If we outsource IT in the interests of lowing labor costs, we must be
mature and acknowledge that there are no free lunches. As you will see evaluating
the actual risks/rewards of unbridled globalization of workforce is not
an easy task.
Lordie, if this isn’t disingenuous, I don’t know what is. From the
Financial Times:
US universities are producing too few engineers to meet industry
demand, Indian outsourcing companies say, leaving such businesses
little choice but to hire foreign skilled workers to fill jobs in
America
And why are there so few students studying computer science? Because
there are no (well, more accurately, hardly any) entry level jobs. I’ve
been reading about this on Slashdot for YEARS, about the utter dearth
of anything resembling a career path in IT. Yes, there are no doubt
ways to brute force getting trained, but that cold reality is not the
sort of situation that encourages college students, particularly ones
that have student loans, to pursue a technically-oriented field of study.
And the proximate cause is that companies only want to hire people
that they don’t need to train (the cliche is that they can “hit the
ground running”), and that they can get away with it because a lot of
junior level work is farmed out to outsourcers.
But you’d never glean this from the FT, which takes the outsourcers’
complaints at face value:
“If you look at the core of what we do, the technology work,
the US simply doesn’t have the talent base today,” said Francisco
d’Souza, Cognizant president and chief executive. “Although unemployment
in the US today is high, IT unemployment is still very low.”
Yves here. Yes, IT unemployment might be very low now, but for how
many years was it higher than in other industries? My sample (high end
IT consultants, the sort that can build mission critical systems and
do cutting edge Web and apps development) is admittedly biased, but
lots of high end shops shuttered, and another I know went through a
Chapter 11. Things have gotten much better for them lately, but most
of the last decade was pretty grim. So if the guys who weren’t competing
with outsourcers had it rough, how was it for the rest of the industry?
Indian outsourcing companies usually keep a small portion of
their workforce in the US to work closely with clients, supported
by the bulk of their staff in development centres in India.
But the protectionism move – a senator who sponsored the legislation
described Indian outsourcing companies as “chop shops”, a reference
to garages that dismantle and sell stolen cars – may have little
impact.
About 70 per cent of US PhD students are foreign born and are
often hired in the US, making their way into Silicon Valley or government
agencies such as Nasa, said Partha Iyengar, of Gartner, the consultancy.
Yves here. I’d like some reader comment, but the idea of a PhD as
the proxy for talent in this space sounds questionable. The one highly
regarded systems architect I know who does have a PhD has it in physics,
not computer science.
Mr. Iynengar does comment on the real problem now that the horse
has left the barn and is in the next county:
“The bigger challenge for the US is, if they start to lose this
talent at the lower end, the innovation engine that has been driving
the economy starts to dry up,” Mr Iyengar said.
More on this topic
(What's this?)
FT.com: Indian and American Call Center Wages Now Reaching Equilibrium
(Fund my Mutual Fund, 8/18/10)
Selected Commentsskj:
at
2:10 am
Yves
I follow your blog with a lot of interest and I think you bring
an interesting point of view forward. But your last few posts and
links about Indians almost make it seem like you have a ‘blind spot’
when it comes to India, particularly when it comes to those of us
who work in high tech.
Ill take the liberty of putting forward a very simple question.
I have about 18 years of formal education, two of them in the US,
where I received a Masters Degree in Computer Science.
What course of action on my part would make you happy?
- If I work in India, you would complain about outsourcing..
- If I come to the US, you would complain about H1B Visas..
Perhaps work in Germany or Japan?..
PS: These sort of posts invariably attract a vicious stream of
commentary. I hope you have the decency to maintain a clean comments
section.
Yves Smith:
at
2:22 am
I’m not keen about outsourcing. It generally is a false economy
from the corporate client’s perspective. I’ve pointed that out from
the early days of this blog. And longer term, it’s damaging for
the US.
This isn’t about India, it’s about IT outsourcing, although since
India is the biggest center for outsourced IT, the two are often
treated as synonymous. And that isn’t helped by Indian outsourcers
conducting a vocal PR campaign against measures to restrict labor
mobility.
Countries are generally not keen about foreign nationals taking
jobs from the locals. I can’t work in Australia for the same reasons
you are complaining about. If you make career plans that depend
on foreign demand, you are at risk of rule changes abroad that will
have an adverse impact on your employment prospects.
Reply
Patriot:
at
2:34 am
Yves,
Outsourcing is also bad for Indian nationals in the United States.
There are many people here on H1B visas who are treated very badly
by the so-called “body shops” that employ them. Many of these contractors
are employed by a hiring agency and then placed at another firm,
and are treated very shabbily by the hiring agency. Workers on H1B
are treated poorly because the employers know that it is difficult
for the worker to find alternative employment. If fired, the H1B
holder has very little time to find a new job or face deportation.
It creates a climate of fear and exploitation in the workforce,
among the H1B holders.
purple:
at
4:31 am
It’s a modern day bracero program, in actuality.
Poco Ritard:
at
2:25 pm
At one of the *other* large famous software companies in Seattle,
HR used to walk around the desks in the room where I worked, handing
out paychecks and collecting paperwork for INS (yes, I witnessed
this on several occaisions). Most of the members (something like
25 out of 30, I counted at one point) of my group were from S. India,
and I think they made on average half of what I did. They worked
7 days a week, shared tiny apartments, sent every dime they could
home and were terrified of losing their job, since getting fired
meant losing the H1B.
They were, as a group, no more or less skilled than anyone else
I’ve worked with. I formed the impression that they were friendlier
and more polite than most of the US citizens there.
Digital Braceros, sounds right to me.
Cedric Regula:
at
5:00 am
Go with your instincts, Ives. They screwed us. Who cares about
silicon valley, it’s corporate IT that was the big employer.
The FT article also failed to point out all of our IT consulting
firms opened up shop in Bangalore. Something about staying competitive
with the Indian IT firms. Perot didn’t even warn us about that one.
Also, our helpful government handed out half a million work visa
and didn’t ramp that down to a quarter million visas until 2004,
which I believe was after the last recession that didn’t end. So
you could import your very own Indian programmer too.
Also, anyone with a CS degree of any kind was a mainframer in
the ’90s. The hot jobs were Unix and client server Wintel. That
opened the door for the rest of us technically inclined people.
Also, engineers are technical people too and I’m sure you heard
what happened to manufacturing?
So they say no one wants to be a technical person in the USofA?
I’m shocked. It’s such easy work too.
skj:
at
4:54 pm
@@ Yves
>> It generally is a false economy from the corporate client’s perspective.
I’ve pointed that out from the early days of this blog. And longer
term, it’s damaging for the US.
I am not sure what you mean by ‘Its a false economy’. Do you
mean to say that you dont think that the corporate client saves
any money? What is false about this economic transaction?
>> This isn’t about India, it’s about IT outsourcing, although
since India is the biggest center for outsourced IT, the two are
often treated as synonymous. And that isn’t helped by Indian outsourcers
conducting a vocal PR campaign against measures to restrict labor
mobility.
What does labor mobility mean when the same task could be performed
just as well in a different country? You start out by saying that
its not about India and by the time you complete the paragraph,
you put forward a couple of lame excuses to treat the two – India
and outsourcing – as the same. Also, you do understand that its
not just about ‘Indian outsourcers’.. IBM in all probability employs
more people in India than in the US. All the companies that you
would identify as American – Intel, Google, Qualcomm, Microsoft,
IBM, Cisco, GE, netapp have fairly large Indian operations.
>> Countries are generally not keen about foreign nationals taking
jobs from the locals.
When you drive a Prius thats made in Japan, aren’t you taking
away a car manufacturing job from an American worker? Why limit
the angst to IT?
>> I can’t work in Australia for the same reasons you are complaining
about.
Actually, you can. Australia has a very comprehensive skilled
worker immigration program.
http://www.immi.gov.au/skilled/
>> If you make career plans that depend on foreign demand, you
are at risk of rule changes abroad that will have an adverse impact
on your employment prospects.
I actually work for an American company that is dependent on
Asian markets to the tune of 50% of its business. So now I am really
confused as to which ‘demand’ I have hitched my career plan to.
Leaving my confusion aside, is your suggestion that I find a company
that does a majority of its business only in India?
kievite:
I can explain to you why this is a false economy based on my
experience with outsourcing, especially in the form of
offshoring which is now prevalent. The problem is not India, the
problem is distance, cultural differences, implicit “IT slave”
mentality and race to the bottom. Distributed development is
more tough. Cultural problems “on the other side of the phone
line” such as nepotism are significant. Distributed system
administration is more plausible area then software development,
but in both the level of loyalty is low and attrition rate is
usually significant. People don’t like to be discriminated and
labour arbitrage is discrimination in velvet gloves so to speak.
1. When you outsource everything on a marginal cost basis,
you create an inherently unstable operating regime. And regime
change often imply growing dependence on outsource as knowledge
flow in only one direction: toward actual programmers who work
in the trenches. Problems usually arise in two or three years.
In case of IT outsourcing those additional costs inherent in
brain drain initially are not even acknowledged. They come
later, and they tend to arrive all at once and by surprise.
2. Loss of flexibility, divided loyalty, demoralization of
staff and the difficulties inherent is distributed development
and managing distributed workforce requires more complex and
more costly coordination that saps a lot of talent and energy of
both programmers and, especially, managers on both ends of the
phone line, so to speak. To be manager of the team split between
here and the other half of the globe is far from fun job.
3. As this is a classic labor arbitrage high attrition rate
and incompetence-related risks are very high. People who cost
$15 an hour in India are often entry level. And when you pay $25
per hour that does not mean that you get who you want. Indian
counter parties are keen on saving money too and can outsource
to save money (I know couple of funny stories with Indian
companies sending some work to Ukraine). The level of “incorrect
information” in resume of the staff of a typical outsourcing
company will makes a nice Onion story, but it can have dire
consequences for the project manager. The quantity of really
talented, highly skilled people in India like in any other
country is very limited. Not all graduates of US colleges are
better then average (especially graduates from private US
colleges, those McDonalds of high education. They often are
ridiculously bad. I personally encountered computer science
graduates with GPS close to 4.0 who cannot write a simple
sorting program in ANY language; and they were from “brick”
campuses not those sham Internet “take money and run” online
universities). So not all of them are worth more then $15 an
hour. As for really talented people few of them are patriotic
enough to stay in India longer than absolutely necessary (that
does not mean that they will not get into ruthless hands of
middlemen here in the USA, if they get H1B). In such an
environment abuse of resources for training, double dealing,
architectural missteps and additional leaks of intellectual
property are inevitable. Too often, a piece of code and the
institutional memory of what it does and how it does it walks
out the door when a developer leaves a company. It is important
to understand that with attrition rate 15% in the three year
offshoring project there might be no key developers at the end
who were present at the beginning of the project. Still the
truth is that even low level developer that is working on a
particular module of code often possesses a lot important
knowledge some of them can be classified as intellectual
property with legs, the property that the company may not even
know he/she possesses.
4. There is almost always middleman in IT outsourcing.
Typically those are real parasites that drain blood from both
side of the project. See other posts about details.
5. All those stories about $150K jobs are good stories but
that does not mean that they happen frequently in the current
economic circumstances. As a former manager I can tell you that
in current environment those jobs, typically held by baby
boomers, are ruthlessly pruned. My guesstimate that $50K-$60K
now is more typical for medium level and $70-$90 for high level
(talented, indispensable) IT staff. I saw quite a lot of
advertisements for entry level IT jobs for $15 per hour. So
labour arbitrage is almost over as $60K is less then $30 an
hour.
Yves Smith:
skj,
1. Surveys of the major companies who outsources (for
instance, once conducted by Deloitte Touche of very large
corporate users, IIRC Fortune 100) find high rates of
disappointment with outsourcing, often 70%. As I have explained
repeatedly, the labor savings of low level workers distort the
picture. These are offset by increases in costs at the
managerial level, and those are much more expensive workers. And
those offsets are considerable.
