It has been an interesting couple of weeks for the tech giant yahoo. First Jackie Reses, the head of HR, wrote a memo forbidding telework for the employees. Shortly after the memo appeared, the internet began to associate it with Marissa Mayer, the CEO of Yahoo and former Vice President at Google.

Last time I checked, Google didn’t have a telework policy — instead, they strived to make the atmosphere at work so wonderful, with free food, massages, a gym, showers, lectures, and on-site medical, that the employees only go home to their empty bachelor-pad like apartments to sleep for a few hours.

Combine Mayer’s background at Google, her reputation for data, and one comment that Mayer found report employees were not “checking in on the VPN” often enough, and suddenly you have a media firestorm about how the CEO of Yahoo eliminated telework at Yahoo because the VPN logs showed people weren’t working.

Bring to a boil and stir, and we quickly see the blog-o-sphere, as well as traditional media, explode in amazement at the hubris, the arrogance, and the foolishness of of Marissa Mayer. And I do mean explode; BlueJeans Video Conferencing just put up a billboard on Highway 101, on the commuting path into San Francisco, that says “The Unofficial Sponsors of WFH. Call us Marissa; we can help!” – at least that is what Kara Swisher is reporting in this blog post at AllThingsD

This leaves me wondering:  What did Mayer actually say about those VPN Logs, and how did it get reported?

Retracing The Story 

 To figure out I tracked the story backwards:  From an IT Business Edge article back to one from BusinessInsider.com, finally to another from Kara Swisher about an interview with Yahoo’s CFO. That second Swisher article was, again, about Yahoo’s CFO, not Mayer, and only had these two relevent sentences:

The work-from-home debate has certainly exploded across the landscape this week, after an edict to eliminate the long-time employee policy at Yahoo, especially since most other Internet companies tout flexible work arrangements.

But, apparently, Mayer thinks Yahoos have abused the privilege — she noted at an employee meeting last week that VPN logs showed work-at-home staff did not sign on enough — and a Yahoo internal memo said that working “physically together” was the way to reenergize the lagging fortunes at the company.

That is all we know, folks:  People working from home did not sign on enough. We don’t know what “enough” is, or what the numbers showed, or how Mayer came to those conclusions. We don’t know the context of the company meeting or why she said it.  While we might imply the comment was  to explain the new “no remote work” policy, we don’t really know.

If you think more information is out there, you can always try to find it. You might, for example, google the topic, find a respectable media outlet like CIO, then follow the links backwards.  I suspect  you will probably end up where I did, at that same post by Kara Swisher with two sentences of actual background.

The Good News

Not every media piece is short-slighted, reactionary, and assumption laden – Cameron Laird, over at Correlsense, has a thoughtful article doing some real spade-work on what we know and what that might mean.

And that’s the good news; real journalism and thoughtful analysis isn’t dead.

You just might have to dig a bit to find it.

Speaking of which, one thing we haven’t seen yet, is any journalist going back to Yahoo, asking the company to explain what Mayer meant (or appealing to her directly). I have tried, but as I hit submit, have not heard back from anyone at Yahoo.

Who knows?  There may be more to come.

The last time I wrote about this I was taking about Call Centers. American Companies had outsourced phone support to other countries, often India, and the results were so bad due to cultural and communications issues that the USA companies insisted on a call center across the street so the Indian Companies rented office space across the street and hired US Workers.

A month after I wrote that article, Tata consulting opened an office for three hundred technology workers in Minneapolis, Minnesota.

Re-shoring isn’t coming to IT, it’s here, and the same offshore companies that started round one are taking the lead in round two.

The odd thing is, at least according to the Chicago School of Business, this shouldn’t be happening – at least on first blush.

Let me tell you why.

How did this happen?

If the Booth School of Business at the University of Chicago were to come up with a slogan, it would probably involve the idea that efficient markets win.

By efficient markets, I mean markets with lower cost structures.  If you pay 2% per transaction in the stock market, and I pay 1%, over ten years, I’m going to end up with more money, right?  Put another way, if we have to pay a five cent fee on every transaction, and work to lower that amount to four cents, in a way, we made money.

If that were true, then the round-tripping of contracts to India/China/Pakistan and back agan, with its associated communications costs (have you ever tried to set up a conference call to a developing nation?), combined with the sheer overhead of managing a multi-national company, should mean that the best deal would be a local deal.

Simply put: This should not be happening.  It makes no sense.

