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Tech Sector Expansion Blunting U.S. Job Outsourcing
xzvf writes "BusinessWeek summarizes a new report from the American Electronics Association (now known as AeA) that they think mitigates the effect of outsourcing on IT employment. US demand for tech workers is through the roof, the highest it has been since the boom of the late 90s. The tech sector added some 150,000 new jobs 2006, and there are no signs that interest will flag in the near future. 'There is so much global demand for employees proficient in programming languages, engineering, and other skills demanding higher level technology knowledge that outsourcing can't meet all U.S. needs. "There would have been a lot more than 147,000 jobs created here, but our companies are having difficulty finding Americans with the background," says William Archey, president and chief executive of the AeA. One culprit is the dearth of U.S. engineering and computer science college graduates. Second, immigration caps have made it difficult for highly skilled foreign-born employees to obtain work visas. Congress has been debating whether to increase the numbers of foreign skilled workers allowed into the country under the H-1B visa program.' "
This was 100% predictable. I'm too lazy to go find where I predicted it, but every industry consists of a mix of inputs. The inputs are chosen based on their value to the company in producing the final product. If you make one of the inputs cheaper (by including outsourcing) (or by including Open Source) that causes the industry to use *more* of the product over time. In the short run, they'll use less because all of their processes are predicated on using the original mix. As they buy new equipment, hire people with different skills, and make new products, they can change the mix to make new of the new cheaper factor.
PLus, I'm in teh race for fr1st p0st.
Don't piss off The Angry Economist
thesedays when a plumber or car mechanic or even a house painter can make more money and doesnt have to bother with degrees etc
dont blame education blame multi-millionaire executives (and shareholders who pay their wages) who think their workers are worth less than the person that paints their house or fixes their car, why would anybody bother ?
pay peanuts get monkeys
The tech sector added some 150,000 new jobs 2006, and there are no signs that interest will flag in the near future.
Emphasis mine. Now where have I heard this before? This should be your warning that the bottom is about to drop out of the economy again.
Once burned, twice shy: be careful; protect your wealth; keep the best interests of your family in mind; avoid irrational exuberance.
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Great but now can we learn from our past mistakes of the 1990's?
Mistake 1: Thinking IT is on top of the food chain. No we are not IT is on the bottom of the food chain we need to service everyone. You may get paid more then the other guy and you may be more skilled but who ever you are doing work for is your boss.
Mistake 2: Not being professional. You should not stand out as the IT Guy because everyone else is wearing business casual and you are in tee-shirt and jeans. It is unfair and wrong but it is the way it is you need to dress to fit in. Otherwise you make people uncomfortable if they are uncomfortable your job can be at risk.
Mistake 3: Saying No. They need to get the job done just not doing it because you personally don't like it will not help anyone.
Mistake 4: Saying Yes. Being Blind to problems without brining them up in the beginning and getting someone else above you involved in a solution could lead you working on a quagmire.
Mistake 5: Thinking you are better then everyone else. Just because they don't know the difference between USB and Firewire doesn't make them stupid. Just because you do doesn't make you a genius. Respect the people you are working with, and they will respect you back.
Mistake 6: Respect your boss. They are a lot of bad bosses out there also a lot of good ones. Even if your boss seems to be cut from Dilbert you should give him the respect that they deserve. For being in that position. It means things like not publicly humiliating them and when arguing your point try not to make it personal.
Mistake 7: Trying to change the world. Don't try to change the world just try to make your work environment better. Put your feelings about GNU, Patents, Microsoft.... Aside and focus on getting your work done.
Mistake 8: Money doesn't matter. It does always keep an eye on how you are effecting the bottom line. You can save 10 minutes a day in computation but the cost for you to make that change would take 100 years to recover the costs then it is not worth doing.
Mistake 9: Work should always be fun. If that was the case most people wont have a job. You need to do the annoying stuff as well as the fun stuff. They hire you to do the stuff that others can't or are unwilling to do.
Mistake 10: You are separated from the business. Try to be involved in the business not make yourself a separate identity who just fixes the computers try to keep IT involved in the major decisions.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
This angers me alot. I grew up in SC and you can walk down the street and find people with IS and other tech degrees. These young adults are stocking shelves at K-Mart, selling cell phones, et cetera. Maybe its racial (they are usually but not always of African American ancestry) or maybe just plain horde mentality but with an annual household income of about $34K (less than 1/2 of most places in CA) I believe the claims companies cannot find American works are just flat out bullshit.