2. The contracts are typically negotiated in a naive fashion.
They are so complex that the big corps rely on specialized
consultants to structure and negotaite them. However, these
consultants demonstrate their value by beating down the vendor
to get the rock bottom price.
So what happens? Often a. Customer is unhappy with service
and can’t do much about it (the outsourcer isn’t making much
money and has incentives to cut corners in every way not
prohibited by the contract and/or b. Something happens, the
customer needs a variance from the contract, the outsourcer hits
him for huge cost (not unlike change orders in construction
projects.
3. You forget I lived in Australia for two years and am very
familiar with theri visa regime, I have used visa highly
regarded visa consultants and lawyers. You are simply wrong re
my ability to get in under the skilled worker visa. My odds of
being approved as someone over 50 are zero. The only way I might
get in is with a corporate sponsor (which means if I leave their
employ, I have to leave pretty pronto) or spousal (and they
scrutinize spousal applications pretty heavily to see if the
marriage is bona fide).
Larry:
at
12:05 pm
How about Green cards instead of H1Bs? Ask these executives,
trade organizations and lobbyists on why they’re so keen on increasing
H1B numbers but not clearing out the Green Card backlog.
Reply
lark:
at
1:40 pm
H1B is only about destroying the job base for technical professionals
in the USA.
Green card is another thing entirely.
Overall, more green cards for engineers would strengthen our innovation
and job market, the latter by no longer undermining entry level
jobs.
Nameless:
at
2:20 am
“And why are there so few students studying computer science?
Because there are no (well, more accurately, hardly any) entry level
jobs. I’ve been reading about this on Slashdot for YEARS, about
the utter dearth of anything resembling a career path in IT. ”
I’m sorry, but this is utter nonsense. Job & career prospects
for people with bachelors’ degrees in computer science are better
than in essentially any other area of study. Students with degrees
in nursing will start with somewhat higher hourly rates (but with
poorer career prospects), and some people will get professional
degrees (MD, JD, MBA) which usually pay off quite well, but BSCS
is still the best bang for the buck and has been for the last 15+
years. I can’t think of any other industry where people with a bachelor’s
and 5 years of experience routinely make six digits.
If the industry had really been decimated and there hadn’t been
“anything resembling a career path in IT”, I’m sure that I’d be
able to afford a decent house with good neighborhood school within
a 30 minute drive from Silicon Valley on less than a $200k/year
household income.
Yves Smith:
What is your data source for this assertion? This is a very frequent
topic of discussion on Slashdot, and the commentors agree on the
very small number of entry level positions in IT (perhaps until
this year, but I have been seeing long threads related to this from
at least 2005 to 2009).
And these people do not have the income expectations you describe
either. The figures you suggest ($200K a year) are well above what
Apple pays for very senior engineers which suggests to me that your
have a limited data set.
Also, Silicon Valley consists of a LOT more than software coding.
Nameless:
Well, 200k/year needed for a family of an engineer to buy a house
in Palo Alto or Los Gatos is likely to be a double income. Ordinary
engineers in non-managerial positions may make 120k, occasionally
up to 150k. (Just check glassdoor.) The point is really that there
are lots and lots of those 120-150k jobs out there; evidently, more
than there are houses in the vicinity of Silicon Valley.
I’m not sure how to quantify the availability of entry-level
jobs in particular, but, as of this moment, there are 6,700 job
listings in Silicon Valley area on Dice, and there are “>1000 matching
jobs” (it won’t tell me how many exactly) in that same area, in
IT on Monster.
Patriot:
When was the last time you applied for an entry level engineering
job?
Yves Smith:
Really? Senior engineers, and I mean the sort working on the
top projects, namely iPad apps, make maybe $140K. They get stock
options too, but you can’t pay for your house or the rest of your
life out of deferred comp.
So tell me again what you know re the pay levels and number of
entry level IT jobs? Your factoids are wide of the mark.
Nameless:
http://talk.collegeconfidential.com/graduate-school/651743-starting-pay-fresh-engineering-ph-d-holder.html
“If you’re going into industry and not Civil Engineering, I think
starting is generally around $75-85k… I know ChemE’s, even with
just a Bachelors, can make around 70-80K straight out… “
?:
As I said, a BSCS gets you nowhere. Thanks for agreeing.
Yves Smith:
I see. The person says “I think” and is talking about Chem Es
and civil engineers.
The topic is IT and the whether there are decent numbers of entry
level jobs. You’ve still failed to disprove what I’ve read repeatedly
on Slashdot.
softwareveteran:
Hi Yves,
Ipad app writing is not a high end job, it is one of the low
hanging fruit, low end job.
Yves Smith:
softwarevet,
Sorry the guys in question are top people at Apple, they are
very deeply involved in all the new product development (as in state
secret stuff). And I do have their pay right. It may be that the
party who told me what they are doing re the iPad oversimplified
(I presume related to development of the apps but not apps writing).
Timo:
Ives,
Apple isn’t necessarily that good a benchmark when it comes to IT
salaries (and neither is a rather large, very well known web software
company in Mountain View) – they’ve been highlighted as paying below
average in the Silicon Valley area several times. Admittedly I’m
not 100% sure if this is still the case in the Apple case.
That said, the $120k-$150k range sounds about right for what
I would be asking for (and usually getting) as a senior software
engineer with > 20 years experience.
michael:
Yves, please lets go back to the central statements Nameless
made: “people with a bachelor’s and 5 years of experience routinely
make six digits.”
I fully agree!
However, making it for 5 years in an IT job means not just you somehow
made your BSCS, but you are able to work your way through all kinds
of tangled messes, without drowning in the complexity.
About entry level jobs: I have only moved to the broader Silicon
Valley area in end of 2007, and was surprised how long it took me
to find a job as senior engineer in data management -actually 6
months- but since then I make 150k.
(But people buying a *decent* house in the Bay Ara on 200k income
are still somewhat insane, in my opinion, as they violate the ‘you
can afford a house for 3 times annual income max’ rule.)
Oh, and stock options comp is more something in start-ups, kind
of “we cannot pay you more, but if everything works out perfectly,
you might be able retire at 40″ lottery.
Poco Ritard:
at
2:36 pm
I’m with you, Yves.
My kid’s 15 and I’m strenuously discouraging him from following
me into Software Engineering. That train left the station a lot
of years ago.
$140K? I wish. I’m a 30 year vet and not near that. OK, I’m in
Seattle and not CA but I ain’t rich by local standards. For example,
the median home price in King County is almost 4x my annual salary.
Granted, I work in a non-profit but it *nix flavored medical research
in Seattle and I am highly skilled (no boast). And most of my colleagues
think I’m well paid.
My recommendation to him is to put together a network admin/support
resume to use finding summer/part time jobs while getting a degree
in something else.
Raging
Debate:
at
2:09 pm
American management that can work with Chindian’s make great
wages.
American coders are getting slaughtered on wages. The six figure
coders on the East coast back in 2000 will take half of that nowadays
but the trick there working with them is the problem of moonlighting.
Managing American software talent requires a ton of day to day tedious
task oversight.
The Slashdot folks don’t like me much but a few of their people
stepped way out of line suing legit companies using Can-Spam Act
of 2004, legislation I directly helped craft.
Reply
purple:
at
4:00 am
The big problem with nursing is, similarly, you can’t get hired
without experience. And there are waiting lists at most nursing
schools because schools ‘can’t find’ teachers given that being a
nurse pays better than being a prof. And because the US education
system is a joke.
A plus about nursing is that it has the most dynamic union movement
in the United States, with a leadership that is almost entirely
female – and welcome change.
poopyjim:
at
8:05 am
I have a CS degree and I work in patent law and I hate it, so
I tried for months to get an IT job.
The job market was atrocious (this is in the D.C. metro area).
I ended up getting one offer, for $50k a year (doesn’t get you far
in D.C.), which would be a $25k pay cut for me. Also, the job involved
no programming, no creativity, or anything intelligent whatsoever.
The employer just wanted someone to update their website (with a
CMS – no coding).
I also interviewed for a PHP/web developer job, the employer
wanted 3+ years of experience and only wanted to pay around $25/hour
with no benefits – absurd for D.C. And, I wasn’t “good enough” to
get this job despite having a good amount of PHP programming experience
(unpaid) – they said they really wanted an “expert”. All the other
jobs I possibly could have gotten were temporary (e.g. 2-month)
projects which of course paid by the hour with no benefits.
So yes, my experience with the IT field is that it is a desolate
wasteland, though I’ll agree that there still exists a way into
the field, and possibly a path to work your way up if you are determined.
mp:
at
2:21 am
No one cares any more. I just can’t get worked up about it.
Empires eventually die. This one won’t be an exception.
purple:
Yes, but this one won’t die with a whisper. The American ruling
class will take down the whole world with them.
Reply
Tao Jonesing:
Yves,
In the last few months, I’ve met with two PhDs (one in Chemical
Engineering out of MIT and another in Physics out of the University
of California system) both asking for advice on how to break into
the intellectual property field, which is my area of expertise.
Both are American citizens, but neither sees a future in the
tech industry, so both are trying to figure out how to position
themselves as either an expert to help out in financial transactions
(e.g., M&A) or as a lawyer.
I found the discussions to be rather sad.
In the meantime, I have been working with some well-established
and brilliant PhDs in the chip design space. The board of their
company includes Bill Joy.
In terms of what is passing as the proxy for talent these days
in the Silicon Valley (where I am located), I think the PhD is the
true currency. The people that I know who get away with less than
a PhD are those who have accumulated meaningful experience in the
industry (myself included).
In spite of what I’ve said, I believe your intuition is correct.
The popular narrative that is being pushed does not have to be the
truth. Unfortunately, the policies that are in place seem designed
to prove the popular narrative true.
Patriot:
I have seen similar trends, where mid-senior technical people
who are very qualified are also trying to get out of tech, or at
the very least, start their own business. They see the writing on
the wall and fear outsourcing. These are people who are in their
late 20s, early 30s with ten years of experience. Some of them have
advanced degrees, others are the proverbial Silicon Valley prodigies
who started writing code at the age of 16.
Patriot:
Should have been “started writing code for pay at 16.”
Nameless:
at
2:48 am
People have been fearing outsourcing continuously for as long
as I can remember (at least since 2000). In the mean time, programmer
salaries in India have been growing at the rate of 10-15%/year,
and potential profits for prospective outsourcers have been shrinking
accordingly.
Patriot:
at
3:40 am
Rising salaries in India have nothing to do with the fact that
people have been fearing outsourcing “forever,” which you defined
all the way back to 2000. Thank you for making my point, though,
that people have been fearing outsourcing for quite a while. It
IS a problem. That’s why people fear it.
Actually it’s been an ongoing problem. You may not remember this,
but the United States used to manufacture hard drives in quantity
domestically. Yes, I know that some firms still run prototype lines
here, but that’s not the same as series production. Certain industry
“leaders” chose to outsource critical parts to Japan. Patents aren’t
the issue. Technical know-how is, and is not contained in the patent
app. American industrial policy made this possible, and gutted manufacturing
of small precision electric motors in the US. Now that US firms
have started making hard drives in Shenzhen, I expect that within
10 years there will be PRC based hard drive companies doing design.
US based Engineers in non-software jobs have become project managers–
industry will lay off the entire domestic team and leave one engineer
to manage the overseas operation.
Chester Genghis:
Re: PRC based design. You are exactly right.
Manufacturing (be it widgets, cars, hardware, or software) is
the foundation of a healthy economy. Anyone who thinks you can outsource
manufacturing without eventually putting at risk the related functions
of engineering, service, marketing, finance, etc. is willfully short-sighted
or a dupe.
