Having Hollowed Out IT in the US, Indian Outsourcers Complain Re Difficulty of Finding US Staff « naked capitalism

Thursday, September 2, 2010

Having Hollowed Out IT in the US, Indian Outsourcers Complain Re Difficulty of Finding US Staff

Lordie, if this isn’t disingenuous, I don’t know what is. From the Financial Times:

US universities are producing too few engineers to meet industry demand, Indian outsourcing companies say, leaving such businesses little choice but to hire foreign skilled workers to fill jobs in America

And why are there so few students studying computer science? Because there are no (well, more accurately, hardly any) entry level jobs. I’ve been reading about this on Slashdot for YEARS, about the utter dearth of anything resembling a career path in IT. Yes, there are no doubt ways to brute force getting trained, but that cold reality is not the sort of situation that encourages college students, particularly ones that have student loans, to pursue a technically-oriented field of study.

And the proximate cause is that companies only want to hire people that they don’t need to train (the cliche is that they can “hit the ground running”), and that they can get away with it because a lot of junior level work is farmed out to outsourcers.

But you’d never glean this from the FT, which takes the outsourcers’ complaints at face value:

“If you look at the core of what we do, the technology work, the US simply doesn’t have the talent base today,” said Francisco d’Souza, Cognizant president and chief executive. “Although unemployment in the US today is high, IT unemployment is still very low.”

Yves here. Yes, IT unemployment might be very low now, but for how many years was it higher than in other industries? My sample (high end IT consultants, the sort that can build mission critical systems and do cutting edge Web and apps development) is admittedly biased, but lots of high end shops shuttered, and another I know went through a Chapter 11. Things have gotten much better for them lately, but most of the last decade was pretty grim. So if the guys who weren’t competing with outsourcers had it rough, how was it for the rest of the industry?

Indian outsourcing companies usually keep a small portion of their workforce in the US to work closely with clients, supported by the bulk of their staff in development centres in India.

But the protectionism move – a senator who sponsored the legislation described Indian outsourcing companies as “chop shops”, a reference to garages that dismantle and sell stolen cars – may have little impact.

About 70 per cent of US PhD students are foreign born and are often hired in the US, making their way into Silicon Valley or government agencies such as Nasa, said Partha Iyengar, of Gartner, the consultancy.

Yves here. I’d like some reader comment, but the idea of a PhD as the proxy for talent in this space sounds questionable. The one highly regarded systems architect I know who does have a PhD has it in physics, not computer science.

Mr. Iynengar does comment on the real problem now that the horse has left the barn and is in the next county:

“The bigger challenge for the US is, if they start to lose this talent at the lower end, the innovation engine that has been driving the economy starts to dry up,” Mr Iyengar said.

190 Comments:

skippy says:

September 2, 2010 at 2:01 am

Eh…profit/loss equation = a few bonuses for some – everyone else getting the burnt end of the stick = conflict Sq’ed.

Skippy…the social license should be revoked pronto!

PS. thx GW.

skippy says:

September 2, 2010 at 2:06 am

Sorry, should be to GW post below although its still apropo… human arbitrage for our betters.

skj says:

September 2, 2010 at 2:10 am

Yves

I follow your blog with a lot of interest and I think you bring an interesting point of view forward. But your last few posts and links about Indians almost make it seem like you have a ‘blind spot’ when it comes to India, particularly when it comes to those of us who work in high tech.

Ill take the liberty of putting forward a very simple question. I have about 18 years of formal education, two of them in the US, where I received a Masters Degree in Computer Science.

What course of action on my part would make you happy?
- If I work in India, you would complain about outsourcing..
- If I come to the US, you would complain about H1B Visas..

Perhaps work in Germany or Japan?..

PS: These sort of posts invariably attract a vicious stream of commentary. I hope you have the decency to maintain a clean comments section.

Yves Smith says:

September 2, 2010 at 2:22 am

I’m not keen about outsourcing. It generally is a false economy from the corporate client’s perspective. I’ve pointed that out from the early days of this blog. And longer term, it’s damaging for the US.

This isn’t about India, it’s about IT outsourcing, although since India is the biggest center for outsourced IT, the two are often treated as synonymous. And that isn’t helped by Indian outsourcers conducting a vocal PR campaign against measures to restrict labor mobility.

Countries are generally not keen about foreign nationals taking jobs from the locals. I can’t work in Australia for the same reasons you are complaining about. If you make career plans that depend on foreign demand, you are at risk of rule changes abroad that will have an adverse impact on your employment prospects.
- Patriot says:
  
  September 2, 2010 at 2:34 am
  
  Yves,
  Outsourcing is also bad for Indian nationals in the United States. There are many people here on H1B visas who are treated very badly by the so-called “body shops” that employ them. Many of these contractors are employed by a hiring agency and then placed at another firm, and are treated very shabbily by the hiring agency. Workers on H1B are treated poorly because the employers know that it is difficult for the worker to find alternative employment. If fired, the H1B holder has very little time to find a new job or face deportation. It creates a climate of fear and exploitation in the workforce, among the H1B holders.
  - purple says:
    
    September 2, 2010 at 4:31 am
    
    It’s a modern day bracero program, in actuality.
  - Poco Ritard says:
    
    September 2, 2010 at 2:25 pm
    
    At one of the *other* large famous software companies in Seattle, HR used to walk around the desks in the room where I worked, handing out paychecks and collecting paperwork for INS (yes, I witnessed this on several occaisions). Most of the members (something like 25 out of 30, I counted at one point) of my group were from S. India, and I think they made on average half of what I did. They worked 7 days a week, shared tiny apartments, sent every dime they could home and were terrified of losing their job, since getting fired meant losing the H1B.
    
    They were, as a group, no more or less skilled than anyone else I’ve worked with. I formed the impression that they were friendlier and more polite than most of the US citizens there.
    
    Digital Braceros, sounds right to me.
- Cedric Regula says:
  
  September 2, 2010 at 5:00 am
  
  Go with your instincts, Ives. They screwed us. Who cares about silicon valley, it’s corporate IT that was the big employer.
  
  The FT article also failed to point out all of our IT consulting firms opened up shop in Bangalore. Something about staying competitive with the Indian IT firms. Perot didn’t even warn us about that one.
  
  Also, our helpful government handed out half a million work visa and didn’t ramp that down to a quarter million visas until 2004, which I believe was after the last recession that didn’t end. So you could import your very own Indian programmer too.
  
  Also, anyone with a CS degree of any kind was a mainframer in the ’90s. The hot jobs were Unix and client server Wintel. That opened the door for the rest of us technically inclined people.
  
  Also, engineers are technical people too and I’m sure you heard what happened to manufacturing?
  
  So they say no one wants to be a technical person in the USofA? I’m shocked. It’s such easy work too.
- skj says:
  
  September 2, 2010 at 4:54 pm
  
  @@ Yves
  >> It generally is a false economy from the corporate client’s perspective. I’ve pointed that out from the early days of this blog. And longer term, it’s damaging for the US.
  
  I am not sure what you mean by ‘Its a false economy’. Do you mean to say that you dont think that the corporate client saves any money? What is false about this economic transaction?
  
  >> This isn’t about India, it’s about IT outsourcing, although since India is the biggest center for outsourced IT, the two are often treated as synonymous. And that isn’t helped by Indian outsourcers conducting a vocal PR campaign against measures to restrict labor mobility.
  
  What does labor mobility mean when the same task could be performed just as well in a different country? You start out by saying that its not about India and by the time you complete the paragraph, you put forward a couple of lame excuses to treat the two – India and outsourcing – as the same. Also, you do understand that its not just about ‘Indian outsourcers’.. IBM in all probability employs more people in India than in the US. All the companies that you would identify as American – Intel, Google, Qualcomm, Microsoft, IBM, Cisco, GE, netapp have fairly large Indian operations.
  
  >> Countries are generally not keen about foreign nationals taking jobs from the locals.
  
  When you drive a Prius thats made in Japan, aren’t you taking away a car manufacturing job from an American worker? Why limit the angst to IT?
  
  >> I can’t work in Australia for the same reasons you are complaining about.
  
  Actually, you can. Australia has a very comprehensive skilled worker immigration program. http://www.immi.gov.au/skilled/
  
  >> If you make career plans that depend on foreign demand, you are at risk of rule changes abroad that will have an adverse impact on your employment prospects.
  
  I actually work for an American company that is dependent on Asian markets to the tune of 50% of its business. So now I am really confused as to which ‘demand’ I have hitched my career plan to. Leaving my confusion aside, is your suggestion that I find a company that does a majority of its business only in India?
  - kievite says:
    
    September 2, 2010 at 9:14 pm
    
    I can explain to you why this is a false economy based on my experience with outsourcing, especially in the form of offshoring which is now prevalent. The problem is not India, the problem is distance, cultural differences, implicit “IT slave” mentality and race to the bottom. Distributed development is more tough. Cultural problems “on the other side of the phone line” such as nepotism are significant. Distributed system administration is more plausible area then software development, but in both the level of loyalty is low and attrition rate is usually significant. People don’t like to be discriminated and labour arbitrage is discrimination in velvet gloves so to speak.
    
    1. When you outsource everything on a marginal cost basis, you create an inherently unstable operating regime. And regime change often imply growing dependence on outsource as knowledge flow in only one direction: toward actual programmers who work in the trenches. Problems usually arise in two or three years. In case of IT outsourcing those additional costs inherent in brain drain initially are not even acknowledged. They come later, and they tend to arrive all at once and by surprise.
    
    2. Loss of flexibility, divided loyalty, demoralization of staff and the difficulties inherent is distributed development and managing distributed workforce requires more complex and more costly coordination that saps a lot of talent and energy of both programmers and, especially, managers on both ends of the phone line, so to speak. To be manager of the team split between here and the other half of the globe is far from fun job.
    
    3. As this is a classic labor arbitrage high attrition rate and incompetence-related risks are very high. People who cost $15 an hour in India are often entry level. And when you pay $25 per hour that does not mean that you get who you want. Indian counter parties are keen on saving money too and can outsource to save money (I know couple of funny stories with Indian companies sending some work to Ukraine). The level of “incorrect information” in resume of the staff of a typical outsourcing company will makes a nice Onion story, but it can have dire consequences for the project manager. The quantity of really talented, highly skilled people in India like in any other country is very limited. Not all graduates of US colleges are better then average (especially graduates from private US colleges, those McDonalds of high education. They often are ridiculously bad. I personally encountered computer science graduates with GPS close to 4.0 who cannot write a simple sorting program in ANY language; and they were from “brick” campuses not those sham Internet “take money and run” online universities). So not all of them are worth more then $15 an hour. As for really talented people few of them are patriotic enough to stay in India longer than absolutely necessary (that does not mean that they will not get into ruthless hands of middlemen here in the USA, if they get H1B). In such an environment abuse of resources for training, double dealing, architectural missteps and additional leaks of intellectual property are inevitable. Too often, a piece of code and the institutional memory of what it does and how it does it walks out the door when a developer leaves a company. It is important to understand that with attrition rate 15% in the three year offshoring project there might be no key developers at the end who were present at the beginning of the project. Still the truth is that even low level developer that is working on a particular module of code often possesses a lot important knowledge some of them can be classified as intellectual property with legs, the property that the company may not even know he/she possesses.
    
    4. There is almost always middleman in IT outsourcing. Typically those are real parasites that drain blood from both side of the project. See other posts about details.
    
    5. All those stories about $150K jobs are good stories but that does not mean that they happen frequently in the current economic circumstances. As a former manager I can tell you that in current environment those jobs, typically held by baby boomers, are ruthlessly pruned. My guesstimate that $50K-$60K now is more typical for medium level and $70-$90 for high level (talented, indispensable) IT staff. I saw quite a lot of advertisements for entry level IT jobs for $15 per hour. So labour arbitrage is almost over as $60K is less then $30 an hour.
  - Yves Smith says:
    
    September 2, 2010 at 9:59 pm
    
    skj,
    
    1. Surveys of the major companies who outsources (for instance, once conducted by Deloitte Touche of very large corporate users, IIRC Fortune 100) find high rates of disappointment with outsourcing, often 70%. As I have explained repeatedly, the labor savings of low level workers distort the picture. These are offset by increases in costs at the managerial level, and those are much more expensive workers. And those offsets are considerable.
    
    2. The contracts are typically negotiated in a naive fashion. They are so complex that the big corps rely on specialized consultants to structure and negotaite them. However, these consultants demonstrate their value by beating down the vendor to get the rock bottom price.
    
    So what happens? Often a. Customer is unhappy with service and can’t do much about it (the outsourcer isn’t making much money and has incentives to cut corners in every way not prohibited by the contract and/or b. Something happens, the customer needs a variance from the contract, the outsourcer hits him for huge cost (not unlike change orders in construction projects.
    
    3. You forget I lived in Australia for two years and am very familiar with theri visa regime, I have used visa highly regarded visa consultants and lawyers. You are simply wrong re my ability to get in under the skilled worker visa. My odds of being approved as someone over 50 are zero. The only way I might get in is with a corporate sponsor (which means if I leave their employ, I have to leave pretty pronto) or spousal (and they scrutinize spousal applications pretty heavily to see if the marriage is bona fide).
    - Skippy says:
      
      September 2, 2010 at 10:49 pm
      
      The TV reality show *Farmer wants a Wife* is doing, ratings wise, quite well over here. Hint. Hint. lol.
      
      Skippy….Yves…the Jillaroo/Plow Jockey, my head spins in absurdity’s embrace.
    - Philip Crawford says:
      
      September 2, 2010 at 11:45 pm
      
      I’m a software entrepreneur and I hire designers and developers from overseas through Elance. There is nothing “false” about it.
      
      I don’t understand the negative view about utilizing developers from cities other than where I live (which I also do). It seems racist to me. I don’t really care if a developer is white. I just care about the value received.
      
      Outsourcing is difficult, it doesn’t matter if it is with people 1000 or 10000 miles away. Enough with the proclamations that it is somehow different than putting out an RFP for service providers from around the US. It isn’t.
    - skj says:
      
      September 3, 2010 at 2:14 am
      
      @@yves,
      @@kivite
      
      Since both of you raised similar points in my view, I hope you dont mind if I type in one response.
      
      You raise very plausible issues with the outsourcing process. Having said that, most of these issues – with the exception of the time zone difference – would apply to any outsourcing/consulting company, regardless of where its located.
      
