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The IT Market: Cyclical Downturn or New World Order?
An anonymous reader wrote: "CNN.com is running an interesting story on the heels of a Forrester
Research report concerning the
shift of high tech jobs from the U.S. to places like China, India, and Russia for cheaper labor and got me thinking about the nature
of the current downtrend in programmer demand in the U.S (as opposed to the "morality" of such a shift). While I'm sure the causes for this downtrend are variable, the more important
question in my mind is this -- Is software guru Bruce Eckel correct in
saying that the current downturn represents a temporary blip in the business cycle as jobs are shifted from large and medium companies to smaller companies,
or are Andy Hunt and Dave Thomas correct in recognizing this as
a new reality. Personally I tend to agree with Hunt and Thomas's view (which is not completely opposed to Bruce's opinion, btw) and
I also agree with their viewpoint that protectionist policies like H1B quotas and tariffs won't work to change anything for the better. So what do you think? Is this
just another business cycle or is this a New World Order in IT?"
For all of the IT jobs that can be moved easily (read programming) it has come down to the lowest common denominator for most low quality projects . I say this from experience competing with people from third world countries for contracts , unless you can price your self down to there level you wont get the majority of contracts . That being said some of the better contracts (grand plus) are still staying relatively domestic (north american) because they want some one who they can phone up if something breaks . One majour thing preventing the shift is the lack of high quality english in those countries , right now (even with my english as you can no doubt tell is very 31337) allows me to win some contracts because I can accuractetly understand the proposal and people think I will do a better job. Once all of those countries with cheep labour get good english ... I dont know
This problem can be fixed by exporting the Labor Unions, so that they encourage everyone everywhere to demand the same high pay. Even without unions, this will happen, only more slowly. Remember when Japanese cars were lots cheaper than American? The obvious reason was the lower cost of labor in Japan. Well, these days Japanese auto workers make about the same or even more than American auto workers. Any difference in cost of autos these days can be traced to greater usage of robotics in Japan. So, I'm convinced that globalization will eventually even out the cost of labor. But it sure is going to hurt until it happens!
And what exactly do you propose, huge tariffs and unconstitutional regulations on outsourcing that not only hurt the industry but increase prices for the end consumer? Not to mention the deprivation of a salary to these foreign employees, while not comparable in US terms, that beats any possible salary they can earn in their country with NO external influence.
The idea of protecting employees in the US is just as selfish to me as the RIAA monopolizing the music industry and charging unreasonable prices. In my opinion, the government cannot look at this at a micro level, but rather must account for the public good. The industry, the end consumer, and the global economy as a whole benefits from products that can be made as cheap as possible. I have little to no sympathy for the IT employees laid off, they must adapt to survive the changes, as we cannot continually look at these issues on a microeconomic scale.
A long habit of not thinking a thing wrong, gives it a superficial appearance of being right.
-Thomas Paine
Fine in theory, but what happens when you handcuff American corporations to American labor? One of two things, either companies in other countries with cheaper labor markets rise to fill the product gap left by their less efficient (in terms of money) and more bloated American counterparts... OR those American companies move their operations to those cheaper locales.
It's the concept of a competitive advantage. It's time that workers in IT (and I am one) recognize that workers in China and India have a fairly pronounced competitive advantage over the workers herein the United States. We're expensive, difficult to manage, and only slightly better programmers than those in other countries (as a whole). You can legislate this all you want, the fact remains however that you burying our heads in our the sand won't make the problem go away. We must find a way to compete as a workforce.. or turn to another economic system. Tariffs and taxes on foreign goods do nothing but destroy OUR wealth.. after all we only make up ~5% of the worlds population.
It's a tough pill to swallow, and our auto workers and manufacturers have had to swallow it in the past. What's insanely funny to me is that Americans in general have this view that in order for our economy to be strong, everyone elses must be weak. You don't have to watch CNN long to hear "We can't have free trade, that will make the Chinese economy stronger!!" Yes, this is the result. Basically the economies in India, China, etc.. are so weak that the cost of living is almost neglible. So a programmer in India doesn't have to make a whole lot to be comfortable by the standards of his society. $5,000 goes a long ways in those countries.
At the end of the day, protectionism doesn't help us.. it doesn't fix any problems. It simply plugs a small hole in the damn and HURTS the overall American economy in a major way. Sure it may keep you in a job for 6 months or a year.. but the fundemental problem remains. We simply can't compete with our foreign counterparts at the salaries we expect.