That’s what is so pathetic about our (lack of) industrial policy.
alex:
‘Certain industry “leaders” chose to outsource critical parts
to Japan. Patents aren’t the issue. Technical know-how is, and is
not contained in the patent app.’
Hear, hear! If only more people understood that know-how is more
important than all the so-called intellectual property in the world,
and that know-how can only be obtained by actually doing it.
As for shifting production to Japan, that’s particularly depressing.
Japan is not a cheap labor country, so even that excuse doesn’t
work.
MyLessThanPrimeBeef:
Isn’t ‘progress’ when they someday come out with a robot that
can write programs?
Then, we don’t have to worry about outsourcing.
I can already see people praying against ‘progress.’
What if one day, some genius comes up with a contraption that
will manufacture/provide all our GDP by itself cheaper than any
person or corporation can do? He will then own the whole world.
But there is one tiny problem – with everyone else not working,
the genius has no customers…unless the overwhelming majority votes
to take from the genius to support themselves.
That would make a good science fiction.
Also, the next time you read in some economics textbook about
automation doesn’t reduce employment, try the above exercise in
reducio ad absurdum.
bob:
The 70% number is probably true, but it speaks much more to the
failed immigration policy of the US. Most of those students want
to stay in the US, and a lot of them come from very wealthy foreign
families who can afford to have a student in school for that long.
I worked with lots within a state university graduate program.
He drove a Porsche. He got pulled over 3 times in one week for driving
well in excess of the speed limit. I suggested that he should tone
down the car(asking him to slow down seemed crazy), not too many
here in blue collar land drive cars that are that expensive. His
response, “It’s the cheapest one they make.”
jbmoore:
PhD level computer scientists can pretty much go where they please.
They’ll be snapped up by top tier companies such as Google. IT consultants
and other IT professionals have to compete for jobs where the educational
requirement can range from a high school diploma to an Associates
or Bachelors degree. An additional problem is that one not only
has to be a systems administrator, but a database administrator
and possibly another specialty as well these days just to get a
foot in the door. I have a doctorate in Biology. I went into IT
to make a living because the job market in academia had been ruined
by a glut of PhDs and because my first postdoc went south. I earned
more as a customer service representative fixing computers over
the phone my first year than I ever did as a postdoc. The dot.com
bust hurt a lot of IT professionals, and with virtualization one
administrator may be taking care of hundreds or thousands of virtual
systems running on 25-100 actual servers making the workloads even
nastier than 10 years ago. Add in the learning curve of keeping
current in a rapidly changing field while competing with cheap Indian
and Chinese labor (H1B and outsource) and it feels like graduate
school again. An additional complication is that Indians are now
running the headhunter shops. Citibank uses Wipro, so one must go
through Wipro to be hired by Citibank. Throw in language communication
problems and the time difference and it makes phone screens and
interviews more difficult.
Chester Genghis:
at
10:32 am
Re: Indians running headhunter shops. Be thankful fluency in
Hindi isn’t typically a job requirement (not yet anyway).
But it will increasingly be so.
Raging
Debate:
You are joking right? The country speaks English as in everybody.
I don’t see Hindi making a comeback, EVER.
michael:
> An additional complication is that Indians are now running
the headhunter shops.
That was my impression also in the greater Silicon Valley or
SF Bay area.
Nameless:
“I’d like some reader comment, but the idea of a PhD as the proxy
for talent in this space sounds questionable. ”
There are two aspects here. One is that value of the PhD in natural
sciences has been so badly degraded over the last quarter of a century,
for a number of reasons (too long to discuss here, but I can provide
links if anyone’s interested), that most people who do get into
those programs, do that with an eye for a green card.
At the same time, the percentage of Americans who get into UNDERgraduate
programs in CS and natural sciences is abhorrently low (as of last
year, 1st-year undergrads in CS, physics, math, and statistics,
taken together, accounted for a little more than 4% of total university
freshmen), and that has more to do with the cultural stigma of being
a scientist/programmer than with imaginary scarcity of job prospects.
Jon H:
at
7:43 am
” and that has more to do with the cultural stigma of being a
scientist/programmer than with imaginary scarcity of job prospects.”
I don’t believe that to be the case. Enrollment has dropped,
largely due to the perceived lack of a future due to outsourcing.
alex:
“that has more to do with the cultural stigma of being a scientist/programmer
than with imaginary scarcity of job prospects”
That “cultural stigma” must be a pretty recent development, because
back in the 90’s undergrad CS programs were full up.
Apparently this “cultural stigma” has, by an astounding coincidence,
coincided with the tech bust and the increase in outsourcing. Or
maybe it’s not such a coincidence – maybe anyone foolish enough
to go into CS in the last decade deserves to be stigmatized.
giulio:
“And why are there so few students studying (computer) science?”
Given the bad public high school system, the number of US high
school leavers with a comparative advantage (be it ability or preference
based or both) in sciences in general has fallen. The same is true
for the UK.
alex:
Wow, the US and UK school systems must have gone downhill in
a hurry, because 10 years ago CS programs were full.
Where is William of Occam when you need him? Why such torturous
alternate explanations for the simple fact that students are loath
to major in fields with poor job prospects?
mudfarmer:
Outside Silicon Valley and NYC’s Financial District, most routine
I/T jobs just don’t pay enough to compensate for the the minimum
education they require. The combination BS/MS that most require
for even mundane jobs will set you back 5-6 years and leave you
with $50-$75k in student loans (if you’re lucky). I don’t know about
India, but do know that my peers in other countries frequently graduated
with comparable degrees with minimal if any debt. It’s difficult
to compete for the same jobs with the same skills when you have
a $75k debt dragging you down.
Ten years out of college I was at the “top” of my career ladder
at IBM and barely keeping my head above water financially.
And to those of you who will retort: well then, don’t borrow
so much money. How, precisely, would you get a BS/MS in the US then
and remain competitive with the worldwide workforce? Your companies
keep increasing the minimal requirements to get in the door while
cutting salaries to be “competitive” on a worldwide basis. The market
has responded — it costs too much to get the skills you require,
so students look for other opportunities. Why are you at all surprised?
As far as outsourcing goes: firing a thousand people in the US
to replace them with staff offshore is one thing. Firing them and
then importing a thousand people via H1Bs to replace them is what
the Schumer legislation targets.
Patriot:
One of the major issues here is educational
arbitrage. The Indian government heavily supports education such
that middle class people can get a very affordable education.
Then they can come to the US and accept jobs at lower salaries than
their American counterparts. The Indian H1B contractors aren’t making
payments on student loans.
Yves Smith:
Mathematics and physics, no question. Plus if you seek a graduate
degree, you can do that without going into debt at all.
Micah:
Applied mathematics, maybe:
http://www.payscale.com/best-colleges/degrees.asp
It’s interesting to read this, because it’s very different from
my personal experience. I went to Harvey Mudd, graduated in 2007
with a degree in CS, and as far as I know, just about everyone from
the CS department ended up with a job (or in grad school). Also,
most of my close friends are either math or physics majors, and
I started out with a better salary than any of them (and, having
since moved on to Google, am now making significantly more).
But CS seems like one of those subjects where getting a degree
from a top school might well be worth quite a bit more than anywhere
else, in terms of how willing people are to look at you. When I
got recruited at Google, it was because the recruiter saw Harvey
Mudd on my LinkedIn profile.
alex:
It’s good that you’re doing well, but frankly you’ve only been
in the workforce for 3 years. Give us a post in 20 years and let
us know about the rampant age discrimination. There’s no reason
what you do shouldn’t be a long term career (historically it was),
but I wouldn’t count on it these days. I honestly hope you’re an
exception, but it’s not the way to bet these days.
Lucio:
Because your system is f****d up. Not only EVERY activity that
can be privately run has been brought private, but eventually must
generate HUGE profits for the supplier. Corporations (and institutions
like colleges) in US have a leverage that we Europeans do not even
think to allow them. Wherever you go (UK excluded) to obtain a college
degree here, you won’t incurr in such costs. You will have to pay
top money only for Masters programs like MBAs, but there the reward
is really high.
Chester Genghis:
Minimum requirements keep increasing, salaries are decreasing,
AND the market & nature of work itself has changed drastically in
the last 10 years. Job duties are narrower, more focused on a single
set of skills (i.e. commoditized).
The market (at least for application software) changed as well.
The perceived value of packaged solutions has gone down (along with
the price point), the perceived value of point/custom solutions
has gone up, etc. These developments are all related.
leroguetradeur:
at
3:33 am
“And why are there so few students studying (computer) science?”
The answer for the UK, from my recent visits, where it has become
a topic of political discussion, is generally said to be that computer
science is no longer taught. I am told it is impossible to study
computer science at high school level or beyond. And very difficult
in further education outside the best universities.
Instead, the schools and almost all further education institutions
are full of ‘computer literacy’ and ECDL courses. These are basically
courses taught by computing illiterates in how to use Google, Office,
Facebook, Photoshop and Twitter. And Windows Explorer of course,
for truly advanced students.
The result is that any able, interested and computer literate
students interested in programming or systems management drop out
or don’t go near the courses. Because the people who plan and run
this stuff are themselves computer illiterates, they don’t think
that the problem is that there are no computer science courses any
more. They think the problem is that people are not taking the courses
on offer. They actually don’t know there is such a thing as programming
or systems management.
This is par for the course in much of UK public education, where
the few bright and informed students who are left in it sit there,
bored out of their minds, while being taught superficial travesties
of the most basic aspects of a subject by people who themselves
do not understand it and do not want to.
jen:
Here’s a good article on the subject by Vivek Wadwa at TechCrunch:
http://techcrunch.com/2010/08/28/silicon-valley’s-dark-secret-it’s-all-about-age/
This is a constant theme in the press, and I believe it’s lobbying.
Older workers get left in the dust by the younger CS workers b/c
in addition to higher salaries, older workers also cost more in
benefits.
PhDs! Wadwa describes a company that successful used HS students,
who quickly became as productive as college grads.
againsomeone:
I’m a former H1B employee now happily employed outside of US
(~150k annual as systems architect) and while I don’t think outsourcing
or restricting labor mobility on all levels is correct course of
action, I absolutely agree that US must protect entry level jobs.
Because if there are no entry level jobs available for US fresh
graduates there won’t be any mid level folks few years down the
road and we all will be worse off.
I think global labor mobility mobility for top 10-15% shouldn’t
be a big deal. At senior level there shouldn’t be much harm from
competition (given anecdotal data of my friends and colleagues around
the globe it does look like earnings somewhat converge at the top).
I think H1B visas should be reformed in a way with only small subset
of visas allowed for entry level jobs with bulk of visas having
high wage requirements floor around 90 percentile. Prevailing wage
crap should be replaced by BLS wage data with some hard defined
floor. I like SS wage cap that is subject to SS tax for instance,
it gets indexed every year, so if company wants to bring some unique
talent over it better pay above max wage that is subject to SS tax.
froggy:
Good point about protecting entry level jobs. Right on the money.
My observation has been there aren’t many jobs that appear enrty
level and every employer wants somebody to hit the ground running.
Dave:
As long as our laws permit companies to import overseas workers
and pay them below market wages there will always be a shortage
of homegrown of tech workers. It’s simple supply and demand: pay
people more for tech work and you will have more tech workers.
purple:
It’s too expensive to get a good ‘official’ education in the
US. Going to a good public school K-12 requires buying a house in
an over priced neighborhood. College requires loans, Masters and
Phd to some extent as well, or at least there will be accumulated
debt due to pathetic stipends. The debt from undergrad also discourages
people from continuing on.
It’s much better to marry a foreigner from a ‘developing’ country
and send your kids to the Free high quality public universities
in those ‘developing’ countries. Mexico has a few, even.