      Secondly, is there any explanation beyond ‘management is short sighted, penny wise and pound foolish’, that can be proffered to explain the secular rise in the revenue of the Indian outsourcing companies?
    - skj says:
      
      September 3, 2010 at 2:43 am
      
      @@ Yves
      >> You forget I lived in Australia for two years and am very familiar with theri visa regime, I have used visa highly regarded visa consultants and lawyers. You are simply wrong re my ability to get in under the skilled worker visa. My odds of being approved as someone over 50 are zero. The only way I might get in is with a corporate sponsor (which means if I leave their employ, I have to leave pretty pronto) or spousal (and they scrutinize spousal applications pretty heavily to see if the marriage is bona fide).
      
      So you *did* work in Australia, pretty much the same way I am working in the US today.. The preconditions you describe for a work permit in Australia sound exactly the same as those required to work in the US today, with one crucial difference. In Australia, you can sponsor yourself as an immigrant, in the US, only your employer can sponsor you.
      
      I am a little disappointed that you did not deal with what I thought was the substance of my comments.
      
      1. If you drive a prius, arent you taking away a job from an American auto-worker, a class of workers that is arguably in much greater need of protection that IT/CS workers? How is this replacement of an American job different from outsourcing or a guest worker?
      
      2. I work for an American company (in America, not India) that relies on Asian markets for almost half of its revenue. Our competitors are German, American and Chinese. A sizable number of Indians work only for us and our American competitors, not for the German or Chinese competitors. Am I satisfying ‘American’ demand, forcing my way into what should be a purely American transaction?
      
      3. What does labor mobility mean when work can be performed equally well across national boundaries using internet connections?
      
      4. Why do sizable, well managed companies like Google, MicroSoft, Qualcomm, Cisco, Juniper, HP, IBM have large Indian development centers?
Larry says:

September 2, 2010 at 12:05 pm

How about Green cards instead of H1Bs? Ask these executives, trade organizations and lobbyists on why they’re so keen on increasing H1B numbers but not clearing out the Green Card backlog.
- lark says:
  
  September 2, 2010 at 1:40 pm
  
  H1B is only about destroying the job base for technical professionals in the USA.
  
  Green card is another thing entirely.
  Overall, more green cards for engineers would strengthen our innovation and job market, the latter by no longer undermining entry level jobs.
sgt_doom says:

September 2, 2010 at 9:19 pm

Nuke India.

End of discussion (USA reached critical mass in jobs outsourcing as of July 1999 — anyone who doesn’t comprehend this is entitled to the name “douchebag”!)

Nameless says:

September 2, 2010 at 2:20 am

“And why are there so few students studying computer science? Because there are no (well, more accurately, hardly any) entry level jobs. I’ve been reading about this on Slashdot for YEARS, about the utter dearth of anything resembling a career path in IT. ”

I’m sorry, but this is utter nonsense. Job & career prospects for people with bachelors’ degrees in computer science are better than in essentially any other area of study. Students with degrees in nursing will start with somewhat higher hourly rates (but with poorer career prospects), and some people will get professional degrees (MD, JD, MBA) which usually pay off quite well, but BSCS is still the best bang for the buck and has been for the last 15+ years. I can’t think of any other industry where people with a bachelor’s and 5 years of experience routinely make six digits.

If the industry had really been decimated and there hadn’t been “anything resembling a career path in IT”, I’m sure that I’d be able to afford a decent house with good neighborhood school within a 30 minute drive from Silicon Valley on less than a $200k/year household income.

Yves Smith says:

September 2, 2010 at 2:28 am

What is your data source for this assertion? This is a very frequent topic of discussion on Slashdot, and the commentors agree on the very small number of entry level positions in IT (perhaps until this year, but I have been seeing long threads related to this from at least 2005 to 2009).

And these people do not have the income expectations you describe either. The figures you suggest ($200K a year) are well above what Apple pays for very senior engineers which suggests to me that your have a limited data set.

Also, Silicon Valley consists of a LOT more than software coding.
- Nameless says:
  
  September 2, 2010 at 2:44 am
  
  Well, 200k/year needed for a family of an engineer to buy a house in Palo Alto or Los Gatos is likely to be a double income. Ordinary engineers in non-managerial positions may make 120k, occasionally up to 150k. (Just check glassdoor.) The point is really that there are lots and lots of those 120-150k jobs out there; evidently, more than there are houses in the vicinity of Silicon Valley.
  
  I’m not sure how to quantify the availability of entry-level jobs in particular, but, as of this moment, there are 6,700 job listings in Silicon Valley area on Dice, and there are “>1000 matching jobs” (it won’t tell me how many exactly) in that same area, in IT on Monster.
  - Patriot says:
    
    September 2, 2010 at 2:47 am
    
    When was the last time you applied for an entry level engineering job?
  - Yves Smith says:
    
    September 2, 2010 at 2:55 am
    
    Really? Senior engineers, and I mean the sort working on the top projects, namely iPad apps, make maybe $140K. They get stock options too, but you can’t pay for your house or the rest of your life out of deferred comp.
    
    So tell me again what you know re the pay levels and number of entry level IT jobs? Your factoids are wide of the mark.
    - Nameless says:
      
      September 2, 2010 at 3:10 am
      
      http://talk.collegeconfidential.com/graduate-school/651743-starting-pay-fresh-engineering-ph-d-holder.html
      
      “If you’re going into industry and not Civil Engineering, I think starting is generally around $75-85k… I know ChemE’s, even with just a Bachelors, can make around 70-80K straight out… “
    - ? says:
      
      September 2, 2010 at 3:13 am
      
      As I said, a BSCS gets you nowhere. Thanks for agreeing.
    - Yves Smith says:
      
      September 2, 2010 at 3:16 am
      
      I see. The person says “I think” and is talking about Chem Es and civil engineers.
      
      The topic is IT and the whether there are decent numbers of entry level jobs. You’ve still failed to disprove what I’ve read repeatedly on Slashdot.
    - softwareveteran says:
      
      September 2, 2010 at 3:39 am
      
      Hi Yves,
      
      Ipad app writing is not a high end job, it is one of the low hanging fruit, low end job.
    - Yves Smith says:
      
      September 2, 2010 at 4:00 am
      
      softwarevet,
      
      Sorry the guys in question are top people at Apple, they are very deeply involved in all the new product development (as in state secret stuff). And I do have their pay right. It may be that the party who told me what they are doing re the iPad oversimplified (I presume related to development of the apps but not apps writing).
    - Timo says:
      
      September 2, 2010 at 2:17 pm
      
      Ives,
      Apple isn’t necessarily that good a benchmark when it comes to IT salaries (and neither is a rather large, very well known web software company in Mountain View) – they’ve been highlighted as paying below average in the Silicon Valley area several times. Admittedly I’m not 100% sure if this is still the case in the Apple case.
      
      That said, the $120k-$150k range sounds about right for what I would be asking for (and usually getting) as a senior software engineer with > 20 years experience.
    - michael says:
      
      September 2, 2010 at 2:36 pm
      
      Yves, please lets go back to the central statements Nameless made: “people with a bachelor’s and 5 years of experience routinely make six digits.”
      
      I fully agree!
      However, making it for 5 years in an IT job means not just you somehow made your BSCS, but you are able to work your way through all kinds of tangled messes, without drowning in the complexity.
      About entry level jobs: I have only moved to the broader Silicon Valley area in end of 2007, and was surprised how long it took me to find a job as senior engineer in data management -actually 6 months- but since then I make 150k.
      (But people buying a *decent* house in the Bay Ara on 200k income are still somewhat insane, in my opinion, as they violate the ‘you can afford a house for 3 times annual income max’ rule.)
      Oh, and stock options comp is more something in start-ups, kind of “we cannot pay you more, but if everything works out perfectly, you might be able retire at 40″ lottery.
    - Poco Ritard says:
      
      September 2, 2010 at 2:36 pm
      
      I’m with you, Yves.
      
      My kid’s 15 and I’m strenuously discouraging him from following me into Software Engineering. That train left the station a lot of years ago.
      
      $140K? I wish. I’m a 30 year vet and not near that. OK, I’m in Seattle and not CA but I ain’t rich by local standards. For example, the median home price in King County is almost 4x my annual salary. Granted, I work in a non-profit but it *nix flavored medical research in Seattle and I am highly skilled (no boast). And most of my colleagues think I’m well paid.
      
      My recommendation to him is to put together a network admin/support resume to use finding summer/part time jobs while getting a degree in something else.
- Raging Debate says:
  
  September 2, 2010 at 2:09 pm
  
  American management that can work with Chindian’s make great wages.
  
  American coders are getting slaughtered on wages. The six figure coders on the East coast back in 2000 will take half of that nowadays but the trick there working with them is the problem of moonlighting. Managing American software talent requires a ton of day to day tedious task oversight.
  
  The Slashdot folks don’t like me much but a few of their people stepped way out of line suing legit companies using Can-Spam Act of 2004, legislation I directly helped craft.
purple says:

September 2, 2010 at 4:00 am

The big problem with nursing is, similarly, you can’t get hired without experience. And there are waiting lists at most nursing schools because schools ‘can’t find’ teachers given that being a nurse pays better than being a prof. And because the US education system is a joke.

A plus about nursing is that it has the most dynamic union movement in the United States, with a leadership that is almost entirely female – and welcome change.
poopyjim says:

September 2, 2010 at 8:05 am

I have a CS degree and I work in patent law and I hate it, so I tried for months to get an IT job.

The job market was atrocious (this is in the D.C. metro area). I ended up getting one offer, for $50k a year (doesn’t get you far in D.C.), which would be a $25k pay cut for me. Also, the job involved no programming, no creativity, or anything intelligent whatsoever. The employer just wanted someone to update their website (with a CMS – no coding).

I also interviewed for a PHP/web developer job, the employer wanted 3+ years of experience and only wanted to pay around $25/hour with no benefits – absurd for D.C. And, I wasn’t “good enough” to get this job despite having a good amount of PHP programming experience (unpaid) – they said they really wanted an “expert”. All the other jobs I possibly could have gotten were temporary (e.g. 2-month) projects which of course paid by the hour with no benefits.

So yes, my experience with the IT field is that it is a desolate wasteland, though I’ll agree that there still exists a way into the field, and possibly a path to work your way up if you are determined.

mp says:

September 2, 2010 at 2:21 am

No one cares any more. I just can’t get worked up about it.

Empires eventually die. This one won’t be an exception.

purple says:

September 2, 2010 at 3:46 am

Yes, but this one won’t die with a whisper. The American ruling class will take down the whole world with them.
- Progressive Ed says:
  
  September 2, 2010 at 8:37 pm
  
  Viva La Raza!!

Tao Jonesing says:

September 2, 2010 at 2:22 am

Yves,

In the last few months, I’ve met with two PhDs (one in Chemical Engineering out of MIT and another in Physics out of the University of California system) both asking for advice on how to break into the intellectual property field, which is my area of expertise.

Both are American citizens, but neither sees a future in the tech industry, so both are trying to figure out how to position themselves as either an expert to help out in financial transactions (e.g., M&A) or as a lawyer.

I found the discussions to be rather sad.

In the meantime, I have been working with some well-established and brilliant PhDs in the chip design space. The board of their company includes Bill Joy.

In terms of what is passing as the proxy for talent these days in the Silicon Valley (where I am located), I think the PhD is the true currency. The people that I know who get away with less than a PhD are those who have accumulated meaningful experience in the industry (myself included).

In spite of what I’ve said, I believe your intuition is correct. The popular narrative that is being pushed does not have to be the truth. Unfortunately, the policies that are in place seem designed to prove the popular narrative true.

Patriot says:

September 2, 2010 at 2:42 am

I have seen similar trends, where mid-senior technical people who are very qualified are also trying to get out of tech, or at the very least, start their own business. They see the writing on the wall and fear outsourcing. These are people who are in their late 20s, early 30s with ten years of experience. Some of them have advanced degrees, others are the proverbial Silicon Valley prodigies who started writing code at the age of 16.
- Patriot says:
  
  September 2, 2010 at 2:43 am
  
  Should have been “started writing code for pay at 16.”
- Nameless says:
  
  September 2, 2010 at 2:48 am
  
  People have been fearing outsourcing continuously for as long as I can remember (at least since 2000). In the mean time, programmer salaries in India have been growing at the rate of 10-15%/year, and potential profits for prospective outsourcers have been shrinking accordingly.
  - Patriot says:
    
    September 2, 2010 at 3:40 am
    
    Rising salaries in India have nothing to do with the fact that people have been fearing outsourcing “forever,” which you defined all the way back to 2000. Thank you for making my point, though, that people have been fearing outsourcing for quite a while. It IS a problem. That’s why people fear it.
    
    Actually it’s been an ongoing problem. You may not remember this, but the United States used to manufacture hard drives in quantity domestically. Yes, I know that some firms still run prototype lines here, but that’s not the same as series production. Certain industry “leaders” chose to outsource critical parts to Japan. Patents aren’t the issue. Technical know-how is, and is not contained in the patent app. American industrial policy made this possible, and gutted manufacturing of small precision electric motors in the US. Now that US firms have started making hard drives in Shenzhen, I expect that within 10 years there will be PRC based hard drive companies doing design.
    
    US based Engineers in non-software jobs have become project managers– industry will lay off the entire domestic team and leave one engineer to manage the overseas operation.
    - Chester Genghis says:
      
      September 2, 2010 at 10:40 am
      
      Re: PRC based design. You are exactly right.
      
      Manufacturing (be it widgets, cars, hardware, or software) is the foundation of a healthy economy. Anyone who thinks you can outsource manufacturing without eventually putting at risk the related functions of engineering, service, marketing, finance, etc. is willfully short-sighted or a dupe.
      
      That’s what is so pathetic about our (lack of) industrial policy.
    - alex says:
      
      September 2, 2010 at 2:50 pm
      
      ‘Certain industry “leaders” chose to outsource critical parts to Japan. Patents aren’t the issue. Technical know-how is, and is not contained in the patent app.’
      
      Hear, hear! If only more people understood that know-how is more important than all the so-called intellectual property in the world, and that know-how can only be obtained by actually doing it.
      
      As for shifting production to Japan, that’s particularly depressing. Japan is not a cheap labor country, so even that excuse doesn’t work.
    - Patriot says:
      
      September 2, 2010 at 3:10 pm
      
      Thanks. Yeah, as far as shifting motor production to Japan, that was done in the 80s. Japanese companies have started outsourcing production as well, from Japan out to SE Asia. But, companies know how to keep certain information proprietary, to protect themselves. Japan, though , is having major problems. The socialist/heavy industry economy that we helped them build in the 1950s isn’t working anymore and the country is stuck in political stasis.
    - Francois T says:
      
      September 3, 2010 at 12:06 pm
      
      “I expect that within 10 years there will be PRC based hard drive companies doing design.”
      
