It's an interesting argument, but I think some of your assumptions are flawed:
1) Japan isn't the best comparison; after all, there are reasons why they call post WW2 Japan "the economic miracle". The development of the keiretsu combined with governmental cooperation and significant cultural stability created a perfect storm of growth, which affected all tiers of society. For this alone, I'm not sure your historical analogy holds up.
2) The disparity between rich/poor, educated/uneducated is significantly higher in India/China than was the case in Japan after WW2. Japan focused on industrial manufacturing and got a healthy boost from the Korean War which increased demand --- demand exceeded supply. Since the product we are referring to in offshoring is ultimately labor, the overall supply of said labor in those two nations is more concentrated than any other place in the world, thus supply exceeds demand - the historical example again isn't particularly relevant.
3) Even if we took your above #1 on face value and your analogy with post-WWII Japan as valid, you still have to remember that Japan had 40 years of absolutely ridiculous growth, and when it stopped, it had little to do with western living standards, it had to do with the banking crisis - a ton of bad debt, and a full bank consolidation. In fact, if you read about it, you'll find that much of the more western dynamics in the Japanese economy were implemented after that crisis, during the 90s and inordinately affected younger workers.
If Japan is the measuring stick, I'm thinking we have a couple of decades to go before the slowdown occurs.
4) And even if we took all of the above to be total bunk, there's one more problem with the argument --- if they did create their own brands and their own companies with the IT workforce, choosing not to bid particular resources rather entire projects or even divisions of US companies, it simply increases the scope of the offshoring capabilities. I work at a bank - we aren't talking about India becoming more organized and starting a bank to compete with my company, we are talking about IT offshoring... they can't bid on a lot now because of lack of business competency in their workforce, but once it's there (given your statement on increased sophistication at an macroeconomic and organizational level), they have the ability to go after even more US IT work.
All of your criticisms of outsourcing were valid when my organization began this effort 2+ years ago. Speed to market was significantly reduced, though the pilot projects were chosen for their lack of direct effect on mission critical business processes. Since then, our outsource partners have created dedicated resource teams to learn pieces of the environment, responded immediately when one of their resources isn't cutting it, and put developers on site in the US. These adjustments in the relationship have largely mitigated your points, and now we are realizing the cost saves. Offshore resources now comprise >12% of our total IT staff.
I think it's a bit naive to think that it has approached its peak; the macroeconomic benefits are too great, particularly for large organizations.
I'm manager of a couple of teams at top 5 bank, and my team is primarily responsible for data warehousing and ETL processing for the mutual fund division. Frankly, the best position in IT is the job that is not easy to acquire offshore, and pure IT is... I can find.NET or Java engineers both in the states or overseas; I can find sysadmins here or offshore; and while the requirements rigor is much higher for offshore resources in a development context, I can get it done cheaper, as unpopular as that may be on this board.
Most IT folks don't work in a pure IT shop, ie - Google/Oracle/Microsoft - essentially a company where the technology is the product/service offering. We are enablers of some other business, and at least at my company, we are offshoring like mad so every new development position gets weighted against a set of criteria to see if it's offshore eligible: unless there's particular industry and/or business data knowledge, they typically are eligible.
My recommendation - learn the business. It's the hybrids that companies will retain in the future. It's the blend of business expertise and IT solutions that is difficult for an organization, hell, even a manager, to replace. A specialist here is truly just a commodity worldwide without the corresponding industry and/or business expertise.
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It's an interesting argument, but I think some of your assumptions are flawed:
1) Japan isn't the best comparison; after all, there are reasons why they call post WW2 Japan "the economic miracle". The development of the keiretsu combined with governmental cooperation and significant cultural stability created a perfect storm of growth, which affected all tiers of society. For this alone, I'm not sure your historical analogy holds up.
2) The disparity between rich/poor, educated/uneducated is significantly higher in India/China than was the case in Japan after WW2. Japan focused on industrial manufacturing and got a healthy boost from the Korean War which increased demand --- demand exceeded supply. Since the product we are referring to in offshoring is ultimately labor, the overall supply of said labor in those two nations is more concentrated than any other place in the world, thus supply exceeds demand - the historical example again isn't particularly relevant.
3) Even if we took your above #1 on face value and your analogy with post-WWII Japan as valid, you still have to remember that Japan had 40 years of absolutely ridiculous growth, and when it stopped, it had little to do with western living standards, it had to do with the banking crisis - a ton of bad debt, and a full bank consolidation. In fact, if you read about it, you'll find that much of the more western dynamics in the Japanese economy were implemented after that crisis, during the 90s and inordinately affected younger workers.
If Japan is the measuring stick, I'm thinking we have a couple of decades to go before the slowdown occurs.
4) And even if we took all of the above to be total bunk, there's one more problem with the argument --- if they did create their own brands and their own companies with the IT workforce, choosing not to bid particular resources rather entire projects or even divisions of US companies, it simply increases the scope of the offshoring capabilities. I work at a bank - we aren't talking about India becoming more organized and starting a bank to compete with my company, we are talking about IT offshoring... they can't bid on a lot now because of lack of business competency in their workforce, but once it's there (given your statement on increased sophistication at an macroeconomic and organizational level), they have the ability to go after even more US IT work.
All of your criticisms of outsourcing were valid when my organization began this effort 2+ years ago. Speed to market was significantly reduced, though the pilot projects were chosen for their lack of direct effect on mission critical business processes. Since then, our outsource partners have created dedicated resource teams to learn pieces of the environment, responded immediately when one of their resources isn't cutting it, and put developers on site in the US. These adjustments in the relationship have largely mitigated your points, and now we are realizing the cost saves. Offshore resources now comprise >12% of our total IT staff. I think it's a bit naive to think that it has approached its peak; the macroeconomic benefits are too great, particularly for large organizations.
I'm manager of a couple of teams at top 5 bank, and my team is primarily responsible for data warehousing and ETL processing for the mutual fund division. Frankly, the best position in IT is the job that is not easy to acquire offshore, and pure IT is... I can find .NET or Java engineers both in the states or overseas; I can find sysadmins here or offshore; and while the requirements rigor is much higher for offshore resources in a development context, I can get it done cheaper, as unpopular as that may be on this board.
Most IT folks don't work in a pure IT shop, ie - Google/Oracle/Microsoft - essentially a company where the technology is the product/service offering. We are enablers of some other business, and at least at my company, we are offshoring like mad so every new development position gets weighted against a set of criteria to see if it's offshore eligible: unless there's particular industry and/or business data knowledge, they typically are eligible.
My recommendation - learn the business. It's the hybrids that companies will retain in the future. It's the blend of business expertise and IT solutions that is difficult for an organization, hell, even a manager, to replace. A specialist here is truly just a commodity worldwide without the corresponding industry and/or business expertise.