Surprise: the New York Times tell us that “the tech sector is slow to hire”

In 1989, I made my first visit to India, and met with several of the pioneers who were launching the nascent Indian IT industry. I returned subsequently for another visit, primarily to see the IT group in Motorola’s Bangalore facility, which had achieved the world’s first SEI-CMM level-5 rating; on the same trip, I met the senior executives at a little startup company called InfoSys — and as I recall, they were able to squeeze into one conference room.

Sobered by all of this, I returned to the Center of the Universe and wrote a 1993 book modestly titled Decline and Fall of the American Programmer , whose first sentence proclaimed, “The American programmer is about to share the fate of the dodo bird.” Ah, well … at the very least, the prediction was premature; and for most of the decade of the 1990s, a great number of people in the IT industry thought I was stark, raving mad. Not only was the entire U.S. economy booming for much of that decade, but the IT industry exploded, gobbling up every college graduate who had the slightest interest in software development, regardless of whether he or she had a computer science or software engineering degree.

But it turned out that the Indian software industry was exploding too, and at an even higher rate than in the U.S. When the combination of dot-com Internet development and Y2K remediation work generated even more demand than the American universities could supply, it was the Indians who picked up the slack. Not too surprisingly, it was also the Indians — along with equally talented and well-educated software people in Eastern Europe, the Philippines, and various other parts of the world — who took advantage of the urgent demand to cut programming costs after the high-tech crash of 2001. The “global outsourcing” phenomenon had actually begun in the late 1980s, if not earlier, but nobody paid much attention to it through the 1990s — indeed, not until the middle part of this past decade, when “global outsourcing” became a synonym (at least in some companies) for laying off high-salaried IT workers in the U.S., and shifting their jobs to low-salaried countries elsewhere.

And as today’s New York Times article (“Once a Dynamo, the Tech Sector Is Slow to Hire“) points out, the trend is continuing. The article quotes Bart van Ark, chief economist at the Conference Board, as saying, “We are talking about people with very particular, advanced skills out there who are at this point just not needed any more.” As a result, “employment in areas like data processing and software publishing has actually fallen … computer scientists, systems analysts and computer programmers all had unemployment rates of around 6 percent in the second quarter of this year.” To put it in more specific terms, the article quotes Catherine Mann, a global finance professor at the Brandeis University International Business School as saying, “C++ is now an international language. If that’s all you know, then you’re competing with people in India who will do the work for less.”

My Decline and Fall book predicted that they would do the work for much less — because at the time, programmers in places like Moscow, Shanghai, and Bangalore were earning ten times less than comparable American programmers. Not only that, they would do better work, because they were paying more attention to software quality principles and techniques that had been originated and published in the U.S., but which many American software developers and their bosses were ignoring.

The salary differential isn’t quite as staggering as it used to be; all of those Chinese and Russian and Indian software developers are looking for higher salaries, too. And the productivity/quality issue may not be quite as extreme any more; a number of U.S. organizations have been shocked out of their complacency, and are working hard to deliver high-quality systems on time, within budget. But the competition is still there; and the largest high-tech companies are looking for a “competitive differential” wherever they can find it. As the New York Times article observes, “economists who follow highly skilled employment say that some of the most promising companies that laid off workers during the recession, like IBM, are expanding their work forces abroad.”

It’s unlikely that any of this will affect the top 20% of the labor pool; the article quotes the CEO of an online brokerage agency as saying, “If there’s one enclave that has been completely unaffected by the recession, it would be Stanford computer science students.” The same is almost certainly true for computer science majors graduating from MIT, Carnegie Mellon, Berkeley, and a couple dozen other elite universities.

It’s the bottom 20% that is most at risk. This group is likely to consist of people who graduated ten years ago from mid-level universities with degrees in “soft” technical areas — e.g., “business administration” — that included a couple of computer courses. These are the folks who learned one or two programming languages, but who are basically performing the same kind of technical work they were doing a decade ago … but with salaries that have increased to the point that they’re almost embarrassing when compared to a 25 year old hotshot with a Master’s Degree in computer science from one of the best institutes in India. Unfortunately, these are also the people who have spent some of their time during the past decade acquiring the material trappings of life: a mortgage, a couple of cars, a spouse, a couple of kids, and a home equity loan that paid for all those winter vacations to Acapulco. Unfortunately, these are the folks who are growing feathers while we discuss their fate, and who will wake up any day now to discover that they have been transformed into dodo birds.

That still leaves 60% of the people in the IT industry — the “intellectual middle class” of the industry. These people aren’t likely to be laid off in the near future; but they probably won’t be getting very big raises either. They’re going to be squeezed, and pushed, and goaded, and prodded to keep producing more work, more quickly, and more cheaply — and that will almost certainly involve a few “death march” projects along the way.. A few of them will decide to go back to school, upgrade their skills, and do whatever it takes to move into that top 20%; and a few will get tired and grumpy, and allow themselves to sink slowly into the bottom 20%. But for everyone else: hunker down, and be prepared for a long, slow grind. Things may eventually get better, but it’s going to take a while…

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