Unless you are awesome, you will be outsourced

We’re quickly moving to a new world where the wealth gap is compounding and increasing.  We’re moving to a world that is going to look a lot like Hollywood: a few people enjoying insane success … and everyone else spends their days waiting tables.

The delta between A-players and B-players in companies has always been high.  A-players get promoted faster and they earn more.  My guess is that an A-player earns about 30% more than a B-player in that same position for most professions.  An A-player administrative assistant usually can earn about 30% more than a B-player in the same position.   That’s a significant difference and even more when you compound that difference in savings and lifestyle over the course of one’s career.

In some professions like sales and entertainment, an A-player might earn 300% more than a B-player and essentially live an entirely different lifestyle.   In the future, everyone’s jobs will look more like salespeople.

Let’s focus on the profession I am most familiar with: software engineers. 

Today, an A-player software engineer has a lot more job prospects than a B-player.  That seems obvious.  But there are plenty of B-player and C-player engineers that work at great companies and get paid well.  Their services are needed and important.  And while they don’t make the contributions that an A-player makes, they still are very valuable to a company and have a lot of importance to the success of an organization.

But things are changing (queue in the Darth Vader music).

Aa yoda blog.egg_aef44

There are three forces that will drastically change work, compensation, and our value to each other forever:

1. A productivity boom will automate B- and C-player work
2. Globalization will commoditize B- and C-player work
3. A-players can have much more impact

The productivity boom will automate your job.

Everyone is massively more productive today than they were just a few years ago.  A salesperson can use tools like Salesforce.com to track customers, LinkedIn to find prospects, and they can easily call and send documents from the road with their iPhones (unless they are on AT&T).  The Internet makes all of us extremely productive and automates parts of our jobs.

In the 1990s, I was a software developer and I remember writing a script to determine if a string was a valid email address.  It took about 12 hours for me to write.  First, I had to research what could and could not be in an email address (dashes are ok, commas are not, only one “@” symbol, etc.) and there were a bunch of corner cases that I had to guard against and test against.  After coding into the night, I finally came up with something I was proud of.

Today those 12 hours of work would take about 1.2 seconds.  There are hundreds of libraries that have been written by really smart people and tested by thousands of programs.  All one has to do is plug one of them in.  It is simple, easy, and effective.   Now I can spend the remaining 11 hours, 59 minutes, and 58.8 seconds on something more useful.

Thanks to the open source trend, even complex projects are free and quick to set up.   My company, Rapleaf, runs all of its systems on an open-source framework called Hadoop.  Hadoop is something that took hundreds of thousands of hours to build. And we get access to this software for free. 

All this means that it is faster than ever to implement good ideas.   Instead of investing resources in implementation, companies won’t need as many engineers to get a project done.  And if implementation is cheap, companies can spend more on ideas instead.

Globalization will commoditize your job.

There used to be a few people in your town competing for your job.  All you had to be was better than those few people and you were golden.  And even if you were not the best, you were still needed.

Aa Bartopen Today there are millions of people competing for your job.  While there are very few amazing developers, there are millions of good ones.  There are tons of people that can write decent code, integrate with APIs, and get stuff done.  And they are all over the world and they want your job.

And globalization will continue to accelerate.  Historically, the biggest missing piece to stopping a world where you can be outsourced at any moment was the technology to collaborate.  Today it is massively easier to collaborate in person than through any other medium.  But that’s changing. 

Even simple tools like ubiquitous video conferencing via Skype, project management systems (like those developed by 37 Signals), and easy screen captures have made a world of difference. Many more communication solutions will be developed — and once we can easily collaborate with someone 12 time zones away, then your job can be more easily outsourced.

A-players can have much more leverage.

Aa_whos_awesome Because of globalization and the productivity boom, implementations will be cheaper and easier.  B- and C-players will be commoditized and their salaries will fall.

At the same time, the value of A-players will rise exponentially.  The typical A-player spends 5% of her time today figuring out what needs to be done, and the other 95% executing it.  When I started working on my script to detect valid email addresses, it probably took me a few minutes to figure out what I wanted, and then hours to actually get it done.

But imagine a world where execution is cheap and fast.  An A-Player can implement dozens of ideas in the time it now takes to implement just one. 

That means the people who can figure out what needs to be done become much more valuable.

So, I can be outsourced.  Now what?

Over the next generation, we are moving to a world where most (like 90%) software developers will earn a decent wage (say $50k/year) and a few (like 10%) amazing developers will earn over $500k.  Yes, the income distribution for the same profession of people who went to the same university and had the same SAT scores could actually be that stark. 