Debra:
I liked the article, and appreciated the discussion, interesting.
There is something that runs ALL THE WAY THROUGH article, and discussion,
though : it’s that the ONLY MOTIVATION for people in getting a job
and a degree is the AMOUNT OF PAY they will receive for it.
This is a simplistic assumption that will not help us address
the problems involved here.
One problem : diplomitis,(the assumption that a piece of paper EQUALS
competence, and is the only way of acquiring it) and the increasing
divorce between our educational system at all levels, and the world
of work.
But we have become rather toxicomaniac in our approach to EVERYTHING,
and not just drugs… moving from one bubble to the next IN THE HOPES
OF GETTING RICH AND MAKING LOTS OF MONEY (for many) does not induce
people to DIVERSIFY their activities, or take the risk of moving
into areas that are not well known (law, medecine).
We need professional and economic diversity at this point. Not
a succession of bubbles, as people seek to MAKE MONEY at all costs.
Yves Smith:
No, Debra, you are going for black and white thinking.
Being concerned about supporting oneself and making plans is
NOT about making money at all costs. It’s called being responsible.
I went to college when it was affordable, and on top of that,
my folks paid for it And I majored in an elite liberal arts major
(as in they refused 2/3 of the applicants to that major).
Despite having done very well academically and taken some decent
math and econ courses, no one would hire me because I had not majored
in economics (and I had decent extra curriculars, the required leadership
BS). Yet I got into every graduate school (law and business) I applied
to.
That was over 30 years ago, when the world was less mercenary
than now.
The pressure to major in something career related comes from
employes. Students are merely responding to reality.
GregL:
As a parent of 3, I urged my kids to get an undergraduate in
whatever caught their fancy. I wanted them to get their bachelors
degrees and the best way to do that (and get good grades) is to
major in something that consumes you. I was pushing the virtuous
circle of enjoyment -> success -> enjoyment. I was paying the full
tab and they didn’t have to work at all.
All three felt that they needed to get jobs and work in school,
take majors that would lead to jobs and sell themselves on the next
step of their ‘careers’ (work or grad school). I tried to dissuade
them from thinking like that but to no avail.
It must be something in the water…
skippy:
Hay Asshats down load this.
The American Dream
http://www.youtube.com/watch?v=acLW1vFO-2Q&NR=1
Skippy…imprinting like a young person having sex for the first
time..eh.
Micah:
I’d agree that a PhD is a poor proxy for talent in CS. As a recent
graduate in that subject, basically the only people from my class
who went on to CS graduate programs were either interested in theory
of some kind or wanted to teach (though some then get lured back
out by the salaries, if they’re good). If you can get it, a job
tends to give you much more practical programming experience than
a further advanced degree. But I do know a number of people with
PhDs in other subjects who have since drifted into programming,
which is probably the kind of person you’re talking about.
jp:
Yves,
American born, IT pro of 25 years, consultant building enterprise
applications for investment banks.
What the author means to say is that they can’t find the talent
they need at the wages they want to pay. If they were paying 2001
money, they would be inundated with high quality, American born,
applicants from the top tier U.S. technical schools. But because
the H1b program has driven wages down, everyone who graduates from
MIT these days wants to go to Wall St. or management consulting.
You are absolutely right– a PhD is a proxy for nothing in IT.
Nobody in IT has an PhD, and none of the groups I’ve worked for
would ever hire a PhD. Not because they are overqualified, but because
they are wrongly qualified for day-to-day software engineering.
The Indian born Stanford PhD in computer science is the bugaboo
that the H1B lobbyist always pull out. They point out that without
these immigrants, Cisco and Qualcomm would be in deep trouble. And
that’s probably true. What they ignore, of course, is that this
deep sciency kind of engineering has nothing at all to do with IT.
The vast majority of IT jobs are software development jobs that
are done by bachelors or masters, and require no specialized education.
Many of these jobs are carried out perfectly well by people who
don’t even have engineering degrees.
I can promise you that most corporate IT jobs, whether executed
here or in India or China, could be competently carried out by any
bachelor, in a quantitative or near quantitative field, from a decent
U.S. university.
And you are correct, there are now
no entry level jobs for college grads. This state
of affairs has arisen through a combination of government corruption
(lobbying on the part of Indian body shops and large U.S. employers)
and shortsighted decision making on the part of our youth. In the
last 15-20 years, most engineering grads aspired to: wall St., management
consulting, or law school. Hands on engineering was rightly considered
a hard and dirty way to make a living.
So 5 years ago, the only people you could find to take $90K jobs
in the Jersey City back office of an investment bank were h1b.
And hiring managers are biased favorably towards h1bs for a couple
of reasons (I know this very well first hand, having hired lots
of h1bs myself).
- First, h1bs are (or were) here as indentured servants. That
means they constantly go above and beyond the call of duty,
or they are on the next boat back to India. This provides great
flexibility for really poor IT management (which is most of
it). As a project manager, you can totally screw up all aspects
of forward planning, design and architecture, and still deliver
something that (at least superficially) resembles what was supposed
to be delivered. You simply make your indentured servants scramble
really hard and work around the clock.
- The other favorable hiring bias for h1bs that I’ve seen
is that many of the “recruiters” (h1b placement middlemen) are
themselves Indian or Chinese and have good personal relationships
with the hiring managers. These recruiters are much more inclined
to place h1bs than non-h1bs because their profit margins are
typically higher when placing h1bs. The profit margins for these
guys are (or at least were until recently) huge. A “recruiter”
will take 20-30% of a “consultants” salary continuously. They
are able to take a bigger cut from h1bs (especially freshers)
because the h1bs don’t understand how the system works (at least
at first).
Now, of course, I’m sure there are plenty of U.S. college grads
who would like to have that $90K/yr back office IT job in Jersey
City. But there are plenty of experienced IT people (mostly through
the h1b program) who are sitting tight on them.
Dont’ you think it’s kind of funny that Obama is willing to spend
$800B on a stimulus that created (reportedly) a couple hundred thousand
jobs? How many h1bs (of all statuses) + L1 + other “guest” visas
workers are in the U.S. now? I’m not certain, but I’ve heard that
the number is north of 1 million. Isn’t that a 1 million person
unemployment reduction that can be achieved without spending any
public money? It simply requires the stroke of a pen.
Captain Teeb:
JP,
Thanks for a interesting comment. These are not so common.
You sound a lot like me: 25 years in IT, really US-born (no ancestors
arriving after 1800), MSCS. I can tell that you’ve been there, was
even enlightened by your remarks on how H1Bs enable bad project
management (which is the rule, not the exception). It all makes
sense.
I say it’s all of a piece with sending factories to China. Every
company wants to lower its costs at the margin, but if manufacturing
and skilled jobs are relentlessly squeezed, then what does the working
population do? This is a high-level policy decision, let’s not kid
ourselves.
Thought experiment: I imagine that Citibank or Lehman could have
found much cheaper Indian or Chinese versions of Dimon and Fuld,
but my guess is that they didn’t even look at foreigners. Why? Are
those guys smarter than everyone in India? (I doubt it.) So the
deciding class decides not to replace itself with cheaper foreign
hires, big surprise.
But this sets the patttern for the US: the hollowing out of the
middle class that Yves has talked about before (as polarization
of wealth, high GINI, etc.). How far can the trend go before something
gives?
I saw this coming in the 1990s and emigrated to Europe. I’ve
worked in four countries now and can say that, in IT, Indians are
rare (and transitory), while Chinese are non-existent. Salaries
are not what the US was during the Y2K (remember that?) run-up,
but everyone’s working. Very few of my colleagues even have CS degrees
(1 out of maybe 20); the rest just got a book and a PC and taught
themselves (though I don’t recommend this; I’m glad to have the
theory). So the job market must be pretty good.
There’s a greater sense in Europe
that you don’t squeeze people simply because you can.
Also, I’m 56, and have colleagues who are even older, so the US-style
Cult of Youth is less important. (Sadly, average project management
is no better here, and possibly worse.)
My favorite English-language job board is jobserve.com. If you’re
interested, go there and put in your favorite skills, plus a country.
Some (typically lowballers) have the salary or daily rate posted
as well.
Cooter:
I have thought of doing exactly what you describe, although I
am not quite yet in the position to pick up and move. Any other
links or resources on visas/processes/blogs/etc on the subject would
be greatly appreciated. If not, thanks for the information provided.
Regards,
Cooter
00rush:
I agree with some of JP’s points above. Yes, most technical jobs
can be done by anybody with a bachelor’s degree in a quantitative
or numerical field. Most programmers now seem to use Google as an
auxiliary coding tool anyway.
However, there is still a measurable difference in the quality
of students coming out with a Comp Sci degree from a good US or
UK university compared to those coming out with a degree from a
middling Indian University. InfoSys, TCS and Wipro can hire thousands
of graduates straight from college in India, train them up in whatever
the ‘in demand’ skill or tool set is and get them doing grunt work
on out sourced projects. I worked very closely with contractors
based in India when I worked for a large US investment bank in London.
I found their skill and motivation levels were poor, and anybody
who showed aptitude / good communication skills was swiftly promoted
and moved on-site. Quality suffers as a result.
There are jobs out here (well in the UK) for people with good
degrees, and those who show an aptitude for the field.
sth:
jp is right on the money. That said, here is my “formula” for
working in IT if you are a US native and are seeing the continuing
rise of laughably low-cost competition and want to know how to survive:
1) Get a BS at a community college, cheap distance learning program,
or simply skip the degree altogether.
2) Do not take on anything resembling large, ongoing expenses.
This means you have to live in a city with good public transportation,
be willing to live in a studio or tiny room, not own a car, never
buy a house, don’t acquire any expensive habits (no gambling, drinking,
drugs, smoking, etc.) and do NOT have any children or other dependents.
Fortunately for me, I am very happy with those things; not everyone
loves being a car-less, childfree, non drinking/smoking/drug taking/gambling,
life-long urbanite living in a sardine can. If you have the option
to telecommute or walk to work, do that as well.
3) Save plenty of money to deal with the lean/dry times. Following
#2 you should not have a huge problem doing so.
4) Be willing to work for tiny companies, startups, sole proprietors,
etc. If you can get past the hilariously stupid roadblocks put up
by HR departments in many large companies, you could take a job
in one of those, but do not count on it. America lost “lifetime
employment” years ago; IT often doesn’t even have “5 year employment.”
There have been times where I did work for 4-5 different clients
a week. Your sleep may suffer sometimes, but there’s not a lot you
can do about that one except try to make it up when things are quieter.
5) Be willing to work 80 hour weeks, be the go-to person for
just about everything, be on call 24/7, and never take extended
vacations. Start adapting your mind to stay-cations/3 day weekends
to avoid burnout; forget about that 2 week trip to Europe forever.
6) Study and learn new things constantly. Even long after you
start your career, you should still be reading up on the latest
technologies posted on Slashdot, reading Q&A on stackoverflow, reading
the ACM/Usenix/whatever email lists, reading 20 technology/development/admin
blogs, and picking up any worthwhile O’reilly books. In today’s
IT, your education /never ends/. The idea many people have
in other industries that you just “get a degree” and work without
learning new things constantly is a pipe dream. You cannot do that
in IT.
The above is not a joke. I’m a native New Yorker, and have lived
here all my life. I’ve been in IT for 15 years and lived in Manhattan
for nearly all of it (before that I lived in Brooklyn, my hometown).
This kind of life is definitely not for everybody, but if you want
to survive (and you aren’t the next Steve Jobs or Bill Joy) the
above may help you.
I’m sure some will find the above sad (and perhaps it is in some
ways), but this is the reality of IT in today’s America.
Whoops, left one out: be wiling to work for under 100k (sometimes
half that), for well, maybe life. Again, #2 should help you there.
Dan:
JP’s thoughts on this matter resonate strongly with my own.