We did this to ourselves

Thanks to the build/boom/bust cycle of American real estate, office space is available cheap.  Thanks to the layoff/outsource cycle, labor is available cheap too.  Those two efficiencies combine to create just enough cost savings to allow for management overhead and awkwardness.  (Shrinking the distance between doer and client adds efficiency as well.) Yet there is opportunity here.

A local company, with less overhead, could be more efficient. That efficiency could lead to a better contract, with more cost savings for the outsourcer and more profit for the local company.  When I think about local contracts, a few companies come to mind; Menlo Innovations, in Ann Arbor, Michigan, competes for that kind of work. Pillar Technology is a 200-odd person delivery company which had no physical offices for over a decade; the executives and staff all work from home. I once took a call from a Pillar Recruiter, working out of her home in Georgia, to do a software project in West Michigan. In 2012, Pillar opened a software studio near Detroit, but its executives continue to operate with no building, which means no gas bill, no lease, and no maintenance, reception, or jantorial expenses.

One more time: Efficient companies win.

There is an opportunity here for local companies that are efficient.

Where are the small local companies?

David Gewirtz is the author of “How To Save Jobs: Reinventing Business, Reinvigorating Work, and Reawakening the American Dream.”  In that book, he claims that we schooled the entrepreneurship out of our society – that by focusing our culture on getting a good education in order to get a “stable, secure, good” job, we actively turned ourselves away from the idea of creating a business.  When the companies merged and laid off redundant departments (or sent work offshore), those now-laid-off went to the market to look for another “stable, secure, good” job.  Multiply that by a thousand mergers and offshore initiatives, and you have a lot of unemployment and a job market ripe for hiring, but no entrepreneurs to do that hiring.

This idea of entrepreneurship is not entirely gone; companies like Pillar and Menlo are still doing impressive things, and we cover the individual perspective right here on this blog.

What’s next?  I’m not sure.  Mr. Gewirtz has recommendations in his book, both for society (more small business) and for any individual stuck in the “good job”/lay-off trap.  My favorite idea from Gewirtz is to look for other people who have good products, then either partner with them (you take over marketing, logistics, and production, to make the product “real”) or outright purchase the product idea and develop it yourself.

There are many people with ideas; Gewirtz suggests becoming a ‘finisher.’

Lessons

Writing this article has helped me realize two things.

First, that we (myself included) in the US are overly focused on ourselves.  This blog has readers from all over the world; it would interesting to hear from the current IT workers in India, Pakistan, and Vietnam on their perspectives on re-shoring.

Second,  I would like to get Mr. Gewirtz to interview on this blog.

What questions should I ask him?

In my Informations Systems Policy Class in Graduate School (yes, they have classes for that), outsourcing was one of the hot topics of the day.  Specifically, outsourcing of business process. The basic idea was to clearly identify services, then cut cost by moving them to low-wage areas.  We even had impressive, triangle-shaped strategy graphs that talked about what to outsource and how to outsource it.   I ended up doing my master’s capstone work on the subject of outsourcing; it still stands up to scrutiny today.

But I have to admit, when the Washington Post ran an article on Indian Companies setting up call centers in the United States, I was as surprised as the next guy.

There is a lot of confusion going on here; a lot of doubt and mis-understanding.

I’m going to try to clear it up … and let the opportunity show through.

 How Did This Happen?

If you’ve ever called an 800-number for technical support, only to be transferred a dozen times, you probably realize how hard it can be for outsourcers to clearly identify lines of service.  Add a half-dozen time zones, eight layers of management, and a great-annual-review, transfer/promotion/forget_about_yesterday culture to the mix, and you’ve got a prescription for some real trouble.

There are plenty of lessons to be learned from that, but one of them is that keeping the outsourcer close — physically close — to the client company adds incredible value.

So that is exactly what the outsourcers have done.

After complaints about poor service, they looked at the United States (and other developed nations) with our bad economy, large numbers of unemployed workers, large amounts of cheap office space with power everywhere (that works!  All the time!) and said “hey, why don’t we set up shop across the street?”

According to the article, Aegis ignores credentials, uses a competency test, and pays workers who can do the job of repeatable business process outsourcing (mostly phone calls) from $12 to $14 per hour, along with a monthly bonus that might be worth an additional dollar per month.

To a competent high school graduate, it isn’t much, but it beats Taco Bell.

Truth and Consequences

One thing that always struck me about offshore technical work – from low-skill to high – was the sheer number of inefficienies in the process.

First you need a sales person on-site in the developed nation; you need an office to support that sales force.