      They already do it for chipsets. This has forced certain mission critical research labs for the DoD, (like Sandia National Lab) to build their own manufacturing capacities. No choice: In supposedly off the shelf chips Made in China, they’re finding code that shouldn’t be there to begin with.
      
      See this:
      http://www.cbsnews.com/video/watch/?id=5578986n&tag=related;photovideo
      
      starting at 7:31mins.
- MyLessThanPrimeBeef says:
  
  September 2, 2010 at 3:29 am
  
  Isn’t ‘progress’ when they someday come out with a robot that can write programs?
  
  Then, we don’t have to worry about outsourcing.
  
  I can already see people praying against ‘progress.’
  
  What if one day, some genius comes up with a contraption that will manufacture/provide all our GDP by itself cheaper than any person or corporation can do? He will then own the whole world. But there is one tiny problem – with everyone else not working, the genius has no customers…unless the overwhelming majority votes to take from the genius to support themselves.
  
  That would make a good science fiction.
  
  Also, the next time you read in some economics textbook about automation doesn’t reduce employment, try the above exercise in reducio ad absurdum.
  - Progressive Ed says:
    
    September 2, 2010 at 8:44 pm
    
    A nurse today told me that robots are impacting her profession (Nor. Calif.). She said R2D2 type robots are being introduced into hospitals to deliver supplies and medications to patients.

bob says:

September 2, 2010 at 2:23 am

The 70% number is probably true, but it speaks much more to the failed immigration policy of the US. Most of those students want to stay in the US, and a lot of them come from very wealthy foreign families who can afford to have a student in school for that long.

I worked with lots within a state university graduate program. He drove a Porsche. He got pulled over 3 times in one week for driving well in excess of the speed limit. I suggested that he should tone down the car(asking him to slow down seemed crazy), not too many here in blue collar land drive cars that are that expensive. His response, “It’s the cheapest one they make.”

jbmoore says:

September 2, 2010 at 2:26 am

PhD level computer scientists can pretty much go where they please. They’ll be snapped up by top tier companies such as Google. IT consultants and other IT professionals have to compete for jobs where the educational requirement can range from a high school diploma to an Associates or Bachelors degree. An additional problem is that one not only has to be a systems administrator, but a database administrator and possibly another specialty as well these days just to get a foot in the door. I have a doctorate in Biology. I went into IT to make a living because the job market in academia had been ruined by a glut of PhDs and because my first postdoc went south. I earned more as a customer service representative fixing computers over the phone my first year than I ever did as a postdoc. The dot.com bust hurt a lot of IT professionals, and with virtualization one administrator may be taking care of hundreds or thousands of virtual systems running on 25-100 actual servers making the workloads even nastier than 10 years ago. Add in the learning curve of keeping current in a rapidly changing field while competing with cheap Indian and Chinese labor (H1B and outsource) and it feels like graduate school again. An additional complication is that Indians are now running the headhunter shops. Citibank uses Wipro, so one must go through Wipro to be hired by Citibank. Throw in language communication problems and the time difference and it makes phone screens and interviews more difficult.

Chester Genghis says:

September 2, 2010 at 10:32 am

Re: Indians running headhunter shops. Be thankful fluency in Hindi isn’t typically a job requirement (not yet anyway).

But it will increasingly be so.
- Raging Debate says:
  
  September 2, 2010 at 3:24 pm
  
  You are joking right? The country speaks English as in everybody. I don’t see Hindi making a comeback, EVER.
michael says:

September 2, 2010 at 2:45 pm

> An additional complication is that Indians are now running the headhunter shops.

That was my impression also in the greater Silicon Valley or SF Bay area.

Nameless says:

September 2, 2010 at 2:33 am

“I’d like some reader comment, but the idea of a PhD as the proxy for talent in this space sounds questionable. ”

There are two aspects here. One is that value of the PhD in natural sciences has been so badly degraded over the last quarter of a century, for a number of reasons (too long to discuss here, but I can provide links if anyone’s interested), that most people who do get into those programs, do that with an eye for a green card.

At the same time, the percentage of Americans who get into UNDERgraduate programs in CS and natural sciences is abhorrently low (as of last year, 1st-year undergrads in CS, physics, math, and statistics, taken together, accounted for a little more than 4% of total university freshmen), and that has more to do with the cultural stigma of being a scientist/programmer than with imaginary scarcity of job prospects.

Jon H says:

September 2, 2010 at 7:43 am

” and that has more to do with the cultural stigma of being a scientist/programmer than with imaginary scarcity of job prospects.”

I don’t believe that to be the case. Enrollment has dropped, largely due to the perceived lack of a future due to outsourcing.
alex says:

September 2, 2010 at 2:58 pm

“that has more to do with the cultural stigma of being a scientist/programmer than with imaginary scarcity of job prospects”

That “cultural stigma” must be a pretty recent development, because back in the 90′s undergrad CS programs were full up.

Apparently this “cultural stigma” has, by an astounding coincidence, coincided with the tech bust and the increase in outsourcing. Or maybe it’s not such a coincidence – maybe anyone foolish enough to go into CS in the last decade deserves to be stigmatized.

giulio says:

September 2, 2010 at 2:38 am

“And why are there so few students studying (computer) science?”

Given the bad public high school system, the number of US high school leavers with a comparative advantage (be it ability or preference based or both) in sciences in general has fallen. The same is true for the UK.

alex says:

September 2, 2010 at 3:02 pm

Wow, the US and UK school systems must have gone downhill in a hurry, because 10 years ago CS programs were full.

Where is William of Occam when you need him? Why such torturous alternate explanations for the simple fact that students are loath to major in fields with poor job prospects?

mudfarmer says:

September 2, 2010 at 2:39 am

Outside Silicon Valley and NYC’s Financial District, most routine I/T jobs just don’t pay enough to compensate for the the minimum education they require. The combination BS/MS that most require for even mundane jobs will set you back 5-6 years and leave you with $50-$75k in student loans (if you’re lucky). I don’t know about India, but do know that my peers in other countries frequently graduated with comparable degrees with minimal if any debt. It’s difficult to compete for the same jobs with the same skills when you have a $75k debt dragging you down.

Ten years out of college I was at the “top” of my career ladder at IBM and barely keeping my head above water financially.

And to those of you who will retort: well then, don’t borrow so much money. How, precisely, would you get a BS/MS in the US then and remain competitive with the worldwide workforce? Your companies keep increasing the minimal requirements to get in the door while cutting salaries to be “competitive” on a worldwide basis. The market has responded — it costs too much to get the skills you require, so students look for other opportunities. Why are you at all surprised?

As far as outsourcing goes: firing a thousand people in the US to replace them with staff offshore is one thing. Firing them and then importing a thousand people via H1Bs to replace them is what the Schumer legislation targets.

Patriot says:

September 2, 2010 at 2:46 am

One of the major issues here is educational arbitrage. The Indian government heavily supports education such that middle class people can get a very affordable education. Then they can come to the US and accept jobs at lower salaries than their American counterparts. The Indian H1B contractors aren’t making payments on student loans.
Nameless says:

September 2, 2010 at 2:55 am

Please name any other bachelor’s degree that, in your opinion, pays better than IT “to compensate for the minimum education it requires”.
- ? says:
  
  September 2, 2010 at 2:56 am
  
  MD JD
  - Nameless says:
    
    September 2, 2010 at 2:59 am
    
    In both cases, you will end up with triple the debt that you would have incurred while getting your BSCS. In case of MD, you’ll follow up with 4 to 7 years of residency, 80 hours/week for $40k/year. In case of JD, unless it’s a T14, you stand a real good chance of ending up a paralegal in the nearby courthouse, earning $40k/year for the rest of your life.
    - ? says:
      
      September 2, 2010 at 3:08 am
      
      As has been pointed out SEVERAL times already for you, a BSCS gets you nowhere, at least an MS is required. Apples to oranges comparisons.
    - Nameless says:
      
      September 2, 2010 at 3:11 am
      
      I know lots of people in IT who don’t have a MSCS, including at least two who make 120K+ with a BS in physics.
- Yves Smith says:
  
  September 2, 2010 at 3:23 am
  
  Mathematics and physics, no question. Plus if you seek a graduate degree, you can do that without going into debt at all.
  - Micah says:
    
    September 2, 2010 at 4:16 am
    
    Applied mathematics, maybe: http://www.payscale.com/best-colleges/degrees.asp
    
    It’s interesting to read this, because it’s very different from my personal experience. I went to Harvey Mudd, graduated in 2007 with a degree in CS, and as far as I know, just about everyone from the CS department ended up with a job (or in grad school). Also, most of my close friends are either math or physics majors, and I started out with a better salary than any of them (and, having since moved on to Google, am now making significantly more).
    
    But CS seems like one of those subjects where getting a degree from a top school might well be worth quite a bit more than anywhere else, in terms of how willing people are to look at you. When I got recruited at Google, it was because the recruiter saw Harvey Mudd on my LinkedIn profile.
    - alex says:
      
      September 2, 2010 at 3:26 pm
      
      It’s good that you’re doing well, but frankly you’ve only been in the workforce for 3 years. Give us a post in 20 years and let us know about the rampant age discrimination. There’s no reason what you do shouldn’t be a long term career (historically it was), but I wouldn’t count on it these days. I honestly hope you’re an exception, but it’s not the way to bet these days.
Lucio says:

September 2, 2010 at 4:45 am

Because your system is f****d up. Not only EVERY activity that can be privately run has been brought private, but eventually must generate HUGE profits for the supplier. Corporations (and institutions like colleges) in US have a leverage that we Europeans do not even think to allow them. Wherever you go (UK excluded) to obtain a college degree here, you won’t incurr in such costs. You will have to pay top money only for Masters programs like MBAs, but there the reward is really high.
Chester Genghis says:

September 2, 2010 at 10:04 am

Minimum requirements keep increasing, salaries are decreasing, AND the market & nature of work itself has changed drastically in the last 10 years. Job duties are narrower, more focused on a single set of skills (i.e. commoditized).

The market (at least for application software) changed as well. The perceived value of packaged solutions has gone down (along with the price point), the perceived value of point/custom solutions has gone up, etc. These developments are all related.

leroguetradeur says:

September 2, 2010 at 3:33 am

“And why are there so few students studying (computer) science?”

The answer for the UK, from my recent visits, where it has become a topic of political discussion, is generally said to be that computer science is no longer taught. I am told it is impossible to study computer science at high school level or beyond. And very difficult in further education outside the best universities.

Instead, the schools and almost all further education institutions are full of ‘computer literacy’ and ECDL courses. These are basically courses taught by computing illiterates in how to use Google, Office, Facebook, Photoshop and Twitter. And Windows Explorer of course, for truly advanced students.

The result is that any able, interested and computer literate students interested in programming or systems management drop out or don’t go near the courses. Because the people who plan and run this stuff are themselves computer illiterates, they don’t think that the problem is that there are no computer science courses any more. They think the problem is that people are not taking the courses on offer. They actually don’t know there is such a thing as programming or systems management.

This is par for the course in much of UK public education, where the few bright and informed students who are left in it sit there, bored out of their minds, while being taught superficial travesties of the most basic aspects of a subject by people who themselves do not understand it and do not want to.

jen says:

September 2, 2010 at 3:44 am

Here’s a good article on the subject by Vivek Wadwa at TechCrunch: http://techcrunch.com/2010/08/28/silicon-valley’s-dark-secret-it’s-all-about-age/

This is a constant theme in the press, and I believe it’s lobbying. Older workers get left in the dust by the younger CS workers b/c in addition to higher salaries, older workers also cost more in benefits.

PhDs! Wadwa describes a company that successful used HS students, who quickly became as productive as college grads.

S Brennan says:

September 2, 2010 at 2:48 pm

Good link Jen
Sundog says:

September 2, 2010 at 11:33 pm

Jen, that *is* a good link. I read before looking at this thread, and was quite depressed.

On the positive side, here’s a link to a piece about a start-up state university campus that seems to be on the right track for preparing folks for tech careers (med tech in this case). I suspect innovative education will do as much to reform tech careers as anything. Long, but worth a peek.

Kevin Carey, “The Mayo Clinic of Higher Ed”
http://www.washingtonmonthly.com/college_guide/feature/the_mayo_clinic_of_higher_ed.php?page=all&print=true

againsomeone says:

September 2, 2010 at 3:46 am

I’m a former H1B employee now happily employed outside of US (~150k annual as systems architect) and while I don’t think outsourcing or restricting labor mobility on all levels is correct course of action, I absolutely agree that US must protect entry level jobs. Because if there are no entry level jobs available for US fresh graduates there won’t be any mid level folks few years down the road and we all will be worse off.

I think global labor mobility mobility for top 10-15% shouldn’t be a big deal. At senior level there shouldn’t be much harm from competition (given anecdotal data of my friends and colleagues around the globe it does look like earnings somewhat converge at the top). I think H1B visas should be reformed in a way with only small subset of visas allowed for entry level jobs with bulk of visas having high wage requirements floor around 90 percentile. Prevailing wage crap should be replaced by BLS wage data with some hard defined floor. I like SS wage cap that is subject to SS tax for instance, it gets indexed every year, so if company wants to bring some unique talent over it better pay above max wage that is subject to SS tax.

froggy says:

September 2, 2010 at 11:28 am

Good point about protecting entry level jobs. Right on the money. My observation has been there aren’t many jobs that appear enrty level and every employer wants somebody to hit the ground running.
Sundog says:

September 2, 2010 at 11:24 pm

againstsomeone, this thread is full of good posts and yours is my fave so far. I agree completely about top-level jobs being open to come-one-come-all global competition. Also, could not agree more that entry-level and mid-career positions should be made very difficult to fill with non-nationals.

Dave says:

September 2, 2010 at 3:49 am

As long as our laws permit companies to import overseas workers and pay them below market wages there will always be a shortage of homegrown of tech workers. It’s simple supply and demand: pay people more for tech work and you will have more tech workers.

purple says:

September 2, 2010 at 3:54 am

It’s too expensive to get a good ‘official’ education in the US. Going to a good public school K-12 requires buying a house in an over priced neighborhood. College requires loans, Masters and Phd to some extent as well, or at least there will be accumulated debt due to pathetic stipends. The debt from undergrad also discourages people from continuing on.

