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

[fobbman]

"But the race to the bottom can happen at all levels of employment..."

Oh really? So when did corporations start outsourcing their outrageously-paid executives to India?

Re:The Economics of Empire

[scalis]

I think you are right. Globalization is a rush to the bottom where production is moved to wherever it is cheapest at the moment. Nike for instance that once made sports equipment is now only a marketing company, they tend to see it as "selling an image" while the producion is long gone, not even kept within the company.
The thing is, this has happened before and will happen again. At first, asian companies didnt have the sophisticated state of the art machinery to produce large quantities of cheap shoes. But then they aquired it and we moved production there since it was cheaper. After that, they didnt have the equipment needed to produce computer components but then they aquired it and now it is "made in china" all over the computers.
The Q is, what are we going to come up with next? Biotech?

Re:The Economics of Empire

[ThePolemarch]

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.

Re:The Economics of Empire

[Webtommy88]

Yup, such is the inevitability of globalization.

The thing that really gets to me is that by outsourcing, these companies are no longer investing in the markets that purchase from them and this short sighted quarter-by-quater view will eventually come back to hurt them.

People higher up that make these decisions don't care, because they're in charge of the company and won't get out sourced. By the time that foreign entities have the purchasing power to buy and remove these people (and this WILL happend), all the higher up's are already gone anyway, what do they care.

It makes me sick sometimes how a company's entire future can be directed by one person with no regard to all the labour that makes the company possible. I have no respect for CEO's.

My econ prof taught us that north american white collar IT types will never be able to compete against India's and Russia on a salary level, so we must instead, compete on a productivity level. But I just can't help but to think management are too ignorant to compare productivity instead of price.

Re:The Economics of Empire

[enjo13]

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.

Re:The Economics of Empire

[BWJones]

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.

The thing that made the US a center for IT was the innovation. When that innovation became comoditized (in terms of current IT), the jobs went where business placed priorities. i.e. money. There is very little loyalty these days in business and it could be argued that perhaps there should not be from a true business perspective (however abhorrent that is). The trick for IT (if IT workers want to maintain their status) is to continue innovating.

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

[Wireless Joe]

David Horsey, the Pulitzer-winning editorial cartoonist for the Seattle PI, had a similar view.

Re:The Economics of Empire

[Colonel Panic]

The plus side is that certain IT skills are difficult or impossible to move overseas. For instance, the ability to build a network, hardware and sofware, is something that must physically be done in the office...The best thing one can do, then, is keep learning and move up to one of those non-outsourcable positions.

Going from programming to routing wires around an office is a move up?

I myself have given a lot of thought to taking university courses in database administration -- this story was just about the last piece of motivation I needed.

And why can't a database admin postion be outsourced? Actually seems like a good candidate for outsourcing.

Re:The Economics of Empire

[Lumpy]

The biggest part of the problem is that we should have never been "white collar" and getting insane salaries. The past 5 years only made people think that it's the easy road, and you get rich doing it. No. it's not.

$35,000.00 to $60,000.00 is the realistic range of salary for the It field. managers who understnad and manage large groups get more because they are management, etc...

It's our own fault that it is this way. The market is flooded with crap-abilities with paper certs wanting high 5 figures or low 6's and HR departments are tired of filtering through the idiots who think they know, the wannabe's who were suckered by the last round of MCSE infomercials promising better wages and a great career. Those of us who have been here before, sat at their job making the supposed paltry $45,000.00 a year are STILL sitting here at our jobs listening to the out of work whine because they can't afford their BMW payment and might have to sell their Porche or sell the 4000 sq foot house with a pool in the valley.

Boo Fricking Hoo. Until IT people get realistic, figure out a way to get rid of the worthless that are masquerading as skilled behind pieces of meaningless paper and prove to the employers that we are actually not just money whores who will chase after whoever has the biggest pile of money... it wont get any better for you. you will never get that 6 figure programming job ever again, because you are not worth it.. You think you are?? then start your own damn company.

The reality is that companies are afraid of IT because of the crap we pulled in 1996-2000.

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

[BluedemonX]

RE: 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).

Well, let me ask you this. How many of us are replaceable in the sense that I could take the day off, and someone else could just walk in and carry on where I left off? You can do that in a tool-and-die or assembly-line position, where a screw is a screw and a nut is a nut. Not so in I.T.

Plus, we have another advantage. We tend to think outside the box, propose better solutions, and have a certain inventiveness, creativity and business savvy that other cultures lack. Many of the cultures mentioned, unless you wish to micromanage these folks to the back teeth nothing will get done. Yes yes yes, they're VERY good at math, but unless you say "do problem 1-4 on page 9" nothing gets done.

Re:The Economics of Empire

[Pxtl]

Actually, tariffs and regulations are exactly what people want. This is no longer about East vs. West, or Communism vs. Capitalism. This is about preservation of human rights. Jobs don't move to countries like France or Sweden, that treat their workers well. They move to Indonesia or China - countries that kill their citizens who step out of line.

The USA supports freedom, and should not be doing business with anti-democratic nations like that. Nations that abuse their people, or the world in general, have not right to any American money. This should be implemented at a UN level - the egalitarian, democratic nations of the world should not be allowing the world's economy to fall into the hands of dictatorships and abusive nations.

If we do not act, we will have two options: let our jobs go to countries where the workers barely make enough to feed their families and live in fear of their lives; or institute similar policies on labour here in order to remain competative. You can't have it both ways.

The solution becomes simple: tax evil.

Re:The Economics of Empire

[scalis]

True enough, the people of china for instance might be better off today than they were some 20 years ago because of production being moved there from foreign companies.
Who knows, when they think keeping production there isnt generating enough profit, they might even outsorce it to some african country...
But just because there are upsides does not mean that there are no downsides!
Cheaply produced chicken for instance, pumped with water to increase weight, moved half way across the globe packed with conservatives is one downside for instance. Just because it is cheaper does not always mean that it is better. Competing in screwing each other over is one competition id rather pass.

Re:The Economics of Empire

[AssFace]

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.

Re:The Economics of Empire

[randyest]

Cheaply produced chicken for instance, pumped with water to increase weight, moved half way across the globe packed with conservatives is one downside for instance.

Wow, as a conservative myself (economically speaking), I have to agree that being packed into a chicken would definitely be a downside to anything. Although having water pumped in would be nice, I mean, if I have to be packed into a chicken, at least it should have running water available, right? :)

Re:The Economics of Empire

[FatherOfONe]

Prove that protecting yourself against slave labor in countries that pay no fricking taxes over hear hurt the U.S. economy? Show me an example how putting a SMALL tax on car imports hurts the U.S. economy. The core difference between cars and code is that it doesn't cost ANYTHING to ship code in to the U.S., and cars take time and effort.

What needs to happen is a tax on ALL code done outside the country.

I could somewhat buy your argument if most of the CXO's around here didn't make decisions soly based off getting themselves rich(er). Most of these idiots just do this crap knowing that it will fail, but it will raise the stock up slightly; then they cash in, with their HUGE severence package, and leave the mess for the next sap to take care of.

Ask yourself this. Why don't U.S. companies use prisoners to code. They could be put on a early release program for quality... That would of course lower the end all product cost for the company... In your view that would be good. In my view India, China and Russia are no different than this.

I predict that within a year or two some laid off I.T. worker is going to come back to his former employment and kill a bunch of people.

Re:The Economics of Empire

[enjo13]

I agree that there is some measure of cultural advantage the we enjoy. Our culture promotes that kind of thinking, but it does not mean that other cultures are incapable of it. To beleive that is simply... ignorant.

There are a lot of new products coming out of India, some of which are quite innovative. Much of the software in the emerging verticals, such as the handheld space, comes from places like Russia, China, Isreal, and India. These efforts clearly show the ability to be free thinkers.

I've had the privilige of working with several foreign programmers. I work with two right now, and they are quite inventive and both very good general problem solvers. As they've become comfortable and learned to speak thier minds more and more, they have become more and more effective. So yes, their is something to the culture argument.. but you've taken it to an illogical and damaging extreme.

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. :)

Re:The Economics of Empire

[ThePolemarch]

In theory you are correct, in practice, no. If we want to change these inhumane governments, you have to deprive the governments and force them to change, not the people.

The actions of these countries is despicable, and should not be in any way endorsed by the US. However, how will preventing the creation of jobs which pay much more than can be made in typical jobs hurting the governments. They aren't just the people, and therein lies the problem.

Re:The Economics of Empire

[deadlinegrunt]

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.

Re:The Economics of Empire

[ameoba]

Makes sense to me; ship hundreds (if not thousands) of manufacturing and design jobs overseas and then get excited about a handful of analyst jobs getting created.

In the New World Order, the only jobs left will be retail clerks, politicians and plumbers; systems analysts are plumbers.

Re:The Economics of Empire

[FatherOfONe]

If what you said took place over a 50 year period people wouldn't be arguing this point. However, this is happening over a two year period!

You are dead wrong about System Analyst. The demand for every aspect of I.T. is considerbly down from what it was three years ago in the U.S.A.

You also fail to mention that people in the U.S. pay taxes on their income, little to no tax is accumulated for work done overseas. A solution to this problem would be a "temporary" tax of say 500% on all code developed over seas, and any administration done as well. This tax could then be lowered over time. Say 20-30 years.

You have WAY more than two choices with change... and your view on this screams that you don't actually don't think about issues very much.

Re:The Economics of Empire

[x_man]

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.

Re:The Economics of Empire

[enjo13]

Simple..

Lets say that Japan has a competitive advantage in auto manufacturing. They can make BETTER cars, cheaper.

The goal of tariffs is to raise the price of a Japanese car to the level of one made in the U.S., the idea being that it negates the Japanese competitive advantage in car manufacturing.

So lets examine two consumers, one in the U.S. and one in Japan. For the purposes of this discussion we'll say they both make the same salary of $50,000 after tax dollars.

The consumer in Japan can buy a high quality car for $18,000. The car is a very good car, just as good (if not better) than it's American counterpart. This is because the Japanese are very good at making cars. Since the consumer pays cash, he has $32,000 left to spend after buying the car.

The consumer in the U.S. can buy a similiar car ,but he has to pay $22,000. He also pays cash, and has $28,000 left to spend.

In overall economic terms the Japenese consumer is now wealthier than the American consumer.. he received the same value in his car purchase, and has an additional $4000 to reinvest in the rest of the economy.

Sure the American buyer may have bought an American car.. but instead of growing the economy by $32,000 he can only contribute $28,000 because he is now less wealthy than his Japanese counterpart.

This is the idea behind globalism in general. By letting the most efficient people build the products, it creates wealth for everyone as they can spend less and get more. They can then grow the economy buy reinvesting that wealth in it. This is the same idea as a tax cut for economic stimulus, but with the bonus of not lowering the spending power of the government.

Re:The Economics of Empire

[f97tosc]

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

How about instead reading some mainstream books on basic ecomomy as understood by our foremost economists and as taught by universities all over the world.

Then you would learn the extreme benefits that trade have brought to everyone. You would learn how the nations that have pursued trade are prosperous, and those who have not impoverished.

can be reversed with rational policies that foster local investment at the expense of unchecked corporate profits

If it really were true that all free trade lead to was extreme profits for the few and lower wages for the many then I would totally agree with your conclusion. But if you look around you will find that wages all over the world are steadingly increasing, and corporate proifts are constant or falling. The reason that profits are not generally increasing is that international business is extremely competitive; savings are passed on to the consumer.

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

Yes, and this development has been good. It has not caused mass unemployment. It has not caused extreme profits or uneven distribution of wealth. If you read economic history you will see that current unemployment is historically typical, that profits are typical or low - the only thing that is changing is ever increasing living standards. I am very glad that people like you were not successful in destroying all the Spinning Jenny's and stop economic development.

Hey I realize that this is a tough sell among American IT workers. My message is this: if you want to keep coding and make twice as much as the guy in India, you better learn the latest tools and techniques and be twice as productive. Americans have done this many times before. That is why our standards of living is higher than almost anywhere else.

Trying to prevent the guy in India from coding for half the price is futile. We know from history what happens if you try - it just leads to economic misery for everyone.

Tor

Re:The Economics of Empire

[RickHunter]

All joking aside, you can bet that's what's going to come next. After all, the almighty shareholders, who upper management have sworn to please at all costs, will have seen the next quarter projection increases possible due to outsourcing. Employee salaries have always been a big number on the budget sheet, and the first target when times get tough. After outsourcing, the biggest numbers left on the budget sheets are going to be the people needed to manage... People who are no longer there.

