Nearly 1 Million IT Jobs Moving Offshore

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Nearly 1 million IT-related jobs will move offshore over the course of the next 15 years, according to a new report released by Forrester Research, Inc.

And that will leave some U.S. IT workers — largely base- to mid-level programmers — out in the cold if they don’t upgrade their skills and move up the ladder away from the work that will be shipped out of the country.

”The people who make this transition will be people who can manage these offshore projects,” says John McCarthy, group director of research for Forrester. ”Programmers and your base IT worker will have opportunities if they evolve — just like the American manufacturer had to evolve. IT workers will have to become more business-centric and not just stay in their little technology cocoons.”

McCarthy says there will be a wave of jobs moving offshore over the next 16 months. He then predicts a two-year slow down while corporate executives digest the economies of the move, and then there will be an acceleration in jobs moving to other countries from 2005 through 2015.

”Gradually, you’re going to see an increase in the pace of this,” says McCarthy, who did the interview from India, one of the main countries absorbing U.S. IT work. ”It’s already been happening. GE has been offshoring for almost 10 years now. The size of the deals, the number of deals, that’s what is increasing.”

And IT jobs are only part of it.

McCarthy estimates that about 3.3 million American jobs and $136 billion in wages will move to countries like India, Russia, China and the Philippines. The IT industry, however, will be leading the initial exodus.

Just as with the textile, shoe and automotive manufacturing industries, IT work can be had more cheaply outside of the U.S. Cheaper labor and more relaxed labor rules means a huge cost savings. But McCarthy says that’s not the only reason that U.S. CIOs are turning to foreign workers.

”They’re getting better quality work done,” he says. ”India is a culture more focused on quality and process than America is. They tend to be much more disciplined. They’ve done the most to turn IT development away from a mystical black art to a real business process… ‘Just wing it’ is not part of the culture there.”

But Humberto Andrade, director of professional services at Hampton, N.H.-based Technology Business Research, Inc., would take issue with that.

Andrade puts a premium on U.S. IT skills and work, saying that while the bulk of IT jobs may move offshore, U.S. workers will still have the high-end, value-add jobs. ”Companies will outsource the infrastructure, the low-end, the time-consuming parts,” he explains. ”But you’re always going to have offices here and you’ll have a large section of work done here.”

Gordon Haff, an analyst at Nashua, N.H.-based Illuminata, agrees that critical IT work will remain in the U.S. but those without high-end skills will suffer.

”There’s some types of work that basically lend themselves to being farmed out,” says Haff. ”Maintenance programming and basic programming that is straightforward are easily sent overseas. But if something is strategic to your company, you want to maintain very close control over it. And when you’re pushing the technology envelope, you need to have much closer communications with the people doing the development.”

Andrade also disagrees with Forrester that there will be a two-year lull in the exodus of jobs. He notes that many companies have being doing this — possibly in small batches — for four, five or six years. They’ve had time to calculate the benefits and expenses and now, battling a down economy, they’re ready to move ahead with offshoring a chunk of their work.

”The Internet and broadband are helping everyone develop large projects outside the country,” adds Andrade. ”There’s a pool of well-educated people overseas, specifically in India. And with the economy slowing down, everyone has been reevaluating their processes and they’re ready to keep moving [in this direction].”

Editor’s note: Gaudin writes for Datamation, a Jupitermedia site.