Monday, June 21, 2021

Offshoring of IT Jobs Expected to Accelerate

Textile mills closed their doors, sending their jobs to foreign shores where
labor is cheaper. Shoe manufactures did the same. Then manufacturers started
handing out pink slips to their U.S. workers, sending the jobs, and the pay,
offshore.

Today, the IT industry is the next one to fall.

Analysts call it ‘globalization’, but IT workers, especially programmers and
technicians in corporate call centers, will call it unemployment. And it’s
coming in a time when the industry is still reeling from the shattering of
the dot-com boom, several years of economic turbulence and a high-tech
slump. IT workers, who only a few years ago had the hottest jobs on the
market and raked in great money, are either unemployed themselves or know
people who are.

And industry watchers say that’s about to get much worse.

”IT, as people understand it now, is never going to be the same,” says
Dale Smith, an information and technology advisor to the British Consulate,
speaking at CDExpo in Las Vegas. ”The model has changed. The world has
changed… That process is unstoppable. Companies will continue to seek
lower-cost labor markets. IT workers must think about how they will survive
this. How do we have a career in this new market?”

And it’s a market that will change quickly.

Today, approximately 8 percent of IT work is outsourced, according to Gordon
Brooks, president and CEO of E5 Systems, Inc., an IT outsourcing company
based in Waltham, Mass. In five years, that number will have exploded to 55
percent.

Forrester Research predicts that $136 billion in wages, or 3.3 million jobs,
will move offshore in the next 15 years.

Most of the analysts speaking at CDExpo say that number, as large as it
sounds, might be wishful thinking. The actual numbers will be much higher.

”We thought for the last 10 years we had seen big change in IT,” says
Brooks. ”That was nothing. You can’t stop this move. People in IT will have
to reinvent what they’re doing. They will have to figure out how to take
advantage of this.”

Analysts say that despite any social and political outcry, IT jobs will
increasingly move offshore. It’s a matter of math.

Brooks reports that computer programming is generally calculated to cost $80
per hour. In India, that figure drops to $22 per hour, and in China it falls
to $15 an hour.

”We can like it or we can not like it, but it’s just math,” said Brooks,
speaking to a crowd at the Las Vegas IT conference. ”It’s nothing but
math.”

Mitchell Levy, president and CEO of ECnow.com, a management consulting firm
based in Cupertino, Calif., says IT jobs are largely going to India and
Russia. But increasingly they’re starting to head to China, the Phillippines
and Canada. And once they’re offshore, the jobs most likely are not coming
back.

During the dot-com boom, it was cool to be a programmer. They were the pony
tail, black t-shirt crowd who worked late at night and played foosball in
the office. It’s not so cool to be a programmer today.

Industry watchers agree that programming is one of the first jobs to be
offshored.

”Those programmers have to grow up… If you code for a living, you need to
reinvent yourself,” says Brooks. ”There will be fewer of those jobs, and
companies will pay less for it. Does that sound like a good long-term job?”

But analysts also say that not every IT job is heading offshore. Upper-level
and management jobs are the ones to have right now.

”This doesn’t mean there won’t be technical people onshore,” says Brooks.
”But the ones onshore will be on the higher end. They’ll be architect
oriented, program managers and business oriented… Now there’s a lot less
artistry. It’s about managing what we have. The new artistic stuff being
handled somewhere else.”

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