And guess what? Times are going to be tough because they've stopped paying people enough to buy their products. Ooops.

Re:The Economics of Empire

[RevMike]

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.

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.

Re:The Economics of Empire

[RickHunter]

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.

But if everyone hires out to a distant country, its not an issue. Anyone who doesn't outsource will be facing a larger short-term investment, and will be crushed before they can reap the advantages of those local, knowledgeable, and expensive workers. They'll be crushed in the stock market too, because the other companies will have better next-quarter financials, and everyone knows that's all that matters.

Who wants to trust their business to someone they've never met, 3,000 miles away, who barely shares their language?

And the answer is... Management! Sure, he's 3,000 miles away, but he's their kind of people - the sort that manages people and cash flow, and doesn't think too hard (or really care) about what exactly his company's making. He owns people that take care of all that confusing tech stuff for a miniscule sum. And to top it off, they don't actually have to get too close to any techies - who are not their kind of people, and think about things like "justice" and "rights" far too much for their own good.

Re:The Economics of Empire

[Michael.Forman]

Below is a link to the article referenced in the parent post.

The Economics of Empire

Michael.

Re:The Economics of Empire

[Mezzrow]

I don't put much faith in innovation as an economic advantage these days. The world has become too small. There is an old saying, previously applied to the 'Big M', "Its much easier to imitate than to innovate."

If you come up with a product, and maintain your work base in the US, it can and will be done more cheaply elsewhere. You may begin with a six month lead, if you're lucky, but your competitors will soon close that lead and undercut you.

Not sure if 'Made in the US' is a viable option these days. And I don't know if theres a decent solution that will allow them to maintain their current standard of living.

Re:The Economics of Empire

[jafac]

Blaming the lazy American worker is false and disingeneous at best.

I'm not afraid to compete at my level with the best Indian or Chinese worker. On a basis of taking cost of living into account. If I could live as cheaply where my family is, as Apu does in Pune, then I'd happily compete with him. But Apu does not pay taxes to pave their roads, provide safe drinking water, inspect food, or even defend their country at the same level I do. Apu does not have regulations protecting him. All of these things contribute to a lower cost. Then, the point of competition isn't about skill or work ethic or productivity or time-efficiency. It's all about cost. Human beings can be thought of as commodities, to your average bean-counter. But they are not commodities.

Re:The Economics of Empire

[rlanctot]

I agree. Cutting out your customer's purchasing power is never a good step. I don't think there's many people in India working for $3 an hour that will be willing to spend $600 on a word processor. Pesky things like food and luxuires like medicine and clean water and reasonable housing will be on the list.

Re:The Economics of Empire

[RickHunter]

Not only that, but when they are well enough off (thanks to all this foreign investment) to spend the equivalent of $600 on a word processor, you can bet that they're not going to buy Word. They're going to buy something from a domestic startup (probably owned by an old co-worker or manager) that does what they need, not what some American design expert thought was useful.

Of course, that's assuming that "globalization" doesn't keep outsourcing jobs to low-cost areas, reducing the entire planet to a giant slum.

Re:The Economics of Empire

[TrackDaddy]

Well, you've pulled the idea of racism into the discussion, but I'm not going to go for that bait. What I would like to point out is that you couch your reply in the shining wrapper of "globalization". I would put it to you that what it currently happening is NOT globalization. It is instead a mechanism being used by various powerful groups to further their economic goals. You can't call it globalization until I, as an individual can freely move from one country to another and secure gainful employment therin. Currently, a large company or corporation can easily outsource my job to India or various other countries around the world, but I cannot follow my job to one of these countries. I can't go get a job in China, India or Russia. So I, as an individual, am not on a level playing field.

So to put it simply, everyone can get all hot and sweaty about "globalization", but what we currently have is not globalization. It is instead, simply a mechanism which detrimental to one group of people to the benefit of another. Is the slashdot crowd opposed to that sort of thing? In general, yes. So, it would seem obvious that why the slashdot crowd is opposed to the current state of affairs.

Re:The Economics of Empire

[cayenne8]

" 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"

However, our Govt. (US) is ONLY supposed to be there for OUR public good...our govt. is NOT set up to help the global economy, countries or industries outside our borders. Our (and any countries govt.) is set up to protect THEIR own people's interest. If our govt. can help other after it protects the interest of our own people first, and this help does not hurt our own people...then ok. But, a Govt. is there to protect and help the interests of its own people first............by definition!!

Re:The Economics of Empire

[AchilleTalon]

Maybe, but it's not the solution.

Keep in mind there is a great risk to invest money in a country which cannot guarantee politic and social stability. So, for now some companies are trying and investing, however, in return, these countries will be required to evolve if they want to keep the investments they grabbed.

That's the beautiful part of the story, at my sense.

On our side, there is a shift in the economy and as it happens for all shifts, there is a crisis. The real challenge, is to manage the crisis without disrupting the community. After all, that's nice to have cheap products, but you need also customers...

Re:The Economics of Empire

[SubtleNuance]

...reducing the entire planet to a giant slum.

hey, thats not true -- their wont be a giant slum -- I'll bet Africa could grow into a lovely fortress for the rich... Just that the middle class, which formerly acted as a barrier between the haves and have-nots will be sufficiently squeezed to start to identify with the have-nots... THEN things start to get interesting.

See the American Revolution, French Revolution, Russian Revolution, Cuban Revolution, %your-favorite-monarch/ruling-class-disposed-by-th e-peasants-here%

*OR* the planet can start to get serious about the business of fair and equitable society. Equal Opportunity for all. Help for those who need it. Peace. Prosperity for all -- not just a few rich SOB CEOs who will run away with a bag-o-cash in a heartbeat, these people are 'world-citizens', they are rich, they can pick up and scoot off to where-ever the hell's not burning... and their newly minted middle class will be happy for the prosperity that trickles down -- and will send their civilized sons and daughters to fight our evil great-grandchildren

Re:The Economics of Empire

[KoalaBear33]

First neo-liberal economics supporter in the crowd... Here I go...

I'm just going to pull the standard leftist arguments (me being a leftist and all :) ):

1. Modern free trade agreements (which cause the out-sourcing) result in harm to workers and the environment. NEarly every country that you out-source to, treats their workers muchworse, and harms the environment far more greatly. You can go and look up the facts. In particular, go and check how the environmental regulations in poor countries are severely weakened by free trade agreements. Similarly, the new workers often have to work longer hours, have less rights and so on. To people on the left, like me, it is almost as if someone who loves prostitution goes to a poor country because the cost is lower and the regulations are almost non-existent (try to figure out whether you can dump waste into rivers in these countries).

2. Wealth discrepancy between the rich and the poor increases. When you out-source, what really happens is that an owner's costs go down, while his profits go up (that's why they do it after all). The workers get poorer overall (since a high salary from a developed country just become a low sarly in an undeveloped country) while the owners get richer (the owners would manage to lower their costs and increase profits). The OVERALL end result is that the gap between the rich and hte poor increases (it does NOT decrease).

3. This is a personal thing... Power shifts to the capitalists and therefore I don't like it. Workers become weaker.

That should be enough for now... if you need more reasons, just e-mail me. I'm sure I can find leftist articles shredding the neo-liberal economist arguments...

KoalaBear33

Re:The Economics of Empire

[argoff]

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.

actually, why cant you? not a flame, I just don't see why you cant. Are there any regulations that prevent you? If it's not that way, then it's not free trade.

Re:The Economics of Empire

[watzinaneihm]

Amazing!! Most of the posts on Slashdot today (atleast all the 4+ modded posts ) seem to be saying "Free market wins" or "information wants to be free". It just proves that geeks are really a more liberal crowd than the average populace.
Rarely have I seen somebody stick to their beleifs of freedom and Justice when they were directly under threat.This has been a marked change from all the previous discussions on Slashdot usually based on feelings and emotions, maybe the "cycle" in the title made people think about the issues before posting? I don't know what more to say. This discussion almost sounds like a great swansong
That or the Indians have got all the mod points today.

Re:The Economics of Empire

[Tablizer]

World peace will come when men of every nation have the opportunity to better themselves through commerce, rather than violence.

Bill Gates, the New Ghandi?.....(choke, gasp, cough)

Re:The Economics of Empire

[Ex-MislTech]

My apologies, it is just a subject that brings great anger
to me and clouds my reason .

I do not think clearly when I am that pissed off .

I look forward ot the day they take the corporate royalty
to task for their sharecropping of america .

Their ultimate goal seems to be little better than that .

Taxes so high, only the rich can afford real property,
either your part of the rich or part of the poor , it
is like a vanishing middle class .

Continuing to raise the tax amounts, but the rich have
loopholes to avoid them .

If anyone makes a decent wage that is not a "suit" find
a way to replace them with someone from another country .

It is a mantra I think should have them deported, and the
politicians that are bought off by them should be sent
to the overseas sweatshops as well .

In the US we make what we do so we can afford the OVER-priced
homes on the East and West coast, so we can just have a place
to live and have a roof over our heads .

I am not talking palatial mansions here, I am talking a
little house on the prairie place going for $250,000 in
the valley in cali .

( deep sigh )

let me calm myself ...

There are intelligent businessman, alot of them were college
drop outs , ie. Mike Dell , Bill Gates and others .

The Visa cards is what got most of the 9-11 hi jackers in here .

The Visa cards is what got them into the flight schools .

The Visa cards is what has brought millions of foreign workers
here, when we have millions of unemployed .

For the "truly" brilliant foreign ppl that apply for jobs and
truly beat out americans on ability, sure , come on down .

But the sweatshops Tatia consulting and others that were
mentioned by Norman mattloff of UC Davis before the Senate
of the United States, it is all just a damn scam .

They voted 96-1 to dbl the number of Visa workers coming into
this country AFTER the DOT BOMB went off .

I say they all need to rot in hell .

Just my 2 cents .

I am not mad at you or saying your wrong about anything,
I am just bent out of shape about this particular subject .

peace,
Ex-MislTech

fire up the plant....

[pauly_thumbs]

.. we'll start making widgets again!

Something is cyclical...

[dcypher_67]

but I believe that cycle has to do with posting stories over and over.

I'm going to say Dave Thomas is right

[Anonymous Coward]

You have to say this: the man certainly knew how to run a quality burger restaurant. And I can't imagine those skills aren't transferrable to IT.

"That's Dave's Way.."

new world order ish

[pigscanfly.ca]

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

Re:new world order ish

[Anonymous Coward]

"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 ." You are missing something here, people in third world countries such as India don't price themselves out, due to strong dollar policies cost of living is simply lower, so at 20% of your salary here, they can have a better life than you. Don't make it sound as if they degrade themselves to unfairly compete with you. This trend will continue till those currencies come to par with the US dollar which is slowly but surely happening. http://www.expressindia.com/fullstory.php?newsid=2 3007 http://www.ciol.com/content/news/CorpResult/2003/1 03071501.asp After that it would not make any sense to outsource jobs to those countries.

Re:new world order ish

[swordboy]

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.

The lowest common denominator applies to other fields as well. Take Dell's foray into technical support - they are ramping some of their call volume into the Phillipines (I believe) and the quality is horse shit. I spent over an hour on the phone trying to get a freaking standard service call in that would have taken IBM or Compaq less than 5 minutes.

After I brought this to management's attention, we've subsequently dumped Dell for another vendor. Hopefully, *someone* will keep smart people on the other end of the horn and end up with good business.

If you don't believe me, call 800-822-8965 option 3 and you'll get a foreign guy trained to speak with a western accent. They all sound nearly the same (with the same static-laden, high-compression VoIP connection noise in the background)...

Protectionist Policies?

[tommck]

protectionist policies like H1B quotas

The fact that H1Bs _exist_ is certainly not protectionist! I don't think H1Bs should even exist at all!! There are plenty of developers having a hard time finding work nowadays without us bringing in third-world workers who think that driving a 1981 Civic is a wonderful privelege!

T

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.

Re:Time to start learning Hindi

[Zoop]

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.

You mean, we have to learn English?

But...but...that means spell-checking our posts...and using punctuation correctly...and, my God, grammar?!?

The horror, the horror.

Re:Time to start learning Hindi

[sn00ker]

You mean, we have to learn English?

But...but...that means spell-checking our posts...and using punctuation correctly...and, my God, grammar?!?

The horror, the horror.