It’s much better to marry a foreigner from a ‘developing’ country and send your kids to the Free high quality public universities in those ‘developing’ countries. Mexico has a few, even.

skippy says:

September 2, 2010 at 4:12 am

I hate, hate E-mail. Although its better than love child’s hate.

George Carlin – Modern Man see:

http://www.youtube.com/watch?v=hkCR-w3AYOE&NR=1

Hay India for frick sake hire some Indos or gamer South Koreans and leave the poor USA a lone! Cough….your laws are not ours…Oh debt collection is a past time in that quadrant of the world lol….sigh.

Skippy….unlimited broadband mmmmmmm.

Nameless says:

September 2, 2010 at 4:13 am

FYI, it seems that some of my recent comments got eaten by a spam filter.

Debra says:

September 2, 2010 at 4:15 am

I liked the article, and appreciated the discussion, interesting.
There is something that runs ALL THE WAY THROUGH article, and discussion, though : it’s that the ONLY MOTIVATION for people in getting a job and a degree is the AMOUNT OF PAY they will receive for it.
This is a simplistic assumption that will not help us address the problems involved here.
One problem : diplomitis,(the assumption that a piece of paper EQUALS competence, and is the only way of acquiring it) and the increasing divorce between our educational system at all levels, and the world of work.
But we have become rather toxicomaniac in our approach to EVERYTHING, and not just drugs… moving from one bubble to the next IN THE HOPES OF GETTING RICH AND MAKING LOTS OF MONEY (for many) does not induce people to DIVERSIFY their activities, or take the risk of moving into areas that are not well known (law, medecine).
We need professional and economic diversity at this point.
Not a succession of bubbles, as people seek to MAKE MONEY at all costs.

Yves Smith says:

September 2, 2010 at 4:26 am

No, Debra, you are going for black and white thinking.

Being concerned about supporting oneself and making plans is NOT about making money at all costs. It’s called being responsible.

I went to college when it was affordable, and on top of that, my folks paid for it And I majored in an elite liberal arts major (as in they refused 2/3 of the applicants to that major).

Despite having done very well academically and taken some decent math and econ courses, no one would hire me because I had not majored in economics (and I had decent extra curriculars, the required leadership BS). Yet I got into every graduate school (law and business) I applied to.

That was over 30 years ago, when the world was less mercenary than now.

The pressure to major in something career related comes from employers. Students are merely responding to reality.
- GregL says:
  
  September 2, 2010 at 9:29 am
  
  As a parent of 3, I urged my kids to get an undergraduate in whatever caught their fancy. I wanted them to get their bachelors degrees and the best way to do that (and get good grades) is to major in something that consumes you. I was pushing the virtuous circle of enjoyment -> success -> enjoyment. I was paying the full tab and they didn’t have to work at all.
  
  All three felt that they needed to get jobs and work in school, take majors that would lead to jobs and sell themselves on the next step of their ‘careers’ (work or grad school). I tried to dissuade them from thinking like that but to no avail.
  
  It must be something in the water…

skippy says:

September 2, 2010 at 4:23 am

Hay Asshats down load this.

The American Dream

http://www.youtube.com/watch?v=acLW1vFO-2Q&NR=1

Skippy…imprinting like a young person having sex for the first time..eh.

Micah says:

September 2, 2010 at 4:24 am

I’d agree that a PhD is a poor proxy for talent in CS. As a recent graduate in that subject, basically the only people from my class who went on to CS graduate programs were either interested in theory of some kind or wanted to teach (though some then get lured back out by the salaries, if they’re good). If you can get it, a job tends to give you much more practical programming experience than a further advanced degree. But I do know a number of people with PhDs in other subjects who have since drifted into programming, which is probably the kind of person you’re talking about.

jp says:

September 2, 2010 at 4:31 am

Yves,

American born, IT pro of 25 years, consultant building enterprise applications for investment banks.

What the author means to say is that they can’t find the talent they need at the wages they want to pay. If they were paying 2001 money, they would be inundated with high quality, American born, applicants from the top tier U.S. technical schools. But because the H1b program has driven wages down, everyone who graduates from MIT these days wants to go to Wall St. or management consulting.

You are absolutely right– a PhD is a proxy for nothing in IT. Nobody in IT has an PhD, and none of the groups I’ve worked for would ever hire a PhD. Not because they are overqualified, but because they are wrongly qualified for day-to-day software engineering.

The Indian born Stanford PhD in computer science is the bugaboo that the H1B lobbyist always pull out. They point out that without these immigrants, Cisco and Qualcomm would be in deep trouble. And that’s probably true. What they ignore, of course, is that this deep sciency kind of engineering has nothing at all to do with IT. The vast majority of IT jobs are software development jobs that are done by bachelors or masters, and require no specialized education. Many of these jobs are carried out perfectly well by people who don’t even have engineering degrees.

I can promise you that most corporate IT jobs, whether executed here or in India or China, could be competently carried out by any bachelor, in a quantitative or near quantitative field, from a decent U.S. university.

And you are correct, there are now no entry level jobs for college grads. This state of affairs has arisen through a combination of government corruption (lobbying on the part of Indian body shops and large U.S. employers) and shortsighted decision making on the part of our youth. In the last 15-20 years, most engineering grads aspired to: wall St., management consulting, or law school. Hands on engineering was rightly considered a hard and dirty way to make a living. So 5 years ago, the only people you could find to take $90K jobs in the Jersey City back office of an investment bank were h1b.

And hiring managers are biased favorably towards h1bs for a couple of reasons (I know this very well first hand, having hired lots of h1bs myself). First, h1bs are (or were) here as indentured servants. That means they constantly go above and beyond the call of duty, or they are on the next boat back to India. This provides great flexibility for really poor IT management (which is most of it). As a project manager, you can totally screw up all aspects of forward planning, design and architecture, and still deliver something that (at least superficially) resembles what was supposed to be delivered. You simply make your indentured servants scramble really hard and work around the clock. The other favorable hiring bias for h1bs that I’ve seen is that many of the “recruiters” (h1b placement middlemen) are themselves Indian or Chinese and have good personal relationships with the hiring managers. These recruiters are much more inclined to place h1bs than non-h1bs because their profit margins are typically higher when placing h1bs. The profit margins for these guys are (or at least were until recently) huge. A “recruiter” will take 20-30% of a “consultants” salary continuously. They are able to take a bigger cut from h1bs (especially freshers) because the h1bs don’t understand how the system works (at least at first).

Now, of course, I’m sure there are plenty of U.S. college grads who would like to have that $90K/yr back office IT job in Jersey City. But there are plenty of experienced IT people (mostly through the h1b program) who are sitting tight on them.

Dont’ you think it’s kind of funny that Obama is willing to spend $800B on a stimulus that created (reportedly) a couple hundred thousand jobs? How many h1bs (of all statuses) + L1 + other “guest” visas workers are in the U.S. now? I’m not certain, but I’ve heard that the number is north of 1 million. Isn’t that a 1 million person unemployment reduction that can be achieved without spending any public money? It simply requires the stroke of a pen.

skippy says:

September 2, 2010 at 4:47 am

Um…quarterly projection P/L vs human life span…sigh.
Captain Teeb says:

September 2, 2010 at 5:25 am

JP,

Thanks for a interesting comment. These are not so common.

You sound a lot like me: 25 years in IT, really US-born (no ancestors arriving after 1800), MSCS. I can tell that you’ve been there, was even enlightened by your remarks on how H1Bs enable bad project management (which is the rule, not the exception). It all makes sense.

I say it’s all of a piece with sending factories to China. Every company wants to lower its costs at the margin, but if manufacturing and skilled jobs are relentlessly squeezed, then what does the working population do? This is a high-level policy decision, let’s not kid ourselves.

Thought experiment: I imagine that Citibank or Lehman could have found much cheaper Indian or Chinese versions of Dimon and Fuld, but my guess is that they didn’t even look at foreigners. Why? Are those guys smarter than everyone in India? (I doubt it.) So the deciding class decides not to replace itself with cheaper foreign hires, big surprise.

But this sets the patttern for the US: the hollowing out of the middle class that Yves has talked about before (as polarization of wealth, high GINI, etc.). How far can the trend go before something gives?

I saw this coming in the 1990s and emigrated to Europe. I’ve worked in four countries now and can say that, in IT, Indians are rare (and transitory), while Chinese are non-existent. Salaries are not what the US was during the Y2K (remember that?) run-up, but everyone’s working. Very few of my colleagues even have CS degrees (1 out of maybe 20); the rest just got a book and a PC and taught themselves (though I don’t recommend this; I’m glad to have the theory). So the job market must be pretty good.

There’s a greater sense in Europe that you don’t squeeze people simply because you can. Also, I’m 56, and have colleagues who are even older, so the US-style Cult of Youth is less important. (Sadly, average project management is no better here, and possibly worse.)

My favorite English-language job board is jobserve.com. If you’re interested, go there and put in your favorite skills, plus a country. Some (typically lowballers) have the salary or daily rate posted as well.
- Cooter says:
  
  September 2, 2010 at 4:54 pm
  
  I have thought of doing exactly what you describe, although I am not quite yet in the position to pick up and move. Any other links or resources on visas/processes/blogs/etc on the subject would be greatly appreciated. If not, thanks for the information provided.
  
  Regards,
  
  Cooter
  - Captain Teeb says:
    
    September 3, 2010 at 1:25 am
    
    Hi Cooter,
    
    I’m sorry (for you) to say that it was just dumb luck for me as I married a European citizen. Unless you have an ancestral connection (parent, possibly grandparent), marrying is the easiest way in. If you’re single, I’d look at that angle. In particular, Eastern Europe’s new EU countries (e.g, Poland, Latvia, Hungary, etc.) are full of gorgeous, well-educated women. You could try a matchmaking service (that’s what I did, pre-Internet; been married 20+ years now).
    
    Another way is to get sent by your employer, then apply for residency or citizenship after 5 years.
    
    There are probably other avenues. Look around the web; there’s lots of chatter about emigration. I noticed recently that Google is hiring in Brazil. The important this is to get somewhere where the govt. is not trying to sell you down the river.
- Sundog says:
  
  September 3, 2010 at 12:04 am
  
  Captain Teeb, thanks for taking the time to comment.
  
  I for one have had enough with people holding up Saudi Arabia (“when they build a church in Mecca, we’ll consider allowing a mosque to be built in lower Manhattan”) or the Taliban (“they kill more Afghan civilians than we do”) as standards by which to evaluate the United States of America.
  - Captain Teeb says:
    
    September 3, 2010 at 1:31 am
    
    Hi Sundog,
    
    You need to get out more. Last time I looked, neither Afghanistan nor Saudi Arabia were in Europe, though plate tectonics may bring them here eventually.
00rush says:

September 2, 2010 at 5:40 am

I agree with some of JP’s points above. Yes, most technical jobs can be done by anybody with a bachelor’s degree in a quantitative or numerical field. Most programmers now seem to use Google as an auxiliary coding tool anyway.

However, there is still a measurable difference in the quality of students coming out with a Comp Sci degree from a good US or UK university compared to those coming out with a degree from a middling Indian University. InfoSys, TCS and Wipro can hire thousands of graduates straight from college in India, train them up in whatever the ‘in demand’ skill or tool set is and get them doing grunt work on out sourced projects. I worked very closely with contractors based in India when I worked for a large US investment bank in London. I found their skill and motivation levels were poor, and anybody who showed aptitude / good communication skills was swiftly promoted and moved on-site. Quality suffers as a result.

There are jobs out here (well in the UK) for people with good degrees, and those who show an aptitude for the field.
sth says:

September 2, 2010 at 7:39 am

jp is right on the money. That said, here is my “formula” for working in IT if you are a US native and are seeing the continuing rise of laughably low-cost competition and
want to know how to survive:

1) Get a BS at a community college, cheap distance learning program, or simply skip the degree altogether.

2) Do not take on anything resembling large, ongoing expenses. This means you have to live in a city with good public transportation, be willing to live in a studio or tiny room, not own a car, never buy a house, don’t acquire any expensive habits (no gambling, drinking, drugs, smoking, etc.) and do NOT have any children or other dependents. Fortunately for me, I am very happy with those things; not everyone loves being a car-less, childfree, non drinking/smoking/drug taking/gambling, life-long urbanite living in a sardine can. If you have the option to telecommute or walk to work, do that as well.

3) Save plenty of money to deal with the lean/dry times. Following #2 you should not have a huge problem doing so.

4) Be willing to work for tiny companies, startups, sole proprietors, etc. If you can get past the hilariously stupid roadblocks put up by HR departments in many large companies, you could take a job in one of those, but do not count on it. America lost “lifetime employment” years ago; IT often doesn’t even have “5 year employment.” There have
been times where I did work for 4-5 different clients a week. Your sleep may suffer sometimes, but there’s not a
lot you can do about that one except try to make it up
when things are quieter.

5) Be willing to work 80 hour weeks, be the go-to person
for just about everything, be on call 24/7, and never
take extended vacations. Start adapting your mind to
stay-cations/3 day weekends to avoid burnout; forget
about that 2 week trip to Europe forever.

6) Study and learn new things constantly. Even long after
you start your career, you should still be reading
up on the latest technologies posted on Slashdot, reading Q&A on stackoverflow, reading the ACM/Usenix/whatever email lists, reading 20 technology/development/admin blogs, and picking up any worthwhile O’reilly books. In today’s IT,
your education /never ends/. The idea many people have
in other industries that you just “get a degree” and work
without learning new things constantly is a pipe dream.
You cannot do that in IT.

The above is not a joke. I’m a native New Yorker, and have lived here all my life. I’ve been in IT for 15 years and lived in Manhattan for nearly all of it (before that I lived in Brooklyn, my hometown). This kind of life is definitely not for everybody, but if you want to survive
(and you aren’t the next Steve Jobs or Bill Joy) the above may help you.

