United States hemorrhaging core tech jobs: Trend could imperil the American programmer

San Mateo County Times ^ | Sunday, July 20, 2003 | Rachel Konrad

[nickcarraway]

Sunday, July 20, 2003 - SAN JOSE -- Peter Kerrigan encouraged friends to move to Silicon Valley throughout the 1980s and'90s, wooing them with tales of lucrative jobs in a burgeoning industry.

But he lost his network engineering job at a major telecommunications company in August 2001 and remains unemployed. Now 43, the veteran programmer is urging his 18-year-old nephew to stay in suburban Chicago and is discouraging him from pursuing degrees in computer science or engineering.

"I told him, 'Unless you're planning to do this as a path to technical sales, don't do it,' said Kerrigan, who lives in Oakland.

He won't be able to have a career designing and building stuff because all those jobs have moved to India.

Like many unemployed programmers, Kerrigan blames the sour labor market on offshore outsourcing -- the migration of tech jobs to relatively low-paid contractors or locally hired employees in India, China, Russia and other developing countries.

The hemorrhaging of tens of thousands of technology jobs in recent years to cheaper workers abroad is already a fact of life -- as inevitable, U.S. executives say, as the 1980s migration of Rust Belt manufacturing jobs to Southeast Asia and Latin America.

But a new wave of technology outsourcing -- involving tasks that involve greater skills -- could be cutting to the industry's bone, threatening to prolong the three-year U.S. economic downturn.

Some who oppose the trend, which such industry stalwarts as Hewlett-Packard, IBM, Dell and Microsoft are embracing, believe it could even usher in the end of American domination in technology.

"We're giving countries like China and India the support they need to build up their technology industries, and the result could disadvantage us in the long run," said Phil Friedman, an electrical engineer and chief executive of New York-based Computer Generated Solutions, a 1,200-employee software company that targets the apparel industry.

"We outsourced electronics manufacturing. We're closing steel mills. Every week, 400,000 people file for new unemployment claims," said Friedman, a 54-year-old Ukrainian native who immigrated in 1976. "At the same time, we're shipping tech jobs offshore -- it's a shortsighted approach and cheats the American work force."

Cost-conscious executives have been shifting lower-level tech jobs in data entry and systems support abroad to cheaper labor markets for more than a decade. But now they are exporting highly paid, highly skilled positions in software development -- jobs that have been considered intrinsic to Silicon Valley and tech hubs such as Seattle; Boston; and Austin, Texas.

Critics say it's the equivalent of exporting not just the automobile industry's assembly line jobs -- but the core engineering and car design jobs, too.

Roughly 27,000 technology jobs moved overseas in 2000, according to a November study by Forrester Research. It predicts that number will mushroom to 472,000 by 2015 if companies continue to farm out computer work at today's frenzied pace.

According to Forrester, companies in the United States and Europe will spend 28 percent of their information technology budgets on overseas work in the next two years.

Boeing, Dell and Motorola have opened software development centers in Russia. Intel employs 400 full-time Russian software research engineers and nearly 200 others in marketing and sales, wireless Internet access and modem projects.

Santa Clara-based Intel entered the Russian market with a small contract project three years ago. But within months, the world's largest chip maker hired all the programmers who write compiler software to optimize the microprocessors' performance, and opened the Russia Software Development Center in Nizhny Novgorod.

"We intend to invest in the fastest-growing markets, and those are India, Russia and China -- that's the long-term plan," Intel spokesman Chuck Mulloy said.

Microsoft is adding software development jobs at its India Development Center in Hyderabad, opened in 1999 to create versions of Windows for giant corporate computers.

Bill Gates said late last year that the expansion was part of an estimated $400 million in corporate investments in the subcontinent.

On its corporate Web site, Microsoft lists dozens of Hyderabad openings, many requiring five years of experience, fluency in multiple computer languages, and college degrees in computer science -- far from the hourly telemarketer jobs that financial services and insurance companies exported to the Philippines and elsewhere in the early'90s.

Some say sending those jobs abroad may cause American tech workers' wages to stagnate.

According to the nonpartisan Economic Policy Institute, non-inflation-adjusted wages for tech workers grew 1.7 percent between the fourth quarter of 2001 and the fourth quarter of 2002 -- not enough to keep up with the period's inflation rate of 2.2 percent.

The average computer programmer in India costs $20 per hour in wages and benefits, compared to $65 per hour for an American with a comparable degree and experience, according to consulting firm Cap Gemini Ernst & Young.

But executives say outsourcing offers advantages beyond wage differences.

Jean-Marc Hauducoeur, a senior vice president at Cincinnati-based human resources consulting firm Convergys, said his 47,000-employee company will employ 6,000 customer service representatives and network engineers in India by year's end.

Convergys' average technical employee in India stays on the job for nearly three years -- more than double the U.S. average, saving tens of thousands of dollars in recruitment and training per employee per year, he said.

People in India are very ambitious and very well-educated, but they're also ready to invest in a company, and they have less of a tendency to move out of the company, Hauducoeur said.

Many U.S. corporate executives say they simply can't afford to overlook foreign computer workers -- especially in India, which produces roughly 350,000 college engineering graduates annually.

Bob Pryor, who heads the outsourcing practice of Cap Gemini Ernst & Young, said it's naive to think outsourcing software jobs could ruin America's tech dominance.