Oh won't somebody think of the children?
Oh, wait, someone did. And decided that it's more important to not call a child a failure than to teach them how to read and write correctly.
I mean, what the fuck is up with the whole apostrophe saga? It's not like they're difficult to use. Don't get me started on their/there/they're either.

If accepting mediocrity is the price of retaining a child's self esteem, then fuck their self esteem and shred it GOOD!

Just like the Clothing Industry?

[jj00]

I wonder if we are going the way of the retail clothing industry. Companies that import clothing using cheap labor and selling it for higher prices. I can't see that business model as NOT being attractive for a business person.

I wonder if Microsoft will eventually ditch all the "die hard" believers they have working for them.

A temporary thing

[VernonNemitz]

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!

Market adjustment

[b-baggins]

The cold, unpleasant truth here, is that 90% of IT isn't worth its salary.

Globalization is the great leveler (assuming free markets). It takes time, but eventually, everyone gets paid what they're actually worth as opposed to what they think they're worth.

The secret is to make yourself worth more. Probably a meaningless admonition to most slashdotters who think that the world owes them a living so they can spend all their time downloading files from Kazaa.

Re:Market adjustment

[Anonymous Coward]

I'll have to disagree with you one this one.

The cost of living in these countries (India, China) is ridiculously low compared to the Western World. They can therefore live off a lot less $, and therefore ask less for every contract.
It has nothing to do with skills... pure economics.

And unfortunately, there's nothing we can do about that, except move on to the next big hi-tech domain (since the core of R&D will undoubtedly stay here in the US).

Re:Market adjustment

[randolfe]

Globalization is the great leveler (assuming free markets). It takes time, but eventually, everyone gets paid what they're actually worth as opposed to what they think they're worth.

The above statement cannot be supported economically. The problem is the qualifier "free markets". Globalization is, in theory, an agent of leveling, but only if it's viewed in a near-zero-sum manner. What is occurring today is not free market globalization, but rather short-term greed exploitation. This introduces more inefficiency, not less.

Specifically, US skilled technology jobs moving to India, if a free market is assumed, should proportionally increase the standard of living in India, along with the relative competitiveness of Indian OEM product. However, when this occurs, pseudo-globalization will simply relocate again to lower cost of production regions. The net effect is that the actual value of the product/service is not reflected in the price of the product/service until either (a) true equality is reached or (b) external factors halt the trend. Further, a cynic, of which there is not shortage on Slashdot, will extrapolate the obvious notorious effect of global politics. That is, the pseudo-globalization effort creates a dependence upon low-wage exploitation. This creates a vested interest in slowing development of developing countries.

Someone evoked the European free market approach earlier. Although certainly not a flawless approach, the European philosophy is more disposed to pricing products/services at their true value. My interpretation of the European model, as applies to Indian off-shoring of high skill jobs, is that enough reasonable protectionism is necessary to both protect the value-price parity of European OEM product, while still encouraging Indian OEM competition. This model benefits both parties and is arguably the true intent of positive globalization.

Re:Market adjustment

[nahdude812]

Sadly this is a little idealalistic. "Worth" has varying definitions as you travel around the globe. An Indian programmer making USD 20,000/yr is far better off in his society than an American making USD 40,000/yr. Thus, an Indian programmer has a fundamentally higher capacity to do more for less. Over a great amount of time, as this money settles out in his economy from his spending it within that economy, that same money becomes worth less in comparison to the American-economy value of it, which is rising as the standard of living decreases in America (deflation, or inflation under 3%).

Also, making yourself worth more doesn't mean you're going to get a job. To make yourself worth more, and be able to prove it, you need additional degrees/certifications, which cost money. If you don't have the money for them, despite being as talented as the next guy who DOES have them, the job market will be a cold cold place to you.

However, Americans *will* have to accept lower salaries for the same jobs as before (already happening to huge extents), and this will shave off the outliers who were making salaries that were simply absurd. Unfortunately this shaving process too often takes off the top of the entire Bell Curve (too often in layoffs, those making the decision on who stays and who goes don't pay that much attention to who was worth their salt), and so more people who were making the correct value of their job will be fired than those who are fired because they make too much.

Once laid off (no matter how appropriately or not), it's extremely difficult to make your resume stand out from the resume of a pseudo programmer who knows enough about technology to banter jargon around, and fill their resume with acronyms because they heard them in an advertisement once. In order to make a competetive resume, one must either be over qualified, or a liar, because you're competing against other liars. And thus you end up having to take a job that is worth less than YOU are, and doesn't take advantage of all of your skills, nor help you to advance your own skills by pushing you at all. Thus you as an employee stagnate unless you have the time or drive to push yourself ahead on your own spare time. In that stagnation process (if you fall victim to it), you become worth less compared to those around you.

In the end I believe it will come around again full circle. What's going on in India, etc, is analogous to what happened in the U.S. in the 90's. An economy can only grow so fast in a healthy fashion. There's a lot of excess money from the 90's boom and subsequent crunch, which is looking for a new home which promises similar returns to the 90's boom. This money will flood economies that are not ready for it, these economies will artificially inflate, just like the U.S. one did, and eventually they're destined for collapse, just like the U.S. economy. This collapse will happen as a result of the U.S. companies having realized that "cheaper" doesn't mean "better," when they see that the quality of their product is reduced (if nothing else, through communication and time zone issues, let alone the "pseudo programmer" phenomenon from the U.S. 90's), and withdraw their money for the now not-significantly-more-expensive American worker alternative.

The next 10 years looks *very* bad for the U.S. IT industry, this is a pendulum, and it is still on its downward swing, away from the U.S. Things are going to get worse from here folks. Be *willing* to take a pay cut if it saves your job. A bird in the hand is worth two in the bush, and thus a $40,000 job is worth an $80,000 job which you were laid off from. Certainly don't expect a raise any time soon.

Re:Market adjustment

[kylemonger]

The secret is to make yourself worth more.

Yeah, right. The secret is marketing half-truths, old-boy networks, graft, etc., the same bag of tricks as always. When I see something like the scene depicted in this David Horsey cartoon then I'll believe in your meritocracy.

Re:Market adjustment

[aliens]

everyone gets paid what they're actually worth as opposed to what they think they're worth.

Yeah those CEO's man, they're worth so much. Especially when they kill the business. They get even more money.

Are you a CEO? You get to decide what someone is worth? Cause I'd like to see you argue that you're worth X while another person is worth Y and that's how it should be.

Re:Market adjustment

[JaxGator75]

Don't explain, sell! You think I wanted to sell my belongings and move (away from my friends and family) to NC??? Nope. Did you consider these things when you signed your mortgage and car note??? Did you REALLY??? I pay rent each month, so look elsewhere for tissues.

I am very cynical about this.

[YllabianBitPipe]

I think this outsourcing trend is the new face of technology in this country. We all have to adapt. We are not going to be able to change the system, because the system is run by the corporations that employ, which have the politicians in their pockets. Take a look at how systematically, the clothing industry, the manufacturing industry, the auto industry has all moved their jobs overseas, to asia, mexico, wherever. At each point, people who lost their jobs in the US made a stink, but nothing was done. I hate to say it but I don't see it any different today, even though our programming jobs are supposedly "white collar" ... BFD.

I think we are just going to have to get used to it. We are either going to have to learn to get by on way lower salaries, or get into another career. Technology just isn't the type of job that's going to last for a whole lifetime. I'm already planning an exit strategy.

remember back in the day of 1999 ... when people said the tech boom was going to change everything? Introduce a whole new way of doing business? Well, that promise is being fullfilled. It wasn't exactly the positive change we were hoping for. But one lesson should be kept from those days. Remember ... be adaptable? Get used to change? If you don't change from your old business ways you'll die? All those messages were being yelled at the management, when it should have been yelled at us netslaves, the ones who supposedly "get it". What we need to get is, be adaptable. Tech is simply too volatile to base your whole life's career on. And those who don't adapt and change, will die a slow, horrible death.

Re:I am very cynical about this.

[xtal]

Tech is simply too volatile to base your whole life's career on. And those who don't adapt and change, will die a slow, horrible death.


People should focus on being able to do something that produces value for a company or society. Learn to make something. Software as a product has a value that is rapidly speeding towards zero. Other sectors, like the embedded market, industrial controls, specialized welding, manufacturing automation and more all have jobs available, but require more learning and experience than your average network installation does. These are also jobs that by their nature cannot be outsourced.

I think IT as it was is going to die hard. The future is in finding new applications of technology to improve the bottom line.

This isn't the end of the world. Everyone needs to eat, and the economy has a way of providing for that. If the economy crashes to the point where there are no jobs, then there's no market for those foriegn produced goods, is there?

Re:I am very cynical about this.

[YllabianBitPipe]

I'm kinda pissed about this, but maybe some of us should have had more management aspirations. I know a lot of programmers are totally anti-management positions for themselves, but I think this comes back to bite you in the ass ... for example if you're a 40 year old coder with no management experience, out of work, looking for a job, competing with others charging half what you are asking ... etc.

Secondly, there are plenty of jobs that require you to be onsite other than management and "service" type jobs. Owning your own business, government work, medicine, lawyer, etc.

Right now might be a great time to start your own business. Low office rent, lots of people out of work for you to hire for cheap locally.

It's happened to manufacturing...

[Malc]

... why shouldn't it happen to software?

The grunt jobs will be shipped off to the cheapest place, whereas there will always be a place for higher-end jobs. The goal posts will constantly be moving though.

job bidding sites..

[joeldg]

I run the site listbid.com and can tell you with certainty that most of the people signing up and bidding on jobs are from eastern block countries. I don't have a huge Asian group, only around 30 or 40 but the majority are from Russia and the Ukraine. And these guys will do large jobs for cheap.

They actually, are the primary reason I added in a IP-To-Country part of the site, you can view where people "say" they come from VS. where their IP block is located geographically.

I will be adding some charts soon on the site to show the statistical breakdowns.

Re:Watch out for phonies

[TrollBridge]

"The dot-com boom created a lot of "programmers" who weren't."

You must be referring to my MCSE...

Oh .. programmers .. I see ..

[TheViffer]

and got me thinking about the nature of the current downtrend in programmer demand in the U.S

I hate this statement. Just what exactly do you consider a "programmer"? Is a MSCE a "programmer".

I look all around me and I see MSCE, 6 week crash course community college trained Java programmers, and guys who think they should be administrating 100 UNIX boxes because they were successful at installing Linux on the fourth try all over the place pissing and moaning on how bad things are.

On the other side of the spectrum I see C/C++ programmers and DBA's with job offers all over the place.

Until "programming" is a certified profession, such as engineers, doctors, even accountants, you can make the numbers do whatever you wish.

In the 90's businesses were pretty stupid. They thought that since you knew things around computers that they need you. Today, they are a little smarter and will ask more indepth questions, and ask to see that $50K+ piece of paper.

Re:Oh .. programmers .. I see ..

[battjt]

As a contract "application architect" (I architect/design/develop/mentor IT projects in Java/C/C++/perl), I'm seeing rates drop in half. Rates are still pretty good compared to digging ditches, but not where they were and I'm having to compete more directly with Indians here in the states. The quality coming out of India is improving. Right now, one of my competitive edges is that I am perceived to relate to and understand the midwestern American office worker better than an Indian consultant, but that is changing. I don't know what I'm going to do in 5 years. I've already taken a 35% pay cut over the last two years. I think protectionist policies are not the answer. I need to learn a new skill or accept the same compensation as my world wide counterparts. May be this is only effecting the incompetent and the contractors now, but I think you'll start seeing changes soon enough. A manager and three DBAs in India are cheaper than one Chicago based DBA. Joe

Asian deflation in many markets

[Ars-Fartsica]

The Asian nations of India and China are not just deflating tech salaries. To limit the view to this is myopic. Both nations have a high number of workers who are well trained and willing to work for very low wages.

Add to this the low barriers to commerce as a result of WTO membership and extensive fiber networks and the result is that we are about to enter a period of hypercompetition that will result in massive profit deflations for many American firms. Consider that the big three automakers are now demanding that their suppliers match the price for potential parts that could be produced at Chinese wages. They are essentially telling suppliers in advance to beat the potential Chinese price or the Chinese price will become a reality.

The end result of this will be the continued growth of Asian economies as China will most likely continue to surpass the US for foreign investment as it did for the first time in 2002.

Maybe in biotech and entertainment the US will keep a lead, but everything else is up for grabs and the lowest price will win.