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One could argue that C++ is C++ no matter where in the world you are sitting.
But to lead a company takes a skillset that is fairly abstract in the making.
From the point of view of the employees, they see a bunch of guys in suits wandering around, making what seem like bad decisions, and worse yet, lyaing people off for the good of the company value.
They seem fairly worthless, and out of my own (limited) experience, it really does seem that a lot of them are just bloat - but that is more middle management IMO.
In terms of the top people, there is a cultrual background that is at play that will likely keep American/European people at the tops of American/European companies, and Asian people at the tops of theirs.
I'm sure 80 people will respond with singular references to an anomoly - but for the most part, you can't outsource your leading braintrust and be successful, if due to nothing else but cultrural issues.
Whereas programming is a means to an end. The people at the top want something does XYZ, and whether it is an American, and Indian, or a smart robot on the moon, the end result is going to be something that does XYZ.
Logic, Math, manpower, etc - all basic skills can be outsourced - but the executives at the top do more than that and are much harder to outsource.
That is a very unpopular opinion here on slashdot, so I suppose this will get modded way down. The fact that it might have truth to it... well, overlook it if you must.
There are some odd things afoot now, in the Villa Straylight.
it makes perfect sense to me.
being a programmer in the future will be like being a writer.
writers are very talented, but they are a dime a dozen.
programmers and writers both operate on intellectual capital. and that, as far as economic rules of supply and demand are concerned, is very cheap.
what do you need to express your writing abilities? just pen and paper.
since these tools are cheap, writers are cheap.
previously, a decade or 2 ago, computer hardware was very expensive and rare, and so those who could manipulate it were very much in demand.
as computers become ubiquitous, those who manipulate them, like those who manipulate pen and paper to express their intellectual capital, will become equally just as cheap.
and so any one smart enough and interested enough can get in to a game. just like writing. equally devalued on the basis of supply and demand.
you want to make money in the future? become a plumber. become a nurse. supply and demand. these people demand more and more $ every day as less people in the west want to get into these fields.
look, IT work is a meritocracy. it amazes me that rich western geeks, who value and uphold the principle of how many mad skillz you got as the judge of your value in their technological world, in a perfect expression of pure meritocracy, should suddenly turn around and be so provincial when it comes to questions such as the globalization of IT.
c'mon, lose the hypocrisy. welcome to the real world. welcome to the globalization. no amount of sour grapes is going to change any of this process. give up your elitism and snobbery and realize that your skillsets are rapidly becoming a dime and dozen.
the golden age of super geek rarity is rapidly becoming a thing of a past. a smart teenager with some extra time on his or her hands can do exactly what you are doing right now. why do you suddenly think you deserve better monetary treatment than them? the economic value of your skillset is shrinking in the world as computers become more ubiquitous. get used to it. it's not going away.
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
Developed countries SELL!
Developed countries BUY!
Developing countries make.
There's many examples given by people like Noam Chomsky and Naomi Klein. From No Logo:
Along the same lines, now that most of the dot-com era is over, it would be possible to see if there was an inverse correlation between the numebr of MBAs at a firm and its survival.
Beta is broken and the link to classic doesn't work. Stop wasting our time or there won't be anybody left here.
Actually what you describe is the difference between democracy and capitalism. The USA does not support freedom, democracy, or republics - it supports capitalism. Unfortunately greed, like everything else in life, without moderation is very, very destructive.
BSD is designed. Linux is grown. C++ libs
You'll note that globalism only seems to work one way. Why can't I buy shoes directly from Indonesia for $5? Why can't I get a PC from China for $100? If American companies really want to compete globally then let's open the door both ways and see how they fare when I can buy a DVD player online for a fiver + shipping.
At first glance, protectionism seems "old school" and unrestricted free trade looks like the logical way to keep a free-trade economy growing. This would be true if all countries were on a level playing field and the entire world was the market place. The reality is that the U.S. consumer is the one doing most of the purchasing from U.S. companies and if you ship U.S. jobs overseas and drive wages down then the very person you're trying to sell to won't be able to afford your product.
The end result will be a decreased standard of living for all but the richest Americans because once you start outsourcing whitecollar work to other countries, you lower the wage-base for the majority of Americans. This creates a nice big insurmountable gap between rich and poor, and great dichotomies of wealth are the stuff of revolutions.
What we're seeing is change, which one can either fear or take advantage of. It's your choice.
Well put!