I’m sure some will find the above sad (and perhaps it
is in some ways), but this is the reality of IT in today’s America.
- sth says:
  
  September 2, 2010 at 7:44 am
  
  Whoops, left one out: be wiling to work for under 100k (sometimes half that), for well, maybe life. Again, #2 should help you there.
Dan says:

September 2, 2010 at 7:51 am

JP’s thoughts on this matter resonate strongly with my own.
I have been a programmer in the New York area for 30 years where I have witnessed the slow death of a profession which was once attracted some of the best talent from the best schools in America. And outsourcing, and in-sourcing of H1b’s and L1′s is largely responsible. If you walk the IT floors at Bank of New York, Citibank, Bank of America, et. al. you will not see a non Indian programmer. As JP mentioned, the approved head hunting vendors are Indian companies. At these banks, you must contract through these Indian firms, and it would appear that they will only hire H1B/L1 candidates. If the quality of their work were superior I would certainly have no comment, since I think a company should hire the best talent available. Unfortunately, this is not the case. In most instances, they are really sloppy and untrained, but as was said before, they will work hard for fear of being replaced for lack of effort. Results be damned. As far as PHD’s are concerned, they represent such a small minority at the banks of which I speak, that they are hardly worth mentioning, except of course by politicians who invoke them to defend this program.
michael says:

September 2, 2010 at 2:55 pm

Thanks for the insight, now I learned another thing to avoid!

JW says:

September 2, 2010 at 6:24 am

Alan Greenspan @ 3:50 of video below says;

“We pay highest skilled labor wages in the world…If we would open up our borders to skilled labor, far more than we do, ah we would attract very substantial quantity of skilled labor which would SUPPRESS THE WAGE LEVELS of the skilled…”

http://www.youtube.com/watch?v=oqx88MyUSck

Notice that Alan Greenspan does NOT mention anything about “best and brightest” or “shortages” in the video clip above. Also notice his hand gestures as he exclaims; “SUPPRESS THE WAGES”!

LastChanceUSA says:

September 2, 2010 at 6:42 am

Outsourcing and off-shoring are about wage arbitrage, corporate profits, and nothing more. Unfortunately, career planning is very difficult for individuals, when they don’t know what occupation will be axed next.

I’m American born with have two MS degrees, one of which is in CS, and used to own a successful IT consulting firm. I had no problem competing with numerous foreign and US IT consultants on quality, quantity, and honesty. However, I was unwilling to compete solely on price ($11- $15 per hour in many cases). After three years of dealing with – “We can get IT people for about $15/hr. You need to rethink your hourly rates.” – I closed my business in 2003. I even got this line from a previous multi-billion dollar client after I single-handedly resurrected one of their projects from the grave, enabled them to meet their original deadline, and prevented millions in lawsuits for breach of contract. Another previous multi-billion dollar client let me go in 2000, after I told them that their muti-million dollar IT transformation project would fail, if they stayed on their current path. A couple of years later and millions spent on the transformation project, they lost over one billion dollars in revenue, because their new software simply didn’t work. They then called me back in to fix the project, as I was the only one who correctly predicated that the project would fail and why. I got the same line from this client, too.

I didn’t spend many years in college, thousands in tuition, and countless hours of self-studying after college to work for $15/hr or less with no possibility of a future. If I can make or save companies millions, I’m worth a lot more than $15/hr.

Most USA managers believe that one FTE (i.e. full-time equivalent) equals any other FTE. Unfortunately for those in the work force, it is much easier to offshore and outsource workers than it is for workers to retrain.

My advice to people today is to pick an occupation that you enjoy, are good at, and REQUIRES YOUR PHYSICAL PRESENCE. If you don’t, then you will eventually be faced with loss of livelihood or greatly reduced wages due to outsourcing and off-shoring.

alex says:

September 2, 2010 at 3:34 pm

“REQUIRES YOUR PHYSICAL PRESENCE”

With the H-1B and L-1 visa programs even that’s no guarantee.
LastChanceUSA says:

September 3, 2010 at 5:33 am

“predicated” should have been predicted

constantnormal says:

September 2, 2010 at 6:46 am

Not all of the hard times in IT employment can be blamed on outsourcing. The (entirely necessary) balls-to-the-wall push for Y2K remediation pulled a lot of employment demand forward, leaving a gaping vacuum following 2000, which accounts for a lot of the employment problems in the IT realm in the first decade of the new millennium.

And given the digging-in-the-dirt nature of much of the Y2K code remediation — that which did not involve complete rewrites or system upgrades, but mucking about in decades-old systems full of cruft and spaghetti-code — that sort of work was typically not considered suitable to be outsourced.

I’m not defending outsourcing, which I regard as a blight upon civilization, destroying the employee-employer relationship and reducing the career aspirations of domestic workers to piles of rubble and lifelong enslavement, but there are other factors that help to explain the employment situation in the realm of IT.

michael says:

September 2, 2010 at 2:58 pm

Not sure why you mention this nowadays, 10 years later – the pull forward from Y2k impacted about the following 18 months.
alex says:

September 2, 2010 at 3:36 pm

“Y2K code remediation — that which did not involve complete rewrites or system upgrades, but mucking about in decades-old systems full of cruft and spaghetti-code — that sort of work was typically not considered suitable to be outsourced.”

On the contrary – an enormous amount of the Y2K work was outsourced. So much so that some consider Y2K the take off point for outsourcing.
- readerOfTeaLeaves says:
  
  September 2, 2010 at 9:47 pm
  
  Some of it was outsourced; certainly nowhere near all of it.
  And note also that the people going through the code for Y2K were often people who knew COBAL, or other now-not-used languages.

Jon H says:

September 2, 2010 at 7:37 am

IMHO, CS PhD aren’t going to touch business IT with a ten foot pole. They have far better opportunities.

wunsacon says:

September 2, 2010 at 7:56 am

The H1B program is a tax on studious Americans.

Let’s see what happens if we bring in H1-B’s to replace realtors, traders, salespeople, baristas, Congress critters, CEO’s, etc. (Even for barista positions, a company can always say it “can’t find qualified people for the salary it can pay”.) Then, we’ll see how much the rest of Americans like this program.

As it stands now, this program exists precisely because it hurts some people but not enough to piss *everyone* off.

Sundog says:

September 3, 2010 at 12:14 am

Dean Baker has been pounding the table on this for a while now.

What is the biggest long-term problem facing the US in terms of public finance? The rising cost of health care.

Why are we not importing medical professionals by the thousands to drive down salaries?

wp says:

September 2, 2010 at 9:28 am

Yves,
In 1990-91, when Manmohan Singh was the finance minister, India was in deep trouble on the forex front. US demanded opening up of the indian economy to US multinationals as a quid pro quo to ease their forex shortfalls. IT offshore industry in India is the single most beneficiary of Manmohan Singh’s decision to open up indian economy to US multinationals.

US multinationals have expanded their reach to indian consumers at the cost of US programmers. It is a two way street.

wp

MKV says:

September 2, 2010 at 9:33 am

[q]About 70 per cent of US PhD students are foreign born and are often hired in the US, making their way into Silicon Valley or government agencies such as Nasa, said Partha Iyengar, of Gartner, the consultancy. [/q]

Something that I’ve found as someone recruiting for comp sci (not IT, mind you) in the elite schools here in the Northeast is that there is a massive injection of foreign students into post-graduates programs because their parents are willing to pay full tuition to put them into these schools, as opposed to many US students who are looking for scholarships in order to be able to attend these schools. These schools need to prop up their budgets so it’s very good business for them to market and recruit these kids. But it doesn’t correlate with good engineers.

babak says:

September 2, 2010 at 10:05 am

This article is ridicules! What they probably are not stating is that what they are willing to hire people for is not competitive to the markets comparebles. Also it may be that people do not want to live in the small towns in America when they can work in the main cities. With U-6 being at 17 I cannot accept that non one is qualified for working for them. Also if they are not qualified maybe they should be training them. Also it could be an excuse for people to bring more people from India and give them Green Cards and hire them at a cheaper price. Please also note that in the past 10 years we had a major wage deflation in IT for American employees. People who made 80k-120k are making 20k-40k less, because of outsourcing. We are slowly eliminating any good paying jobs in the US. We are going to be stuck with Dr. and Lawyers and nothing else… wake up america!

Ron says:

September 2, 2010 at 10:25 am

Two points

1. US has ALWAYS benefitted from attracting the best minds. The US economy was NEVER built by local talent, but always by new immigrants.

2. US is not doing this as well as it did in the past. Think of the country as a company. Wouldnt you want to retain the top talent, rather than those that are “close to the decision makers” (usually from behind).

3. Some ideas
- Give stipends to top talent from other countries to study here for advanced degrees
- Give immediate working permits to foreign students graduating at the top of their class in US universities
- give immediate working permits to entrepreneurs in other countries that want to come here. Its a misconception that they take American jobs. Net-net, they create more jobs than they take

Chester Genghis says:

September 2, 2010 at 11:16 am

Huh????

We’re at almost 10% unemployment (only the official rate, mind you), with many more underemployed and you think the real problem is brain drain???
alex says:

September 2, 2010 at 4:20 pm

“US has ALWAYS benefitted from attracting the best minds.”

Is it your contention that H-1B’s and L-1′s are generally the “best minds”? What’s are your criteria and data for arriving at that surprising conclusion.

“The US economy was NEVER built by local talent, but always by new immigrants.”

First, H-1B’s and L-1′s are guest workers, not immigrants. Don’t mix apples and oranges.

Second, I gotta love positive stereotypes, which are just the flip side of negative stereotypes. Is it your contention that Americans have always been inadequate to the task? In additions to the millions of very capable rank-and-file Americans, do names like Edison, Ford, Westinghouse, Wright, Curtiss, Armstrong, Shockley, Bardeen, Brattain, Noyce and Gould mean anything to you?

LAS says:

September 2, 2010 at 10:26 am

Having worked with some Indian companies lately, it occurred to me at times that India doesn’t have the talent base either. I felt like it involved training them to get through the projects properly and they had a tendency to crumble before every new challenge. At some point, it just won’t be worth going to India anymore. Come on America, I’ve seen you do this work better than it’s being done over there now.

Pete says:

September 2, 2010 at 10:40 am

Yves,

Great post and great comments. I agree with the other commenters that a CS PHD is not really suitable for most actual corporate jobs. I have a nice technical analyst position for a large insurance company and a BA in History, with about 12 years experience in IT. I have a very niche business expertise which has allowed me some level of comfort, but otherwise there would be no way I could compete with the H1B folks on pure talent+work ethic+cost basis.

Workers in many industries have to deal with outsourcing, but throwing the H1B issue on top of it is a real problem for a couple of reasons. First, it is unfair to native workers to make a specific exception for one industry, especially when you consider that most of the jobs we are talking about are in no way “strategic” for our economy as a whole. Second, as you state it closes the door for people to get into the field.

I have many Indian friends and consider myself to be pro-immigration, so I don’t want my opposition to H1B to be construed as nativist in any way, but I really oppose the program. As has been stated by other commenters, these guys get paid less and work crazy hours out of fear of losing their immigration status. I do not understand how this could fail to depress wages in the industry, making it less attractive for new people to enter.

Raging Debate says:

September 2, 2010 at 4:08 pm

They just do what the programmers of the 1990′s did and stretch out completion of the project for eons. If you get something that actual performs to spec it is a miracle.

Some of the folks I speak to in high places in the corporate world get it, the cost-benefit of I.T. outsourcing is shrinking fast or already gone.

bluffraise says:

September 2, 2010 at 10:42 am

It’s tough to compete with someone who wants foreign work experience on his resume and will therfore work for a bus token and lunch money. Such was the case in 2001. Job prospects are a little better now.

Tom Hickey says:

September 2, 2010 at 10:48 am

“The bigger challenge for the US is, if they start to lose this talent at the lower end, the innovation engine that has been driving the economy starts to dry up,” Mr Iyengar said.

Another torch being passed to Asia. After a while it wil be the US trying to reverse engineer Asia innovations and get around Asian patents.

Energy is the biggest and baddest gorilla in the room though.

Der Spiegel: Military Study Warns of a Potentially Drastic Oil Crisis

Sundog says:

September 3, 2010 at 12:23 am

Regarding innovation in Asia, fer sure the end of privacy works in both directions.

Cynthia says:

September 2, 2010 at 10:53 am

It’s only a matter of time before the world’s largest companies that produce things other than food and bottled water are headquartered in Asia and all of their CEOs are Asian born and live there, forcing American CEOs to join the ranks of the unemployed.

This is patently obvious to anyone whose head isn’t in the sand.

Power always follows production, which is the heart of any economy. When American corporations decided to offshore production to Asia so they could teach their greedy American workers a lesson and vastly overpay their CEOs while vastly underpaying their Asian workers, they dug their own grave and engraved their own tombstone.

Chester Genghis says:

September 2, 2010 at 12:36 pm

I agree with you on the inevitable outcomes, but current CEOs are laughing all the way to the bank. It only takes 2-3 years for them to loot all they need –well before the other shoe drops.

duffolonious says:

September 2, 2010 at 10:58 am

Very interesting.

Speaking of _right now_, I’ve been trying to hire a couple people at the small company I work at. One of the things we do is post jobs at the nearby Big Ten university – and we’ve gotten only a couple hits. Last time we hired (early ’08) there were a ton of candidates (even _a_ woman [all the ones I knew when I was in college in the early 00's went to IBM]). If I had a referral from a friend I might even ignore a lack of schooling (I have a lot of college dropout friends – they all have great IT jobs – Intel, porn, et al).

And I’m not sure what I’m doing wrong. Except for one guy that we may hire once he’s done with school (in a year), all the rest have been pretty sad. One example is a candidate who does windows tech support at major US company – so no programming experience and our shop is entirely Linux. A problem with IT is all the sub-career paths – once you go down one, it’s a tough crawl back up to the others.

Our company is so niche that even the much better candidates we’ve hired in the past took a few months to get up to speed.

Another problem is that business is only OK. With the economic outlook I’m worried about making a mistake on hiring and it costing too much in time and resources. So it makes us more reluctant to expand in the first place.

There is a ton to write on the subject of IT companies and employment – it’s so specialized, and good candidates are a tough fight (how can we compete with Google).

froggy says:

September 2, 2010 at 11:45 am

It seems like your situation is similar to entry level workers; your an entry level businesses and have a tough time working your way up. Maybe the way to become a market force, is to think juggernaut and go public? Or sell your sole to some big company in need of creative new ideas? Being small is rough, and in a global business environment, seems like the challenge is how to sell and compete globally.
AFL says:

September 2, 2010 at 1:00 pm

“Our company is so niche that even the much better candidates we’ve hired in the past took a few months to get up to speed.”

This is Yves point!

Most companies are unwilling to train. They always want people to be able to hit the ground running.

If you’re interested in the long term viability of your company, you have to invest in hiring and training entry level employees.

But if you invest in training, that’s money/time/effort not spent on your short term goals.