I think it's a sad reality

[Uttles]

It is the sad reality that companies are willing to trade any sense of locality for the quick buck. Problems with shipping high tech jobs overseas are hard to quantify, and therefore do not show up on investor reports. The main problem today is that companies are working for the easiest way possible to get a little jump on some chart or graph rather than establish long term paths to success. These shortcuts will come back to haunt them though, and eventually things will even out, in my opinion.

Overseas Outsourcing

[spector30]

I am curious about the overseas outsourcing of call centers. When does it become more of a burden to tell your customers that they have to speak to someone that speaks their language as a second or third language than it does to provide quality service and support? I bear no grudge against people that have accents, as a matter of fact I find accents quite interesting personally. But customers rarely want to deal with this. When they call for help or with a complaint they want to speak to someone that not only understands them and their concern, but that they can understand as well. When this does not occur another customer is lost to some other company that does it well.

Just my $.02US (which probably isn't worth much right now, but wait for deflation to hit and watch out)

I saw this a decade ago

[BluedemonX]

A certain high tech company in Canada was experimenting with this about a decade ago.

They realised a few things quickly - and that was that you spent more time and money writing specs, that turned out to make the projects far less flexible. Also, because of cultural differences, for example, when finding a major bug after the project goes gold, some cultures have a "duck the head, don't say anything" mentality, which resulted, in one occasion of note, in a very expensive recall of MANY CDs that had been pressed and sent to customers.

The biggest reason for cost overrun in IT is NOT the salary of the engineer in question, but boneheaded decisions made at levels higher - yes, it may look good in the short term to hire cheaper people, but that doesn't necessarily translate into cheaper projects. Especially when you take the 3am long distance bills into consideration.

I believe Canada swung back after these experiments because it was costing them more than they anticipated, with too much attendant risk. (Company goes out of business? Sells the code on the open market?)

Of course, they wouldn't let us telecommute because they needed us RIGHT THEN AND THERE IN THE OFFICE FOR EMERGENCY MEETINGS, etc. But outsourcing the work halfway across the planet? A mere logistical hurdle to be hurdled.

Big corporate company

[ryanw]

I work for a big corporate america company that everyone has heard of. I could confirm that the demands of the current business stradegy is to off load programming to india or any other off USA soil site.

In the past development of new products was always developed here with local people and then once a product became "steady state" or in a maintaince mode it was then sent off shore to have them maintian any code or product.

This new development of working with offshore sites to develop new products has been a bit of a hastle. The business loves it because it appears to save money immediately being cheaper per line of code or per hour, BUT there are huge gaps when trying to deploy or release this product into production.

One of the major problems is offshore people can hardly speak english. We've found ourselves needing to rely on local foreigners to either translate or attempt to speak better english. This makes implimentation time and working with the system administrators a much more drawn out process.

Re:Call Centers and the Like

[mrlpz]

Are you nuts ? Have you ever tried using tech support call centers outside the country for anything of useful purpose ? Consider that DELL does this now, and there is nothing but discontent among customers ( and I'm not just talking about US customers, so that dispels the "US consumer as whiner" myths ).

And it's not just level 1 support, either.

Mmm...

[Greyfox]

Like IBM's Printing System's company, who does all their printer driver development in Romania. Which place you can get a damn good programmer with a Master's degree in IT for dirt cheap and don't have to worry about paying for nicities like health insurance. The trick being, of course, that instead of opening a branch of the company over there you sign a contract with a consulting firm and they worry about all the local regulations for you. Since software isn't a "product" like a printer or a cellphone is, it's not succiptable to the same taxes.

By the way, while I was over there, I met a guy from Siemens who was doing some manufacturing plant stuff in the area. He was complaining that they paid huge taxes on outgoing shipments, although most of that was refunded by the government a few months later. They were thinking of relocating their plant to Singapore or somewhere because of that.

It's quite obvious where this trend stops. Once we figure out how to outsource the entire command chain all the way up to the CEO, our shares of stock should be worth that much more because the company's cut their costs by a couple of orders of magnitude. I bet I could find a guy in Romania who'd be willing to be the company's CEO for one one-hundredth of what the current guy makes, with the same or better credentials. It's only a matter of time before shareholders realize this...

Average Programmers Need Not Apply

[at_kernel_99]

The boom times may be over, but they're more 'over' for the folks that entered technology for the money. The kids that switched majors or took a couple courses at a tech school in order to get a lucrative programming job are in trouble. But the folks that can actually think for themselves & communicate ideas effectively are not going to have as much trouble staying employed.

In the late 90's, anybody that claimed to have passed a VB, HTML or Java class (ha!) could find work without having to proove anything. As the job market tightens, the incompetent folks are getting laid off. Go figure. But the folks that know what they're doing & actually add value to a business continue to work.

Where I work, now and for other employers over the past 10 years, we've been doing custom software devlopment in a fast paced, dynamic environment. I've worked on multi-national teams that have had minor communication issues when we're all in the same office. No way did we have the time to write detailed specs that we could send off to another part of the world & expect to get perfect code back that just 'plugs in'. Our developers have needed the ability to communicate with one another on an ad hoc basis. This at all phases of the project - design, unit test, integration, production support. Some folks call it XP, some bad planning / project management. But the fact is that this kind of development is going to continue & the people hiring for these positions are going to have their pick of the cream of the crop. For those of us working in the field we're going to have to get used to the fact that most folks' salaries don't jump 10 to 20% a year.

Re:Average Programmers Need Not Apply

[doinky]

The boom times may be over, but they're more 'over' for the folks that entered technology for the money. The kids that switched majors or took a couple courses at a tech school in order to get a lucrative programming job are in trouble. But the folks that can actually think for themselves & communicate ideas effectively are not going to have as much trouble staying employed.

I have a CS degree and 10 years of experience; as do most of my peers. This downturn, in addition to the structural interference with the market by the government (H1B) is definitely having a non-trivial impact on the job market; people are unemployed longer than they would be and they are getting less money when employed.

The snarky kids at slashdot are in for a rude awakening one of these days. Believe me; I know a lot of ex-"only bad programmers can't find work" believers.

I'd say it's both - and neither

[Badgerman]

OK, that's an ambiguous answer.

First, it's obvious the market has changed. We had the dot-com-to-bomb experience, economic slowdowns, etc. New technology is coming out, old ones fade - then suddenly hang on. I'm not sure what's going on, but it definitely doesn't seem like it did a few years ago.

However my feeling is companies have overreacted to the changes going on, thus making the changes in the economy and jobs far more painful and pronounced than need be. So we have a "blip" on top of actual changes.

That being said, I think our ultimate problem now is that in a shifting and changing world, with changing technologies, it's hard to know what is going on, and may well only get harder. Things will change faster. Trends will shift quicker. Overall patterns will be harder to determine.

Our methods of predicting and reacting to economic trends are far behind the speed of the world.

Just 2 cents tossed in the wishing well of the future . . .

"protectionist policies like H1B quotas"

[JoeBuck]

The H1B program is not an example of anti-protectionism. Without any trade barriers at all, the employment situation in the US would be like that within the EU boundaries: a programmer from Portugal can get a job in Germany with the same rights as a German worker. Under H1B, an Indian programmer does not have the same rights as a US programmer; he is basically an indentured servant, who must accept any conditions his employer imposes or face immediate deportation.

The argument for H1B is the claim that there is a shortage of skilled technology workers in the US. At present, there is not a shortage, except in very limited cases. However, many companies prefer H1B workers to citizen or permanent resident workers, because they can drive them harder and pay them less, holding the threat of being sent back to India or China in reserve.

Re:"protectionist policies like H1B quotas"

[doinky]

The H1B program is an instance of government interference in the market - at the behest of big business, who did not like the idea that labor (programmers) were making more money than managers in many instances.

The EU is a good example - they simply don't allow guest workers in anywhere near the scale that H1B allowed. And just try to immigrate to Germany and see how far you get.

Re:"protectionist policies like H1B quotas"

[doinky]

What a load of crap. Yes, sponsorship costs dollars. A few thousand, in fact. When you can get an Indian to perform a 70K job for 35K, though, that extra few thousand for sponsorship is meaningless.

The reason not everybody uses it is that you have to have a fairly large HR department in order to handle the paperwork; or outsource to somebody who does.

H1B visas...

[weave]

Ah, why are these things still around? They were put into place when there was a shortage of tech workers.

So it's a double-screwing, exporting tech jobs and importing tech workers.

I knew I should have took up nursing. The only sure-fire growth industry these days...

Sad Truth

[kenp2002]

The sad truth is that the H1B Visa is no longer an issue. It is easier and cheaper to outsource your entire support staff to a foreign country. With the maturing of high speed communications the ability to work with staff across the world is forcing labor costs down. Any law passed is easily circumvented as the support center ( consulting shop outside the US) is not part of the business entity. The only way that this behavior could be deterred is by putting a tarriff on foreign services which would too broadly impact other industries that arn't "abusing" (relative term here) this business option. P.S> Thank Clinton for raising the H1B visa cap his last day of executive power. 3 days later 2000 IT staff nation wide (US) were given notice. 700 here in Minnesota. Where I was at the time EVERY person that was laid off was replaced by H1B staff the following month (That totalled 22 people). One of my co-worker at $33/hr was replaced by a H1B @ $9.50/hr. NY Times was applauding Bill for helping create a 5 BILLION dollar IT industry in India. That's 5 billion that American Workers lost. That's 5 billion directly gone from the US economy.

Re:Sad Truth

[DaveWhite99]

Bad conclusions. Here's where you messed up:

1) $33/hr is about 3 times more expensive than $9.50/hr. Therefor, $5B in America does not equal $5B in India. Try $5B in India and $15B here or $1.67B in India and $5B here.

2) Money does not grow on trees. Someone is paying their (your) salary. Their (your) company just slashed their labor costs by 66%, thus saving money. If they had not, they might have:

(a) gone bankrupt, putting everying out of a job

or

(b) laid off 66% of the workforce to cut costs, in which case they (you) would still be out of a job

3) Remember that your $0.99 fries from McDonald's is possible mostly because the dude/dudette frying them up is getting paid minimum wage, not $33/hr. At $33/hr, those fries would probably cost about $4 or $5. The point is that cheap labor benefits the consumer of the product of that labor. You are a consumer. You do benefit from cheap labor.

4) They (you) are not entitled to $33/hr. They (you) have to _earn_ their (your) pay.

That depends...

[j_kenpo]

Once again this topic comes up on Slashdot. I remember a quote one time (cant remember where to link) but the jist of it was that while cheaper labor, they provide a different mind set to projects. The poster mentioned that American programmers have a better problem solving mindset, while Indian programmers could spit out more generalized code much much faster and could do math based programming better. While I don't necessarily agree with this, it did bring up a good point in my mind, and that's the old "right tool (or programmer) for the right job". It's too bad that businesses see it in dollars, not sense and leave a lot of good American programmers without work, and put Indian programmers on programming tasks they would better suited for.

But back to this threads topic, I do think that it is a trend that will be difficult to break. The reason is saturation of programmers in America. Partially because during the IT boom, everyone and their mother went to get a programming degree, which left the US market saturated with programmers that were in it for the money, not because they loved it. I think that's the root cause of the US IT employment woes, just like in the early to mid 80's when everyone went the MBA's. And in about 10 years the same thing will happen, a new fad market will arise (legalized marijuana growth is my hope...) and the saturated market will subside. That's just my opinion...

Re:Call Centers and the Like

[pvdl]

> they are only outsourcing the call centers and
> other jobs for which no skill is required.

That is just completely misinformed and inaccurate.
Much software development work has already gone overseas to India and Russia. They work at about 50% of the rate you have to pay a programmer in the US.

That work is never coming back to the US economy. New software development and QA jobs are going overseas faster than they are being developed here. The skills you learned in college don't help with this.

It is not unusual to see ads in the Silicon Valley paper (Mercury News) for software management jobs in Bangalore. They are trying to lure home Indian expats.

Things are ugly in the world right now.

high CMM level != good code

[jkabbe]

The most insulting part of the slideshow was the assumption that a high CMM level for an organization meant good code was being written.

All the CMM level means is that things are being done in a defined manner. Crappy code can be written in a defined, repeatable manner.

TODO: Workflow and Training

[blunte]

Many development jobs may be leaving the US, but there are many other tech related jobs that will exist (and don't currently).

From my consulting experience (large and small companies), I've seen two areas that need major improvement: workflow and training.