Expect Freedom.
Here's a quote from a Seattle Times article last week, that sums the point up rather nicely: Businesses bemoan the alleged shortage of Americans trained to do the work. But wait a second -- the law of supply and demand states that a shortage of something causes its price to rise. Wages in information technology have been flat.
The companies fret that not enough young Americans are studying science and technology. Well, cutting the pay in those fields isn't much of an incentive, is it? I have yet to see any of the people complaining about the "lack of U.S. skill" answer that question adequately...
I'm sure there's significant demand for skilled technical workers willing to work at crummy wages compared to other, easier to learn fields.
In a related story, there is also significant demand for $1.00 lakefront homes.
Every article about outsourcing or jobs in general has a quote along these lines. And they never qualify it with "for the rates they are willing to pay." Unless a company is doing some serious, way-out, pie-in-the-sky research, there are people that can and will do the job for the right price. Employers just don't want to pay it. If a company really wants a CCIE with 20 years experience in networking for a position in New York City, they just might have to pay a premium rate. I didn't take Econ 101, but it seems like simple supply and demand to me. How come limited supply increasing demand is good when companies want to sell products, but bad when they are hiring?
Still, with a plan, you only get the best you can imagine. I'd always hoped for something better than that. -CP
They say there's higher demand, but higher demand is supposed to lead to higher salaries, more jobs, or both. Why do we keep hearing that neither one is happening?
(IANAL)
Someone ought to do a study on how many people got IT degrees over the last 7 years and do not work in IT. Now that would probably be well over 147,000. In fact, just conjecture, I'm guessing around 50,000 per year and as many as 350,000 and that's not including tech schools and other training programs.
Expect Freedom.
The industry chiefs finally realized that you get what you pay for. Amazing.
That statement is true only in a perfect equilibrium.
Most equilibriums have a degree of lag. Supply increases in one area, demand takes a while to catch up so costs are low. Demand increases in an area, supply takes a while to catch up, so costs are high.
Businesses are profitable by moving faster than that equilibrium shift and exploiting it. Businesses lose profitability the closer they are to an established equilibrium and they outright lose money when they fall behind it.
India is a great example:
There were a lot of very highly skilled engineers with minimal to no demand for their talents and thus would work for next to nothing. Smart businesses identified this and exploited them. Those businesses could now get high skill levels for very low cost.
Everyone else saw these profits, Newsweek wrote articles on it, everyone moved in to the sector. As demand increased towards supply, profitability decreased. As demand exceeded supply with many dumb U.S. businesses working on articles and quotes from three or four years earlier, costs increased rapidly, the supply of skilled engineered diminished, many poor engineers saturated the market looking for the now great wages, it became a lousy area for U.S. businesses to exploit.
The same has gone for big screen TVs. A few years ago, Circuit City, Best Buy, CompUSA, etc. were making a killing on every high end unit they sold. About a year ago, Walmart finally woke up, realized there was money to be made, slashed the margins so it could insert itself and killed their business model. For a long time, demand for TVs was greater than the number of stores supplying, profits were high. Once Walmart and Target realized there was money there, supply increased, profits decreased.
It happened in the U.S. with the dotcom bubble and it's happened more recently with housing. For a while, a given market is massively exploitable. Over time, everyone thinks it's exploitable, everyone moves in to doing it, the margins decrease, it loses its exploitability.
So, your statement is only partially true...
Over time, yes, you get what you pay for (you may even get less if you're on the wrong side of the wave).
BUT, if you're smart enough to identify the trends and get there ahead of others, you really can get far more than you pay for.
For those that bitch about high executive salaries, that's what they're often really getting paid for: They're people who've established they're good at staying ahead of the wave, surfing its leading edge and keeping their companies hugely profitable. If your ability can keep your company on the leading edge of the equilibrium wave, making $500m more a year than a company that rode the top of the wave, isn't it worth paying you $50m for that edge?
My thoughts exactly. There are plenty of jobs available for workers, and plenty of US workers available for jobs. This article is yet another round in the ongoing saga of corporate interests applying downward pressure on wages.