So as a business owner, do you race towards the bottom like everyone else, or do you take the high road which might lead to bankruptcy…
- duffolonious says:
  
  September 2, 2010 at 2:14 pm
  
  “This is Yves point!
  
  Most companies are unwilling to train. They always want people to be able to hit the ground running.”
  
  Yep yep. And every company has to decide “how long will it take to train this person?” And “what is the maximum amount of training we want to give?” Those two questions set the stage. What is fair, for the employee and for the company?
  
  In fact I like doing a decent amount of on-the-job-training, because the investment also seems to be rewarded with loyalty.
  
  Nonetheless, I read the articles Yves bring up on the subject and think wanting people to hit the ground running (with little to no training) is more an excuse to not expand; than a reason to not hire.
Raging Debate says:

September 2, 2010 at 4:15 pm

Run ads in your local papers for a “Web Developer”. Shift through the couple of dozens resumes for those that have SQL and PHP experience (web design). Make sure they really have those data skills though. Setting up a database is tit, managing it for CRM functions, marketing etc. require some good hand-on experience by the employee. Best of luck.

Software Insider says:

September 2, 2010 at 11:00 am

As someone who has worked in the software industry for about 15 years, I have a few observations:

1. A PhD in Computer Science is overkill for most positions. The majority of projects/products in the overall software space do not require complex algorithms; rather, they require facility with a particular platform, ability to map business rules to functional designs and functional designs to technical designs, and general problem-solving ability.

Most positions involve either a focus on one of these skills or a mixture of the skills. None of these skills comes directly from a CS program, but the foundational skills for programming with some level of competency are taught in most undergraduate CS programs. The rest is either innate or comes only with experience working on non-trivial real-world projects and really understanding trade-offs.

2. As in a lot of industries, the entry-level job seems to have died out in software. I think some of this is endemic short-termism: anyone managing a project or team simply wants to get the product or release out the door, not spend time training someone. So you start to see a focus on lists of skills and meaningless measures of experience (e.g. “must have 10 years of object-oriented low-latency transactional processing at a large company”). I have worked at several different firms where the “business” side of the shop had a robust internship/trainee program, but the “technical” side was expected to only hire people who would be (in theory) immediately productive at a high level.

3. The majority of the people working in software are not designing world-class search algorithms or mobile operating systems, nor are they designing snazzy Web 2.0 interfaces. They are, instead, creating or maintaining systems into which people enter data, store data, retrieve data, and process data (think insurance, banking, accounting, etc.) These people do fairly boring work and get decent but not fantastic pay. It’s a nice middle-class job with limited career options.

Regarding the alleged problem of a skills shortage, there may be a few things at work. My guess is that companies are trying to hire a high level of experience at a low level of compensation. This means there is no match with entry-level candidates (say recent grads), nor is there a match with experienced candidates who already have jobs that compensate them well.

There may well be skills shortages at the very high end in technology (chip design, high-performance systems, etc.), but I don’t see it in the general business software area that makes up most of the job market.

Dave says:

September 2, 2010 at 11:31 am

Another industry veteran here (10 years). Agree completely except for this: “It’s a nice middle-class job with limited career options.”

Correction, WAS a middle-class job. Wages are totally stalled and developers are on their way to joining the lower middle class, and eventually working poor.

A data point…I started in IT out of school earning $65k in 2000 (fabulous pay, I agree). Laid off in 2001 and spent a year minimally employed. Got another development job in late 2002. In 2006, I was making $87k. Inflation adjusted, this is maybe 10-12% more than my very first job.
10 years on, I’ve increased my productivity and skill by many, many orders of magnitude and lead a team of 4. I make $105k, barely a third more than my starting wage.

All these jobs are in cities where a dumpy 1200sf condo costs $600k and the schools are terrible. My benefits have always been typical for the IT industry (i.e. terrible…15 days PTO, no sick days, low to no 401K match, expensive health benefits, 8 holidays a year).

Barring some miracle whereby I become an executive, I expect this is very near the peak of my lifetime earnings as an engineer. At 36 years old, I figure I have AT MOST 15 more years of employability. I am responsible for funding my own retirement yet do not make enough save adequately, despite no kids and an extremely frugal lifestyle.

Here in Los Angeles, if you use reasonable assumptions about career duration and the present value of retirement benefits, you’ll find that the typical union carpenter, prison guard, or municipal bus driver earns far more over a career than the typical software engineer.
- lark says:
  
  September 2, 2010 at 1:50 pm
  
  Dave I hear you. The profession has been destroyed. The sick thing is that by the time it totally dries up we’ll be too old and broke to get something else that is decent.
  
  And it’s amazing how they have broken the retirement systems in this country. Working in a business, as opposed to working for govt, has become such a rip off.
- Dave says:
  
  September 2, 2010 at 5:22 pm
  
  Apparently you aren’t aware of a phenomenon known as inflation.
  
  $65k in 2000 is about $78k today.

Larry says:

September 2, 2010 at 12:03 pm

As an actual engineer… it’s rough out there. For one thing, I’d like to know exactly what counts as an IT job.

We’ve seen the collapse of the job market affect engineering departments. In last couple decades, radio frequency (RF) engineering, power engineering, petroleum engineering and nuclear engineering have all shrunk. So, all the knowledge in these fields are now overseas.

Cynthia says:

September 2, 2010 at 12:09 pm

According to Thom Hartmann (watch link below), the Obama Administration is proposing that the U.S. Bureau of Labor Statistics stop reporting the number of American jobs being outsourced. If he is right, then this is just another example of our most powerful elected officials trying to hide the ugly truth from us. First it was about our wars, now it’s about our jobs.

http://www.youtube.com/watch?v=_PlCO-mADfs

And I can’t think of a bigger slap in the face to the American workers for NBC to launch a comedy show about American jobs being outsourced to India!

http://www.nbc.com/outsourced/

Mike Snow says:

September 2, 2010 at 12:13 pm

I have spent 30 years in the commercial software industry, outsourced thousands of man hours to India (and other countries). As far as the impact on America’s abaility to inovate
1) Most of the offshore outsourcing hours come from big companies, like banks, telco’s, airlines, etc. These companies do very little in the way of innovation around software (just try their websites). Also more and more the big tech companies don’t innovate, just buy (Oracle, HP, Microsoft).
2) Most software innovation happens in tech companies, some large (Google, Amazon, or Apple), mostly small to medium. The small to medium guys do very little off shore outsourcing, and most of that is around testing (man power intensive). This is because you have to be close to your customer to design great software and so off shore is a non-starter.
3) Most off shore companies provide a lot of hype about innovation, but they don’t deliver. The do deliver low-cost, talented labor, who are very good at following directions, not so good about innovating in a way that is valuable to the end customers.
4) You don’t have to have a degree in CS to be an innovator in the software industry. Most of the real value comes from people who understand the business being served and don’t get obsessed by the tech. Many of the best designers learned to program after they got a degree in business or science.
So being a believer in the invisible hand, if the demand is really there, the supply will show up.

lark says:

September 2, 2010 at 1:46 pm

Thanks for being honest about your role in outsourcing jobs.

I have my own startup in Silicon Valley and I can tell you, you are dead wrong about start ups being immune from outsourcing.

Venture capital requires outsourcing to be in place before they’ll fund. That has been true for years now. You info is out of date.
- Raging Debate says:
  
  September 2, 2010 at 4:22 pm
  
  Don’t know about that stringent a condition for VC but in speaking with the investors, you do have to be willing to consider it. I like the programmers in the Czech Republic. About 2/3 American wages and they innovate AND complete the bloody projects without a ton of micro-management.
  - lark says:
    
    September 2, 2010 at 5:10 pm
    
    Yes I’ve heard the Eastern Europeans are the best.

oliverks says:

September 2, 2010 at 12:48 pm

My experience after getting a PhD in math is I could not find anyone who wanted to hire me at all. Admittedly the market was not very good at the time.

CS PhDs may be more employable. Almost all PhD student in math want to become professors, although very few will eventually make it to be tenured. As a result the math departments do nothing to cultivate ties with industry.

I finally found a small little company where the owner was more interested in people. The pay was low (probably 10% less than a undergrad with CS), but it gave me my start.

I should mention that I was a TA for a computer programming course, so it was not like I had not programming background. But I had no formal education in programming.

Oliver

NR says:

September 2, 2010 at 1:11 pm

Yves,

I just don’t see why American companies can repatriate income by selling carbonated soda in India whereas India and China are blamed for providing goods and services to the US. When economic colonialism works for the West, why is there so much umbrage with the reverse? I could argue that highly sophisticated marketing ploy of coca-cola company is unfair against a vast majority of farmers in India who sell coconut-juice for a living (not to mention the health aspects)

If your argument is primarily around labor mobility, would you be okay if services are provided remotely from India with no onshore presence? Also, Labor arbitrage is a genuine competitive phenomenon, much like a country that possesses Uranium or makes Levis.

When does free-trade become fair-trade?

oliverks says:

September 2, 2010 at 4:19 pm

Unfortunately I think it is too late to solve the problem. But in essence if you are going to allow the free mobility of capital, you have to allow the free mobility of people. Capital will still be at an advantage, but the US would still be the center of software development.

The salaries of programmers would be lower here, but the future would be brighter, and the tax base would be much better.

I think it is too late for this now.

lark says:

September 2, 2010 at 1:43 pm

Yves you are so right on the money on this. I speak from 20 years experience.

This whole discussion has revealed to me the sick stupidity of the media. They never learn, no matter how many times they get bombarded by feedback from engineers who know the facts on the ground.

They are captives of corporate spin and press releases. No wonder they were whistling Dixie when we walked over the cliff.

I am disappointed in the FT though. The best of the lot.

Cat says:

September 2, 2010 at 1:45 pm

A) Software engineering isn’t as easy as everyone thinks it is. A bad hire can cause your project to fail. This is probably the reason for a dearth of entry level positions. Lets not forget the IT revolution is still pretty young. After the big growth where almost anyone would do people now realize you have to pick and chose.

b) IT Projects are hugely expensive, prone to cost over runs and failures. This keeps downward pressure on wages and hiring managers wanting specific skill sets that will help them get the project done on time with no training involved. The fractured nature of the IT business with your multitudes of programming languages and development platforms makes this even worse. While a skilled programmer with 10 years doing windows development would succeed on your Web blah point blah project, the safer route will always be to hire someone who has the ‘experience’ even if they might not be as skilled or have as much time in the workforce.

C) Because of this the desire for specific experience the pay for engineers stalls mid career. You never got to those upper pay levels because the requirement for new projects are always changing to a new paradigm. Sure you are 5x more productive then someone with 2-3 years of work experience, but you don’t know Java or .net. You’ve never worked with the compiler or the Object framework so you aren’t qualified and if you do get the job you certainly aren’t worth your high salary.

D) Which leads to the biggest problem. Software Engineer’s jobs have shelf lives unless they are elite of their profession. You will almost be unemployable with 15 years of experience or more as you will be to specialized for mid-level jobs or to expensive for mid-level jobs.

Timo says:

September 2, 2010 at 2:37 pm

Unfortunately one of the reasons that software engineers supposedly have a shelf life is because:

a) Investment in training good engineers is considered a waste of money if your HR department is under the illusion you can hire someone cheaply who supposedly knows the technology already. Unfortunately a lot of the companies that write software in house for their own use are often not very clued up when it comes to proper IT recruiting.

b) Most larger companies can’t tell a good software engineer from a mediocre one in the first place, which makes (a) even more prevalent, plus they are rare

c) A lot of the IT community has so gotten used to having to change employers in order to advance their career in any way that they’ve often given up on any long term career planning. This is also mirrored by a lot of the larger companies not really offering any sort of longer-term career perspective for IT employees (hint: not every IT guy wants to be come a manager).
- oliverks says:
  
  September 2, 2010 at 4:13 pm
  
  I have argued before that programmers have problems pricing themselves in terms of ability. There is an interesting externality in that bad programmers get too much money by mooching of good programmers.
  
  I don’t think software is unique to this problem. I find that lawyers suffer the same problem, and it is interesting that no one has found a way to solve this issue.
  
  In both cases you are really paying for the prevention of future problems. For example, if a bad lawyer writes a flawed contract, it can cost millions to fix. Likewise a bad coder, who appeared to complete his / her module on time, can cost $100Ks in short term problems and $1M’s later on in software maintenance.
  
  So the problem in both cases is that the lawyers or programmers appear to have met the short term requirements, but can saddle you with very long term costs. That is the hard part to sell, and why the price differentiation is not easy.
  
  Oliver
- readerOfTeaLeaves says:
  
  September 2, 2010 at 10:21 pm
  
  Investment in training good engineers is considered a waste of money if your HR department is under the illusion you can hire someone cheaply who supposedly knows the technology already. Unfortunately a lot of the companies that write software in house for their own use are often not very clued up when it comes to proper IT recruiting.
  
  Superb point, too seldom publicly stated.

sth says:

September 2, 2010 at 1:47 pm

A genuine competitive phenomenon? It’s not possible to compete with countries that are Mercantilist/use near slave labor, or have standards of living that *should* disgust any human being (and so have much lower costs of living.)

Money flows freely, labor does not. When standards of living, worker protections, human rights, and immigration/emigration policies come to about parity between countries, maybe we can talk about “Globalization” or “Free Trade” (or opening up the H1B program). Until then, it’s a race to the bottom in a shiny McDonald’s-yellow veneer.

You can go to IIT, get sponsored, and live in California. Can you go to MIT, get sponsored, and live in Bangalore? This question was researched recently – someone contacted various organizations in countries like India (business orgs, government orgs, immigration agencies) and asked if they had programs like the H1B. They were laughed at hysterically.

Not to mention what was laid out in paragraph 2. Even if you COULD move to these places and get a job easily, do you really want to live in a race to the bottom world? Do you want to live in places with poor sewage systems, garbage on the streets, and terrible human rights policies? Places with health care systems more broken than in the US?

I’m ALL for it once we have all those protections/roughtly equal standard of living in place. The funny thing is, once that happens, NO COMPANY WILL EVEN BOTHER UNLESS THEY ARE DESPERATE FOR A PERSON WITH A PARTICULAR SKILLSET THAT THEY CAN’T FIND IN THEIR OWN COUNTRY. Why? Well, it’s not about skills in many/most cases – it’s about cheap labor. Once labor costs are a parity between countries, that “advantage” will disappear and these sorts of programs will get little more than a shrug.

