Is the Future in Insourcing?

This post originally appeared on August 6, 2010 on

Don Dodge is awesome. This guy really gets me to thinking. An article he posted to his blog today sparked a thought about what it might take for the ‘western world’ to bring back jobs that those of us who spend our time working on projects helped to outsource over the last decade. I’ve always had a problem with the term 'low cost labor’ but the reason why never clicked until Don pointed it out.

Its not that the labor in these 'low cost’ countries is any cheaper than it was in prior decades, its just that the cost of transporting raw goods to those countries and then transporting finished goods back here is so much cheaper and easier than it once would have been.

We know that oil will not last forever. Almost every form of alternative energy that is currently possible has at least one major limitation. At some point we will either 1) develop a new (or make an existing form commercially viable) alternative energy source or 2) transportation costs will increase to the point where travel will no longer be as cheap and easy as it is right now.

Assuming that option 1 does not occur and that option 2 does occur, our world will now be at an interesting place. The developed world would once again need to begin manufacturing its own goods, meaning a possible return to an economy that is more similar to the one we had in the 1950s… but with a twist.

The people, like us as project members, who don’t directly supervise the workers who directly make things, will either need to move into close proximity to our places of work, or we’ll need to rely even more on telecommuting. Given that energy costs will likely be spiking for other forms of energy at this time as well (scarcity of one will cause greater demand for other forms, and thus scarcity of those forms as well), employers will wish to shift as much cost away from themselves as possible. Having project teams work remotely from their own homes, requiring team members to pay their own internet and heating/cooling costs, not to mention space in general and office supplies, will fall into the 'cut every cost you can’ priority list.

Projects of the Future

But its the projects I see us working on, or at least our successors if we are fortunate enough to have saved enough to retire by this time, that fascinate me. Just as project people can work from home, so why couldn’t the whole telecom services segment work from home as well? Imagine, instead of having a large number of call center reps onsite with their data center (or with a massive pipe into a hosted center), everyone has a relatively small pipe into their own house’s data center. How would that change the requirements for hosted applications?

Its not just software projects, but business processes that would need to change drastically. Think about large shipping companies like UPS and FedEx. Already these companies do everything they can to avoid costs due to fuel and labor, utilizing large software applications to plan routes that take more right turns than left so that vehicles are left idling for less time in traffic. Now what will these companies ask of their business planners who see package traffic moving back to rail or even going by river traffic. It sounds absurd, but a boat flowing downriver takes a lot less energy than does the fleet of trucks traveling on the interstate next to the river.

What about you? What types of interesting projects do you forse if such a transport-starved future were to occur?