I want to point out that I’m not advocating that this divergence in compensation happen.  I’m not.  It has the potential to fracture society.   And it seems like it will massively reward people that have lucky breaks.  But I’m worried that regardless of how we feel about this growing division between the A-players and B-players, it will happen anyway.

This stark division is already happening at companies like Google.  Most engineers there have similar backgrounds and all get paid well.  But a few of the amazing engineers earn compensation over ten times the average.  Yes, 10x.  One day, every company will look like Google.

So what do you do about it?

You must be the Jedi Master of your profession. 

Unless you are awesome, you will be commoditized. 

Here are some things that will be less valued in the future and some things that will be more valued:

Less-valued More-valued Why?
General knowledge Judgment Search engines will be attached to our brain
 
Knowing more than one major spoken language
 
Sales in any language We’ll have universal translators
Coding Art Building things will be much easier.  Designing aesthetics will always be hard.
 
SAT scores Combining left-brained and right-brained thinking
 
Systems-thinking will be easier to outsource
Majoring in business Majoring in philosophy Learning to “think” will be more valued that just learning
 

Special thanks to Jeremy Lizt, Paul Santinelli, and Travis May for their help in writing this.

 

45 thoughts on “Unless you are awesome, you will be outsourced

  1. Eric Di Benedetto

    A players create new knowledge. B, C and below players apply and reapply knowledge they learned from others, at best. B, C and below are “human algorithms”, increasingly replaced with more reliable and cheaper software programs. Ultimately, AI including genetic algorithms will even replace some A players. The “Uber-A” players, masters of algorithmic research will render some of their peers obsolete and capture an increasing share of the value creation. While this has many implications, it reinforces the need for revamping our education system to emphasize the development critical thinking skills as opposed to mechanical re-hashing via dumb multiple choice questionnaires…

    Reply
  2. Alex Greene

    Sounds good, to compare A-list programmers with A-list celebrities, but you don’t stop to think about A-list problems: the mental breakdowns, the drug addictions, the rapid burnouts, the karoshi, the srrests, the lunatic cults, the mayfly marriages, the fact that none of them make good parents, unless they want their peers to start calling them “B-list” and usurp their place at the top of the dung heap.
    Aesop’s tortoise was a B-list character.
    Oh, and you know that universal translator thing? Unless you know the language, you can’t guarantee that the machine won’t make you sound like a laughing stock. “What’s yours is mine” coming out as “What’s yours is a hole in the ground full of mineral ores,” or some such. A B-list grade in languages is still better than any A-list guy with fancy gear and no idea.

    Reply
  3. Auren Hoffman

    Excellent point Eric. (Of course, you are one of the well-known A-player investors). It is an interesting question: will computers eventually take over the world (like in Terminator)? Possibly. If that happens, sign me up for the rebel alliance.

    Reply
  4. Auren Hoffman

    Excellent point Alex. Being successful in one’s career does not mean one is happy. Most A-list celebrities have serious personality issues and for many, happiness eludes them their whole lives. If we are outsourced, maybe we’ll start focusing on the truly important things in life: parenting, helping others, building our community, faith, etc.

    Reply
  5. Munir Mandviwalla

    Excellent points. But. Aren’t you outlining the characteristics of an entrepreneur? Perhaps not upper case entrepreneur – a person who creates new companies but perhaps lower case entrepreneur – a person who can create and innovate within the box?
    Also. What about non-silo thinking? (I am sorry i can only state it in the negative…). The idea that a person can apply their judgement, art, and philosophy to cross boundaries when it makes sense and to stay within their comfort zone when it does not?

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  6. Lars Vaule

    This technology effect echoes across many industries: when Edison invented the phonograph the same divergence of success hit opera singers. Why listen to your local tenor when you can listen to a recording of the great Caruso?
    @alex – Aesop might say that the tortoise understood the race, where the hare did not.

    Reply
  7. Sophia Yen MD

    I disagree about the philosophy major point. but agree with the intent of that example.
    It will be important to know how to think and not just how to memorize and regurgitate facts. What I liked about the MIT education/philosophy was that it didn’t matter what the answer was, it mattered how you got there. All tests were open book b/c the “facts” will always be available, it’s what you do with them that matters. But B-school will still be important, I think. Part of life is who you know and b-school or a good college allows that.

    Reply
  8. John Norris

    I believe that in this decade Text Analytics will substantiay solve the “contextual meaning” problem that you describe. I and others have been working on solutions for some 35 years, and Support Vector Machines (SVMs) are showing great promise here.

