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

[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

[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

[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

[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

[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

[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

[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

[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

[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.

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

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.

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

[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.

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:Watch out for phonies

[TrollBridge]

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

You must be referring to my MCSE...

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...

"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.

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.

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: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.

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?

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: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

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.

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.

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."

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.

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 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.

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"

Re:In other words

[Marc2k]

(fucking candians, taking all of our jobs)

Candians? Are those natives of Candyland©?

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

[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.

"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...