Death of IT Jobs In America?
Dean
Our friend Scott Kirwin (a frequent commenter here on Dean's World) works for the IT Professionals Association of America, and recently released the following press release. I thought people here might find it interesting:
Continuing Decline in Computer Science Graduates Expected(PRWEB) February 4, 2005 — The IT Professionals Association of America, (ITPAA, inc www.itpaa.org) does not see any end to the decline of students pursuing degrees in Computer Science any time soon. Scott Kirwin, founder of the group states that shortage concerns voiced by industry leaders such as Microsoft, HP, and IBM are overblown.
"People vote with their feet," Kirwin says. "Salaries continue to decline in IT, and entry-level positions for new graduates are hard to come by since most of these have been offshored to India and China. Given that the average college student graduates with $50,000 in debt, it makes sense that he or she would avoid fields such as IT that are disappearing, and go into those that provide the income necessary to pay back that debt."
Kirwin believes that outsourcing and labor dumping - a term coined by Kirwin to describe flooding the American labor market with foreign workers - are to blame. "Pro-offshoring and pro-labor dumping industry sponsored groups like the IT Association of America (ITAA) and Compete America want talent, but they don't want to pay for it - so they head abroad to find that talent on the cheap. The free market goes both ways," he says. "If there are too many American IT workers, then their salaries go down and people avoid the field. If salaries began rising, then people would become interested in the field again, but that hasn't happened, nor do we expect it to anytime soon."
Kirwin believes that the IT industry has become hooked on cheap labor and has lost the ability to find the value of American IT professionals. "We see it in the lack of innovation across the board. There has been no major advance in software engineering in a decade, nor in hardware engineering or technical design - all fields that have been sent abroad."
"Americans are extremely creative and the most productive people on the planet," Kirwin states, "Yet that creativity and productivity has been ignored by the industry in pursuit of a few less dollars an hour."
Kirwin remains extremely pessimistic about IT in the USA. "I'm not much for doomsaying," he says, "but it's hard to avoid thinking that way when you look at the state of the IT field today. It's gone, and what little remains is packing its bags." He believes that the United States will soon be under pressure in other areas because of outsourcing and labor dumping.
"Banks like Citibank and JP Morgan-Chase have educated tens of thousands of foreign nationals in banking and the backoffice that supports it. HP and IBM have taught tens of thousands of software designers and engineers. While HP executives like Carly Fiorina may not harbor patriotic or nationalistic feelings for their own nation, those they trained do - and will act to build their home banks and service firms to compete against America."
When asked what solution he believes is necessary, Kirwin demurs. "I really believe it's too late. I've studied the problem for three years now, and I don't see any solution beyond letting the so-called 'creative destruction' force of the market go forward."
"In a sense," Kirwin adds, "it's justice. American firms thought they could get something for nothing by firing Americans and hiring foreigners, and now the foreigners are coming back to compete with them. The people who gained from offshoring jobs will now be the ones who suffer, and the declining enrollment in Computer Sciences is only the beginning."
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Honestly I'm still not sure what I think of any of this. Except that in the late 1990s I was seeing the overemphasis on the value and security of IT jobs and I was convinced the industry would implode eventually. So it has. Is offshoring jobs really the main problem? Scott and the ITPAA seem convinced, I'm not so sure. But as I've mentioned, I have at least one friend in IT whose job depends on outsourcing (European and Asian companies are big clients for his company's IT services) and I work for a large company that stopped outsourcing because it was finding it ineffective and more expensive in the long run. So my personal experience is simply not matching the trends claimed by ITPAA--and I've thought for a long time there were too many people rushing into the field.
This seems like just a repeat of the same old argument: are free trade and globalization net plusses, or net minuses?
I'd love to see Scott get into a debate with the folks who run the Globalization Institute weblog. It would be good reading methinks.
I see a lot of parallels between your position on HIV=AIDS and mine on globalization. I was a staunch globalist, until I lived in Japan and learned that while I was global minded - they sure weren't.
In America I might weigh two products on value and quality regardless where they were made: the Japanese would ignore those and buy based solely on where the product was made. If it was made in Japan, they'd buy it. If it was made abroad, they wouldn't.
We see the same with India, China and even the Asian Tigers like Taiwan and South Korea. In the USA we get pilloried as ignorant and reactionary for wanting to buy products made by the locals; in those countries, they consider it a badge of honor.
While I'm glad your friend has a job today, note that the American trade deficit has reached record highs - and the trade surplus in services we have enjoyed for decades continues to decline. Last I checked, we'll be in deficit in services in three years or so. So, I'm afraid you can't overgeneralize based on your friend.
As I said in the story, I'm not much into doomsaying, but from the data I have gathered from my sources around the country, IT continues its decline. Sometimes you've got to calls 'em as you sees 'em.
I don't work for the ITPAA: I founded the ITPAA and run the ITPAA.