I have been a programmer in the New
York area for 30 years where I have witnessed the slow death of
a profession which was once attracted some of the best talent from
the best schools in America. And outsourcing, and
in-sourcing of H1b’s and L1’s is largely responsible. If you walk
the IT floors at Bank of New York, Citibank, Bank of America, et.
al. you will not see a non Indian programmer. As JP mentioned, the
approved head hunting vendors are Indian companies. At these banks,
you must contract through these Indian firms, and it would appear
that they will only hire H1B/L1 candidates. If the quality of their
work were superior I would certainly have no comment, since I think
a company should hire the best talent available. Unfortunately,
this is not the case. In most instances, they are really sloppy
and untrained, but as was said before, they will work hard for fear
of being replaced for lack of effort. Results be damned. As far
as PHD’s are concerned, they represent such a small minority at
the banks of which I speak, that they are hardly worth mentioning,
except of course by politicians who invoke them to defend this program.
JW:
Alan Greenspan @ 3:50 of video below says;
“We pay highest skilled labor wages in the world…If we would
open up our borders to skilled labor, far more than we do, ah we
would attract very substantial quantity of skilled labor which would
SUPPRESS THE WAGE LEVELS of the skilled…”
http://www.youtube.com/watch?v=oqx88MyUSck
Notice that Alan Greenspan does NOT mention anything about “best
and brightest” or “shortages” in the video clip above. Also notice
his hand gestures as he exclaims; “SUPPRESS THE WAGES”!
LastChanceUSA:
Outsourcing and off-shoring are about wage arbitrage, corporate
profits, and nothing more. Unfortunately, career planning is very
difficult for individuals, when they don’t know what occupation
will be axed next.
I’m American born with have two MS degrees, one of which is in
CS, and used to own a successful IT consulting firm. I had no problem
competing with numerous foreign and US IT consultants on quality,
quantity, and honesty. However, I was unwilling to compete solely
on price ($11- $15 per hour in many cases). After three years of
dealing with – “We can get IT people for about $15/hr. You need
to rethink your hourly rates.” – I closed my business in 2003. I
even got this line from a previous multi-billion dollar client after
I single-handedly resurrected one of their projects from the grave,
enabled them to meet their original deadline, and prevented millions
in lawsuits for breach of contract. Another previous multi-billion
dollar client let me go in 2000, after I told them that their muti-million
dollar IT transformation project would fail, if they stayed on their
current path. A couple of years later and millions spent on the
transformation project, they lost over one billion dollars in revenue,
because their new software simply didn’t work. They then called
me back in to fix the project, as I was the only one who correctly
predicated that the project would fail and why. I got the same line
from this client, too.
I didn’t spend many years in college, thousands in tuition, and
countless hours of self-studying after college to work for $15/hr
or less with no possibility of a future. If I can make or save companies
millions, I’m worth a lot more than $15/hr.
Most USA managers believe that one FTE (i.e. full-time equivalent)
equals any other FTE. Unfortunately for those in the work force,
it is much easier to offshore and outsource workers than it is for
workers to retrain.
My advice to people today is to pick an occupation that you enjoy,
are good at, and REQUIRES YOUR PHYSICAL PRESENCE. If you don’t,
then you will eventually be faced with loss of livelihood or greatly
reduced wages due to outsourcing and off-shoring.
alex:
“REQUIRES YOUR PHYSICAL PRESENCE”
With the H-1B and L-1 visa programs even that’s no guarantee.
constantnormal:
Not all of the hard times in IT employment can be blamed on outsourcing.
The (entirely necessary) balls-to-the-wall push for Y2K remediation
pulled a lot of employment demand forward, leaving a gaping vacuum
following 2000, which accounts for a lot of the employment problems
in the IT realm in the first decade of the new millennium.
And given the digging-in-the-dirt nature of much of the Y2K code
remediation — that which did not involve complete rewrites or system
upgrades, but mucking about in decades-old systems full of cruft
and spaghetti-code — that sort of work was typically not considered
suitable to be outsourced.
I’m not defending outsourcing, which I regard as a blight upon
civilization, destroying the employee-employer relationship and
reducing the career aspirations of domestic workers to piles of
rubble and lifelong enslavement, but there are other factors that
help to explain the employment situation in the realm of IT.
michael:
Not sure why you mention this nowadays, 10 years later – the
pull forward from Y2k impacted about the following 18 months.
alex:
“Y2K code remediation — that which did not involve complete rewrites
or system upgrades, but mucking about in decades-old systems full
of cruft and spaghetti-code — that sort of work was typically not
considered suitable to be outsourced.”
On the contrary – an enormous amount of the Y2K work was outsourced.
So much so that some consider Y2K the take off point for outsourcing.
Jon H:
IMHO, CS PhD aren’t going to touch business IT with a ten foot
pole. They have far better opportunities.
wunsacon:
The H1B program is a tax on studious Americans.
Let’s see what happens if we bring in H1-B’s to replace realtors,
traders, salespeople, baristas, Congress critters, CEO’s, etc. (Even
for barista positions, a company can always say it “can’t find qualified
people for the salary it can pay”.) Then, we’ll see how much the
rest of Americans like this program.
As it stands now, this program exists precisely because it hurts
some people but not enough to piss *everyone* off.
wp:
Yves,
In 1990-91, when Manmohan Singh was the finance minister, India
was in deep trouble on the forex front. US demanded opening up of
the indian economy to US multinationals as a quid pro quo to ease
their forex shortfalls. IT offshore industry in India is the single
most beneficiary of Manmohan Singh’s decision to open up indian
economy to US multinationals.
US multinationals have expanded their reach to indian consumers
at the cost of US programmers. It is a two way street.
wp
MKV:
[q]About 70 per cent of US PhD students are foreign born and
are often hired in the US, making their way into Silicon Valley
or government agencies such as Nasa, said Partha Iyengar, of Gartner,
the consultancy. [/q]
Something that I’ve found as someone recruiting for comp sci
(not IT, mind you) in the elite schools here in the Northeast is
that there is a massive injection of foreign students into post-graduates
programs because their parents are willing to pay full tuition to
put them into these schools, as opposed to many US students who
are looking for scholarships in order to be able to attend these
schools. These schools need to prop up their budgets so it’s very
good business for them to market and recruit these kids. But it
doesn’t correlate with good engineers.
babak:
This
article is ridicules! What they probably are not stating is that
what they are willing to hire people for is not competitive to the
markets comparebles. Also it may be that people do not want to live
in the small towns in America when they can work in the main cities.
With U-6 being at 17 I cannot accept that non one is qualified for
working for them.
Also if they are not qualified maybe they should be training
them. Also it could be an excuse for people to bring more people
from India and give them Green Cards and hire them at a cheaper
price.
Please also note that in the past 10 years we had a major wage
deflation in IT for American employees. People who made 80k-120k
are making 20k-40k less, because of outsourcing. We are slowly eliminating
any good paying jobs in the US. We are going to be stuck with Dr.
and Lawyers and nothing else… wake up america!
Ron:
Two points
1. US has ALWAYS benefitted from attracting the best minds. The
US economy was NEVER built by local talent, but always by new immigrants.
2. US is not doing this as well as it did in the past. Think
of the country as a company. Wouldnt you want to retain the top
talent, rather than those that are “close to the decision makers”
(usually from behind).
3. Some ideas
- Give stipends to top talent from other countries to study here
for advanced degrees
- Give immediate working permits to foreign students graduating
at the top of their class in US universities
- give immediate working permits to entrepreneurs in other countries
that want to come here. Its a misconception that they take American
jobs. Net-net, they create more jobs than they take
Chester Genghis:
Huh????
We’re at almost 10% unemployment (only the official rate, mind
you), with many more underemployed and you think the real problem
is brain drain???
alex:
“US has ALWAYS benefitted from attracting the best minds.”
Is it your contention that H-1B’s and L-1’s are generally the
“best minds”? What’s are your criteria and data for arriving at
that surprising conclusion.
“The US economy was NEVER built by local talent, but always by
new immigrants.”
First, H-1B’s and L-1’s are guest workers, not immigrants. Don’t
mix apples and oranges.
Second, I gotta love positive stereotypes, which are just the
flip side of negative stereotypes. Is it your contention that Americans
have always been inadequate to the task? In additions to the millions
of very capable rank-and-file Americans, do names like Edison, Ford,
Westinghouse, Wright, Curtiss, Armstrong, Shockley, Bardeen, Brattain,
Noyce and Gould mean anything to you?
LAS:
Having worked with some Indian companies
lately, it occurred to me at times that India doesn’t have the talent
base either. I felt like it involved training them
to get through the projects properly and they had a tendency to
crumble before every new challenge. At some point, it just won’t
be worth going to India anymore. Come on America, I’ve seen you
do this work better than it’s being done over there now.
Pete:
Yves,
Great post and great comments. I agree with the other commenters
that a CS PHD is not really suitable for most actual corporate jobs.
I have a nice technical analyst position for a large insurance company
and a BA in History, with about 12 years experience in IT. I have
a very niche business expertise which has allowed me some level
of comfort, but otherwise there would be no way I could compete
with the H1B folks on pure talent+work ethic+cost basis.
Workers in many industries have to deal with outsourcing, but
throwing the H1B issue on top of it is a real problem for a couple
of reasons. First, it is unfair to native workers to make a specific
exception for one industry, especially when you consider that most
of the jobs we are talking about are in no way “strategic” for our
economy as a whole. Second, as you state it closes the door for
people to get into the field.
I have many Indian friends and consider myself to be pro-immigration,
so I don’t want my opposition to H1B to be construed as nativist
in any way, but I really oppose the program. As has been stated
by other commenters, these guys get paid less and work crazy hours
out of fear of losing their immigration status. I do not understand
how this could fail to depress wages in the industry, making it
less attractive for new people to enter.
Raging
Debate:
They just do what the programmers of the 1990’s did and stretch
out completion of the project for eons. If you get something that
actual performs to spec it is a miracle.
Some of the folks I speak to in high places in the corporate
world get it, the cost-benefit of I.T. outsourcing is shrinking
fast or already gone.
bluffraise:
It’s tough to compete with someone who wants foreign work experience
on his resume and will therfore work for a bus token and lunch money.
Such was the case in 2001. Job prospects are a little better now.
Tom Hickey:
“The bigger challenge for the US is, if they start to lose
this talent at the lower end, the innovation engine that has been
driving the economy starts to dry up,” Mr Iyengar said.
Another torch being passed to Asia. After a while it wil be the
US trying to reverse engineer Asia innovations and get around Asian
patents.
Energy is the biggest and baddest gorilla in the room though.
Der Spiegel: Military Study Warns of a Potentially Drastic Oil Crisis
Cynthia:
It’s only a matter of time before the world’s largest companies
that produce things other than food and bottled water are headquartered
in Asia and all of their CEOs are Asian born and live there, forcing
American CEOs to join the ranks of the unemployed.
This is patently obvious to anyone whose head isn’t in the sand.
Power always follows production, which is the heart of any economy.
When American corporations decided to offshore production to Asia
so they could teach their greedy American workers a lesson and vastly
overpay their CEOs while vastly underpaying their Asian workers,
they dug their own grave and engraved their own tombstone.
Chester Genghis:
I agree with you on the inevitable outcomes, but current CEOs
are laughing all the way to the bank. It only takes 2-3 years for
them to loot all they need –well before the other shoe drops.
duffolonious:
Very interesting.
Speaking of _right now_, I’ve been trying to hire a couple people
at the small company I work at. One of the things we do is post
jobs at the nearby Big Ten university – and we’ve gotten only a
couple hits. Last time we hired (early ‘08) there were a ton of
candidates (even _a_ woman [all the ones I knew when I was in college
in the early 00's went to IBM]). If I had a referral from a friend
I might even ignore a lack of schooling (I have a lot of college
dropout friends – they all have great IT jobs – Intel, porn, et
al).