    Reply
  9. Chris Neumann

    Good post. I see this happening already, but not necessarily in engineering, it’s happening across the board. I’m “rural sourcing” customer service for TextMarks, and I’m personally doing conversion rate optimization work for several companies now because I know what to test and can implement the tests myself, so I’m much more efficient than the average company at executing A/B tests who would have to involve several different departments. To your point below, it gives me a lot more leverage on my time than being a company employee.
    I predict Thomas Friedman writes a book on this in 2020. He always seems to write about this stuff way after it happens.
    The other thing that’s interesting is how it will affect international economics – I know several entrepreneurs who are planning on emigrating once they make their money. A developer friend of mine in Kiev is planning on going to Estonia very soon because of the bad environment in Ukraine. Feels a bit like Atlas Shrugged. This will not be good for the US in the long run as we build in higher and higher expectations of the working class.

    Reply
  10. Sonia

    Interesting article, thanks for sharing (and writing it up!). Seems to be a topic of conversation I keep having lately with many clients about their staff, the state of the economy and the need to replace people who are ‘B’ or ‘C’ players and but not being in the situation to bring on ‘A’ players – whether financially, they are not available or whatever. I do not believe everyone is replaceable which is a stance that many companies feel. I own a company and do Digital Media Consulting (in addition to having a personal food and lifestyle brand that is non-profit). I am hired to come in, strategize and mainly execute because the staff my clients have cannot do this. For that I am paid well and running my own venture, I get to hand pick and choose my gigs. I’m often disheartened by people that don’t see the reality that if they are not Rock Stars their function will be outsourced. It’s almost like they are scared to try and be agressive or better than the rest. Bigger topic there…but many thanks for sharing!

    Reply
  11. michael schrage

    i could not disagree more with this….i personally and professionally know ‘players’ who do a wonderful job of ‘creating new knowledge’ and have absolutely no clue about monetizing/commercializing/getting value from their creations….
    …indeed, i’d argue that the ‘real’ A plaers are those who can identify where new knowledge can be applied and/or how ‘old’ knowledge can be profitably recombined to capture mind and and marketshare…
    ….i’d also argue that ‘collective intlligence’ algorithms – recommendation engines, etc. – represent a different design paradigm so it’s a smidgen too early to say what constitutes A vs C ‘playership’…
    as a former AI person (expert systems) and someone who dabble a lot in the GA space, there’s little question that simply possessing superior cognitive processing or pattern recognition skills will be enough to buy you sustainably A status in any industry…but i’d add that your point about about critical thinking – as opposed to computational/calculational thinking – skills is where one has to be if you hope to make a living in a ‘knowledge intensive’ industry….
    as for me, i’m beginning to wonder if the future value of ‘software development’ will come less from helping people ‘think’ than influencing how they ‘behave’…
    to wit, behavioral economics strikes me as likely to be a more useful disciplinary design point that normative/optimization economics….

    Reply
  12. Bernard Miranda

    Increased productivity in the tech sector will not lead to a decrease in the demand for engineers. It will, most likely, increase the demand for engineers at all levels. It would do you well to look up “Jevons Paradox”- it’s a very well-established phenomenon.
    Secondly, I disagree with the categorization of people as “A” players vs. “B” and “C” players. Pretending that an engineer in New Delhi could be fully interchangeable with an engineer in Toronto is simply wishful thinking by the investment class. People are not single-faceted ciphers, easily categorized like oranges or cuts of beef – they have strengths and weaknesses; they’re complex. Aldous Huxley already wrote about a world where Alphas are easily distinguishable from the Gammas – it didn’t end well (and wasn’t terribly realistic).

    Reply
  13. Erica

    Love the post. But the Your (sic) Awesome poster has a typo! Was that to show that sometimes part of being awesome means making mistakes?

    Reply
  14. John

    Thanks Auren. Good to hear from you. I agree completely with your assessment of the future workforce valuations. Although I have been out of the investment banking at big banks for a few years, we see even more of the A-B player distinction in our small business. Small companies cannot afford to “average” their players, we can only afford A players. I may have mentioned that my brother is a world renowned expert in computer graphics for the film industry. He is a professor and only accepts the best of the best for his graduate program. All the major film production companies are waiting in line for his graduates–they only want the best. Wish I had some skills like that. What was that saying, “Be good or be gone”? Now it is “Be great or be outsourced”.