NR says:

September 2, 2010 at 2:11 pm

SR,

Your premise that trade is going down the path of “race to the bottom” is not well supported statistically. Trade improves countries, their peoples and their competitiveness. (Singapore, Malaysia, Japan, etc.). You cannot point to a Nike sweat shop to point out why it does not work. Generally, it works.

In the 50′s, you could have accused the Japanese of being mercantile. As their living standards improved, they enforced laws that are now consistent with global governance rules. Even within the Indian companies, the IT companies enforce better standards than the rest of the country as they start to globalize.

It is not possible to be selective about globalization, nor can you enforce pre-conditions. If the US decided not to import products and services from India due to a lack of “level playing field”, American companies should not be selling cars and juices either. Each country will come up with their criteria for level-playing fields and trade can just say bye-bye.
- sth says:
  
  September 2, 2010 at 2:22 pm
  
  Well, we could come up with some wild ideas about how to fix it. Here’s one:
  
  Government enforced price and wage reduction down to India/China/Vietnam levels along with a massive wealth
  confiscation scheme to to keep all the percentages lined
  up (could likely be done by creating massive monetary
  inflation, or directly via fiat.) The same would
  be done with debt.
  
  No one gets richer or poorer in real terms; it only affects trade.
  
  Here’s another crazy idea: devalue our currency so
  that we’re as cheap as workers in other countries.
  
  Along with all this, institute a /real/ free, universal
  higher education and jobs training program (which
  would include paying for your food, rent, bills, etc.)
  until you graduate.
  
  I could come up with more, but this would be plenty
  to get started.
- Doug Terpstra says:
  
  September 2, 2010 at 3:49 pm
  
  NR, you say “It is not possible to be selective about globalization, nor can you enforce pre-conditions….Each country will come up with their criteria for level-playing fields and trade can just say bye-bye.”
  
  Selective rules and enforcement is exactly what’s happening now under all SHAFTA agreements—by design—because the masters of the universe, the US architects of rigged trade (not fair trade), want it that way. Do you really think Chindia is required to meet fair trade rules? If so, please send for my latest book: “Easy money in Real Estate”
  
  That reminds me of Sen John McCain’s insult to American workers in 2006 (when he was for amnesty before he was against it, who said we didn’t need a “dang fence” because Americans wouldn’t do the jobs of illegal immigrants). At a speech to labor, as clueless as M. Antoinette, he offered $50/hr to pick lettuce and was subsequently drowned by takers.
  
  You’re right that FAIR trade is beneficial, but sth has it exactly right about the current rigged-trade regime:
  
  “Can you go to MIT, get sponsored, and live in Bangalore? This question was researched recently – someone contacted various organizations in countries like India … and asked if they had programs like the H1B. They were laughed at hysterically.”

Jake says:

September 2, 2010 at 1:49 pm

In most major engineering schools (I work at one), thousands of Indian and Chinese are brought in at full tuition rates to goose up the Universities cash flow.

So where does a poor Indian kid get $80,000 for two years masters program?
Simple: the University arranges loans through Citibank and JP Morgan (no money down).

Unlike lower tier schools employers line up to hire here and until recently I’ve never heard of a single student not finding work after graduation. It’s funny to see them in the shops with their shiny new Chase credit cards swiping away.

After graduation they may work in the USA for 1 year on their student visas, which later translates into an h1-b or some other visa. In fact some go back home then return on L-1 visas; which is considered nothing more than an intra-company transfer.

Most people don’t realize that a small number of meg-schools dominate almost the entire production of US engineers. After many years of working with these people, I strongly dispute the notion these foreigners are the ‘best and the brightest’. Many can barely write a coherent sentence in English.

So Banks win, the Universities win and the employers get cheap slave labor. Now why would any of the above parties allow this state of affairs to end?

As for the IT/Software crowd one of the biggest abusers of ignoring US applicants is Bloomberg in NYC. If you look through their published (see link below) visa files from flcdatacenter.com they employ a vast number of foreign software developers across the country.

http://www.TinyURL.com/249qahz

Sundog says:

September 3, 2010 at 12:56 am

I hereby nominate your comment for inclusion in “Annals of early 21st century American dysfunctional incentives.” Cheers.

Poco Ritard says:

September 2, 2010 at 2:15 pm

Just another anecdote:

While working at a certain enormous software company in Seattle in the late 90s, my dev lead (that’s “boss” to us code monkeys) was frequently out of the office. It seems there were so many trips abroad to recruit cheaper talent (particularly eastern Europe at that time) that his level of management basically was required to periodically do a stint on the meat hunt.

I remember one meeting at which THE WORD FROM THE MAN HIMSELF was loudly proclaimed “Find Something To Outsource Today!” Accompanied by blows on the conference table.

Seriously.

readerOfTeaLeaves says:

September 2, 2010 at 10:29 pm

Also in Seattle region.
Totally believable.

chad says:

September 2, 2010 at 2:24 pm

man so many good comments on this article. I have a BSCSE from an OK school, live in Dallas, and have about 10 years professional experience writing software for the health care industry, specifically pharmacy.

I agree that a PhD doesn’t mean a whole lot in my field with respect to salary. Software engineering is so broad and a PhD so focused that it’s hard to match a PhD to a job even remotely similar. Furthermore, most of the PhD’s I know took the route because they wanted to learn not because of job prospects. Much of the CS crowd are just people in love with technology.

Also, good software engineering is just plain hard. There will always be a shortage of people that can do it right. I’ve never ever seen an outsourced software project come to fruition but I have seen them drag on for years and years in a perpetual state of development which is common in my field unfortunately.

Nancy says:

September 2, 2010 at 2:35 pm

Let me try to impress upon those who don’t get the dangers and common citizen’s objections to outsourcing Information Technology; mind you, IT data and information is not in the same category as outsourcing manufacturing of diapers and pens.

I assume you commonly receive spam emails requesting your SSN and bank details, written in poor English and orginating from overseas?

How would you like it if Nigeria became the next global hub of IT outsourcing for the Financial Industry, and industry which has been in the forefront of outsourcing IT with little heed as to the security consequences?

Your identity and asset information will be at the disposal of those who would otherwise pay to obtain it.

Such customer information is a national asset, it is not meant to be handled by those who have no vested interest in enforcing security of that information, and by those whose GDP per capita are orders of magnitude less than yours.

The American public is totally oblivious to the security breaches that are occurring with their information overseas – they’re kept well under the cover, not subject to US disclosure laws.

I really wonder if CEO and executives are aware of the risk they are exposing the trusting American public to, including themselves.

The true cost of outsourcing IT will be recognized… if only too late.

Raging Debate says:

September 2, 2010 at 4:34 pm

You are correct but what you are describing began happening in the 1990′s. Government programs Project Echelon and Carnivore were the data collection programs and this was orchestrated through the SAIC which is a private company and which also sells data. There is no more internet or data privacy in reality. I am not saying it is right, just stating the reality.
- Sundog says:
  
  September 3, 2010 at 1:09 am
  
  [places gold star on RD's forehead]

S Brennan says:

September 2, 2010 at 3:14 pm

I believe every word the CEO’s are saying about how critical the H1-B & L-1 programs are to America’s future and to their companies survival. Without them, their company would fail and that they are too big to fail…no matter what size they are.

Now that we have establish this as truth, it falls to congress & the white house to show the mindless minions of America that these companies are telling the truth, heretofore all these brilliant and critically needed H1-B’s / L-1′s are to be paid MORE than 1.5 times the wage of the top earners in the industry AND all over time is to be double time.

By their own statements, CEO’s would gladly do this to:

1] Establish once and for all these brilliant and critically acclaimed individuals are truly needed to prevent their company from going into complete collapse.

2] Shut those willfully slothful US citizens up once and for all. Let them work as maids & butlers.

So lets call the CEO’s bullshit, no limit on H1-B’s just pay them what you say they are worth.

Ron Hira says:

September 2, 2010 at 3:27 pm

Data is available to answer at least a few of these claims/questions.

…said Francisco d’Souza, Cognizant president and chief executive. “Although unemployment in the US today is high, IT unemployment is still very low.”

RH: This is a false claim. According to the US Bureau of Labor Statistics the unemployment rate for Computer Professionals has averaged 5.8% over the first two quarters of 2010. That’s more than twice the rate of 2.6% in 2008. And more imporantly the current 5.8% rate is higher than its peer group of All Professionals, which is 4.5% for 2010. Can anyone argue that there’s a widespread systemic shortage of professionals today?

“About 70 per cent of US PhD students are foreign born and are often hired in the US, making their way into Silicon Valley or government agencies such as Nasa, said Partha Iyengar, of Gartner, the consultancy.”

RH: I guess the reporter was unaware that PhDs account for a miniscule number of workers, even in computing. According to the National Science Foundation there were 1,656 Doctorates awarded in Computer and Information Sciences at US universities in 2007 – this includes both to US and foreign students.
The US IT labor market is about 3.4 million so those 1,656 cannot have any material effect on the overall supply of IT workers.
Almost all IT workers, even the ones Cognizant hires, do not hold PhDs.

Ron Hira
Rochester Institute of Technology

alex says:

September 2, 2010 at 3:49 pm

Ron,

Thanks for the hard stats. I don’t know how many people here are familiar with you and your work on this issue, but I personally want to thank you. For anyone who’s not familiar with Ron’s work, just search on his name.

I’d also suggesting searching on “Norm[an] Matloff”. Professors Hira and Matloff have been two of the best spoken and most authoritative people speaking about this issue. Both heavily base their arguments on hard data.
alex says:

September 2, 2010 at 4:07 pm

’5.8% is close to full employment.’

For the economy as a whole, yes. For a specific profession, no. Ron Hira pointed out that 5.8% is higher than the 4.5% for all professions. Is it your claim that there’s no unemployment problem in the professions these days? Admittedly it’s not as bad as for all non-professionals, but that doesn’t make it good. Also the software engineer who’s now flipping burgers is not counted as an unemployed professional anymore, so those numbers can be very deceptive.

‘I’m not sure how to describe 2.6% unemployment in 2008 other that “shortage”.’

Why is that a shortage? That’s not an unusually low rate for professions. Incomes weren’t rising faster than productivity, so there was no shortage in any meaningful (as opposed to propaganda) sense. At best it’s close to market clearing. Is it your contention that we should always have as much slack labor as possible? Is that how your bread gets buttered?

‘And note that it is directly at odds with Yves’ assertions that … the very small number of entry level positions in IT … from at least 2005 to 2009″.’

Which isn’t a contradiction at all. The CS grad who can’t get a first job and winds up flipping burgers or going to grad school for a remunerative profession doesn’t get counted as an unemployed CS professional.

Doug Terpstra says:

September 2, 2010 at 3:55 pm

Thank you, Yves. This is the classic lament, “you just can’t find good help anymore”, and it exposes another fine example of unenlightened self-interest inaction— Econners cutting off their noses, and eating their seed corn.

Beyond hand-wringing and blaming victims, TPTB and MSM make no attempt to address root causes, including the rising cost of college education and the generally pathetic public commitment to equal-opportunity education at all levels. The Neocon motto: “A mind is a terrible thing to waste [tax dollars on]”

yoganmahew says:

September 2, 2010 at 4:00 pm

So many comments… who says the internet is for nerds…

Anyway, 20 years as of three days ago in airline IT (assembler). Based on an undergraduate degree in modern history and a three month training class at my first employer. The problem is, in my book, that employers aren’t prepared to spend the money (quite modest amounts) inducting people into the specific jobs they want them to do. Mostly because the employer has no idea what it is that they want done. Headless chickens on a hot tin roof…

mezurak says:

September 2, 2010 at 4:12 pm

You think you have it bad? Try being a hardware tech. Never mind if you have been working on computers since the Commodore 64. If you don’t have a string of certifications behind your email sig along with a BS to back it up then you don’t get in the door. I was a Field Engineer on mainframes in the 70′s. The only qualification I needed was some related military training and a HS diploma. The company taught me the rest. The young guys today are lucky to get on a help desk with a BS. Five years of experience gets them not Google but a gaggle of low end system admin jobs and useless certifications to put on their resume. Training? Ha! Hit the ground running, trial by fire, OJT, don’t let the door hit you on the way out, there’s your training. I feel sorry for these guys because they are on the buggy whip path once cloud computing strips the need for private data centers.

Wade says:

September 2, 2010 at 4:13 pm

I have worked in IT for 15 years and am a senior level systems engineer. Almost none of the people I work with have Computer Science degrees. As a matter of fact the best people at their jobs have either an engineering degree or no degree at all.

Since I started in the industry, there has been a shift from looking for aptitude to looking for people with degrees and certifications. This shift hasn’t helped the quality of worker at all. Getting a degree means that you can show up for 4 years, learn information that will be useless in your field, and pass tests with no bearing on reality. It doesn’t mean that you can think independently and troubleshoot problems to a rational conclusion. This has resulted in the shortage of suitable IT people since we discard candidates based on degree first.

As far as outsourcing to India goes, it isn’t as good as it once was. Training hundreds of thousands on people with no apptitude to work in the computer industry just diluted the talent pool to the point that you can’t seperate the wheat from the chaf. Outsourcing was popular mostly because it was perceived as cheap, got lots of press, and most of all shifted responsiblity for failure to someone else. The reality was that the outsource companies didn’t deliever what was contracted and their turnover was so high that they could not support anything that they wrote. I am seeing more and more projects being run in house.

Sundog says:

September 3, 2010 at 1:46 am

Wade said: “Outsourcing was popular mostly because it was perceived as cheap, got lots of press, and most of all shifted responsiblity for failure to someone else.”

This bit I’ve emphasized is right up there in the “Annals of 21st century dysfunctional American incentives.” As they say on the twitters #impunidad, #estadofallido, #mexicorojo.

lark says:

September 2, 2010 at 5:07 pm

One more data point.

I started at HP in a high level systems software position in the mid 80′s and stayed 12 years (left before Carly).

At that time the company allowed you to attend simulcast Stanford graduate CS classes on site for free, audit or credit, to keep up with advanced topics in your field. You could watch the class videos over lunch. You could also be supported in local grad CS programs.

This from the same company that axed 75% of its R&D a couple of years ago. A lab mgr friend of mine took early retirement from HP Labs and left the field (saw it coming). This from the same company that throws money away on acquisitions because it axed its seed corn. This from the same company that axed profit sharing. On and on and on.

And of course, the huge facility where I worked (Cupertino) is now virtually empty, due to outsourcing, and the plan before Hurd (‘Hurt’) got his golden parachute was to shut it down and move the survivors to Palo Alto.