And I’m not sure what I’m doing wrong. Except for one guy that
we may hire once he’s done with school (in a year), all the rest
have been pretty sad. One example is a candidate who does windows
tech support at major US company – so no programming experience
and our shop is entirely Linux. A problem with IT is all the sub-career
paths – once you go down one, it’s a tough crawl back up to the
others.
Our company is so niche that even the much better candidates
we’ve hired in the past took a few months to get up to speed.
Another problem is that business is only OK. With the economic
outlook I’m worried about making a mistake on hiring and it costing
too much in time and resources. So it makes us more reluctant to
expand in the first place.
There is a ton to write on the subject of IT companies and employment
– it’s so specialized, and good candidates are a tough fight (how
can we compete with Google).
froggy:
It seems like your situation is similar to entry level workers;
your an entry level businesses and have a tough time working your
way up. Maybe the way to become a market force, is to think juggernaut
and go public? Or sell your sole to some big company in need of
creative new ideas? Being small is rough, and in a global business
environment, seems like the challenge is how to sell and compete
globally.
AFL:
“Our company is so niche that even the much better candidates
we’ve hired in the past took a few months to get up to speed.”
This is Yves point!
Most companies are unwilling to train. They always want people
to be able to hit the ground running.
If you’re interested in the long term viability of your company,
you have to invest in hiring and training entry level employees.
But if you invest in training, that’s money/time/effort not spent
on your short term goals.
So as a business owner, do you race towards the bottom like everyone
else, or do you take the high road which might lead to bankruptcy…
duffolonious:
“This is Yves point!
Most companies are unwilling to train.
They always want people to be able to hit the ground running.”
Yep yep. And every company has to decide “how long will it take
to train this person?” And “what is the maximum amount of training
we want to give?” Those two questions set the stage. What is fair,
for the employee and for the company?
In fact I like doing a decent amount of on-the-job-training,
because the investment also seems to be rewarded with loyalty.
Nonetheless, I read the articles
Yves bring up on the subject and think wanting people to hit the
ground running (with little to no training) is more an excuse to
not expand; than a reason to not hire.
Raging
Debate:
Run ads in your local papers for a “Web Developer”. Shift through
the couple of dozens resumes for those that have SQL and PHP experience
(web design). Make sure they really have those data skills though.
Setting up a database is tit, managing it for CRM functions, marketing
etc. require some good hand-on experience by the employee. Best
of luck.
Software Insider:
As someone who has worked in the software industry for about
15 years, I have a few observations:
1. A PhD in Computer Science is overkill for most positions.
The majority of projects/products in the overall software space
do not require complex algorithms; rather, they require facility
with a particular platform, ability to map business rules to functional
designs and functional designs to technical designs, and general
problem-solving ability.
Most positions involve either a focus on one of these skills
or a mixture of the skills. None of these skills comes directly
from a CS program, but the foundational skills for programming with
some level of competency are taught in most undergraduate CS programs.
The rest is either innate or comes only with experience working
on non-trivial real-world projects and really understanding trade-offs.
2. As in a lot of industries, the entry-level job seems to have
died out in software. I think some of this is endemic short-termism:
anyone managing a project or team simply wants to get the product
or release out the door, not spend time training someone. So you
start to see a focus on lists of skills and meaningless measures
of experience (e.g. “must have 10 years of object-oriented low-latency
transactional processing at a large company”). I have worked at
several different firms where the “business” side of the shop had
a robust internship/trainee program, but the “technical” side was
expected to only hire people who would be (in theory) immediately
productive at a high level.
3. The majority of the people working in software are not designing
world-class search algorithms or mobile operating systems, nor are
they designing snazzy Web 2.0 interfaces. They are, instead, creating
or maintaining systems into which people enter data, store data,
retrieve data, and process data (think insurance, banking, accounting,
etc.) These people do fairly boring work and get decent but not
fantastic pay. It’s a nice middle-class job with limited career
options.
Regarding the alleged problem of a skills shortage, there may
be a few things at work. My guess is
that companies are trying to hire a high level of experience at
a low level of compensation. This means there is
no match with entry-level candidates (say recent grads), nor is
there a match with experienced candidates who already have jobs
that compensate them well.
There may well be skills shortages at the very high end in technology
(chip design, high-performance systems, etc.), but I don’t see it
in the general business software area that makes up most of the
job market.
Dave:
Another industry veteran here (10 years). Agree completely except
for this: “It’s a nice middle-class
job with limited career options.”
Correction, WAS a middle-class job. Wages are totally stalled
and developers are on their way to joining the lower middle class,
and eventually working poor.
A data point…I started in IT out of school earning $65k in 2000
(fabulous pay, I agree). Laid off in 2001 and spent a year minimally
employed. Got another development job in late 2002. In 2006, I was
making $87k. Inflation adjusted, this is maybe 10-12% more than
my very first job.
10 years on, I’ve increased my productivity and skill by many, many
orders of magnitude and lead a team of 4. I make $105k, barely a
third more than my starting wage.
All these jobs are in cities where a dumpy 1200sf condo costs
$600k and the schools are terrible. My benefits have always been
typical for the IT industry (i.e. terrible…15 days PTO, no sick
days, low to no 401K match, expensive health benefits, 8 holidays
a year).
Barring some miracle whereby I become an executive, I expect
this is very near the peak of my lifetime earnings as an engineer.
At 36 years old, I figure I have AT MOST 15 more years of employability.
I am responsible for funding my own retirement yet do not make enough
save adequately, despite no kids and an extremely frugal lifestyle.
Here in Los Angeles, if you use reasonable assumptions about
career duration and the present value of retirement benefits, you’ll
find that the typical union carpenter, prison guard, or municipal
bus driver earns far more over a career than the typical software
engineer.
lark:
Dave I hear you. The profession has been destroyed. The sick
thing is that by the time it totally dries up we’ll be too old and
broke to get something else that is decent.
And it’s amazing how they have broken the retirement systems
in this country. Working in a business, as opposed to working for
govt, has become such a rip off.
Formerly known as Nameless:
105/65 = 1.615. And since when is 105k a lower-middle-class salary?
80% of the country would kill to make that money.
Formerly known as Nameless:
http://swz.salary.com/salarywizard/layouthtmls/swzl_compresult_national_tr20000003.html
“The median expected salary for a typical Bus Driver in the United
States is $18,663″
and I bet that benefits are SPECTACULAR.
Formerly known as Nameless:
let’s check carpenters for sh*ts and giggles too.
http://www.careerfield.org/jobs/send.php?job=2211&utm_source=Indeed&utm_medium=organic&utm_campaign=Indeed
“Salary: 41,000 – 50,000 Annually
Required Education: Some College
Required Experience: 2 Years of Experience in a Related Field Required”
Dave:
Apparently you aren’t aware of a phenomenon known as inflation.
$65k in 2000 is about $78k today.
Larry:
As an actual engineer… it’s rough out there. For one thing, I’d
like to know exactly what counts as an IT job.
We’ve seen the collapse of the job market affect engineering
departments. In last couple decades, radio frequency (RF) engineering,
power engineering, petroleum engineering and nuclear engineering
have all shrunk. So, all the knowledge in these fields are now overseas.
Cynthia:
According to Thom Hartmann (watch link below), the Obama Administration
is proposing that the U.S. Bureau of Labor Statistics stop reporting
the number of American jobs being outsourced. If he is right, then
this is just another example of our most powerful elected officials
trying to hide the ugly truth from us. First it was about our wars,
now it’s about our jobs.
http://www.youtube.com/watch?v=_PlCO-mADfs
And I can’t think of a bigger slap in the face to the American
workers for NBC to launch a comedy show about American jobs being
outsourced to India!
http://www.nbc.com/outsourced/
Mike Snow:
I have spent 30 years in the commercial software industry, outsourced
thousands of man hours to India (and other countries). As far as
the impact on America’s abaility to inovate
1) Most of the offshore outsourcing hours come from big companies,
like banks, telco’s, airlines, etc. These companies do very little
in the way of innovation around software (just try their websites).
Also more and more the big tech companies don’t innovate, just buy
(Oracle, HP, Microsoft).
2) Most software innovation happens in tech companies, some large
(Google, Amazon, or Apple), mostly small to medium. The small to
medium guys do very little off shore outsourcing, and most of that
is around testing (man power intensive). This is because you have
to be close to your customer to design great software and so off
shore is a non-starter.
3) Most off shore companies provide a lot of hype about innovation,
but they don’t deliver. The do deliver low-cost, talented labor,
who are very good at following directions, not so good about innovating
in a way that is valuable to the end customers.
4) You don’t have to have a degree in CS to be an innovator in
the software industry. Most of the real value comes from people
who understand the business being served and don’t get obsessed
by the tech. Many of the best designers learned to program after
they got a degree in business or science.
So being a believer in the invisible hand, if the demand is really
there, the supply will show up.
lark:
Thanks for being honest about your role in outsourcing jobs.
I have my own startup in Silicon Valley and I can tell you, you
are dead wrong about start ups being immune from outsourcing.
Venture capital requires outsourcing
to be in place before they’ll fund. That has been true for years
now. You info is out of date.
Raging
Debate:
Don’t know about that stringent a condition for VC but in speaking
with the investors, you do have to be willing to consider it. I
like the programmers in the Czech Republic. About 2/3 American wages
and they innovate AND complete the bloody projects without a ton
of micro-management.
lark:
Yes I’ve heard the Eastern Europeans are the best.
oliverks:
My experience after getting a PhD in math is I could not find
anyone who wanted to hire me at all. Admittedly the market was not
very good at the time.
CS PhDs may be more employable. Almost all PhD student in math
want to become professors, although very few will eventually make
it to be tenured. As a result the math departments do nothing to
cultivate ties with industry.
I finally found a small little company where the owner was more
interested in people. The pay was low (probably 10% less than a
undergrad with CS), but it gave me my start.
I should mention that I was a TA for a computer programming course,
so it was not like I had not programming background. But I had no
formal education in programming.
Oliver
NR:
Yves,
I just don’t see why American companies
can repatriate income by selling carbonated soda in India whereas
India and China are blamed for providing goods and services to the
US. When economic colonialism works for the West,
why is there so much umbrage with the reverse? I could argue that
highly sophisticated marketing ploy of coca-cola company is unfair
against a vast majority of farmers in India who sell coconut-juice
for a living (not to mention the health aspects)
If your argument is primarily around labor mobility, would you
be okay if services are provided remotely from India with no onshore
presence? Also, Labor arbitrage is a genuine competitive phenomenon,
much like a country that possesses Uranium or makes Levis.
When does free-trade become fair-trade?
oliverks:
Unfortunately I think it is too late to solve the problem. But
in essence if you are going to allow the free mobility of capital,
you have to allow the free mobility of people. Capital will still
be at an advantage, but the US would still be the center of software
development.
The salaries of programmers would be lower here, but the future
would be brighter, and the tax base would be much better.
I think it is too late for this now.
lark:
Yves you are so right on the money on this. I speak from 20 years
experience.
This whole discussion has revealed to me the sick stupidity of
the media. They never learn, no matter how many times they get bombarded
by feedback from engineers who know the facts on the ground.
They are captives of corporate spin and press releases. No wonder
they were whistling Dixie when we walked over the cliff.
I am disappointed in the FT though. The best of the lot.
Cat:
A) Software engineering isn’t as easy
as everyone thinks it is. A bad hire can cause your project
to fail. This is probably the reason for a dearth of entry level
positions. Lets not forget the IT revolution is still pretty young.