    Reply
  15. Carla Ghosn

    Great article Auren! I had to come back to it again because it’s driving me to think of the issue from different perspectives: socially, economically, and both from a humanitarian as well as from an education point of view. (1) I believe that the education system in the US prior to college is sub-level ; then college is very expensive for most people – without a good education, most people can’t become A-players. (2) Economically speaking, if the US will continue to outsource, it will eventually affect its economy negatively because the money flowing out is not flowing back in – the unemployed who have been replaced by outsourced people would then become a burden on the US economy and on taxpayers who now have to pay for their unemployment, which then create not just social issues but all sort of other dilemmas because society is not very functional this way. And let us not forget, that even if education is available to ALL EQUALLY, we are not all born equally; so to discriminate against those who are less talented would become a humanitarian and social issue. Balancing capitalism with a sense of community should be a reminder that outsourcing may be appealing in the short run but not on a long term basis. But then again, in the US, both the government and companies mostly operate on short-term goals.

    Reply
  16. Auren Hoffman

    Chris: very interesting Atlas Shrugged analogy. it will be interesting if A-Players start moving (either to different states or to countries). A great country would be actively recruiting A-players (whether they be mechanics, software engineers, or teachers) from around the world.

    Reply
  17. Clinton Bonner

    Nicely done here. Something we are seeing – I work with TopCoder the 313,000+ Community of developers, designers and algorithmists – is that the very awesome – on individual levels – are embracing opportunities to leverage crowds/communities to become force multipliers themselves. More concrete: Inside crowds are hyper-specialized skill-sets (many specialists)and those working with us have individual employees who recognize this for what it is, then learn how to engage the Community to emerge themselves as an exceptional generalist because they understand how to access the specialists on-demand. So perhaps this is another avenue to awesome? If you yourself – as an individual within a company – become amazingly skilled at tapping crowds and getting so much more done than you alone could possibly ever have accomplished.
    Want to say, not pie in the sky, we have Global 1000s who tap our competitive Platform, and the success they have is driven by individuals or small teams who realize how they can multiply their efforts.
    So as some will get outsourced/commoditized, others will grab the actual reigns, learn how to engage external communities and themselves rise up to the level of rock-star A-Level player. Thought that added wrinkle might further this impressive discussion.
    Thanks for the very well written piece – enjoyed the read.

    Reply
  18. Robin Dymond

    I just taught a course and participated in a software conference in Vilnius Lithuania. Over the last 3 years I have taught Scrum to over 800 software development staff in the Ukraine, and hundreds more in the US and Brazil. The situation is much more complicated then you portray, and not as negative as the article implies for US/EU workers. The huge missing piece in this article is VALUE. The perspective presented is only focused on cost. It is about the same as saying if only there were lower taxes the US job market would improve. This is false thinking, and surprising from an investor. Why do we invest? Because of the potential opportunity. For example take the team of A players tweaking the Linux kernel yet again, and compare them to the B players who develop a hugely popular web site like gamespot. Which team generates more value? Another missed point is the huge demand for software. Unemployment in the US IT sector is 3.2%, compared to over 10% in other sectors. A more recent phenomena is companies who outsourced all development now rehiring developers because of communication, speed and quality problems. Capital One and Wells Fargo are examples.
    By far the largest problem in software development is management. Managers who learn how to build and nuture lean
    and agile organizations will be able to respond much more quickly to the market while growing the strength of their teams. This is where many companies fail miserably, and generate huge amounts of waste in failed projects, burned out staff and unmet expectations. There are no lean and agile organizations in our industry today.
    Toyota became the largest and most profitable car company with staff from all over the world. They did it because the Toyota Production System is unmatched in terms of creating successful results. This is a management system and a way of viewing the world of work. Whether the cars are built in Manila or Kentucky, the driving force for success is not the cost of labor.

    Reply
  19. Cascadian

    So what are the inevitable 90% (of the what, maybe 25-30% who are in software or similar fields) supposed to do? This sounds like a description for 2-3% of the population kicking ass, 25% or so eking out a reasonable middle class existence, and roughly 70% having no decent prospects at all.
    Until we find a way to flatten out inequalities in compensation to give at least a bare majority a sustainable place in the middle class, our economy is broken, and most people should just go join the crowd occupying Wall Street.

    Reply
  20. Barry

    Aside from the fact that Atlas Shrugged was fiction, it had a world where it wasn’t A-players, but A+++++ players were the only thing standing between civilization continuing or crashing. A person who’s actually one in a thousand would, in Atlas Shrugged, die miserably if the one in a million didn’t keep the wheels turning.
    Now, who works in an environment like that?

