Outsourcing is the silver bullet of the IT age. Everything can be made more cheaply and more profitably by sourcing the work from places with a lower cost of living. But do those places always have to be overseas? Not necessarily.
The perils of overseas outsourcing are well known, ranging from communication through cultural or time zone incompatibilities. What if there were a way to eliminate those incompatibilities while still retaining the benefits of workers who live in an area with a lower cost of living? This is possible through “insourcing.”
There are regions of the United States where the cost of living is quite low, allowing companies to have their cake and eat it too. Work can be done much more cheaply and there is no communication barrier. Additionally, impoverished areas benefit from employment.
Sounds good, you say, but what is the catch? Why hasn’t it been done already?
The main reason why companies outsource instead of insource is brain drain. Often when workers increase their technical skill, they also leave low-wage areas for high-wage areas. So, even though work can be done for a lower wage, people still living in the area have not had the necessary training for a high-tech IT job. On the other hand, when a company is outsourcing to a developing country, it is possible to have both low wages and high technical skill.
Yet coding is not the only sort of technical work needed. Thanks to artificial intelligence, there is now technical work that can be done by most people.
Yes, it is a paradox. Artificial intelligence was supposed to wipe out all our jobs but instead it has opened new avenues for employment. If we were to take a step back from the present and look at history as a whole, this would not be so surprising. Most technological innovations, while eliminating jobs, have tended to create whole new planes of productivity.
Just look at the internet as an example. It greatly undermined the power of established media but it has opened up whole new venues of expression — and not just cat videos. Think of online historical documentaries like The Biology of the Second Reich or intelligent social commentary like Alternative Math These types of media were not very practical to produce and distribute before the internet. The only reason people think that this time things will be different is that they think artificial intelligence can replace human intelligence.
It turns out that artificial intelligence is not very intelligent. The models must be trained with enormous amounts of data to learn even simple tasks. And where does all this data come from? It cannot come from artificial intelligence. It has to come from people. And that is where insourcing comes into play.
The great thing about human intelligence is that it is possessed by all humans. The level of training necessary to have human intelligence is zero. Gone is the technical training barrier. Thanks to artificial intelligence absolutely everyone can have a role to play in the new technological transformation. This is due to a very simple calculus. Since artificial intelligence needs so much human intelligence, and at the same time is so useful, then we are bound to see the inverse of Ray Kurzweil’s Singularity : artificial intelligence will cause an explosion in the need for human intelligence within IT systems.
Artificial intelligence will become widely adopted, which will drive a need for human intelligence to train the models, which will cause even more success for artificial intelligence. It will require even more people employed training the models. It is a virtuous cycle, making humans essential for all IT systems of the future. And if it is an exponential explosion, then demand will outpace the number of humans which will bring about a demographics spring.
So, enough high flying theorizing. Back to the idea of insourcing. Since we’ve established that the new IT environment will absolutely depend on human intelligence, the next big frontier will be insourcing. The advantage of developing nations that their technical skilled workers are cheaper will matter much less. We are back to only requiring lower wages to create a competitive advantage. In which case, insourcing makes a great deal of financial sense because barriers introduced by sending work to foreign countries are eliminated.
Indeed, I predict that, thanks to artificial intelligence, ordinary human intelligence will become the new oil.
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