It seems strange that a communty like /., who almost to a man supports concept of the freedom of information (as expressed by OSS, FSF, etc.) can be so reactionary when it comes to dark skinned people from places other than US, Canada, and Europe getting jobs using the skills related to that information.
In the long run, globalization leads to open interdependant economies. Those economies lead to more wealth for all, as well as a more stable peace.
I offer as evidence the most recent rounds of serious saber rattling between India and Pakistan. It has been widely reported that it was the leaders of India's growing high tech sector that pressured the Indian government to step back from the brink of war. That pressure came because they felt that war would damage their ability to get new contracts with western businesses.
As another example, China's growing economic contacts with the US, Japan, etc. have a stabilizing effect on the Taiwan situation. China's entrepreneurs would find the disruption of trade too great a blow to stomach a forced re-unification.
It is also instructive to observe the actual progression of globalization. First, unskilled jobs like simple textile work move overseas. After a while, the standard of living in that place improves and so those un-skilled jobs move to somewhere else and semi-skilled jobs like auto assembly take their place. Then those jobs move on and highly skilled jobs - chip fabrication for one - move in. At the same time the standards of living keep improving. In 30 or 40 years people in a once third world country are living comparably to those in the first world. Many of the factories along the Mexico/Texas border provide their workers with a middle class lifestyle. Those Mexicans, in turn, have the wealth to purchase goods and services from the US, re-employing the people whose jobs were lost when the factory moved to Mexico.
While there will be many bumps in the road, globalization will be a long term net positive for every nation. Nations go to war when their leaders have less to lose by war than by peace. Globalized economies have a great deal to lose, while isolated economies have little at stake. World peace will come when men of every nation have the opportunity to better themselves through commerce, rather than violence.
are you saying that Indians just aren't cut out for programming?
I worked at a job where I had many coworkers that were Indian, and we outsourced a lot of our stuff to our Indian office.
The code from those guys SUCKED.
I too figured, hell, them fellas must all be retarded.
But no, then I went and worked at a different company and worked with some of the brightest people I know - they were from India as well.
It turns out, just like the States - people can be total idiots, and people can be really bright.
If anyone is going to present a good arguement here - it should be that India has suffered a serious brain drain throughout the economic boom here in the states. Their best and brightest have come over here on the H1B, leaving behind the ones that would like to also become IT and cash in on that field.
That argument makes a bit more sense than "they are different than me, therefore, they must be retarded"
There are some odd things afoot now, in the Villa Straylight.
Oh, there might be a few more cycles, but the trend is going to be inevitably downward -- and not just in IT.
Why? Because, simply, the status quo is an unmaintainable imbalance. The problem isn't greedy American corporations, the problem is greedy Americans, who think its Good and Right that our tiny country controls such a vast portion of the world's wealth. Whether it's Good and Right or Evil and Wrong, the fact is that a free market abhors this sort of imbalance, and absent draconian controls, the imbalance will be corrected. If an Indian can do the same job, and only needs to be paid a small apartment and a nice bicyle, where an American wants a huge house, two SUVs and annual vacations in Fiji, the Indian will get the job. And should!
I'm an American, and I very much enjoy my comfortable lifestyle, my nearly 4000 ft^2 house, my cars, my expensive hobbies, etc., but I've lived outside of the US and I have no illusions that the status quo can be maintained for long. There are too many people in the world who are just as deserving, just as smart and, frankly, probably willing to work harder. My comfort is as much an accident of my birth as anything I've done, and I don't think I have any God-given right to it.
Further, I think Americans need to realize that much of our current material wealth actually comes from the very places we complain are taking our jobs. Walk into nearly any store, look at the prices on the goods, then think about how much material and labor was required to make them. The stuff we buy is *amazingly* cheap; our own incomes are stretched to nearly ridiculous lengths by the abundance of cheap labor overseas. Quite simply, our lifestyle is all out of proportion to our productivity, and the market is going to correct that. IT is just one of the current victims/opportunities (depending on your point of view).
Protectionism, isolationism and schemes to keep ourselves on top by keeping everyone else down won't work forever, because they just don't make economic sense. We're going down, because that's the way it should be. All of the crying about evil corporations looking for a quick buck is just self pitying noise. The imbalance means that over the next few generations, we'll have to learn to cut back our lifestyles somewhat as people in other parts of the world improve theirs.
And if you spend a little time in the 3rd world, and see how many smart, hard-working, deserving people there are, you'll understand that that's a Good Thing, even if it's personally painful.
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