    Reply
  21. IStandWithOccupyWallStreet

    Yes: we should all sacrifice our lives for the good of the corporation. If that means abandoning our children and families, having heart attacks at an early age, having no social life outside the corporation, working 90 hour weeks so we don’t get outsourced, so be it! As long as we are under the delusion we are a “jeti master” right up until the time they lay you off at 50 with no health insurance because a younger jeti master has come along.
    It is this type of thinking that fuels the Occupy Wall Street folks and makes the rest of us wonder what ever happened to this country.

    Reply
  22. IStandWithOccupyWallStreet

    I was never an A player. I was a dreamer. in my 20’s I hitch hiked to Austin TX to play music. In my 30’s I went to New York to pursue painting. I always did exactly what I wanted to do and I never worked for an awesome company. Never saw an awesome company. I was a dreamer, pursued what I loved without worrying about how much I was going to make. in my late 40’s I started my own company because every company I worked for was run by morons. I’ve been starting companies ever since. Every company I started was designed to give me ultimate freedom in life to pursue what I was interested in. Stop worrying about being a “jedi master”, follow your bliss, never sacrifice yourself to the corporation, carve out a good life for yourself and ignore advice that is presented in this blog post. As Steve Jobs said: don’t sacrifice your inner voice for someone else’s agenda.

    Reply
  23. kent j

    Freedom is always the answer. Liberals who want more government control are simply baling from the back of the boat to the front of the boat. Put your faith in freedom and vote for freedom loving people. Democrats must REALLY find those in their ranks that love freedom. Those that have read the constitution, the most freedom promoting document on the planet (proven in the laboratory!).
    Peace without freedom becomes tyranny. 120 million died in peace times under the hands of their own governments in the 20th century.
    Free markets = Capitalism = Freedom… SYNONYMS.
    Greed. The label one man puts on an other mans safety net.

    Reply
  24. jamal_staffindia

    Economically speaking, if the US will continue to outsource, it will eventually affect its economy negatively because the money flowing out is not flowing back in – the unemployed who have been replaced by outsourced people would then become a burden on the US economy and on taxpayers who now have to pay for their unemployment, which then create not just social issues but all sort of other dilemmas because society is not very functional this way. And let us not forget, that even if education is available to ALL EQUALLY, we are not all born equally; so to discriminate against those who are less talented would become a humanitarian and social issue. Balancing capitalism with a sense of community should be a reminder that outsourcing may be appealing in the short run but not on a long term basi
    Virtual Assistant from India for £299 pm,

    Reply
  25. Brian Hayashi

    There are three kinds of people, in this order…the people that “are” the mechanical turk, the people that “wield” the mechanical turk, and the people that “design” the mechanical turk.
    In the short term, workers that “are” the turk will be able to get by simply because of momentum and the inefficiency of the marketplace. Students aren’t so lucky because they have no momentum, unles you’re counting time spent in dead-end retail or QSR jobs. But like the web, there is a hockey-stick function at work here: at some point, growth goes hyper, and all of the assumptions you thought were sacrosanct will be re-tested.
    For those that “wield”, incentives in this vague new world will be key, and “gamification” is only a first stab at this issue. Legal considerations will be increasingly tested as we explore the quid pro quo for brief outlays of talent and reputation. If your collective is made up of 100% MIT grads, what are the implications?
    And for those that “define”…I’m reminded of the birth of packaging 100 years ago, specifically the insight that sugar repackaged as single servings would not only lead to greater convenience, but the opportunity cost of measuring the sugar in the first place, once removed, would lead to unimaginable consumer paradigms.
    If the 20th century was able learning how to scale stuff, the 21st century is about learning how to scale ambition. Wowza.

    Reply
  26. didier

    I agree with Bernard, this article is already biased by the fact that predicting “players” performance is not deterministic. Someone can be good today, and just bad tomorrow, he can have great ideas and have superior brain but not be a hard worker. Too smart people tends to not get the job done. Job tasks are not linear, sometimes u need to innovate, sometimes to be a problem solver, sometimes to be a code monkey and code well and fast. Plus, having great ideas is just the beginning. You always improve the idea, and you must be right in the dev process to see the bottlenecks (A-player would be too far from dev, they will loose control). Without adding the fact that a lot of projects don’t require “Einsteins” like people, just regular hard working people that can build well crafted system. Your ‘A player” as I understand are top searchers in R&D center, that are paid by government to “invent” breaking stuff. They will be bored at any job they can find that is not 100% research and where they have freedom.
    Now i cannot agree more that software is going to be outsourced more and more, just because of cost.

    Reply

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