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?"

Comments

The Economics of Empire

[gokubi]

We never thought it could happen to us: globalization was just supposed to make stuff cheaper to buy. But the race to the bottom can happen at all levels of employment, for all tasks that don't need to be performed on site. This includes us, the white collar IT workers.

This is not "the sound of inevitability", it's the sound of years of government/corporate policy to make the world our cheap labor playground. It can be reversed with rational policies that foster local investment at the expense of unchecked corporate profits. What happens when you have corporations that are invested in a locality? They don't ship the jobs overseas just to save a buck.

Read "The Economics of Empire" in the May Harper's. Excellent piece.

It happened to textile workers long ago. It's happening to us now.

Re:The Economics of Empire

[H310iSe]

...it happened to textile workers ... it's happening to us now

Well, think about textile workers for a second - what are the characteristics of their job - medium capital investment for the plant, light skill set for the workers, culturally independent job description (a worker from africa works a loom the same way one from america does).

What does that have to do with high-tech? You need to compare apples to apples. The high-tech jobs that can be easily commotified, which have a clear project scope and easily definable deliverables will be outsourced to the cheapest places. But if you have a company, say, in Germany, and you need someone to come in, understand your business and design some peice of technology to help you integrate better into your customers supply chain, a) wtf does that have to do with textile production and b) how are you going to outsource that to anyone other than a german with knowledge of your industry?

There are many places in IT where someone from a distant country might try compete with local talent, but they'll get their butts kicked every time because business sees an advantage to hiring more expensive, local, knowledgeable workers. Who wants to trust their business to someone they've never met, 3,000 miles away, who barely shares their language?

Outsourcing will effect programmers and other IT workers but there is a huge part of IT that at least partially relies on interpersonal factors that simply can not be packaged and sent to India for processing. It might be a good idea to make sure your skill set fits in the latter category now, because I do think it's going to get worse...

Re:The Economics of Empire

[TopShelf]

I hear this argument over and over again, and I say, if your goal is to work in a shoe factory, then by all means join the anti-globalization rush and raise those trade barriers! What we're seeing here is change - while some jobs are heading offshore, others are growing. Systems analysts, for example, are becoming more in-demand, focusing on the successful application and integration of technologies to achieve business needs, rather than focusing on purely technical matters.

The other side of the issue, of course, is the effect overseas. What has happened in China over the last 20 years, for example, is astounding in terms of the numbers of people lifted out of abject poverty. They are entering the global marketplace and building themselves into an economic powerhouse.

What we're seeing is change, which one can either fear or take advantage of. It's your choice.

Re:The Economics of Empire

[Rimbo]

"They move to Indonesia or China - countries that kill their citizens who step out of line."

I went to China last year. While no self-respecting libertarian would say that the country is Free, getting a personal tour from my girlfriend of her romping grounds and the like were eye-opening.

The days when China would kill citizens who step out of line are drawing to a close. A big reason for this is... well, whaddaya know, globalization. China wants the money and success of the West, but they have to make concessions on the Human Rights issue to gain the right treaties. And then, when the jobs and money do start flowing in, China cannot prevent the ideas from also flowing in and having an impact.

Cell phones and the internet -- the same technologies that empower individuals here -- are empowering ordinary Chinese citizens over there. SMS messaging reported the spread of SARS far more quickly than the PRC gov't wanted -- even more quickly than was reasonable, since it led to a worldwide panic!

And it's not just about technology. The money people have allow them to stop worrying about getting fed, and as they gain comfort and possessions, they gain more and more to lose from the government just taking from those according to their abilities and distributing to those according to their needs. Or simply taking people's lives. Funny, that a lack of anything to lose would encourage someone to suicide bomb, but that a great many things to lose leads someone to want to fight -- and win.

As for the main topic of the thread, I think the fear of jobs moving overseas is mostly hype; even if it is, we will adapt, re-educate ourselves, and take new jobs. And we will still write code! We'll just have a lot more open-source contributors that way. :)

Time to start learning Hindi

[bpm140]

In the last 20 years we've gone from the idea of working at one company for your entire career, to working at several companies in your career, to having multiple careers. This just seems like another logical step.

It will certainly take some getting used to, and not everyone will compete, but I think that the average white collar American is finally learning what globalization means. Highly skilled folks in the rest of the world have been dealing with this for years -- they all learned English to compete. Now it's our turn.

Fundamental shift

[smoon]

Three points:

1: Copyright, patent, and tradmark laws are not uniformly followed in the various off-shore programming destinations. You'd be unlikely to see "Intellectual Property" (their term, not mine -- don't flame me) concious companys sending serious development work offshore for fear of it being hijacked.

2: Companies that have sent work offshore will have very mixed results -- just as they have had with American workers, but much worse. With American workers many 'failed implementations' could rightly be blamed on scope creep, slipping schedules, and unrealistic expectations. The offshore work will suffer all of these, but throw in a communication (language) barrier. This will eventually be worked through, but in the meantime a lot of companies will get burned by systems that don't work, detailed design specs that the foreign programmers don't understand, etc.

3: As companies in general move more towards open source and Free software, corporate programmer jobs will split into two broad categories: Things that no one wants to work on without pay and that are difficult to outsource (e.g.: business applications); And integrating various components to make a system that adds business value (some Free, some open source, some commercial, some built offshore).