They're actually strongly related. Many companies are just now basing a significant part of their business processes on technology. They've been gradually moving this way for some time, but it's at the point now where a tech catastrophy would seriously hurt them. However, they're still only taking advantage of perhaps 10 to 40% of what's technically feasible and also practical. There's still quite a lot of double entry of data and shuffling of papers.

So the workflow side should see a continued increase in technical development for years to come, and this will require services of "experts" of both the problem domain and technology solutions.

Training is the other area that should see continued and hopefully increased rate focus from businesses. Most users (and their bosses) approach computers and software as they approach a rental vehicle. They don't typically get much or any formal training, and they don't spend much time with books or manuals.

They're just scratching the surface of what much of their tools could do for them. Many people need broad and specific training to really make their technology work. An example of this is MS Exchange and Outlook. (I'm no fan of these, but I use them as example since they're ubiquitous.) Most business users can send and receive email, possibly with attachments. But most never touch their calendars, public folders, etc.

So maybe development is moving away, but there exists a big vacuum for other tech-related services, and those are going to stay right here in the US, if only because they often require personal contact.

New World

[nycsubway]

This is most likely a new world order. although I wouldn't call it a 'new world order', it certainly will change things. Here's why:

Programming is a skill used by people to generate applications/programs that companies use, and that companies sell. It costs money to employ someone as a programmer to produce these programs. Up until this point, it did not make economic sense to hire people in places other than where you were selling the product. Usually because there were not enough skilled people available outside of the US and europe who could program.

Now there are many other places where people exist who know how to program and who will do it for less than people here in the US. The fact that the programmer is not geographically close to the company does not matter anymore with the advent of the internet. I think this trend will continue because it is so similar to how other industries were lost in the US.

The only two reasons a company in the US will hire someone in the US a) the company cannot get the product cheaper with an employee working in another country b) there are no workers with the necessary skills outside the US

Textiles, auto manufacturing, and steel mills were successful in the US until it became cheap enough to ship the products from another country to the US. This became reality when US companies could find cheaper labor overseas. The worker and the company no longer needed to be near each other, because the link between them (shipping, communication) was cheaper than hiring someone locally.

This same thing is happening with software. It is now affordable to hire someone who doesn't live near the company. And there is an abundant supply of skilled workers who will work for less than americans.

This scenario is not much different than what happened with US manufacturing jobs starting in the 1980s. I predict the IT world will have a similar outcome.

Re:Watch out for phonies

[molarmass192]

I'm floored, you actually posted something that isn't a troll or flamebait. Even more absurd, I agree with you 100%. The boom created an artificial number of "programmers" who were anything but. Reality is that if you didn't study comp sci in college, you probably shouldn't expect to get another job in IT. The "gold rush" is over, only those that have in depth skills and stay on top of those skills should have an expectation of remaining in this biz. If you don't work in IT for the sheer love of it first and a paycheck second, your days are numbered.

One area safe

[grennis]

One area of software development that will never be outsourced is projects for the U.S. Government and military. Get a security clearance and you can write your own career ticket.

The New World Order

[herwin]

It's difficult to predict anything, particularly if it involves the future, but I'll give it a go. My experience with the expansion of higher education in the UK to the great unwashed is that it hasn't changed the top end of the curve--the added programming labor has been rather clueless. Then my experience with foreign students taking a software engineering MSc has been that they fit in with that group, probably because the resources aren't yet available to teach them adequately at the BSc level. I've also heard from colleagues in the USA that sending programming tasks offshore is even worse than sending them across the country--don't have anything life-critical or mission-essential done in a place where you can't check up on the help. So if you're good, you'll keep your job or even get a raise if you can manage a bit. If you're not so good, it won't be so much fun.

Re:Gee

[nomadic]

Face it. What the USA do, you do because it benefits you. You're not shining white knights. You are cutthroat egomaniacs, willing to go to any length just to keep your average 3.5 SUVs per household.

Yeah, we do what we do because it benefits us. The same as every other country, only we get flack for doing the same things everyone else does.

You think I could get a job in India? Hell, do you think I could even get a work visa?

If you think the trade barriers in the US are anything compared to those of say, Japan, you're delusional. But we're expected to be selfless.
You think we spread "venom" over the world? Look how other world powers have acted over the centuries--what we do is pretty damn tame.

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).

MOD PARENT DOWN - PLAGIARIZED!

[SlashChick]

The parent post was copied directly from this link (originally linked in the article summary as Bruce Eckel's viewpoint.) Please do not mod the parent post up, as it is not an original post and does not identify the original source.

Mod him up!

[jcr]

IT workers never had any right to prevent their customers from seeking cheaper alternatives. The customers aren't anyone's property; we have to compete for them, and that's as it should be.

-jcr

I vote New World Order

[Pedrito]

I'm afraid we're looking at a buyer's market, as far as IT people are concerned. At all levels. There are more programmers these days than there are jobs. There are WAY more web developers than there are jobs. Things will settle over the next few years, but one things is certain; The days of easy money are no more.

No longer will we be able to command an average pay $60,000-$80,000 a year with stock options (who would want them anyway), and the other perks programmers are accustomed to. Programmers are going to become like accountants, at best, in terms of their work environment, and probably salaries and other things as well.

Gone are the wonderful days when we held all the cards. Gone are the days when we got foosball tables and video games in the office.

I'm not bitter. Really, I'm not. I've been without steady work for over 6 months (though I do have several contracting things going on that are keeping me just barely afloat). It's a hard reality, but I think that is the reality. I had never expected it, but it's sinking in.

I've got a lot of experience. I've been programming for 24 years. I'm pretty damn good at it, if I do say so myself. I'm not a prodigy, but I've coded assembly for 3 CPUs, I've programmed in Algol, Cobol, Pascal (even wrote a Pascal compiler years ago), Perl, Modula-2, C, C++, and C# (these days). I've architected and written some really impressive stuff. I'm sure if I'd be willing to relocate to other locations, finding work would be a bit easier.

I've written a book in this field and about 20 articles. And I have trouble finding work. That's not a good sign.

I'm currently looking into other things that interest me a bit more than programming does these days, though. We'll see what pans out. There are some good opportunities for programmers down in Mexico too, and I like living there, so maybe I'll head back there. Who would think people would be going to Mexico for work?

The new reality? It's Half

[swb]

That's the new reality. It's half. Whatever you were getting before or thought you deserved before, it's now half. And it's not ever getting any better than that.

Guys making $100k? Try $50k. Making $60k? It's $30k. It's half.

Had a 2 BR apartment? Enjoy 1BR. Had a 1BR? It's studio time for you. It's half.

Had a BMW? Enjoy your Civic. Had a Civic? I've got a use Kia or a bus pass. It's half.

I don't like it anymore than you do, but I'm afraid it IS the new economic reality.

again?

[*weasel]

even in the boom people were worried about tech outsourcing. so why is this suddenly back up on the radar? my guess is that with a down economy it's more likely that this 'news' will shock people into reading/watching/consuming.

for some reason (ethnocentricity) i doubt that tech jobs will ever be significantly outsourced overseas. yes, gone may be the days of low-hanging fruit in the tech sector, and our growth rate certainly could not be sustained - but if you think it makes sense for the average small or even medium sized company to outsource, you're nuts.

not to mention integration and consultation are the two biggest gems yet to be mined for tech professionals. And they're entirely localized problems. You can't outsource the kind of tech that walks over to your user's desk to help them understand how to get the most from their system - the kind of tech that integrates -your- phone switch with -your- mail server, in -your- office to promote -your- core business practices.

and its not only cost management, it's risk management in a down economy. If you have $10m to invest in a project, and it's kinda risky - hiring local leaves you with full-time employees, employees whose loss -will- affect the morale of everyone else at the company, who -will- be drawing medical coverage, (who probably will get severence or at least holiday pay), and who -will- require infrastructure to support.

if you're not sure a new development is going to bring you new business - it makes sense to outsource. if it fails and you outsourced, you cut your losses and move on. that easy. and while you're outsourcing, what's the difference between the shop down the road and the shop down the pacific?

oh, and that slideshow by Hunt and Thomas was crap. basically it was: reinvest in yourself to keep your job, don't lock your dev experience to a particular vendor/language/industry (duh). but we can't all be 'recognized experts' or lecturers or project managers now can we? it's more a treatise on how the gray hairs can fend off the tide of young coders than how coders can defend themselves from being restructured or outsourced.

Re:again?

[MasteroftheVoxel]

wrong. The point is the is the tech jobs ARE being significantly outsourced. Look at the developer jobs AOL is moving to India. Look at i2. Look at dozens and dozens of other companies.

Yes, you can outsource integration and consultation and they are doing just that. i2 has all its internal and external tech support in India. The call centers are there. The sysadmins are there. The programmers are there. Soon all the servers will be moved there. The local tech people were laid-off and more in Bangalore were hired. Companies are offering relocation packages at 1/4 the pay to move to Bangalore. Some Indians who have immigrated to the US are taking them and moving back gome.

Its exactly what you are saying WON'T happen that IS happening and that is why many are upset and think it is a bad idea. Read the articles and look at the data out there.

People are People

[ThulsaDoom]

Wired just ran an interesting article last week about Indian IT workers falling apart after long hours. IT Sweatshops Breaking Indians

Everyone has thier breaking point I guess.

All the comments

[doinky]

from the Slashdot Libertarian Brigade miss the point:

This isn't happening because our markets are free and it's what just happens naturally.

It's happening because of the interactions between national economies; which most certainly are NOT subject to the normal rules of capitalism.

H1B was big companies trying to use the government to change the law of supply and demand for labor. The intercompany transfer visas were more of the same.

Offshoring, on the other hand, is a different case; but still not "normal capitalism". Companies overseas are simply not treated the same way as companies in the local nation (whichever one you're in). They work under different labor laws; different environmental laws; they enjoy or suffer different taxation burdens. This competition is not fair and not particularly helpful in the long-run for EITHER country in the equation. The first-world country loses money and jobs; the third-world country gains better-paying but still sweatshop employment but never develops a middle-class and the concomittent protections against the unchecked abuses of the free market.

Awww, somebody's player-hating again...

[MohammedNiyalSayeed]

Yes, all of us Americans are incapable of properly pronouncing words. Yes, we're all evil. Now bring your throat a little closer, so I can cut it, bitch.

Fact: we're a huge economic juggernaut, and you can't topple us. Sure, it may make you cry like the little baby you are, but you can't do a goddamned thing about it.

Sucks to be you, eh?

Re:The game is up - redux

[ebusinessmedia1]

This is too important an issue to just point to a link; here's the body of the text for the link above, written by Sanford Forte for the Merc News in San Jose a month ago; his article says it all:
http://www.bayarea.com/mld/mercurynews/59188 24.htm

"Foreign engineers will change our economic world; prepare yourself
By Sanford Forte

WE'RE hearing a lot these days about economic distress. What we're not hearing enough about are global economic and business changes that hit our manufacturing, technology and financial sectors -- and lead to job displacement. These changes will not abate; if anything, they will accelerate.

It's more complex than just ``globalization.'' It's a series of technology and capital transfers that have fundamentally changed our industrial and technological playing field. The rest of the world is close to fielding robust post-industrial infrastructure, and learning to outplay the best of us.

The National Science Foundation reports that China graduated nearly 200,000 engineers in 1999 from good universities that get better by the year. By comparison, American Universities graduate a mere 60,000 undergraduate engineers annually.

Combined, India and China produced nearly 26 percent of the world's newly minted engineers in 1999. Excluding Japan (where engineering wages are higher), Asian economies graduated 320,000 engineers in 1999 alone.

Wages for Chinese engineers range from roughly $4 to $8 per hour. Engineers from many other Asian nations (excepting Japan) command little more than that. These well-trained engineers are all perfectly capable of working ``on the wire'' for engineering firms all over the world -- and they are doing just that.

China has some 18 million people migrating from the interior to the coastal manufacturing provinces every year. This represents a virtually limitless source of low-cost labor for the next 10 or 20 years. It will feed China's surging consumer demand. Don't believe for a minute that China's (or the Pacific Rim's) economic development will be mostly fueled by American-made products and technology. It won't.

China is already the largest manufacturer of consumer electronics products in the world, and within three years will be the world's largest automotive manufacturer.

Manufacturing is migrating from Pacific Rim economies (Malaysia, Japan, Korea, Taiwan, India) to China, leaving large workforces and technology infrastructures behind. Those displaced workers are migrating to the technology service sector, and already posing a competitive threat to high-tech service sectors in the developed West.

