src="https://counter.theconversation.com/content/18221/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Leslie Willcocks does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A report from the Public Accounts Committee has revealed that the National Programme for IT in the NHS has cost the taxpayer close to £10 billion, despite having been abandoned. The committee’s chairman…Leslie Willcocks, Professor of Technology Work and Globalisation, London School of Economics and Political ScienceLicensed as Creative Commons – attribution, no derivatives.