Friday, October 24, 2008 Eating your cake By Francisco M. Largo University of San Carlos Academe Committee, Sun.Star Economic Forum
THE recently concluded Sun.Star Economic Forum 2008 focused on the business process outsourcing industry in Cebu. In one of the presentations, a key official of an information technology (IT) industry group commented that his organization was a result of a ceasefire between industry and the academe as both had taken to blaming each other for the various problems hampering the development of the IT industry in Cebu.
I was a bit taken aback by this revelation. That such animosity between stakeholders would lead to the blame game being described in effect as a war and its cessation a ceasefire was surprising.
This was surprising to me since I had always thought that forces were in play such that if academe failed to provide what industry needed, industry would simply look elsewhere or stop operating altogether. This would be to the disadvantage of the academe, which would soon find no takers for its programs.
I was intrigued as to why these adjustments were not happening. If industry badly needed the professionals that were sorely lacking, then the wages of the few people available should have been bid up to such levels to encourage those of similar quality to enter the same professions. These students will look for those institutions which give them the appropriate training for these lucrative jobs and hence keep these responsive institutions afloat.
There are many reasons why this mechanism may not be working, but I have a nagging hunch that industry may be wanting to have its cake and eat it too.
I know as I have said to the same industry official in another conference that I will be initiating a minor skirmish in a heretofore peaceful front. But I would seriously love to investigate if wages for these valuable professionals were indeed going up in real terms.
In short, would industry be willing to share the gains from the high returns that these individuals would provide them in the form of higher wages? Or are the proprietors looking for the best of both worlds: the availability of qualified professionals at low wages? In effect, eating the cake and miraculously having the cake exist after the feast.
As a realist of some 30 odd years in this world, I have come to realize that such miracles are in incredibly short supply.
If such divine interventions are needed to keep an industry alive, then, in my opinion, that industry will slowly but surely go the way of the dodo bird.
Economists have coined an intriguing term for such an event: creative destruction.