After the big growth where almost anyone would do people now realize
you have to pick and chose.
b) IT Projects are hugely expensive,
prone to cost over runs and failures. This keeps downward
pressure on wages and hiring managers wanting specific skill sets
that will help them get the project done on time with no training
involved. The fractured nature of the IT business with your multitudes
of programming languages and development platforms makes this even
worse. While a skilled programmer with 10 years doing windows development
would succeed on your Web blah point blah project, the safer route
will always be to hire someone who has the ‘experience’ even if
they might not be as skilled or have as much time in the workforce.
C) Because of this the desire for specific
experience the pay for engineers stalls mid career. You
never got to those upper pay levels because the requirement for
new projects are always changing to a new paradigm. Sure you are
5x more productive then someone with 2-3 years of work experience,
but you don’t know Java or .net. You’ve never worked with the compiler
or the Object framework so you aren’t qualified and if you do get
the job you certainly aren’t worth your high salary.
D) Which leads to the biggest problem.
Software Engineer’s jobs have shelf lives unless they are elite
of their profession. You will almost be unemployable with 15 years
of experience or more as you will be to specialized for mid-level
jobs or to expensive for mid-level jobs.
Timo:
Unfortunately one of the reasons that software engineers supposedly
have a shelf life is because:
a) Investment in training good engineers
is considered a waste of money if your HR department
is under the illusion you can hire someone cheaply who supposedly
knows the technology already. Unfortunately a lot of the companies
that write software in house for their own use are often not very
clued up when it comes to proper IT recruiting.
b) Most larger companies can’t tell
a good software engineer from a mediocre one in the first place,
which makes (a) even more prevalent, plus they are rare
c) A lot of the IT community has so
gotten used to having to change employers in order to advance their
career in any way that they’ve often given up on any long term career
planning. This is also mirrored by a lot of the larger
companies not really offering any sort of longer-term career perspective
for IT employees (hint: not every IT guy wants to be come a manager).
oliverks:
I have argued before that programmers have problems pricing themselves
in terms of ability. There is an interesting externality in that
bad programmers get too much money by mooching of good programmers.
I don’t think software is unique to this problem. I find that
lawyers suffer the same problem, and it is interesting that no one
has found a way to solve this issue.
In both cases you are really paying for the prevention of future
problems. For example, if a bad lawyer writes a flawed contract,
it can cost millions to fix. Likewise a bad coder, who appeared
to complete his / her module on time, can cost $100Ks in short term
problems and $1M’s later on in software maintenance.
So the problem in both cases is that the lawyers or programmers
appear to have met the short term requirements, but can saddle you
with very long term costs. That is the hard part to sell, and why
the price differentiation is not easy.
Oliver
sth:
A genuine competitive phenomenon? It’s not possible to compete
with countries that are Mercantilist/use near slave labor, or have
standards of living that *should* disgust any human being (and so
have much lower costs of living.)
Money flows freely, labor does not. When standards of living,
worker protections, human rights, and immigration/emigration policies
come to about parity between countries, maybe we can talk about
“Globalization” or “Free Trade” (or opening up the H1B program).
Until then, it’s a race to the bottom in a shiny McDonald’s-yellow
veneer.
You can go to IIT, get sponsored, and live in California. Can
you go to MIT, get sponsored, and live in Bangalore? This question
was researched recently – someone contacted various organizations
in countries like India (business orgs, government orgs, immigration
agencies) and asked if they had programs like the H1B. They were
laughed at hysterically.
Not to mention what was laid out in paragraph 2. Even if you
COULD move to these places and get a job easily, do you really want
to live in a race to the bottom world? Do you want to live in places
with poor sewage systems, garbage on the streets, and terrible human
rights policies? Places with health care systems more broken than
in the US?
I’m ALL for it once we have all those protections/roughtly equal
standard of living in place. The funny thing is, once that happens,
NO COMPANY WILL EVEN BOTHER UNLESS THEY ARE DESPERATE FOR A PERSON
WITH A PARTICULAR SKILLSET THAT THEY CAN’T FIND IN THEIR OWN COUNTRY.
Why? Well, it’s not about skills in many/most cases – it’s about
cheap labor. Once labor costs are a parity between countries, that
“advantage” will disappear and these sorts of programs will get
little more than a shrug.
NR:
SR,
Your premise that trade is going down the path of “race to the
bottom” is not well supported statistically. Trade improves countries,
their peoples and their competitiveness. (Singapore, Malaysia, Japan,
etc.). You cannot point to a Nike sweat shop to point out why it
does not work. Generally, it works.
In the 50’s, you could have accused the Japanese of being mercantile.
As their living standards improved, they enforced laws that are
now consistent with global governance rules. Even within the Indian
companies, the IT companies enforce better standards than the rest
of the country as they start to globalize.
It is not possible to be selective about globalization, nor can
you enforce pre-conditions. If the US decided not to import products
and services from India due to a lack of “level playing field”,
American companies should not be selling cars and juices either.
Each country will come up with their criteria for level-playing
fields and trade can just say bye-bye.
sth:
Well, we could come up with some wild ideas about how to fix
it. Here’s one:
Government enforced price and wage reduction down to India/China/Vietnam
levels along with a massive wealth confiscation scheme to to keep
all the percentages lined up (could likely be done by creating massive
monetary inflation, or directly via fiat.) The same would be done
with debt.
No one gets richer or poorer in real terms; it only affects trade.
Here’s another crazy idea: devalue our currency so
that we’re as cheap as workers in other countries.
Along with all this, institute a /real/ free, universal
higher education and jobs training program (which
would include paying for your food, rent, bills, etc.)
until you graduate.
I could come up with more, but this would be plenty
to get started.
Doug Terpstra:
at
3:49 pm
NR, you say “It is not possible to be selective about globalization,
nor can you enforce pre-conditions….Each country will come up with
their criteria for level-playing fields and trade can just say bye-bye.”
Selective rules and enforcement is exactly what’s happening now
under all SHAFTA agreements—by design—because the masters of the
universe, the US architects of rigged trade (not fair trade), want
it that way. Do you really think Chindia is required to meet fair
trade rules? If so, please send for my latest book: “Easy money
in Real Estate”
That reminds me of Sen John McCain’s insult to American workers
in 2006 (when he was for amnesty before he was against it, who said
we didn’t need a “dang fence” because Americans wouldn’t do the
jobs of illegal immigrants). At a speech to labor, as clueless as
M. Antoinette, he offered $50/hr to pick lettuce and was subsequently
drowned by takers.
You’re right that FAIR trade is beneficial, but sth has it exactly
right about the current rigged-trade regime:
“Can you go to MIT, get sponsored, and live in Bangalore? This
question was researched recently – someone contacted various organizations
in countries like India … and asked if they had programs like the
H1B. They were laughed at hysterically.”
Jake:
In most major engineering schools
(I work at one), thousands of Indian and Chinese are brought in
at full tuition rates to goose up the Universities cash flow.
So where does a poor Indian kid get $80,000 for two years masters
program? Simple: the University arranges loans through Citibank
and JP Morgan (no money down).
Unlike lower tier schools employers line up to hire here and
until recently I’ve never heard of a single student not finding
work after graduation. It’s funny to see them in the shops with
their shiny new Chase credit cards swiping away.
After graduation they may work in the USA for 1 year on their
student visas, which later translates into an h1-b or some other
visa. In fact some go back home then return on L-1 visas; which
is considered nothing more than an intra-company transfer.
Most people don’t realize that a small number of meg-schools
dominate almost the entire production of US engineers. After many
years of working with these people, I strongly dispute the notion
these foreigners are the ‘best and the brightest’. Many can barely
write a coherent sentence in English.
So Banks win, the Universities win and the employers get cheap
slave labor. Now why would any of the above parties allow this state
of affairs to end?
As for the IT/Software crowd one of the biggest abusers of ignoring
US applicants is Bloomberg in NYC. If you look through their published
(see link below) visa files from flcdatacenter.com they employ
a vast number of foreign software developers across the country.
http://www.TinyURL.com/249qahz
Poco Ritard:
Just another anecdote:
While working at a certain enormous software company in Seattle
in the late 90s, my dev lead (that’s “boss” to us code monkeys)
was frequently out of the office. It seems there were so many trips
abroad to recruit cheaper talent (particularly eastern Europe at
that time) that his level of management basically was required to
periodically do a stint on the meat hunt.
I remember one meeting at which THE WORD FROM THE MAN HIMSELF
was loudly proclaimed “Find Something To Outsource Today!” Accompanied
by blows on the conference table.
Seriously.
chad:
man so many good comments on this article. I have a BSCSE from
an OK school, live in Dallas, and have about 10 years professional
experience writing software for the health care industry, specifically
pharmacy.
I agree that a PhD doesn’t mean a whole lot in my field with
respect to salary. Software engineering
is so broad and a PhD so focused that it’s hard to match a PhD to
a job even remotely similar. Furthermore, most of
the PhD’s I know took the route because they wanted to learn not
because of job prospects. Much of the CS crowd are just people in
love with technology.
Also, good software engineering is just plain hard. There will
always be a shortage of people that can do it right. I’ve never
ever seen an outsourced software project come to fruition but I
have seen them drag on for years and years in a perpetual state
of development which is common in my field unfortunately.
Nancy:
Let me try to impress upon those who don’t get the dangers and
common citizen’s objections to outsourcing Information Technology;
mind you, IT data and information is not in the same category as
outsourcing manufacturing of diapers and pens.
I assume you commonly receive spam emails requesting your SSN
and bank details, written in poor English and orginating from overseas?
How would you like it if Nigeria became the next global hub of
IT outsourcing for the Financial Industry, and industry which has
been in the forefront of outsourcing IT with little heed as to the
security consequences?
Your identity and asset information will be at the disposal of
those who would otherwise pay to obtain it.
Such customer information is a national asset, it is not meant
to be handled by those who have no vested interest in enforcing
security of that information, and by those whose GDP per capita
are orders of magnitude less than yours.
The American public is totally oblivious to the security breaches
that are occurring with their information overseas – they’re kept
well under the cover, not subject to US disclosure laws.
I really wonder if CEO and executives are aware of the risk they
are exposing the trusting American public to, including themselves.
The true cost of outsourcing IT will be recognized… if only too
late.
Raging
Debate:
You are correct but what you are describing began happening in
the 1990’s. Government programs Project Echelon and Carnivore were
the data collection programs and this was orchestrated through the
SAIC which is a private company and which also sells data. There
is no more internet or data privacy in reality. I am not saying
it is right, just stating the reality.
S Brennan:
I believe every word the CEO’s are saying about how critical
the H1-B & L-1 programs are to America’s future and to their companies
survival. Without them, their company would fail and that they are
too big to fail…no matter what size they are.
Now that we have establish this as truth, it falls to congress
& the white house to show the mindless minions of America that these
companies are telling the truth, heretofore all these brilliant
and critically needed H1-B’s / L-1’s are to be paid MORE than 1.5
times the wage of the top earners in the industry AND all over time
is to be double time.
By their own statements, CEO’s would gladly do this to:
1] Establish once and for all these brilliant and critically
acclaimed individuals are truly needed to prevent their company
from going into complete collapse.
2] Shut those willfully slothful US citizens up once and for
all. Let them work as maids & butlers.
So lets call the CEO’s bullshit, no limit on H1-B’s just pay
them what you say they are worth.
Ron Hira:
Data is available to answer at least a few of these claims/questions.
…said Francisco d’Souza, Cognizant president and chief executive.
“Although unemployment in the US today is high, IT unemployment
is still very low.”
RH: This is a false claim. According to the US Bureau of Labor
Statistics the unemployment rate for Computer Professionals has
averaged 5.8% over the first two quarters of 2010. That’s more than
twice the rate of 2.6% in 2008. And more imporantly the current
5.8% rate is higher than its peer group of All Professionals, which
is 4.5% for 2010. Can anyone argue that there’s a widespread systemic
shortage of professionals today?
