February 5, 2009

High-Tech Anxiety

Michael Feldman

In case you hadn’t noticed, the global economic collapse is causing more churning in the tech workforce than we’ve seen since the dot-com bust. The recent announcements of thousands of layoffs by IT stalwarts like Microsoft, Intel, AMD, Sun Microsystems, IBM and HP is re-energizing the discussion of US technology employment. So as Congress and the Obama administration prepare a stimulus package that aims, in part, to titillate the tech sector, the problems of offshoring, outsourcing, H-1B visas, and math and science education are coming under renewed scrutiny.

I’m encouraged this week to see a couple of recent articles that reflect a more honest assessment of these tech worker issues.

The first article is from Tom Kaneshige at InfoWorld and his main point is that IT jobs are still a fairly safe bet in this economic climate. Considering the depth and breadth of the recession, that might be faint praise. But Kaneshige points out that despite the well-known tech workforce problems, IT jobs still have a lot going for them, namely a “relatively” healthy market for high-tech workers and decent pay.

That’s little consolation to the thousands of IT workers now scrambling to get a job. But Kaneshige argues that demand for techies is still strong and points to the relatively low unemployment rates among such workers. For example, according the U.S. Bureau of Labor Statistics, computer software engineers have a 98.1 percent employment rate (although I’m guessing that is not the most recent figure).

The article also claims salaries are strong, although I’d argue that looking at the longer view, that’s probably not true. For most IT workers, industry wages over the last decade have been more or less stagnant.

The underlying assumption of all this is that the demand for tech workers is larger than the supply. But the lack of upward pressure on wages would suggest otherwise. I think what most employers are experiencing is a huge gap between the existing skill sets and what they’re demanding. A lot of this has to do with the rapidity of change in the industry, where today’s hot technology can become obsolete in just a few years — often too fast for workers to adapt. Meanwhile, the attraction of offshoring and using H-1B visas to shop for targeted skills (often at a much lower cost than native workers) means companies have little incentive to retrain their own employees.

To protect against outsourcing and offshoring, the traditional advice for tech workers is to move higher up on the food chain. Positions that entail project management, process design, system definition and design, and quality assurance are less susceptible to being farmed out. Writes Kaneshige:

[I]t’s good to know what’s hot and what’s not. Foote Partners survey found “urgent demand for talent” in three technical areas: management/methodology/process, database, and messaging/communication. The areas to avoid: application development, SAP and other enterprise applications, operating systems, Web and e-commerce, and systems networking.

The fact that those “areas to avoid” were very much in demand less than five years ago points to the dilemma of tech careers. Worse, the economic downturn seems to be accelerating the turnover, as company’s look to exploit newer more cost-effective technologies, while casting off older ones.

One way this is likely to manifest itself is for private datacenters to give way to cloud computing. This was bound to happen anyway, but the deepening recession is probably going to make this transition both quick and painful — at least if you work in the IT department.

Does the government have a responsibility to help the plight of the tech worker? That’s the focus of the second article from Timothy Prickett Morgan at The Register.

Morgan reports that the Computing Technology Industry Association (CompTIA) has its own ideas about what the stimulus package legislation should be doing for the IT sector. For example, CompTIA’s answer to the “IT skills shortage” is getting federal and state governments to invest in education for the next generation of tech workers.

Morgan’s take is that “there isn’t an IT skills shortage in America so much as a shortage of companies willing to pay a living wage and to provide training to existing IT employees to learn the new skills that will be required to build modern applications.” Like many, he believes that over the last decade IT workers have been systematically replaced by cheaper bodies offshore or via the H-1B visa program.

But according to Morgan, government is not the answer:

[Y]ou can’t blame the government for the IT skills issue, and you can’t expect the government to fix it. Bill Gates could fix it in a heartbeat. This might work: BillG decides to take a few billion of the Gates Foundation bucks and create free scholarships to comp-sci majors who go to state schools, and IT suppliers agree to guarantee jobs to students who make decent grades. If that sounds too pricey, how about no-interest loans instead of tuition grants? Make people pay the money back to the Foundation. They’ll gladly do it.

OK. Maybe you can’t blame the government, but you can’t put it all on Gates’ shoulders either. The general premise sounds good though: Have industry stakeholders offer free scholarships for tech degrees. On top of that, how about free training for any out-of-work techie so they can refresh their skills? In return, those newly-polished workers would return the favor and offer a year or two of service to the contributing firms.

But I think you’re going to need government money and direction to make this work. Most IT companies, whether US-based or not, are multi-national in every sense of the word. They have little motivation to act in the best interest of US workers. On the other hand, the government does.

One thing seems clear to me: Treating employees as disposable commodities and depending on the market to work its magic isn’t going to do it. Until tech workers find they can maintain viable careers in the industry, there’s no reason to believe that the IT skills shortage is going to be solved — either in the US or anywhere else.

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