ITAA Report: NOT SO FAST

Computerworld ^ | 4/5/04 | Frank Hayes

[ninenot]

APRIL 05, 2004 (COMPUTERWORLD) - Here's a comforting bedtime story: Offshoring won't just save companies money. It will also create jobs. And reduce inflation. And grow the economy. Those are the top-line conclusions of a new report from the Information Technology Association of America, the IT vendors' lobbying group. Just don't read very far past that top line -- at least, not if you want to get any sleep tonight.

See, the report says those new jobs won't be IT jobs. And that reduced inflation will come in part from lower pay -- "wage compression," as it's charmingly dubbed by the report's principal author, Global Insight Inc. chief economist Nariman Behravesh.

And that economic growth depends on the willingness of the foreign employees who get our offshored jobs to spend their paychecks on U.S.-made exports.

Don't take my word for it. It's all in the report, brought to you by the people who, just a few years ago, were saying that the U.S. desperately needed to increase its IT workforce. Yes, really. Since early 2000, the ITAA has predicted the creation of more than 4 million new U.S. IT jobs -- 1.8 million of which would go begging because there just wouldn't be enough IT people to fill them.

How many new U.S. IT jobs have actually been created since 2000? According to the ITAA's own annual jobs report, maybe 400,000.

But wait -- according to this new report, since the dot-com bubble burst in 2000, a total of 372,000 software and IT services jobs have been lost in the U.S. (Only 104,000 were lost to offshoring; the rest went because of the recession, productivity gains and an end to what the report calls "overhiring.")

The new report also predicts that "in the software and services area, the economy will create 516,000 jobs over the next five years in an environment with global sourcing but only 490,000 without it. Of these 516,000 new jobs, 272,000 will go offshore and 244,000 will remain onshore. Thus the U.S. IT workforce will continue to grow."

So, let's do the math: Without offshoring, the U.S. gets 490,000 new IT jobs in the next five years, a net increase since 2000 of 118,000 U.S. IT jobs. With offshoring, the U.S. gets 244,000 new IT jobs -- a net loss since 2000 of 128,000 U.S. IT jobs. Some growth, eh? Yes, there will be new jobs -- in education, health services, transportation, utilities and construction, all areas where the work can't easily be shipped overseas. They just won't be jobs in IT.

At least that's what the ITAA's offshoring report says. Is it true? Well, remember that this report is driven by politics every bit as much as the ITAA's wildly optimistic job-growth estimates of a few years ago.

Back then, the ITAA was lobbying for more H-1B visas, and its jobs survey miraculously showed a spectacular increase in the number of U.S. IT job openings about to be created. Now the ITAA is lobbying against restrictions on offshoring. And, amazingly, its new report concludes that offshoring will do everything but whiten teeth and freshen breath.

So if you're a techie, you may be able to sleep a little easier. After all, you already know what you need to do in order to dodge the offshoring bullet: build up your business skills, increase your face time with users and generally become the kind of IT person whose job can't easily be shipped overseas.

And if you're an IT manager or CIO? Then it's not so easy. See, some people will take this report seriously. Like your best techies, who may decide to bail out of a shrinking IT job market. Or the brightest students, who may conclude that IT is a dead end and opt for business or law or medicine instead.

That could leave you with the loss of your best people and not enough new kids coming in to replace them -- a staffing nightmare, courtesy of the ITAA's fumbled efforts to hype the benefits of offshoring.

Pleasant dreams.

[ninenot]

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[Reelect President Dubya]

The only solution is to secede from the world to protect American jobs.

[TrueBeliever9]

ITAA: founded by friends of Bill & Hill Clinton; run by friends of Bill & Hill Clinton; valuable arm of Clinton machine.

[TrueBeliever9]

ITAA is the organization pushing for electronic voting machines per previous thread on FR

[ninenot]

Frankly, I'd rather get Dubya to pay attention to these threads. He's taking a real beating in the Midwest on the manufacturing problem, and he doesn't need any more.

Of course, if he insists on calling everyone who brings up the problem as "isolationist protectionists" (translate neanderthal dummies), he may just not have ANY friends.

Rational discussion is good.

[Redbob]

There they go, trying to protect the jobs of the buggy-whip makers.

They should be thinking that if IT "professionals" hadn't demanded such obscene salaries in the past few years, companies might not have been quite so quick to "offshore" their jobs.

[ninenot]

Do you s'pose that if so many damn fool companies had not OFFERED large sums to these folks that it would be different?