“About 70 per cent of US PhD students are foreign born and are
often hired in the US, making their way into Silicon Valley or government
agencies such as Nasa, said Partha Iyengar, of Gartner, the consultancy.”
RH: I guess the reporter was unaware that PhDs account for a
miniscule number of workers, even in computing. According to the
National Science Foundation there were 1,656 Doctorates awarded
in Computer and Information Sciences at US universities in 2007
– this includes both to US and foreign students.
The US IT labor market is about 3.4 million so those 1,656 cannot
have any material effect on the overall supply of IT workers. Almost
all IT workers, even the ones Cognizant hires, do not hold PhDs.
Ron Hira
Rochester Institute of Technology
Formerly known as Nameless:
5.8% is close to full employment. I’m not sure how to describe
2.6% unemployment in 2008 other that “shortage”. And note that it
is directly at odds with Yves’ assertions that “most of the last
decade was pretty grim” and “the commentors [at Slashdot] agree
on the very small number of entry level positions in IT … from at
least 2005 to 2009″.
alex:
‘5.8% is close to full employment.’
For the economy as a whole, yes. For a specific profession, no.
Ron Hira pointed out that 5.8% is higher than the 4.5% for all professions.
Is it your claim that there’s no unemployment problem in the professions
these days? Admittedly it’s not as bad as for all non-professionals,
but that doesn’t make it good. Also the software engineer who’s
now flipping burgers is not counted as an unemployed professional
anymore, so those numbers can be very deceptive.
‘I’m not sure how to describe 2.6% unemployment in 2008 other
that “shortage”.’
Why is that a shortage? That’s not an unusually low rate for
professions. Incomes weren’t rising faster than productivity, so
there was no shortage in any meaningful (as opposed to propaganda)
sense. At best it’s close to market clearing. Is it your contention
that we should always have as much slack labor as possible? Is that
how your bread gets buttered?
‘And note that it is directly at odds with Yves’ assertions that
… the very small number of entry level positions in IT … from at
least 2005 to 2009″.’
Which isn’t a contradiction at all. The CS grad who can’t get
a first job and winds up flipping burgers or going to grad school
for a remunerative profession doesn’t get counted as an unemployed
CS professional.
alex:
Ron,
Thanks for the hard stats. I don’t know how many people here
are familiar with you and your work on this issue, but I personally
want to thank you. For anyone who’s not familiar with Ron’s work,
just search on his name.
I’d also suggesting searching on “Norm[an] Matloff”. Professors
Hira and Matloff have been two of the best spoken and most authoritative
people speaking about this issue. Both heavily base their arguments
on hard data.
Doug Terpstra:
Thank you, Yves. This is the classic lament, “you just can’t
find good help anymore”, and it exposes another fine example of
unenlightened self-interest inaction— Econners cutting off their
noses, and eating their seed corn.
Beyond hand-wringing and blaming victims, TPTB and MSM make no
attempt to address root causes, including the rising cost of college
education and the generally pathetic public commitment to equal-opportunity
education at all levels. The Neocon motto: “A mind is a terrible
thing to waste [tax dollars on]”
yoganmahew:
So many comments… who says the internet is for nerds…
Anyway, 20 years as of three days ago in airline IT (assembler).
Based on an undergraduate degree in modern history and a three month
training class at my first employer. The problem is, in my book,
that employers aren’t prepared to spend the money (quite modest
amounts) inducting people into the specific jobs they want them
to do. Mostly because the employer has no idea what it is that they
want done. Headless chickens on a hot tin roof…
mezurak:
You think you have it bad? Try being a hardware tech. Never mind
if you have been working on computers since the Commodore 64. If
you don’t have a string of certifications behind your email sig
along with a BS to back it up then you don’t get in the door. I
was a Field Engineer on mainframes in the 70’s. The only qualification
I needed was some related military training and a HS diploma. The
company taught me the rest. The young guys today are lucky to get
on a help desk with a BS. Five years of experience gets them not
Google but a gaggle of low end system admin jobs and useless certifications
to put on their resume. Training? Ha! Hit the ground running, trial
by fire, OJT, don’t let the door hit you on the way out, there’s
your training. I feel sorry for these guys because they are on the
buggy whip path once cloud computing strips the need for private
data centers.
Wade:
I have worked in IT for 15 years and am a senior level systems
engineer. Almost none of the people I work with have Computer Science
degrees. As a matter of fact the best people at their jobs have
either an engineering degree or no degree at all.
Since I started in the industry, there has been a shift from
looking for aptitude to looking for people with degrees and certifications.
This shift hasn’t helped the quality of worker at all. Getting a
degree means that you can show up for 4 years, learn information
that will be useless in your field, and pass tests with no bearing
on reality. It doesn’t mean that you can think independently and
troubleshoot problems to a rational conclusion. This has resulted
in the shortage of suitable IT people since we discard candidates
based on degree first.
As far as outsourcing to India goes, it isn’t as good as it once
was. Training hundreds of thousands on people with no apptitude
to work in the computer industry just diluted the talent pool to
the point that you can’t seperate the wheat from the chaf. Outsourcing
was popular mostly because it was perceived as cheap, got lots of
press, and most of all shifted responsiblity for failure to someone
else. The reality was that the outsource
companies didn’t deliever what was contracted and their turnover
was so high that they could not support anything that they wrote.
I am seeing more and more projects being run in house.
lark:
One more data point.
I started at HP in a high level systems software position in
the mid 80’s and stayed 12 years (left before Carly).
At that time the company allowed you to attend simulcast Stanford
graduate CS classes on site for free, audit or credit, to keep up
with advanced topics in your field. You could watch the class videos
over lunch. You could also be supported in local grad CS programs.
This from the same company that axed 75% of its R&D a couple
of years ago. A lab mgr friend of mine took early retirement from
HP Labs and left the field (saw it coming). This from the same company
that throws money away on acquisitions because it axed its seed
corn. This from the same company that axed profit sharing. On and
on and on.
And of course, the huge facility where I worked (Cupertino) is
now virtually empty, due to outsourcing, and the plan before Hurd
(’Hurt’) got his golden parachute was to shut it down and move the
survivors to Palo Alto.
One thing that really burns me is that the press and academia
gets such a ‘rise’ out of free markets and global business and the
like, that they are just incapable with seeing the facts on the
ground. We shouldn’t have to lose the whole industry before some
‘expert’ notices!!!!!
It really shows the problem with captive media and ideologically
captured economics. It happened with the housing bubble, the financial
crisis – how much destruction can this country take??
lark:
Of course now they expect you to keep up with the field at your
own cost and time – of which there is none to spare.
PQS:
We shouldn’t have to lose the whole industry before some ‘expert’
notices!!!!!
Amen. I’m in construction, and just last week saw an article
on the local Pacific NW paper about the massive crisis in our industry.
Construction is always on the end of the butterfly in the Amazon,
but the descent into 27% UI and so quickly is unprecendented. Yet
I cannot think of a single news article about this issue. Maybe
everyone thinks that only the hardhats are in construction. Most
of the white collar people I know have been out of work for months
or even into years. Architects, engineers (not the civil guys),
PMs, Superintendents with decades of experience.
2Cents:
In India entry level guys are mass hired in a batch, and based
on the time they have done, they all expect their H or L visa to
be filed. This is the reason all H visas are exhausted till recently
the day they open for filing. Indian companies do not want to pay
the additional cost arising out of visa fee hikes, nor can they
manage their staff and file for visas just in planned time, they
have to file them enmass.
lark:
To see another example of media bias on this topic, see
http://www.nytimes.com/2009/04/12/business/12immig.html
This article weeps for corporations who can’t recruit freely
because of H1B restrictions.
I wrote the writer of this article the following letter. Of course
nothing changed in the coverage of this issue. The corporate bias
is an outrage.
My letter to the NYTimes (not published by them of course):
Dear Editor,
Matt Richtel’s article, “Tech Recruiting Clashes with Immigration
Rules”, left out a few essential facts and thus left readers with
a view of the situation shaped more by industry propaganda than
reality.
One cannot understand the H1 B visa unless one grasps how it is
used in practice. Richtel’s article portrays a highly skilled immigrant
who wants to be a contributing member of American society. For the
most part, H1 B is not used for this type of immigrant.
H1 B is and American visa used overwhelmingly by Indian software
companies. Their engineers go into American firms where they are
trained by American engineers and then they go back to India, taking
the job to India. In 2006 the three companies who took the most
H1 B visa slots were Wipro and Infosys (both Indian companies) and
Cognizant Technology Solutions, which has most of its operations
in India.
These companies took 70% of the H1 B visas. Statistics for 2007
can be found at
http://tinyurl.com/cwst2u.
This information is easy to find. There have been well publicized
Congressional hearings on precisely this topic.
Your article reads like a corporate press release. This is not
a simple minded case of anti-immigrant sentiment. I am disappointed
that the New York Times presented this careless and one-sided article.
If Google and Intel and the rest want to fast track highly qualified
individuals through our immigration system, then there is a case
to be made for that. But American corporations are not arguing or
acting in good faith, and thus they have undermined both the trust
of American citizens and the H1 B program. Your article perpetuates
this dishonesty and I believe you owe your readers a correction.
Sincerely
lark, etc
yoganmahew:
Mind you, you chaps in the US have it easy in some respects.
Your high-end technical salaries are very good and you have some
status with your job. Pity us poor Irish who have to deal with this:
“I find it very hard to swallow the notion that a computer programmer
is
carrying on a profession. In what way is he any different from a
clerk in the
19th century sense? He is just a numerate and literate person carrying
out
clerical work. Obviously, not all programmers fall into that category
(numerate and literate).”
– Frank Carr, Irish Taxation Review, September 2002
Yes, our tax clerks look down on us programming clerks…
chad:
It’s interesting how so many IT industry folks read this blog.
Steve:
After 21 year in consulting and seeing
the outsourcing takeover of the last few years, I can say with certainty
that the average Indian IT resource is pretty useless.
We have to clean-up the messes of our offshore staff all
the time with the onshore staff. They
simply do not have the required aptitude, they were just run through
some process to memorize enough to pass a test and become billable.
This is starting to become visible to the low and middle managers
at the client side who are not happy with the quality of work, but
the high level client managers are simply concerned about budgets
and overrule their recommendations. The next few years should bring
this to a head at many companies when failures are clearly identified
from this approach, I doubt that the big banks etc. that have become
too large to change will do anything, but the middle tier companies
are going to see that they cannot afford to let a critical part
of their business become unreliable, especially with the need to
compete in the technical infrastructure required for their business.
I expect that this will stabilize things in the US and should
help to revive the industry if we have not completely gutted the
education and experience pipeline. However I would be hesitant to
push a newbie into things just now, though to be honest, what job
is safe today?
cougar_w:
Just a data point:
20 years in IT, mostly web application development. Like most
workers in my age group I am self-taught (there were pitiful CSCi
departments in the 80s and everything now in play came about in
the last 5 years anyway). I still make around 85K in the Bay Area
CA.
I’ve actually worked in outsourcing for a little while. What
a joke. I’ve been outsourced twice. One to India, a second time
to Hungary.
I won’t let my kids do this work. Not on a bet. Mechanical or
civil engineering if they want, but that’s it. IT and software development
became a dead-end.
Will the US suffer for having slain their home-grown IT expertise?
Seems inevitable. But companies don’t really care; current management
is just harvesting the gains from innovation of a previous generation
of workers, who (like myself) are now entering retirement. When
that harvest has played out it will fall to the Chinese and Indians
to take the game forward as the US IT industry follows the example
of other empires that became deluded by their past greatness, and
falls into decline and irrelevance.
Time is everywhere, and so are the costs of letting it slip away.
By sharpening your "delay slayer" skills, you can leave procrastination
dragons at your feet instead of at your throat.