I work as a contractor for a small firm in the Delaware Valley as a business analyst.
Also, at this same campus, in the late 90's, recruiters were shadowing the halls, shagging out seniors, juniors, and even sophmores in the IT and CIS depts. The money offered to "just forget" the rest of their education and degree was incredible [we had security guys whose only job was to find and "throw the bums out"]. The kids who stayed in talked about starting salaries in the high 70-80's. Well, we all know what happened next. I think IT students were spoiled. Teacher candidates in our area get a whopping 24,000 and are glad to get it.
That's what we call the "education myth". While math skills may be down in the population as a whole, those in the IT field have some of the best math skills in the country (you must since it is the basis of most programming languages). Besides, the people that are losing their jobs are experienced and trained, and they are being replaced by inexperienced and untrained people abroad.
As proof, consider that Tata America - the American arm of the Indian IT firm - ranked the skills of its employees (all expat Indians) and the results were stunning (link to ITPAA story):
1. 50% of their workforce is under the age of 25. Over 80% is under 30.
2. 93% of their workforce has under 5 years of experience. 52% has less than 2 years.
When I was alerted to these statistics, I didn't believe them - yet there they were on Tata America's website.
As for the rest of your comments. "Teachers get a whopping 24k and are happy to get it."
You say that proudly, as if this is a good thing. Should IT people make less? Is this your argument?
If you want to compare the salaries of IT personnel, why not compare them to CEO Carly Fiorina who lost her job today? She made $12 million last year. You won't be seeing her in the unemployment line either because she has a "golden parachute".
Yes there had to be a correction after Y2K, but don't confuse the correction with a fundamental change in the market.
IT is leaving America, and we have yet to see anything to take its place.
My second point was that, for awhile, IT students thought they were made of gold. Some changed majors when they realized they would be making the same as other dept. grads with a B.S. Again, this addresses why there are fewer graduates, not what is occurring with professionals currently in the workforce.
This was good for IT, but bad for business generally as it was quite hard to get anything done, because everything was hard.
Software nowadays has improved greatly; the web, standardization, etc has seemingly removed the deep skill that was once necessary for successful deployment of a big IT project, and frankly with the skill-level lowered, the salaries would ultimately be lowered too - at least if one's main claim to fame was an ability to operate the computer (ie programming, admin, setup, etc).
OTOH, big IT projects still fail at about the same rate as in the past, and for many of the same reasons: can't meet performance requirements, inability to execute, poorly done biz requirements analysis, etc.
My own feeling is that anything that can be easily outsourced will ultimately be automated, so trying to stop it with this and that won't help. Also, one just has to hope that other things will come up.
For myself, I've stayed employed for 20 years in software development by being "deep" as opposed to broad. A jack-of-all-trades strategy in software is a path to being offshored and unemployed, but if you know everything there is to know about something that the market cares about (and that is somewhat esoteric), you'll find work until your specialty dries up. But one has to pay close attention: specialties obviously come and go.
Yeah, this is the main thing I've thought on this issue: outsourcing is like arguing that automation will destroy jobs.
If you look at how much the systems can do for themselves these days, the need for extreme coding skills seems to have gone way downhill.
I dunno, maybe Scott's right. Either way it seems an inevitability.
The equivalence between "outsourcing" and "automation" is often drawn, but I'm not sure it is a valid one. Things can only be automated if they can be reduced to a recipe that can be understood by a program. On the other side of the outsourcing (offshoring) line, however, are intelligent human beings.
I believe that part of the problem is cost of living and employees expecting more from thier employer than ever before. I feel, that in a lot of ways, the average American worker is overpaid but they have to be in order to meet cost of living. I live in Michigan the the property value is completely mad! There's no reason for the housing here to cost as much as it does! In many way the property value is on par with New York and Los Angeles. Why!?
Additionally, employees are demanding/expecting more from thier employer when it comes to benefits: better health, 401K, stock options, profit sharing... all kinds of things. That's an additional ammount and employer has to pay for their employee not adding in the inflated hourly/salery ammount.
Scott states that employers are looking to save just a few dollars. It's not just a few dollars. It's hundreds of thousands of dollars a year. An article in Wired Magazine tells me that for what I make an hour a company that outsources can be split between over 5 Indian workers - and that's without having to worry about health benefits and such! People say the government needs to give tax breaks for companies that keep jobs this side of the pond. But when you're looking at millions of dollars of savings, also without having to worry about health/life benefits and labor laws... they simply cannot compete.
The cost of living must come down before fixing this problem so that it makes economic sense for American employers to stay here.
(Scott does raise a very good point about American pride in American products versus other countries and their inhouse products. But, I'm sorry to say, the American label doesn't mean the quality it once did.)
The part that's hard and will stay hard is legacy migration and interfacing; this is why many of those huge system deployments fail, and is brutally tricky to do well.