India already has Six Sigma (a universal measure of quality that strives for near perfection) technology and consulting firms equal to our very best, offering superb technology solutions at cut-rate prices.

Roughly 47 percent of Americans are directly or indirectly dependent on technology for their livelihood; keep this number in mind when considering how the ``Law of Lowest Wages and Costs'' has already -- and will increasingly -- impact our economy and lifestyle.

Bottom line: We in Silicon Valley -- and America -- are in for a long, somewhat painful ride. We will be challenged like never before. Americans will, after a time of readjustment and pain, finally have to ask what ``enough'' is . . . and that's a good thing.

It's a good thing because the seemingly never-ending upward spiral of promised prosperity that Americans have recently taken as their birthright has come at real cost: disintegration of families, environmental degradation, unhealthy xenophobia borne of the fear of ``losing advantages'' that we so dearly enjoy.

After the looming crisis fully takes hold, after the scapegoating of politicians, foreign nations and immigrants has run its course, Americans will search inward for values and ways of life that don't depend on maintaining material hegemony that is in excess of ``enough.''

We can be prosperous without obsessing ab

maturation of a market

[circletimessquare]

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.

Re:maturation of a market

[heli0]

"become a plumber... these people demand more and more $ every day as less people in the west want to get into these fields."

I think salary in that profession has more to do with the membership quotas that the local unions set than with supply of labor.

Re:maturation of a market

[wytcld]

being a programmer in the future will be like being a writer.

writers are very talented, but they are a dime a dozen.

Awk. Bull. Talented writers are very rare on the ground. And that's a large part of the reason for the current slump in the US economy. The tech "bubble" wasn't based on programmers or sysadmins becoming suddenly brilliant. It was based on writers - the original Wired crew for instance - giving the general public a vision of a new future worth moving to that just happened to require giving a lot of work to programmers and sysadmins for awhile.

Then this general enthusiasm got coopted by other writers who were more interested in hyping economic rather than cultural plenty - still, some were very talented as writers. With the crash of the illusion of instant economic plenty, we've also lost the vision of tech-based cultural plenty. Programmers will be lacking work just as long as it takes to restore that vision. That restoration can be helped by a few real-world examples of neat new stuff from programmers and engineers, but finally is only sold to the wider world through excellent writers (who, what with public speaking fees plus their book royalties make a pretty dime indeed when riding a wave).

If we had more good, insightful writers, programmers wouldn't be out of work.

Your Right but I disagree

[Brigadier]

In many sences your correct but I disagree. In many third world coutries the cost of living is a fraction of that of the US. Here we have $30,000 cars, we pay $1,800 a month for rent. In the Sudan .. you can live on that $1800 a month in lavish. I grew up in Jamaica and compared to now my expenditure is a fraction of what it is now. No I dont think everyone should have a nice car and expensive houses. Health insurance yes, education yes. But in the US what we spend the big bucks for is wants and not needs.

Re:Your Right but I disagree

[Khomar]

Something else that I have yet to see in this discussion is the cost for safety and environmental laws. The American government has been many restrictions and regulations on companies that have made it very expensive to produce physical goods. These restrictions are much reduced or non-existent in most of the countries that provide these materials. Now, I am not saying that we should remove these measures -- taking care of the environment and people's safety is important -- however we are adding an extra cost to American companies that other countries do not need to face putting local production at a disadvantage. As a result, we no longer have the ability to produce steel in our country, and our manufacturing capability is extremely small.

It makes me more than a little nervous to realize that we have virtually no production capability within our country. We had better hope that our neighbors will continue to be willing to trade hard goods for our "information" technology. I really wonder sometimes on what exactly our economy is running other than an increasingly large bubble of debt (you consumers better go out and buy more, though, for the sake of the economy). Scary.

Re:Your Right but I disagree

[Pxtl]

That's why I mentioned "the world in general" - I don't think the first world should be purchasing products from environmentally unsound countries - to do so makes their own environmental laws totally pointless. I didn't want to mention it, because my original comment was aimed at the mainstream patriotic American, and including environmentalism in my post would make it sound like I'm a tree-huggin' granola-type.

Think of it this way - if your country complies with the Kyoto accord and it makes your cars really expensive, but you buy from country X that does not, then your screwing your own economy for no reason at all - the same amount of cars are being made, screwing the environment just as bad, the only thing is the responsible nation is getting screwed economically. Ergo, don't buy from non-compliant nations or else nothing gets solved.

It's not IT, it's IP.

[ahfoo]

Thinking that problems are limited to IT is a bit myopic. Semiconductors are not exactly the place to be these days either.
The problem goes back to the Reagan era policy of putting all the US's eggs in the service sector and then building up this straw man called intellectual property that is essentially hollow. It was never intended to be more than a scam like ponzi or a pyramid game which is what it has turned out to be.
Tighten up patent law back to where it was before the depression, make deregulation a mantra and the monopolies will grow like cockroaches in a backed up sewer.
Well, it worked. Now we're talking about deflation. Hmm, is this really so mysterious.

Your role explained

[zoeblade]

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:

...I ment a seventeen-year-old girl who assembles CD-ROM drives for IBM. I told her I was impressed that someone so young could do such high-tech work. "We make computers," she told me, "but we don't know how to operate computers."

low tech sector wages are relative

[ratfynk]

When the US economy takes a so called down turn it is not a huge suprise. The so called "growth" factor that our economy relies on for market business decisions is fundamentally wrong. There is no reason for economic models to be geared to constant growth.
The tech sector fell into this trap in the 1990s.

The economic mumbo jumbo you hear and see everywhere in the US media is in stark contrast to reality. We have relaxed our environmental laws, beaten up on labor unions, sent jobs off shore to make consumer products cheaper, and still corporations are not satisfied. Why? Because constant growth in consumer spending is no longer possible.

The so called consumer is not getting wise to the Credit Card trap, essentially the cause of October 1929.

The engine of our economic growth has become the credit card, and the unrealistic expectations of the business world. The chickens are coming home to roost, first in the tech sector, then in all sectors if consumer credit continues to increase to unsustainable levels.

Raising interest rates will only precipitate the crash, so as the fed knows, it is caught in a terrible trap. The only solution perhaps is huge consumer credit default and mayhem.

Re:The Economics of Empire - exactly right

[ebusinessmedia1]

This, from:
http://www.bayarea.com/mld/mercurynews/5918 824.htm

Foreign engineers will change our economic world; prepare yourself
By Sanford Forte

WE'RE hearing a lot these days about economic distress. What we're not hearing enough about are global economic and business changes that hit our manufacturing, technology and financial sectors -- and lead to job displacement. These changes will not abate; if anything, they will accelerate.

It's more complex than just ``globalization.'' It's a series of technology and capital transfers that have fundamentally changed our industrial and technological playing field. The rest of the world is close to fielding robust post-industrial infrastructure, and learning to outplay the best of us.

The National Science Foundation reports that China graduated nearly 200,000 engineers in 1999 from good universities that get better by the year. By comparison, American Universities graduate a mere 60,000 undergraduate engineers annually.

Combined, India and China produced nearly 26 percent of the world's newly minted engineers in 1999. Excluding Japan (where engineering wages are higher), Asian economies graduated 320,000 engineers in 1999 alone.

Wages for Chinese engineers range from roughly $4 to $8 per hour. Engineers from many other Asian nations (excepting Japan) command little more than that. These well-trained engineers are all perfectly capable of working ``on the wire'' for engineering firms all over the world -- and they are doing just that.

China has some 18 million people migrating from the interior to the coastal manufacturing provinces every year. This represents a virtually limitless source of low-cost labor for the next 10 or 20 years. It will feed China's surging consumer demand. Don't believe for a minute that China's (or the Pacific Rim's) economic development will be mostly fueled by American-made products and technology. It won't.

China is already the largest manufacturer of consumer electronics products in the world, and within three years will be the world's largest automotive manufacturer.

Manufacturing is migrating from Pacific Rim economies (Malaysia, Japan, Korea, Taiwan, India) to China, leaving large workforces and technology infrastructures behind. Those displaced workers are migrating to the technology service sector, and already posing a competitive threat to high-tech service sectors in the developed West.

India already has Six Sigma (a universal measure of quality that strives for near perfection) technology and consulting firms equal to our very best, offering superb technology solutions at cut-rate prices.

Roughly 47 percent of Americans are directly or indirectly dependent on technology for their livelihood; keep this number in mind when considering how the ``Law of Lowest Wages and Costs'' has already -- and will increasingly -- impact our economy and lifestyle.

Bottom line: We in Silicon Valley -- and America -- are in for a long, somewhat painful ride. We will be challenged like never before. Americans will, after a time of readjustment and pain, finally have to ask what ``enough'' is . . . and that's a good thing.

It's a good thing because the seemingly never-ending upward spiral of promised prosperity that Americans have recently taken as their birthright has come at real cost: disintegration of families, environmental degradation, unhealthy xenophobia borne of the fear of ``losing advantages'' that we so dearly enjoy.

After the looming crisis fully takes hold, after the scapegoating of politicians, foreign nations and immigrants has run its course, Americans will search inward for values and ways of life that don't depend on maintaining material hegemony that is in excess of ``enough.''

We can be prosperous without obsessing about prosperity, that is, sacrificing our very lives and identities to some abstract definition of ``success.'' I predict a resurgence of interest in things spiritual, a more relaxed defi

Outsourcing outrageously-paid executives

[SgtChaireBourne]

Oh really? So when did corporations start outsourcing their outrageously-paid executives to India?

Good question. The average executive compensation has been creeping up towards 500 - 600 times the average employee compensation. Saving even half of that would allow 250-300 staff to be retained instead of downsized, or could even be used for staff bonuses, or -- get this -- reinvested back into the company to promote growth.

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.

Re:Outsourcing outrageously-paid executives

[Misch]

Oh, don't worry about re-investing in growth. Since Bush as pushed through the dividend tax cut, companies are saving up their money and will shell it out to their investors in 2004 (when the 0% tax on dividends goes into effect).

If a company isn't willing to spend it's money investing in itself, why should I?

Outsouce. Save $. Then complain about quality.

[Capt_Troy]

Here's what I've seen...

I've been fortunate enough that even in the downturn and the current economy, I was only unemployed for 3 months. I feel for those who are out of work now because I know that there are many many excellent programmers who can't find anything.

The problem?

Let's face it, a lot of people went to programming without experience and talent durring the dot-com years when they could get 60K without a college degree and a little experience in visual basic.

Those people along with the legitimate programmers lost their jobs and now they are all mixed together out there in the hiring pool.

To make matters worse, there is a corporate reality now that one programmer is as good as any other (and in my experience, the people doing the hiring have no facilities to tell if an applicant is qualified), so they hire the cheap guy or the fancy talker our outsouce to another country. I know a lot of really excellent unemployed programmers that have been passed up for inexperienced and untalented programmers.

So they continue to hire the cheapest workers and outsource to countries with an abundance of low wage workers and then they complain about the quality of software these days. It's ironic, but they can't seem to get that stigma out of their eyes...

T

Best laugh all day

[autechre]

> Cheaply produced chicken for instance, pumped
> with water to increase weight, moved half way
> across the globe packed *with conservatives* is
> one downside for instance.

(emphasis added)

You know, I'd really have to weigh the benefits of that one. I'm opposed to commercial mass-farming of animals, but if they were stuffed with the likes of Bill O'Reilly and Michael Savage...mmm...

(I think you meant preservatives, but I can dream)

We Are All A Commodity!

[webzombie]

Lets face it...

Globalization is just one part in a very large movement that looks to increasingly turn human labour, be it sales person ot programmer into "just another commodity".

As with any significant shift in the human condition, technology will evenutally commodify more and more jobs and careers and unfortunately business will always chose the quicker and cheaper path to improving the bottom line...

Its like business HP style...cutting our way to a better bottomline and bigger executive bonuses

Just something you're going to have to get used to

[CashCarSTAR]

20-25% unemployment
Massive social uphevel
No job security

There is no solution.

We played the game as a society, and we lost.

Such is life.

Outsourcing in general

[__aaaehb3101]

Since most companies see no "Real Value" in IT, it is no wonder that IT jobs are moving to where labour is cheapest. When the major computer manufacturers and the major software companies are already outsource thier own support and programming. How long do you really think it will before your job goes "away'?

Come again?