Still takes two to tango--or doesn't it?

[InABunkerUnderSF]

You know, it always fascinates me when I see posts decrying "obscene salaries", demanded by 'IT "professionals"'.

Exactly at what point does a salary become "obscene"? The last company I worked for, the CEO got 660K, plus bonus, plus stock, plus car, plus driver, plus parking space (worth $26 a day in and of itself in SF) plus the usual other bennies. Yet, at about $120K MY middle managers salary was "obscene" and furthermore, with a BS in computer science, certifications in network and project management and continuous, self financed, training (about $1000 a year) to keep my skills current for the past 20+ years I am a "professional"

For the benefit of the rest of us, could you please express for us your definition of

(1) An "obscene salary" and
(2) An actual professional as opposed to a "professional"?

Thank you.

[templar]

And that economic growth depends on the willingness of the foreign employees who get our offshored jobs to spend their paychecks on U.S.-made exports.

Only two things wrong with this idea that I see.

(1)It assumes we will still be making stuff to export to those foreng workers

(2)It requires that they (the foreign workers in question) will double cross their fellow countrymen by buying American made goods (if there still are any) at higher prices than those made by their own neighbors (thereby putting them out of work the way we Americans put our fellow Americans out of work by buying duty free cheap foreign goods).

[ninenot]

Uhhh-it ALSO assumes that the folks earning 25 cents/hour in China can actually purchase a washing machine, e.g.

[ninenot]

The President of the Catholic Knights' Insurance Company (located in Milwaukee) has raised this issue, rather forcefully stating that CEO emoluments are more than generous.

The following Companies paid their CEO MORE THAN 100X the comp of their lowest-level workers: Cendant, Compuware, Delta Air Lines, the El Paso Corp., International Paper, Sun Microsystems and Viacom.

Further, "In 2002 the average CEO of a public company made about 300 times more than the average worker at his or her concern, according to data compiled by the AFL-CIO.

"That is down from the 531 times posted in 2000, probably a reflection of the poor stock markets of 2001 and 2002 that devalued the options composing a large part of executive pay packets. Information for 2003 will not be available until proxy statements are sent out later this year."

FYI, Steininger is paid 7x the comp of his lowest-paid FTE.

[VOA]

Exactly at what point does a salary become "obscene"?

Way, way back in the 1970s, I remember the "obscene profits" epithet hurled
at oil companies (by liberals as they had their down-stairs help fill the
gas-tank of their limos).

This was brought into perspective by a chemical-engineer friend who said
"the losses from a failed oil-exploration project are obscene as well".

[Mortimer Snavely]

You are looking at these countries as they actually are, rather than how these free traders wished that they were.

Shame on you for spoiling the party.

[Mortimer Snavely]

The difference in compensation between CEOs and line workers doesn't bother me a bit. What does bother me is the exportation of the production lines to Red China.

[InABunkerUnderSF]

I don't really care what anyone else makes. Charge what the market will bare.

I do object when someone like a Sumner Redsone of Viacom makes what he makes, then goes to China in 1999 to celebrate the founding of the PRC and declares himself to be a "Socialist At Heart". If he is a Socialist At Heart, why doesn't he show it by cutting his salary to the Viacom Mean and donating his wealth to the federal government to be redistributed?

I also object to people like Carly Fiorina, who send thousands of jobs off shore and bring in thousands more foreign contractors into the US to improve "competitiveness" and then rake in huge salaries with all the corporate bennies money can buy. If she and her board are so concerned about "competitiveness", why isn't she working for what HP pays their H1B and L1 contractors?

[Reelect President Dubya]

Frankly, I'd rather get Dubya to pay attention to these threads. He's taking a real beating in the Midwest on the manufacturing problem, and he doesn't need any more.

The Truth About Offshoring

[ninenot]

Yeah, I saw the article.

And you likely saw the article from ComputerWorld in which the reporter absolutely SLAMMED the outsourcers, too.

As long as GWB insists on calling names "isolationist, protectionist" at ANYONE who dares to question the wisdom of the FreeTraders, he's losing support. Sorry--it's true.

He can do what he thinks is best. I can't vote Kerry, but...

[Reelect President Dubya]

As long as GWB insists on calling names "isolationist, protectionist" at ANYONE who dares to question the wisdom of the FreeTraders, he's losing support. Sorry--it's true.

I bet you voted for Ross Perot.

Mouthing nice words don't make it so.