Then you need the recruiters, trainers, and management overhead in the developing nation, plus, likely, an army of translators and liason-people.  You need to pay taxes, fees, and lots and lots of airfare and hotel expenses.

All this translates to inefficiencies in the system – it makes costs go up.

The Opportunity

A few years ago, an offshore company was offering programmers at $30/hour.  The work wasn’t that complex; it couldn’t be, in order to be offshored.  At the time I thought “A good college intern would accept that rate.  Why, I could get student to drop out of college for a few years, pay them $25/hr, and collect the float.”

I did have a bit of a chicken and an egg problem – I could not get the employees until I had the sales, and vice versa, but the idea was right.  I thought local people of ability could compete directly with offshore work by eliminating complexities in the supply chain. (In English: Cut overhead and work from home.)

I didn’t have the investment cash to pursue this, but it turns out, someone else did.

Today, the outsourcers are setting up shop locally and hiring the talent themselves.

The thing this – they are still saddled by those layers of management, the sales force, the physical office.

With IP telephony and rerouting, someone is going to build a virtual office, enable people to work from home, and lower costs to providers.

The only question is if it will be the developed nations … or the entrepreneurial, scrappy, outsourcers they have come to rely on.

If anyone wants to talk about this — you know where to find me.

We’ve been talking about what is going on at Hewlett-Packard, or, well, at least trying to understand it.

So far, we know that HP has signaled a desire to get into the software market, especially enterprise software, and a desire to exit the PC market.

For a moment, let’s forget about the why’s, and think about the “what’s next?”

Not for HP, but for the rest of us.

A big gaping hole where PC sales used to be

It’s been a long time since every techie and their brother could make a few bucks assembling parts from personal computer shopper magazine. Over the past two decades we’ve seen a steady flow of mergers, acquisitions, and failed companies, until only a handle of PC manufacturers dominate the field: HP, Dell, Acer, Lenovo, and Toshiba.

According to wikipedia, those five companies controlled 68 percent of the PC market in 2010. HP tops the list, with 17.9 percent.

Assuming HP sells it’s PC unit, and you are a reasonably big company.  Who are you going to buy computers from?

Sure, you could buy from whoever buys the unit.  That makes sense.  But now you’ve just lost the benefit of single-sourcing.  In addition to payment and ordering pain, you may have some software and integration pain.

Beyond that, you may want to purchase from an organization headquartered in the United States.

When I asked my magic eight-ball if an HP purchaser would be base in the United States, it answered me that “outcome is unlikely.”

I suspect that’s overly optimistic

Our Next Best Hope: Dell Computer

Can this man win HP's customers?

Yes, Dell Computer, the American company that started our of Michael Dell’s dorm room, the one that made it to the #1 company in PC sales in 2001, only to lose that title shortly after Michael Dell left the CEO spot in 2004.  (It’s okay.  He came back in 2007.)

Yes, Dell Computer, know for it’s cheap, low-end PCs, often sold to small and medium organizations.

If HP leaves a hole at the top of the market – larger companies, with lots of employees, security and privacy concerns, and, well … budget … Dell might just go after it.

I’m not the only person to notice this; BusinessWeek ran an article in it’s September 18 issue that hinted along those lines, claiming the company was looking to provide integrated services to small and medium sized businesses. According to the article:

Through a string of 10 acquisitions in less than two years, Dell has branched into areas such as IT services, computer networking, and data storage. He thinks the kind of low-cost, low-margin hardware Dell is known for—the company sold about $39 billion worth of desktops, laptops, and related products last year—can open the way for sales of higher-margin enterprise products. At the same time, and in a nod to reality, Dell is winnowing its troubled line of consumer products and focusing its attention on the small- and medium-size businesses and government agencies that already account for more than half its sales.

Translation: Dell, like HP, is looking to sell it’s dogs and invest in the segments where it’s business is growing, ideally becoming a one-stop shop for everything from servers to desktops to services, including Software As A Service and cloud computing.  Yes, I said cloud computing; Dell has been semi-publicly talking about cloud offerings at reasonable prices for months.

Think about it: A local company that built it’s reputation on service and excellent operations management, getting back into the market it knows best (business hardware), moving into a hole created by the exit of a giant, and looking to expand it’s share of a profitable, expanding market (cloud computing.)

Will the play work?

Time will tell, but my money is on Dell Computer.

If anyone is up an interesting bet, please let me know. Last time I shaved my head was 1994, and that was a barber at Ft. Benning, Georgia!