[Pac]

Human rights my ass, unless you are talking about fat rich Western kids rights to have an overpaid job. You propose to let the Indonesians for whom a US$ 5 a day wage buys a living, die jobless, moneyless and foodless, in order to pay ten or a hundred times more to someone in San Francisco, Berlin or London for exactly the same job.

The two countries you name, China and Indonesia, have indeed lots of human right issues. The jobs offered by Western companies make this situation better, by creating a new technological middle class capable of seeing the benefits of free information flow and educated enough to fight for it.

I won't even try to take away your dreams as in "The USA supports freedom", but try finding out why China is one of US largest commercial partners and also which foreign countries support the Indonisian regime.

Biting The IT Bullet

[Foofoobar]

Companies are going to pay in the long run and many already are figuring out the folly in this. Though tech workers in foreign companies are cheaper, unless you are actualy willing to have a presence over there, this is not a viable solution. Communication barriers and cultural differences create too many miscommunications and problems and something that could have been done stateside takes twice as long.

My wife who is a QA tester, had to work for a company that moved all there QA to India and it became increasingly more and more difficult for the developers who were Indian to work with the developers who were American. Aside from that, they didn't understand goals and expectations for the product and ended up giving them something much different that what was asked for.

I think tech support, customer support and other low-tech things like that can be moved but in the long run, if you are willing to commit to a presence in a foreign country, you are better off sticking stateside... or trying Canada. :)

unlimited appetite for GOOD programmers

[brlewis]

Successful programming projects save companies lots of money. One successful project will only whet their appetite for more. I expect there will always be work for me, no matter how many overseas programmers compete.

An addition

[richard_willey]

Many of the discussions taking place on this mailing list seem to be focusing on one part of this argument while ignoring a number other significant issues.

Case in point: Let us consider a production process in which output is a function of two factors of production. K = Capital and L = Labor. Globalization is creating new opportunities to outsource labor, which, in turn is causing the price of labor to fall. Simply put, wages are falling while returns to capital owners are increasing. In turn, everyone on Slashdot is obsessing where it is good or bad that jobs are being outsourced.

What is being neglected is that the government can (and some would argue) should intervene in the economy to smooth out the dislocations. The higher returns that are being generated by the capital owners can be taxed and used to provide income supplements and educational training to displaced workers. If the outsources is "pareto improving" income to capital owners can be increased without decreasing returns to labor, then go ahead and outsource away. If, however, outsourcing results in a net drain on the economy, things get a bit more dicey.

Where the current systems in the US are breaking down is the combination of massive outsourcing with increasingly regressive social policies. We are increasing the share allocated to capital at the same time that we are slashing taxes. In turn, this is dramatically skewing income distributions. Not a good combination.

Elbonians

[BillFarber]

The Elbonians are simply too cheap to compete with and will eventually perform all IT work.

In other words

[SideshowBob]

Let me distill your post down to its essence:

"The good ole' boys network will keep the fat cats from suffering the same fate as the rest of us"

Thats my take on it anyways. And I don't necessarily disagree with you, but I don't have to like it either.

Re:In other words

[Marc2k]

(fucking candians, taking all of our jobs)

Candians? Are those natives of Candyland©?

One problem with this...

[sterno]

You've got a programming team of say 100 developers. You decide to outsource. You take 90 of those jobs and send them overseas. 10 of them you transition to do integration and analysis. So, what do those 90 people do?

Sure we can try to move up the food chain, but the nature of this is that there are inherently less jobs the further you move up the chain.

The Reality of it All

[zpiderz]

I currently work for $7.25 / hour doing small time web development for a department while I'm in school. It's not that much, but I don't do much either. A friend visiting from India says that a middle class person makes about 1,000-1,500 rupies a month (and that's full time out of college) You get about 46 rupees per dollar now. So, if I work 4 hours I've already made enough to live decently for a month in India. If I worked fulltime (8 hrs / day) I'd be filthy rich for 1 days work. They work long hours all month long and make what I (a cheap college web developer) make in 2 days. How can we compete with this?

Ironically, this could be good news

[Canadian FBI]

Although, since I'm employed as a programmer, I have to cringe at stories like that one on CNN.com, there is a silver lining to news like this. The more headlines about how bleak the outlook is for the tech sector, the fewer students will go for computer science and similar degrees. Aside from less competition in the future for those of us already in the field, it'll mean the people doing computer-related work will be doing it because they like or and/or are actually good at it, not because they thought it was an easy ticket to riches. Having entered college during the dot-com days and graduated after the bubble burst, I think this is a good thing.

We have ourselves to blame

[Bob Abooey]

The IT industry has continued to work to make high level programming tools and to reduce the barriers of entry until programming has finally become a commodity.

So now we have programmers who are used to getting $80 per hour for highly skilled work demanding the same thing for work that your average self taught hacker can do. Of course it makes sense for business to farm it over seas to have it done at a fraction of the cost. It's pretty straight economics if you can remove your emotions from it.

Re:Watch out for phonies

[wideBlueSkies]

>>Reality is that if you didn't study comp sci in college, you probably shouldn't expect to get another job in IT.

Hmm. So my company taught me COBOL and JCL in 1985. While I worked as a junior programmer maintaining 15 year old batches I taught myself C and C++. I worked up my level of responsibility at my job and was trusted with new development for a major mainframe implementation. So I learned DB2 and CICS along the way.

After that, my boss at the time started to talk to me about webifying some of the mainframe systems. He knew that I was learning C*. So I wrote a couple of big C++ based CGI systems that talk to DB2 on the 390.

I have fantastic relationships with my users. They call me when they have trouble, because they know that I'll listen to them and help them.

I have good relationships with developers all over my firm. I believe in sharing knowledge, and working together to brainstorm and solve problems. This I learned over the years is important towards getting projects done.

These days I'm a j2ee guy and an architect for a $10 million dollar system.

I took only 1 computer class in college before dropping out in 1987.

The parent's comment indicate that because I don't have schooling, I don't deserve my job. Is this true even though this is what I've always wanted to do, and I love it?

BTW, I'm working to get out of straight coding, and into project technical leadership.

cyclical? bah!

[evilWurst]

I don't think computer work is cyclical at all. I think it's going to follow the same pattern as labor, and while I don't know exactly where it's headed, I don't think it repeats (no cycles, hence it is not "cyclic").

Work is outsourced to wherever it's cheapest to do, and it looks like it's already at the cheapest point already. There might be one more step left (Africa) and then we'll have gone through the whole world, and prices are going up worldwide as standards of living improve - making this shifting of the jobs less worthwhile as time goes on.

When will it be cheaper to have an automated chip fab/car plant/whatever here than to build a fully manned one elsewhere? When will foreign IT cost more than the communication barriers and planning make worthwhile? Those are the points where the work comes back home to stay. There's definitely a process of shifting and settling going on, but it doesn't look very cyclical, it just looks like different industries are at different steps in the process (and going through it at different rates). That can give the illusion of cycles.

(This theory probably has an official name or something, which would have saved me a lot of explaining, but I'm not a professional economist, so I had to go the long way around :)

reality strikes

[rutledjw]

C++ may be C++ to some, but there are other stories as well. I have cousins who own a company which is NOT IT based but has moderate-to-heavy IT requirements. They've had trouble with goofy contractors writing poor software. Then again, they're in a small town far from a bigger one with better people.

Solution? Use an Indian company to do the job! C++ IS C++, after all. Within a year, they were back at square one. I have another friend that is interviewing and testing Indian developers for a proposed India-based development lab. Result? Very few were able to answer half the questions correctly (mid-level Java developer-type questions).

So, quality does kick in at some point. India is NOT the IT panacea some have hoped for. I still think we'll see some more outsourcing, but it isn't the end of IT as we know it. Not every company can do this kind of thing.

On the executive point, yes and no. There are a LOT of execs who are part of the good-ol-boy system. Those who are good, do a great deal more. But the squids...

Anywho, my opinion...

Re:reality strikes

[AssFace]

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"

Outsourcing doctors?

[srowen]

Most people think that software development will go offshore and stay offshore, just as most textile manufacturing jobs did earlier in the century, and that it will be painful and inevitable.

Before you think that too, ask yourself -- how much do you think software engineering is like making a pair of pants?

I'd cite a different event, or non-event, in history -- the U.S. has yet to outsource (expensive!) jobs like doctors, lawyers, architects, executives, etc.

Is software development more like this? evolving into a new highly specialized, skilled profession?
In that case a certain, large amount of dev work will never be outsourced.

Alternatively, think of it this way... if outsourced development is actually as useful as some people think, it will eventually become more expensive. As soon as it is anywhere near the cost of on-shore resources, it ceases to be useful.

Over time, the solution is not cheaper people but fewer, skilled people -- with smarter tools instead of an army of bodies to do grunt work. I think companies that think this way will ultimately do a lot better technology-wise and just overwhelm the outsourcers of the world in the end with superior products.

Re:Outsourcing doctors?

[Anonymous Coward]

the U.S. has yet to outsource (expensive!) jobs like doctors, lawyers, architects, executives, etc.

That's because these people must be licensed to practice in the US. Why? Because they all maintain professional organizations, the AMA for example, to protect them from foreign competition.

Try practicing medicine with a degree from a foreign medical school. Very difficult.

It's here to stay

[swillden]

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.

Re:It's here to stay

[gillbates]

The stuff we buy is *amazingly* cheap;

Yes, but unfortunately, the largest expenses for an American are housing, transportation, and food, none of which an employed person can do without. In India, someone with only a bicycle can get a job, but in America, it's almost impossible to find good work without a car. The problem isn't that we lead extravagant lives, it's that we overpay for the basic necessities. The fact that someone is willing to pay $500,000 for a 4000 square foot house means that even well-paid programmers can't afford a house.

I have nothing against foreign workers who would like to have my standard of living. However, if I had the chance to say anything to them, it would be this: "Don't settle for anything less than $35 an hour - you'll being doing us both a favor." I know that they make $8/hour, and I wouldn't have any problem working for the same salary that they do, if my cost of living was the same as theirs. In Chicago, a family of 2 needs to gross about $70k a year just to make ends meet. It's not as if we're greedy, just that we want to be able to make a living doing what we love. Foreign workers are taking away the ability of American workers to support their family, and it has nothing to do with laziness, and everything to do with disparities in the cost of living between the US and other countries .

Re:It's here to stay

[swillden]

The problem isn't that we lead extravagant lives, it's that we overpay for the basic necessities.

And where does that overpayment go? Housing isn't a good example, because a big part of the cost is the land, and the cost of land varies greatly based on how many people want to be in that particular area. The rest of a house, however, consists of materials and labor, and that cost is directly proportional to the scarcity of the materials used and the amount, and cost, of the labor employed. You can't say the labor is overpriced, because construction workers are not wealthy. If the materials are expensive, well, that was your choice.

The fact that someone is willing to pay $500,000 for a 4000 square foot house means that even well-paid programmers can't afford a house.

No, the problem is that people think they have to have such a large house. Go take a drive around your town and look at homes from different periods, starting back in, say, the early 1900s. What trends do you notice? What I see is that homes have consistently gotten larger and more complex.

Don't settle for anything less than $35 an hour - you'll being doing us both a favor.

Uh huh. And if their choice is $5 per hour or not working, they'll disagree completely that they're doing themselves a favor by demanding $35. And they won't care much about you.

It's not as if we're greedy, just that we want to be able to make a living doing what we love.

Two points: First, "make a living" means a very different thing to an American than it does to a person living in, say, rural Mexico. Things we take for granted they see as luxuries. Does your Chicago family just making ends meet with $70K have a television? Cable TV? Carpeted floors? Air conditioning? A stereo? A widely varied diet, including lots of foods imported great distances or grown expensively out of season? I'll grant that "greedy" is the wrong word, but basic expectations are vastly different. And the fact is that most Americans live better than your example (some by making more money, some by living in a cheaper place). Second, the notion that we *should* be able to make a living by "doing what we love" is also not a God-given right. If you want to make a living, you need to do something that *others* want to have done. If you're able to find something that you also enjoy, that's a bonus.

Foreign workers are taking away the ability of American workers to support their family, and it has nothing to do with laziness, and everything to do with disparities in the cost of living between the US and other countries .

Right, but follow the money trail and figure out where those disparities really come from and you'll understand what I'm saying.

Also, foreign workers are not taking away the ability of American workers to support their families; American workers can still do that, they just may have to work an extra job, or cut back on luxuries, or move to a cheaper locale, or even all of the above.