Or instead of sitting on your backside waiting 9 months for a job you could go an get experience. I don't mean a job, I mean experience. Volunteer, network, talk to local companies, work with local companies, do work for local charities, etc. In addition to that learn new skills, if you can't be a programmer see if there are any related or more specialized fields open.
If you can't put actual work or be even minimally creative in finding a job then its only your fault that you don't have one.
A few things you're not considering:
1) The only two pretty reliable technical degrees on the software development side are Computer Science and Software Engineering; IS/CIS/MIS/BIS/IT are dumbed down, and they pay a lot less on average for the same position because they're assumed to be bringing a weaker knowledge with them.
2) Non-software development positions are better filled by people with real experience of any kind that people with real technical degrees. There are very few schools that will teach you how to be an admin type.
3) You may have to move. To get a good job, I had to leave rural Virginia for Northern Virginia.
4) A lot of people who go into these degree programs are horrible at practical work. Not just lazy, but they genuinely suck at it. I'm not being elitist here, but just because you have a degree, doesn't mean you are capable of performing a job. GPA doesn't necessarily mean much either. Brilliant people often get 3.0 GPAs in Computer Science for a variety of reasons. I've known people who are mediocre at best who had 3.8-4.0 GPAs in the subject, all because of hard work and memorizing the textbook and lectures.
Don't forget that 180,000 H1-B Visas expire this year. This is the first part of the obscene growth in H1-B's from 6 years ago. We have two more years of 180,0000 limits to go through, because H1-B visas last for 6 years.
THIS is why all of the H1-B's were issued in one day this year; you've got 180,000+ people competing for 65,000 (or 85,000 to be more accurate) Visas. And you can look forward to the exact same phenomena happening over the next two years, before the limits went back down to 65,000 in 2004.
And this is exactly why the outsourcing industry has been pushing so hard to raise the limits. The big players stand to lose A LOT of money.
It's no coincidence that the U.S. job market is now starting to take off. 95,000 jobs is a large chunk of the current unemployment rate for U.S. tech workers.
Well, I'm glad I didn't give up on engineering. After 20+ years in the field, working in analog, rf, and digital, I had almost given up and changed fields thinking that outsourcing plus imported workforces would finally kill my career off.
Hopefully the demand will keep wages where they should be. I'm tired of jerks with nothing more than a "C"-average MBA in spewing worthless marketspeak make twice my salary.
In order to attract good, skilled, qualified, dedicated people - you have to pay them. And add incentives, benefits, and merit raises to keep them. Not underpay them and have them sit under a dangling axe just waiting to be outsourced into oblivion.
What sensible person would put in 6+ years of engineering education plus student loans just to be underpaid and fear their job might go away at any moment.
Looks like the field might still have a chance of survival...for now.
-dh
Maybe, instead of rasing the cap on H1-B visas, it would be wiser to INVEST in our education infrastructure starting at the high school level. I don't know how many HS's are left that even teach things like basic electronics or engineering skills, but the earlier you start such the more likely you are to fire up interest in the students.
Keep the peace(es).
Bruce Lane, KC7GR,
Blue Feather Technologies
saving capital on one type of cost (90s era IT positions) frees up capital to spend it on other types of costs (domestic IT sector positions in 2007).
Wealth is not a zero sum game.
It sucks in the very short term to be a worker who is laid off because someone else can do their job more cheaply, but its better for everyone else in the entire world economy. By and large, those who direct the employment of stock do not simply horde it, as they know that they can get more return by skillfullly investing it.
Humans are not insects. We can specialize when it suits us and we can adapt when it suits us. Do I ever fear losing my job? Sure. Do I have some money saved up to help? Yes. Am I developing contingency employment plans? Yes.
Security and Freedom are often at odds, and employment is no exception.
My opinions are my own, and do not necessarily represent those of my employer.
But being cynical as I am, I suspect it's really just an exercise to drive salaries down with H-1B hires.
Am I not destroying my enemies when I make friends of them? --Abraham Lincoln
One thing I have noticed in the past few weeks is the lack of entry level jobs. Many of them seem to require 1-2 years experience. One required 3-5. Furthermore, many required knowledge of something that cannot be found within the realm of academia. With all these requirements, how are college graduates supposed to find work?