Perhaps Scott has hard data to back up what he says, but it doesn't mesh with my experience, either. One data point: Microsoft is planning to hire 5000+ plus more people this year. Here in the Pacific Northwest, anyway, well-paying jobs in software don't seem to be especially scarce.
So I'm not surprised to hear that less people are entering the field.
Most of the people I have met who were let go from IT firms did not really have any real IT skils like programming or development but were merely in marketing or non-technical consultancy. If you have real IT skills companies are desperate for your services. I can't tell how often I hear people in the business complaining they cannot fill programming positions with qualified people. This is nice for at least two members of my band family, both of whom are freelance programmers/techies who made a rather good living indeed.
Let's work backwards...
Andrew:
Most of the people I know who were offshored had skills, including me. I was a database and web developer and was forced to train my replacement before I was let go. Since I've been in the field for 8 years, most of the people I know are technical: engineers, designers, and developers.
Pete:
This is something that I have been suspecting (and encouraging): a backlash against offshoring.
Your post lists all the issues that my team found when we were offshored to Chennai: VPNs that were constantly failing, arranging meetings between business stakeholders, the onshore team, and the offshore team, staff turnover in India (reminiscent of the job hopping at the height of the Internet Bubble here).
Most of the companies (like yours) who have experienced this have quietly moved functions back. They have not heralded this move like they did the outsourcing because it shows management failure.
As for hard data, what do you need? The story was on declining CS enrollment. Even Microsoft and HP have publicly fretted about that.
As for MS hiring, I believe that most of the hires are in India and China.
Foobarista:
That's the path I've taken by becoming a business analyst. The problem with your argument is the fact that one of the 5 of our team is an Indian national on an H-1b visa. She's sitting in the next cubicle and does the same job as I do.
So not only am I competing with offshore personnel, I am competing with h-1b/l-1 visa holders. I've termed this labor dumping: using non-immigrant visas to bring in cheap labor to drive down wage costs.
Kevin D:
Your point is taken. The price of my house has gone up 50% at the same time my salary has declined. Some businesses are taking advantage of low standard of living markets by moving their operations to small towns and rural areas.
This has been called "Farmshoring" or "rural sourcing". The ITPAA has no problem with this, and believe that it is a cost effective way of keeping costs down while employing Americans.
Photon:
Excellent point. One of the problems with offshoring is that the outsourcing firms have attempted to break down complex systems into bite-sized, compact processes that can be shipped abroad.
While I believe that there are some systems that are capable of "surviving" this deconstruction, most systems and the business processes they support are not constructed in modular ways that lend themselves to this method.
Meezer:
Yes, the gold-diggers have gone elsewhere. The problem is: the profession has so radically changed that even those who have a talent or a love of the field cannot find jobs.
So, again, excellent comments. I was expecting to be flamed, and once again the quality of Dean's commenters comes through.
As for H1Bs, my own feeling is that we should just give anyone who wants to come to the US and has the skills an immediate greencard - or at least take the qualification process out of the hands of employers. This would get rid of the ability for unscrupulous employers to use "greencard slavery" to drive down salaries. Temporary L1s should also be abolished or at least much more tightly policed as this sort of salary arbitrage is just plain wrong.
While increasing standardization has made it easier to develop applications of modest complexity, large complex applications still impose the same demands on design and architecture that they did 20 years ago. In my experience, when roll outs of large applications fail it is most often because the ground work of functional or requirements analysis and overall design was either left undone or was poorly done. When the reason for project failure is that old saw about "continually changing requirements", usually someone failed to do the required homework. Sure requirements often change, one mark of a good design and implementation (possible only when based on good analysis) is how well it accommodates those changes. Another way to say this is that standardization MOVES the areas that demands intellectual rigor further from the hardware and OS and closer to the user and allow us to build larger more complex systems in a timely fashion.
As I have mentioned before I work for a company that makes extensive use of outsourcing. They pay top dollar for their overseas talent and as a result the overseas people with whom I work are very bright, often smarter than me. Despite that they (for the most part) are unable to handle large complex projects. Nor (once again for the most part) are they able to perform in depth problem analysis.
I've discussed this both with technical peers, managers, and consumers both inside and outside this company and their experience is the same. I don't have an explanation that I'm happy with, at this point I believe its cultural , but thats highly speculative.
Bottom line is this simple observation. This is the fifth round of attempted outsourcing. Every prior attempt has failed for the same reason that this attempt has problems. I see no reason to believe that this attempt won't fail as well. This time the delay in recognizing the problem is longer but slowly the work is returning.
While America has no monopoly on creativity, we are different. Read Den Beste's writings on how engineering is not so much about being right as about finding whats wrong early and rewarding those that discover the short comings in their work before it becomes a boondoggle. In my experience that is uniquely western and more prized on our side of the atlantic. That cultural difference is why I believe that outsourced work is destined to come back over and over again.