One thing that really burns me is that the press and academia gets such a ‘rise’ out of free markets and global business and the like, that they are just incapable with seeing the facts on the ground. We shouldn’t have to lose the whole industry before some ‘expert’ notices!!!!!

It really shows the problem with captive media and ideologically captured economics. It happened with the housing bubble, the financial crisis – how much destruction can this country take??

lark says:

September 2, 2010 at 5:12 pm

Of course now they expect you to keep up with the field at your own cost and time – of which there is none to spare.
PQS says:

September 2, 2010 at 7:54 pm

We shouldn’t have to lose the whole industry before some ‘expert’ notices!!!!!

Amen. I’m in construction, and just last week saw an article on the local Pacific NW paper about the massive crisis in our industry.

Construction is always on the end of the butterfly in the Amazon, but the descent into 27% UI and so quickly is unprecendented. Yet I cannot think of a single news article about this issue. Maybe everyone thinks that only the hardhats are in construction. Most of the white collar people I know have been out of work for months or even into years. Architects, engineers (not the civil guys), PMs, Superintendents with decades of experience.

2Cents says:

September 2, 2010 at 5:23 pm

In India entry level guys are mass hired in a batch, and based on the time they have done, they all expect their H or L visa to be filed. This is the reason all H visas are exhausted till recently the day they open for filing. Indian companies do not want to pay the additional cost arising out of visa fee hikes, nor can they manage their staff and file for visas just in planned time, they have to file them enmass.

lark says:

September 2, 2010 at 5:26 pm

To see another example of media bias on this topic, see

http://www.nytimes.com/2009/04/12/business/12immig.html

This article weeps for corporations who can’t recruit freely because of H1B restrictions.

I wrote the writer of this article the following letter. Of course nothing changed in the coverage of this issue. The corporate bias is an outrage.

My letter to the NYTimes (not published by them of course):

Dear Editor,

Matt Richtel’s article, “Tech Recruiting Clashes with Immigration Rules”, left out a few essential facts and thus left readers with a view of the situation shaped more by industry propaganda than reality.
One cannot understand the H1 B visa unless one grasps how it is used in practice. Richtel’s article portrays a highly skilled immigrant who wants to be a contributing member of American society. For the most part, H1 B is not used for this type of immigrant.

H1 B is and American visa used overwhelmingly by Indian software companies. Their engineers go into American firms where they are trained by American engineers and then they go back to India, taking the job to India. In 2006 the three companies who took the most H1 B visa slots were Wipro and Infosys (both Indian companies) and Cognizant Technology Solutions, which has most of its operations in India.
These companies took 70% of the H1 B visas. Statistics for 2007 can be found at http://tinyurl.com/cwst2u. This information is easy to find. There have been well publicized Congressional hearings on precisely this topic.

Your article reads like a corporate press release. This is not a simple minded case of anti-immigrant sentiment. I am disappointed that the New York Times presented this careless and one-sided article.

If Google and Intel and the rest want to fast track highly qualified individuals through our immigration system, then there is a case to be made for that. But American corporations are not arguing or acting in good faith, and thus they have undermined both the trust of American citizens and the H1 B program. Your article perpetuates this dishonesty and I believe you owe your readers a correction.

Sincerely
lark, etc

yoganmahew says:

September 2, 2010 at 6:10 pm

Mind you, you chaps in the US have it easy in some respects. Your high-end technical salaries are very good and you have some status with your job. Pity us poor Irish who have to deal with this:
“I find it very hard to swallow the notion that a computer programmer is
carrying on a profession. In what way is he any different from a clerk in the
19th century sense? He is just a numerate and literate person carrying out
clerical work. Obviously, not all programmers fall into that category
(numerate and literate).”

– Frank Carr, Irish Taxation Review, September 2002

Yes, our tax clerks look down on us programming clerks…

chad says:

September 2, 2010 at 6:23 pm

It’s interesting how so many IT industry folks read this blog.

Steve says:

September 2, 2010 at 7:09 pm

After 21 year in consulting and seeing the outsourcing takeover of the last few years, I can say with certainty that the average Indian IT resource is pretty useless. We have to clean-up the messes of our offshore staff all the time with the onshore staff. They simply do not have the required aptitude, they were just run through some process to memorize enough to pass a test and become billable.

This is starting to become visible to the low and middle managers at the client side who are not happy with the quality of work, but the high level client managers are simply concerned about budgets and overrule their recommendations. The next few years should bring this to a head at many companies when failures are clearly identified from this approach, I doubt that the big banks etc. that have become too large to change will do anything, but the middle tier companies are going to see that they cannot afford to let a critical part of their business become unreliable, especially with the need to compete in the technical infrastructure required for their business.

I expect that this will stabilize things in the US and should help to revive the industry if we have not completely gutted the education and experience pipeline. However I would be hesitant to push a newbie into things just now, though to be honest, what job is safe today?

cougar_w says:

September 2, 2010 at 8:13 pm

Just a data point:

20 years in IT, mostly web application development. Like most workers in my age group I am self-taught (there were pitiful CSCi departments in the 80s and everything now in play came about in the last 5 years anyway). I still make around 85K in the Bay Area CA.

I’ve actually worked in outsourcing for a little while. What a joke. I’ve been outsourced twice. One to India, a second time to Hungary.

I won’t let my kids do this work. Not on a bet. Mechanical or civil engineering if they want, but that’s it. IT and software development became a dead-end.

Will the US suffer for having slain their home-grown IT expertise? Seems inevitable. But companies don’t really care; current management is just harvesting the gains from innovation of a previous generation of workers, who (like myself) are now entering retirement. When that harvest has played out it will fall to the Chinese and Indians to take the game forward as the US IT industry follows the example of other empires that became deluded by their past greatness, and falls into decline and irrelevance.

alex says:

September 2, 2010 at 9:06 pm

“Mechanical or civil engineering if they want …”

Don’t bet on Mech. E. unless there’s a revival of manufacturing in this country. When you see the offshoring consultants swinging from lampposts, it’ll be safe to matriculate.

TripleHash says:

September 2, 2010 at 10:16 pm

Wow! Lots of comments. Why don’t our political class pay attention to these comments? Yeah, we’re not organized.

Two points:

1) Entry level jobs (mainly Help Desk, Support, etc.) are gone. QA jobs are almost all gone now. We’re about 50/50 on programmers, DBAs, and system admins. When these are almost gone, so too will the engineers and architects. All that will be left is management. And that will disappear without anyone seeing it. We’ll have shell companies here with nothing by foreign nationals making a paycheck. I’ll be a greeter at WalMart selling more “stuff” to these foreign nationals.

2) The problem doesn’t get fixed until we start outsourcing lawyers, politicians, and the American CEO.

Suffern ACE says:

September 2, 2010 at 11:41 pm

My feeling is that this problem will continue to barely make the radar until we start outsourcing the media. Once someone realizes that the anchor or the weatherman’s job could easily be done by someone reading a script from Bangalore or Hungary for 1/10th the cost of the stuffed suit, there will be a general reluctance by Financial Reporters to simply cheer this hollowing out of the departments.

readerOfTeaLeaves says:

September 2, 2010 at 11:04 pm

Remarkable thread. Thanks, Yves, for attracting such an impressive range of informed comments. Clearly, quite a few of us are feeling Econned.

And The comments on this thread are very insightful, and I hope that someone in the policy realm reads them. These are the topics and experiences that get far, far too little public display. Yet, IMVHO, it’s the relationships, experiences, related here that are the ‘substrata’ of the economy. It’s not a pretty sight.

Lou says:

September 2, 2010 at 11:55 pm

I left IT because all the lower and mid level jobs got shipped (HPUX Admin). Survived at HP in my last IT job as they moved all entry and mid level jobs to KL and South America. When those birds come to roost, bb hp.

Philip Crawford says:

September 3, 2010 at 12:02 am

I’ve been doing IT project management for years, started my own SaaS business, and helped software startups. It is still difficult to find truly good programmers in the US. I’d say 80% are schwag. The good developers here in the midwest earn at least 70k, which makes for a very good lifestyle. As an IT PM, the salary range here is usually 80k minimum. Commonly above 90k.

Really, really good devs can make 100k working for other people.

By and large though, if you want to make coin, you take the risk and go out on your own. There is still a LOT of money in consulting for the talented developer.

This market is normal to me. What was truly NOT real were the markets during the Y2k scare where idiots were employed as “programmers” and the time about 2008-06 where again, anyone in IT with any experience was making 75k. Many of those people are now unemployed, trying to figure out how to make that salary again. It will never, ever happen as it shouldn’t have happened for them in the first place.

Still a lot of opportunity in software. Really talented people are really, really difficult to find. Still.

Dave Petersen says:

September 3, 2010 at 12:38 am

I’ve got almost 30 years in the business. I work in a small professional services firm. Our wages have been flat since 2000. We haven’t done a new hire in at least 12 years. We can’t sell entry level programming at rates for which we can make a profit. The joke in our office, is what does a 45 year old programmer do? Sell real estate. That died with the economic belly flop.

I think most US students are making an good decision avoiding technical fields. In modern business thinking, design and build skills are cost centers to be minimized. And so they are.

As one of the writers above pointed out, you don’t need an IT degree to do business software. My degrees are in history and political science. I did get through scientific calculus, physics, and several statistics courses. So… I can analyze data and patterns. I can listen to a client and find the sweet spots to be automated in their business. With modern software, not a lot of code needs to be written so the machine does most of the work, not outsourced programmer/typists.

As somebody with a bent towards the historical and political, I wonder how many of the companies who use the programming/engineering/manufacturing resources have seriously planned for the eventual instabilities of likely to occur in their source economies. How does one short those who did not take a twenty year perspective?

Sundog says:

September 3, 2010 at 2:15 am

Just to say wow what a thread NC, y’all rawk!

In Hell's Kitchen says:

September 3, 2010 at 1:16 pm

Great post and comments.

I just wanted to mention that, imo, as soon as network
latency is no longer an issue even janitorial jobs will
be outsourced to joy-stick jockeys in Chindia (or wherever
the new “emerging market” is deemed to be) controlling
the mop bot, or the dusting bot, or the garbage can bot, etc.,
you get the idea.

toschek says:

September 4, 2010 at 3:12 am

Speaking as an IT pro (‘NIX engineer) there’s a lot of truth to what people are saying about the hours, the stress and the compensation. Working 80+ hours a week for months on end for 100k is way worse than working a regular old job even making $15, at least you can to some degree call it a day when you’re done. I’m one of those “essentials” that gets called 24×7 even when I’m on “vacation”. I’ve banked 2 years of time off because I simply can’t (read am not allowed) to take it. This year they’ve stopped letting us roll it over but it’s still frowned on to actually use it.

I am constantly being told by managers that my job is easily outsourced, but I’m one of the only people there who actually knows how all these systems integrate what the business logic is behind all the servers and can actually fix any issues. This mindset bothers me incredibly — how can the people who demonstrably create value (i.e. keep a transactional system healthy and functional) be so poorly rewarded and taken advantage of/manipulated when people with MBAs (most worthless degree ever) get rewarded hand over fist for destroying value. I’d be interested to see how the US trade deficit has INCREASED since the inception of management culture and outlandish “performance based” executive compensation.

ChrisPacific says:

September 6, 2010 at 1:44 am

Late to the thread and haven’t fully reviewed all the comments. I’ll add my own thoughts in the comforting knowledge that everyone else will have moved on by now and they will probably be read by nobody.

The whole argument against H1-Bs strikes me as thinly disguised protectionism. I got a job via the H1-B program after graduating with an advanced degree from a US college. While the commentators above may blithely write this off as an outlying case, there are a great many foreign nationals who come to the US to study and end up graduating with advanced degrees. Many of them are very smart and capable, and many decide that they’d quite like to stay on in the US and work after they are done. Currently the H1-B program is the only realistic way to do this. Eliminate it and you cut yourself off from all that human capital.

I stayed in the US for quite a while and ended up holding a green card for a few years before surrendering it when I moved out of the country – long enough to be eligible to apply for citizenship if I wanted. Had I done so, I would have gone from an H1-B worker, to a permanent resident, to a US citizen – all while sitting at the same desk, doing the same job for the same salary, renting the same apartment to live in, paying largely the same taxes, and spending my money at the same stores. (That’s a little hyperbolic as the process would have taken a number of years and there would likely have been some changes, but I think the basic point is valid).

Now I know from reading the comments above that when I was an H1-B I was contributing to the destruction of the US economy by screwing some poor US IT worker out of a job, while if I’d become a citizen I would have been contributing positively to the economy as a proud American IT worker, to be guarded against the depredations of all those foreign workers trying to take my job and ruin the economy. But it’s hard for me to believe that the difference was really that dramatic. I was doing the same job. I was spending my money on the same things. The economic framework in which I existed would have been almost identical in both cases. Did it really matter that much to the American economy whether I was doing the work on a temporary work visa or as a citizen?

I don’t doubt that the H1-B program is abused, perhaps even widely so. So are cars and alcohol, but the answer is not necessarily to get rid of them entirely.

tz says:

September 6, 2010 at 7:03 pm

This labor day, evidence that the quality of labor is about the same as the other cheap junk, at least on average:

http://spectrum.ieee.org/at-work/tech-careers/outsourcings-education-gap

tz says:

September 6, 2010 at 7:10 pm

I have no degree at all, yet get high consultant rates. But I can do everything from designing and building a circuit up to doing a large database. I have code in the Linux kernel.

One project was slow so the company got some of their chinese PhDs. They were smart and picked things up quickly but were at best a break-even since every detail they needed to know required me to explain it to them including very basic things (“what is a UART”).

There is a lot of bulk coding which I can appreciate having outsourced (or having someone from the company in the US), but it only works like a surgical team with me doing the complex surgery and them handling the other necessary but less critical functions.

Jack Parsons says:

September 7, 2010 at 3:14 am

Way out of date, but… I’m a silicon valley lifer and don’t recommend software to anyone. If you’re not in the customer’s face, you’re doomed. Radiology is now outsourced to doctors licensed in a state and living in India (on a princely income!).

My nephew was pushed into engineering (Cal Poly) and escaped in a year. He went to golf industry trade school in San Diego (apparently a major school). Serving the affluent will be a (relative) growth area.

To young engineers today: become city infrastructure engineers. There will always be a market for good water, power and sewage system engineers. And, you can live anywhere- very important, I’ve discovered. If the US and the world have a devastating slide down, there will still be funding for local infrastructure.

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