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The IT Market: Cyclical Downturn or New World Order?
An anonymous reader wrote: "CNN.com is running an interesting story on the heels of a Forrester
Research report concerning the
shift of high tech jobs from the U.S. to places like China, India, and Russia for cheaper labor and got me thinking about the nature
of the current downtrend in programmer demand in the U.S (as opposed to the "morality" of such a shift). While I'm sure the causes for this downtrend are variable, the more important
question in my mind is this -- Is software guru Bruce Eckel correct in
saying that the current downturn represents a temporary blip in the business cycle as jobs are shifted from large and medium companies to smaller companies,
or are Andy Hunt and Dave Thomas correct in recognizing this as
a new reality. Personally I tend to agree with Hunt and Thomas's view (which is not completely opposed to Bruce's opinion, btw) and
I also agree with their viewpoint that protectionist policies like H1B quotas and tariffs won't work to change anything for the better. So what do you think? Is this
just another business cycle or is this a New World Order in IT?"
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.
I'm much funnier now that I'm a subscriber.
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
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.
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!
You must be referring to my MCSE...
There's a Mercedes gap too. I want one and can't afford one, but it's not government's job to do anything about it.
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.
-=[ Who Is John Galt? ]=-
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).
"But actually trying to use m4 as a general-purpose langage would be deeply perverse" --ESR
it makes perfect sense to me.
being a programmer in the future will be like being a writer.
writers are very talented, but they are a dime a dozen.
programmers and writers both operate on intellectual capital. and that, as far as economic rules of supply and demand are concerned, is very cheap.
what do you need to express your writing abilities? just pen and paper.
since these tools are cheap, writers are cheap.
previously, a decade or 2 ago, computer hardware was very expensive and rare, and so those who could manipulate it were very much in demand.
as computers become ubiquitous, those who manipulate them, like those who manipulate pen and paper to express their intellectual capital, will become equally just as cheap.
and so any one smart enough and interested enough can get in to a game. just like writing. equally devalued on the basis of supply and demand.
you want to make money in the future? become a plumber. become a nurse. supply and demand. these people demand more and more $ every day as less people in the west want to get into these fields.
look, IT work is a meritocracy. it amazes me that rich western geeks, who value and uphold the principle of how many mad skillz you got as the judge of your value in their technological world, in a perfect expression of pure meritocracy, should suddenly turn around and be so provincial when it comes to questions such as the globalization of IT.
c'mon, lose the hypocrisy. welcome to the real world. welcome to the globalization. no amount of sour grapes is going to change any of this process. give up your elitism and snobbery and realize that your skillsets are rapidly becoming a dime and dozen.
the golden age of super geek rarity is rapidly becoming a thing of a past. a smart teenager with some extra time on his or her hands can do exactly what you are doing right now. why do you suddenly think you deserve better monetary treatment than them? the economic value of your skillset is shrinking in the world as computers become more ubiquitous. get used to it. it's not going away.
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
Developed countries SELL!
Developed countries BUY!
Developing countries make.
There's many examples given by people like Noam Chomsky and Naomi Klein. From No Logo:
Along the same lines, now that most of the dot-com era is over, it would be possible to see if there was an inverse correlation between the numebr of MBAs at a firm and its survival.
Beta is broken and the link to classic doesn't work. Stop wasting our time or there won't be anybody left here.
are you saying that Indians just aren't cut out for programming?
I worked at a job where I had many coworkers that were Indian, and we outsourced a lot of our stuff to our Indian office.
The code from those guys SUCKED.
I too figured, hell, them fellas must all be retarded.
But no, then I went and worked at a different company and worked with some of the brightest people I know - they were from India as well.
It turns out, just like the States - people can be total idiots, and people can be really bright.
If anyone is going to present a good arguement here - it should be that India has suffered a serious brain drain throughout the economic boom here in the states. Their best and brightest have come over here on the H1B, leaving behind the ones that would like to also become IT and cash in on that field.
That argument makes a bit more sense than "they are different than me, therefore, they must be retarded"
There are some odd things afoot now, in the Villa Straylight.
Oh, there might be a few more cycles, but the trend is going to be inevitably downward -- and not just in IT.
Why? Because, simply, the status quo is an unmaintainable imbalance. The problem isn't greedy American corporations, the problem is greedy Americans, who think its Good and Right that our tiny country controls such a vast portion of the world's wealth. Whether it's Good and Right or Evil and Wrong, the fact is that a free market abhors this sort of imbalance, and absent draconian controls, the imbalance will be corrected. If an Indian can do the same job, and only needs to be paid a small apartment and a nice bicyle, where an American wants a huge house, two SUVs and annual vacations in Fiji, the Indian will get the job. And should!
I'm an American, and I very much enjoy my comfortable lifestyle, my nearly 4000 ft^2 house, my cars, my expensive hobbies, etc., but I've lived outside of the US and I have no illusions that the status quo can be maintained for long. There are too many people in the world who are just as deserving, just as smart and, frankly, probably willing to work harder. My comfort is as much an accident of my birth as anything I've done, and I don't think I have any God-given right to it.
Further, I think Americans need to realize that much of our current material wealth actually comes from the very places we complain are taking our jobs. Walk into nearly any store, look at the prices on the goods, then think about how much material and labor was required to make them. The stuff we buy is *amazingly* cheap; our own incomes are stretched to nearly ridiculous lengths by the abundance of cheap labor overseas. Quite simply, our lifestyle is all out of proportion to our productivity, and the market is going to correct that. IT is just one of the current victims/opportunities (depending on your point of view).
Protectionism, isolationism and schemes to keep ourselves on top by keeping everyone else down won't work forever, because they just don't make economic sense. We're going down, because that's the way it should be. All of the crying about evil corporations looking for a quick buck is just self pitying noise. The imbalance means that over the next few generations, we'll have to learn to cut back our lifestyles somewhat as people in other parts of the world improve theirs.
And if you spend a little time in the 3rd world, and see how many smart, hard-working, deserving people there are, you'll understand that that's a Good Thing, even if it's personally painful.
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