The Economist has a decent article to supplement my last blog entry.
Most of the drop in prices for PCs, mainframes and so on was caused by the relentless advance of technology; but she still thinks that trade and globalised production—all those Dell Computer factories in China, for instance—was responsible for 10-30% of the fall in hardware prices. These lower prices led to higher American productivity growth and added $230 billion of extra GDP between 1995 and 2002, equivalent to an extra 0.3 percentage points of growth a year.
The "she" in the above quote is a reference to Catherine Mann's recent paper that shows drastically reduced PC hardware prices during the 1990's are in part due to offshoring. Note that Mann's article is referring to productivity growth due to increased use of IT: this is still growth beneath the knowledge worker productivity "plateau" I was describing in my prior entry. This plateau also should be seen as a "slow growth" plateau, not an immovable object. It also is purely a qualitative theory, intended for provoking discussion.
This productivity "plateau" also is why I think you're seeing the Does IT Matter? controversy bubbling up: IT can only bring so many advantages, we need new human techniques to increase productivity. It just so happens, however, that I think such techniques may just come out of the IT world, whose fringe has a lot of experience with high performance teams.
Unfortunately, the Economist does include a sour raspberry:
As for the Indian threat, “offshoring” is certainly having an effect on some white-collar jobs that have hitherto been safe from foreign competition. But how big is it, really? The best-known report, by Forrester Research, a consultancy, guesses that 3.3m American service-industry jobs will have gone overseas by 2015—barely noticeable when you think about the 7m-8m lost every quarter through job-churning. And the bulk of these exports will not be the high-flying jobs of IT consultants, but the mind-numbing functions of code-writing.
To think that code-writing is mind numbing shows a complete lack of respect and understanding of what goes into such knowledge work. The analogy between a coder and a factory worker is a common one, but is a perfect example about why the mainstream collectively has zero clue about how to raise knowledge worker productivity: they're still stuck in scientific management's old methods.
One cannot set up a development shop in terms of tiers of archtects, designers, and coders, with coders being nothing more than "skilled labour", and expect to get the productivity advantages of the best teams. Nor can you expect coders to be in a completely different time zone. The communication overhead is tremendous in such a team, and agility (for changing requirements) necessitates decentralized decision making. This is a major constraint on offshoring IT software development jobs: for projects that have stable, well-known requirements, it can work. Otherwise, you'll want something as co-located as possible. Requirements change, priorities are re-ordered, understanding evolves. Software developers are organized around ambiguity, whereas traditional production is organized around physical constraints.
Alas, we may be quite a ways off from getting the mainstream to understand this.