I was flying back from vacation in California this weekend, and the guy next to me noticed the magazines I was reading and asked if I was in IT. I said yes, not bothering to distinguish between software and IT. He said, “With all the outsourcing, you must be the last one left!”
That’s the popular perception, and it's unfortunate because the actual IT employment conditions are in some ways better than they have ever been, but non-stop media reports of offshore outsourcing are driving people away from the profession.
First, some tech-worker employment facts: An April InformationWeek analysis of Bureau of Labor Statistics showed that more IT workers were employed than ever before, even surpassing the bubble employment of 2000-2001, and more of the jobs are higher-end software engineering jobs than programming jobs. More importantly, the unemployment rate among IT workers had dropped to only 2.5%, down from 5.4% in the first quarter of 2004.
The low unemployment rate is leading to a skills shortage in the United States; according to AMR Research , "the difficulty IT management is having locating and acquiring the right skills at the right time [in the U.S.] is intense—and worsening." This is driving fast-rising pay in key skillsets (7% to 10% increases in the first half of 2006), leading to 74% of tech workers saying they were happy in their jobs in July.
When the lower-skilled jobs are offshored, will the high-skill jobs be next to go? McKinsey Global Institute doesn't think so - they analyzed all service jobs in high-wage countries and found that "only 11% of service jobs could, in theory, be performed remotely." As a result, "offshoring is a relatively small phenomenon in the scheme of total employment of any occupation."
McKinsey's analysis also found that the oft-reported infinite supply of cheap IT workers in India and China is a mirage - only between 10% and 25% of college graduates in those two countries are employable by a multi-national corporation; plus the increasing demand for those graduates has led to 23% annual wage inflation in India's tech sector, almost doubling tech salaries between 2002 and 2005.
Mitigating the jobs that are actually transferred, offshoring has several rebound effects that increase employment in the high-wage country: high-skill local workers are needed to oversee the offshore provider's projects and deliverables; firms that outshore grow faster and hire more local workers for the remaining higher-value tasks; and the offshore providers themselves hire local account managers and project managers to work onsite with clients.
Finally, as Joel on Software put it, there's always work for really good programmers, no matter where they are. And most programmers really like what they do; to quote Joel, "if you love to program computers, count your blessings: you are in a very fortunate minority of people who can make a great living doing work they love."
Meanwhile, the drumbeat of anecdotal stories about jobs going offshore to India and elsewhere is causing a large decline in the number of college freshmen considering Computer Science as a major. When I was hiring at the Colorado School of Mines earlier this year, the director of placement said that Computer Science graduates were down 50% from several years ago.
Across all undergraduate institutions, incoming freshmen are dramatically less interested in Computer Science. The Computing Research Association reported in a survey of college freshmen last year that the popularity of Computer Science as a major dropped 70% between 2000 and 2005, down to an interest level last seen in the 1970s. [Interest in Computer Science among first-year women has dropped even more dramatically... not sure what that means, but it's definitely not good.]
So even as our world gets more technical and technically challenging, the focus on computer technology is declining as an educational pursuit and as an career path. This is a shame; in my view, technology offers a more rewarding and interesting career than most other options out there for the intellectually curious; more on that in my next post.