Re:It's here to stay

[swillden]

The moral notion of worth that you describe is a nice idea, but not the way the world works, and isn't necessary to maintain fairness. Experience has shown that competition between profit-seeking companies, and negotiation between workers and owners (with some government oversight to prevent egregious unfairness on either side) results in a pretty good situation for everyone, on average. You seem to be pretty happy with that notion, as long as the negotiation only includes people who live in the US, but I think it can and should include the whole world, even if that means our situation declines.

Further, I don't necessarily think that an application of your notion of worth would be at all healthy for a company, and it might not be too good for employees, either. What happens when the cash-cow product you're working on (and paid handsomely for, since it contributes so heavily to the company's bottom line) declines into obscurity? Do you really want your pay history to look like a roller coaster? Of course not. Would it be good to have employees c0mpeting to work on the high-paying products, as opposed to the ones that need the attention? Pay scales are extremely subjective, and equating pay with value rendered is really, really hard.

Take my position, for example. At times I work for external customers and bring in around $500K per year, which would seem to indicate that I ought to be making serious bucks. At the moment, I'm working on internal projects that don't directly make the company any money at all. We hope they will someday, but they very well may not, and *I'm* not interested in accepting that risk/reward tradeoff. If I were interested in that, I'd start my own company. I prefer a stable, reliable paycheck at this point in my life.

The notion of moral worth you mention is really based on an underlying notion that excessive profits are immoral, which I don't buy, simply because I don't believe excessive profits can long exist, except in a monopoly. Excessive profit just means there's an opportunity for a competitor to jump into the gap. A company that artificially reduces its profit margins by paying excessive wages is just asking to be driven out of business by a competitor who doesn't -- and where does that leave the employees of the very-moral company?

No, the best thing a manager can do for both his employees and his shareholders is to compete as aggressively as possible, paying just well enough to keep the needed employees on board. Businesses often fail at this, because they're run by fallible people -- and because it's really hard -- and the very best managers are genuinely concerned about their people as well as the business, but the bottom line is that the survival and growth of the business comes first, else *everybody* is out of a job.

Because of that, refusing to hire the contractor in India for the least he'll take is immoral and unethical (and could be illegal in certain cases). A good company can and should do what they can to soften the blow to the guy who's losing his job, but to keep him would be unfair to the shareholders and to the rest of the employees.

Some CEOs don't care about employees, of course, and may not even really care about the company and the shareholders. They're interested in short-term boosts in profitability and share price so that they get big bonuses, or can cash out on their options. I don't know how to fix that, except to hope that boards and shareholders will recognize such actions. Notions of moral worth don't help, because such people aren't concerned with morality in any case.

Center of innovation

[SgtChaireBourne]

Yes, the U.S. has been a center for innovation, but that's something that has to be actively maintained and is not guaranteed to continue. To keep the momentum, you need the pick of the world's students and researchers, as well as an enviroment conducive to research.

One of the factors for the U.S. gaining the advantage for a few decades, aside from the havoc in Europe from WWII, has been the ease with which the best students and researchers from the whole world can work onsite with their peers. Visa problems and other undesireable side affects caused by P.A.T.R.I.O.T. and other anti-U.S. legislation makes can help move IT centers out of the U.S. Outsourcing drives this by providing funding and further incentive.

DMCA-like legislation and software patents also stifle innovation. Although there will not necessarily be mass emmigration from those lands, they will over time suffocate innovation, In contrast, lands where development can build on previous develoments and on investigation and publication, can move forward.

So, in short, the U.S. had for wa while a great environment for IT develoment and growth. The U.S. or some other economy which can produce or maintain such an environment is going to get the growth in the future. Whether it's Asia, East Asia, North America, or Europe (or Australio-Pacific) depends largely on which ones take themselves out of competition by enacting weird P.A.T.R.I.O.T.-DMCA-SofwarePatent laws

As a Russian developer...

[Reservoir Penguin]

Thereis nothing natural about this trend. Its based on an entirely fucked up econimic model where there is free movement of products and services without free movement of labour. Outsourcing only exists because a guy in Romania is stuck there and has no other choice but work for $300/month. Btw, I'm saying this as a Russian developer making most of my income thru offshore development. IMHO US should grant green card citizenship to any skilled developer so they could come and compete on qeual terms with US guys it will still drive the salaries down but not nearly as much. (simply because you cant sutvive on $300/m in the States)

Outsourcing top management

[Animats]

Once production is offshore, and engineering is offshore, and customer support is offshore, what's the role of the U.S.-based company? Not much. Look at what happened to consumer electronics. Almost all consumer electronic devices are made outside the US.

In some areas, the US doesn't have the technology any more. CD and DVD drives require licensed technology from Asian companies.

Very little loyalty in buisness to our nation,also

[w4rma]

IMHO, it's a national security issue. We don't need to be exporting our expertise, we need home grown expertise that will stay in America.

Big buisness uses H1-B and L-1 visas to hire employees that they can pay well under the going rate for U.S. citizens. Small buisness doesn't have the overseas connections to hire folks with this so it only serves to give big buisness even more power over the start-ups.

Additional information on H1-B and L-1 visas:

Washtech.org

L1s Slip Past H-1B Curbs

Re: H1B and L1 visa influence US unemployment

After H1-B visa, L1 now bytes IT

I don't see any critical software going overseas

[BrittPark]

In my years in the commercial software development world--admittedly 2 companies, both startups--we've never considered outsourcing any work overseas. We did outsource I18N work--to an American company--because not one of us programmers wanted to touch I18N. The universal experience of all the programmers I know in the USA is that outsourcing _significant_ software development overseas results in universally disastrous code. It's may sound harsh but the US still has 90% of the really good coders, and any US company that wants to succeed is best advised to stick with US operations. Of course of the really good coders in the US a significant fraction are not originally American. But, I don't see the balance of talent changing any time soon.

"I.T. Jobs" or "Tech Jobs"?

[NetFu]

I actually read the article, and it's not talking really about I.T. jobs. I'm in I.T., and what this article is talking about is strictly programming jobs (not really even I.T. programming jobs) and tech "creation" jobs. In fact pretty much all of the article focuses on out-of-work programmers -- these are not I.T. people.

I.T. is more a service industry while programming is a creation industry -- two very different beasts if you want to outsource to foreign workers.

When a guy in our California office has a problem creating a document in a database on our Notes server is he going to call/wait for an I.T. guy in the UK? No way.

When we need to make a programming change to our back-end server in California, do we care whether the guy making the change is in California, Nevada, or the U.K.? No, of course not.

There are two fundamentally different situations here -- the tech industry is simply going through a shift from a creation-oriented focus to a service-oriented focus. This is not very different from the change a lot of other industries have gone through, but it seems scary because it's now hitting our beloved tech industry.

The fact is I'm essentially a programmer with a computer science degree, and I have a good, solid, well-paying job in the I.T. sector where I'm programming only a small percentage of the time. I'm a director, so I hire I.T. people pretty often. The applicants I see are either I.T.-oriented, or they're programming-oriented.

The bottom line is that if you aren't able to adapt to a more service-oriented role in the U.S. tech industry, you will have more and more of a problem getting a job because you'll be competing for an ever-shrinking pool of jobs...

Re:Watch out for phonies

[weeboo0104]

You must be referring to my MCSE...

You joke but you would be amazed how many people I have interviewed that say are MCSEs and really aren't. When I see a MS certification on a resume, I ask the interviewee for their MCP certification number. (The one you get when you really DO certify) Many times the answer was "Uh, I don't know where I put it.". Sometimes the interviewee would come clean and admit they weren't certified but knew the "Windows 2000 Unleashed" book from front to back.

What it all comes down to are asshats who lie on their resumes and claim false credentials that make it difficult for hiring companies to quickly and accurately weed through the mountains of resumes.

Slave labour sux?

[vandan]

This is one of the many contradictions of the western capitalist system.
Everyone claims that we should let 'market forces' take care of who produces item X and who can afford to buy item Y. The problem is that 'market forces' includes bribes, extreme political pressure and military intervention.

About a year ago, I decided to practise what I preach and tried to buy some clothes that were made in Australia. Anyone who has made a similar decision will know what I found: there are NO clothes made in Australia. There are plenty made in Chinese & Indonesian sweat shops. There is no consumer choice. If there were, those companies who offered it would discover what it meant to be bankrupt rather quickly, as people would avoid their higher prices like the plague. The point is that the so-called empowered consumers have NO choice in the matter - it is all decided by multi-national corporations, and rubber-stamped by corrupt politicians all around the world.

Back to the article ...

You think companies will employ programmers at a premium of 5 times what they can get elsewhere? Some will. Very few. Good old 'market forces' will send most people to sweat shop programmers. And do you think your government will step in and fight for the rights of foreign citizens and demand they get decent working conditions? I didn't think so. Probably it would be impossible anyway, as the foreign citizens' government is too busy paying off loans for weapons of mass destructions to the World Bank, or too busy trying to deal with the social problems caused by the IMF's 'recommendations' that the backbone of the country is privatised.

Thinking of responding with some mindless name-calling? I'll get you started. I'm a left-wing radical. I'm a stupid mindless hippie. I'm a fucking communist. Whatever. At least I've made some observations about why our world is so fucked up. Try to address these issues. That's the point here. To discuss the problem, not call each other names.

Re:I call bullshit.

[pkesel]

COST != PAY

The programmer costs his salary, benefits, software licensing, network fees, PC lease or purchase, security clearance, etc., etc. Training, materials, connectivity, travel, facilities (rent, desk, chair).

Talk to any manager about what's really in his budget. Just having you in a chair in an office and with the lights on costs thousands a year.

IT needs a makeover anyway

[BluedemonX]

It seems to me that doing this whole outsourcing bit is really solving the wrong problem.

Technology is not in and of itself useful. I mean, yes, your compiler writers are useful, and the software itself provides some service, but the net worth of IT is what it can do for a person, company, etc.

The value in the internet is not selling servers, but implementing an e-commerce site that allows people to buy plane tickets more easily.

The value in the office is not 10 boxes of Office, three quarters of the features of which never get used, but in setting up an office system in which documents can be edited, tracked, archived and shared.

IT kind of strayed from its initial premise and attempted to model itself after other, box moving enterprises. But code isn't like raw oats or widgets. The endgame of it is, how much time or money will the use of it save me?

Re:Bullshit - English is lingua franca in Indian t

[sn00ker]

If the governments of China and other countries are really smart, they will make english instruction mandatory

Mandatory isn't enough. It also needs to be high quality.
The problem with trying to learn English is the language structure - Or lack thereof. I'm not an English student, so I don't know all the proper terms, but I do know that English is a prick of a language to learn because of its unstructured nature.

When you're learning by rote from a teacher who barely speaks the language themselves, of course you're going to have difficulty. There's a reason why native English speakers are in huge demand in Asia as teachers of the English language.

You are forgetting one thing

[bigmattana]

As the jobs of educated, middle class people go, the unemployment rate will skyrocket. What you describe as an imbalance has nothing to do with these people, or people with low-paying jobs. It has everything to do with the WEALTHY. The 1% who own 99% of the wealth. These peoples' jobs are not getting shipped overseas, and even if they were, you can make plenty of money if you ALREADY HAVE plenty of money. So we will still maintain 99% of our wealth, but it will just be less evenly distributed. As long as the wealthy are in this country (and why would they leave?), it keeps the cost of living high for the rest of us. This combined with the fact that the rich executives and stockholders are making money from the exporting of jobs, while the average Joe is losing his job. We simply cannot compete with the lower salaries the rest of the world are willing to accept because they do not have to compete with as many wealthy citizens for a place to live, etc.

Although I don't know if there are any feasible ways of isolation that don't hurt certain countries, I do think that it is better for every country to have a plentiful suppply of jobs than for every person to have a dirt cheap VCR. What good does a cheap VCR do my if I don't have a job? Maybe this exporting of jobs is good for third world countries now, but in the long run, it makes more sense to have local economies that can supply products for themselves, and by themselvs.

heh

[autopr0n]

Of course, that's assuming that "globalization" doesn't keep outsourcing jobs to low-cost areas, reducing the entire planet to a giant slum.

You mean, as opposed to the current situation where the place where you live is nice, but all the rest of it is an even worse slum? There is absolutely no moral principle for which you could claim that that's a good thing. Yes, the world will all be a "slum" if you consider $9/hr for coding 'impoverished'. but on average most people will be better off then they were before.