Thanks, I see a lot of "bad" attitudes on here, especially concerning the tech job market. Guys, the market is hot right now, companies WANT to hire Americans. The problem is they want people who have shown they can do the job which means a little experience. Where are your college internships? co-ops? Hardly anyone ever falls in love with their entry-level job. You work for a few years and find something better. Thats just the way it is. Don't expect to get a $70K/yr job with your shiny new CS degree and no experience. The point is to always be progressing. If you can't change something you might as well accept it rather than waste your time fighting. The universe owe's you nothing, you never get what you deserve, only what you negotiate.
It comes from BusinessWeek. It's market place is for business management not employees. Offshoring is not a myth. It continues and is growing. The story states nearly 150K jobs created but it also mention the fact that over 1 million jobs were sent out of the country. And this trend is not likely to stop or slowdown any time soon.
Also, Congress is looking to increase H-1Bs into this country. The dearth of qualified tech professionals was the same rallying cry for new visas ten years ago.
Basically, it is not a myth to offshore. H-1Bs do not solve the issue of filling in the gaps for businesses. Job openings are filled as soon as they are posted. The ones that go unfilled are posted by business managers who fail to see why a a good developer should be paid almost as much as they even though they they think it's that "same web stuff my kid does on his cell phone" belief.
Business will always want cheaper labor costs and they will continue to offshore until the benefits of it are no longer apparent. Dell is the perfect example: they pulled the business Help Desk call center from India when business threatened to stop paying on contracts and canceling orders because they couldn't understand what the heck Help Desk was saying. And this was only for business. They kept the personal computer Help Desk in India because losing one or two support contracts and people who have already bought the system was not losing them money.
>But what's this about plumbing? I haven't hired a plumber in over 7 years
You have time for it. This probably means you aren't running a business or are any type of artist or working two jobs.
The reason you hire a professional to do a job is because the value of your time to yourself is much higher than the cost of hiring the professional to do the job. In my case, time spent working on cars or plumbing or fixing drywall is time away from either my job, my academic research, or my music practice. (I'm a software developer, a part-time student, and a musician, and no, I do not have time for slashdot.)
-fb Everything not expressly forbidden is now mandatory.
I have nothing to contribute, other than to try to get the parent post some due recognition. Sometimes I wish Slashdot threads were ordered by relevance rather than time of posting. If that were the case, the parent should be listed first.
[ Off topic: It's like the endless discussion on other sites yesterday about Sheryl Crow's comment about one square of toilet paper per sitting. Nobody on digg got it, but toward the end of the thread on metafilter someone finally pointed out what I wanted to say: she's a girl, and she's talking about "#1" not "#2". All of the male posters were too busy ranting about the insanity of using one square for #2 to realize that women have different restroom usage patterns than men. The point I'm trying to make here is that everyone's too busy ranting on their own misunderstanding of the problem, and someone finally got it right, but nobody's paying attention because the comment was made by an Anonymous Coward. ]
Wages have been generally flat since 2000. (disclaimer; mine have been going up but that's what the paper said today-- interesting that multiple sources are pushing this slant today with non-identical articles-- astroturf campaign??)
Our company has over 200 indian nationals working for us from infosys INSTEAD of Americans.
And there are rumors they plan to offshore the rest of our jobs in the next two to three years. It is really a race against inflation and appreciation of the rupee (18% combined inflation and appreciation means indian workers will be *double* the cost in only four years).
While I hope these companies fry in the pan they made by destroying so many american IT people's lives that the students all got the correct idea that you didnt' want to spend $50,000 to train for a field where you might get 3-5 years of work before being laid off for a year- lose your house- your insurance- etc.
I understand that indians are cheaper and speak english. I have nothing against them and obviously work on a lot of projects with them. They can take these wages and live like kings back home for now.
But I don't understand and agree with paying $5.50 a pill for my BP medicine that sells there for $.10. I don't understand paying $20.00 for the same DVD that sells there for $2.49. I dont' understand microsoft GIVING AWAY
And I understand but burn with the hippocracy of laying off a $80k programmer but not laying off a $800,000 executive (whose job could easily be done by a competant indian executive).
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.