"The reality is that we live in a global economy and we compete against global players. We need to look at where we have strategic advantage -- whether it's resources or skills," Pryor said. "It frees up people and dollars to do much more value-added strategic things for clients."

Marcus Courtney, a former contract worker for Microsoft and Adobe Systems and president of the Washington Alliance of Technology Workers, said many tech workers understand and even endorse free trade and globalization.

"They even enjoy living on the cutting edge -- taking courses in advanced computer languages, getting experience in a variety of business disciplines, and endorsing a philosophy of continuous improvement," he said.

But many find it tough to reconcile their macro-economic outlook with their own unemployment.

"We need to move beyond the idea that individuals can simply cope and retrain," said Courtney, whose 275-member union is asking Congress to study and possibly regulate offshore outsourcing. "Workers need a voice over their economic future and a voice against the executives making these unilateral economic decisions."

[Marine Inspector]

Ping.

[mvpel]

Rescind all H1-B Visas now.

[only1percent]

How does rescinding H1Bs reduce outsourcing? If we assume (as is fair) that the best, most talented Indian programmers are getting most of the H1B slots, sending them back to India only strengthens the Indian outsourcing companies.

[VadeRetro]

Trend could imperil the American programmer

"Could?" Duh-uh!

[Lion in Winter]

Nickcarraway, old boy,

Did you know that Cap Gemini is a French Outfit? bo hiss... French!

Me thinks that the first company they bought in the USA was DASD, a computer consulting company out of Milwaukee, Wi. Perhaps it was about 1982. One is not quite sure.

They fired many a DASD employee, but of course. My sister-in-law had worked for DASD for several years and VERY briefly for the new froggie owners.

VOILA'... her position was gone!

Ah, yes. Froggies.... green, as well YELLOW!

*/8 ^ (

[VOA]

bump

[Lion in Winter]

You have hit the proverbial nail on the head there, VadeRetro... spot on.

Well, duh.... right!

*/: ^ /

[JoeSchem]

Twenty dollars an hour sounds about right for sitting on your gluteus at a computer terminal. I don't see engineers as being dumber than computer science majors and that's about what engineers are making these days. Do people deserve $65 an hour for four years of college?

[fuente]

"...threatening to prolong the three-year U.S. economic downturn."

Oops, too late. In fact, this combined with 9/11 IS the economic downturn.

[BRL]

I was talking to one of the programming consultants that our company often employs about this subject. (He is a fantastic asset to our company when we have used him).

He said that everyone was all excited about the telecommuting jobs.... where people could just log on at home and not come to work. Well, the telecommuting job is now a reality, but they now outsource those jobs to India. If your job requires interfacing with others to get the project done then it won't be outsourced.

Telecommuting is here, but it did not turn out as expected.

[scottlang]

The issue of jobs could derail Bush's reelection. Yes the economy is slowly improving, but if a large number of white middle class subrubarrian people (core Republicans) do not feel that their job outlook is good they will look elsewhere. A moderate Democrate who addresses the issue of outsoursing, h1b, and l1 visas could walk away with the 2004 election.

[VadeRetro]

As I know only too painfully personally well, the market for programmers in this country has been ratcheting down since the end of the Cold War. It may twitch up a little bit, once in a while, but the drops can be dizzying.

The people who get shaken out of the tree don't get back in, either. Soon the only actual work being done in this country will be things that absolutely postively cannot be moved offshore. Such things tend to involve the immediate laying on of hands and are often what is traditionally viewed as "menial."

I don't know what I would tell a young kid in this country to study. Hindi, maybe.

[EGPWS]

Some who oppose the trend, which such industry stalwarts as Hewlett-Packard, IBM, Dell and Microsoft are embracing, believe it could even usher in the end of American domination in technology.

Hogwash

We ARE technology to the rest of the world. This is all doom and gloom talk. No country in this world is going to surpass American technology. As for the jobs going overseas? Well, the lower jobs can go and we can improve ourselves individually and we can open the borders so the lesser skilled can come to our country to do the job(in some cases illegal) or we can defer the jobs to overseas countries. We were, are, and will be the lone superpower in this world either way.

[oceanperch]

So now we have are lower paying jobs going to those carrying a Mex. ID card and our higher paying jobs being shipped out of the country. Hmmmm

I guess all Americans will have to become politicians to find work.

[Nick Danger]

We need to look at where we have strategic advantage -- whether it's resources or skills," Pryor said. "It frees up people and dollars to do much more value-added strategic things for clients."

That's pretty dumb for a guy who probably thinks he inhabits the high end of the bell curve.

He's right — for himself, and for people like himself. But the number of people who are running around doing "value added strategic things" is pretty small, and that's just as well because there aren't all that many "value added strategic things" to do.

The average IQ is 100. There are a lot of people in the old bell curve within 10 or 15 points of that. They aren't going to be doing any "value added strategic things" for Cap Gemini Ernst & Young. But neither are they going to sit still and shut up while the way they make their livings get shipped to India.

That guy is a flip jerk, and he is going get Hillary elected thinking like that.

[oceanview]

Yeah, we will dominate the industry, we just won't have any Americans employed doing it.

I think 2008 is where this problem really comes home. The Rs cannot afford to cede a block of voters, these displaced workers, who come from the private sector white collar middle class. That's a demographic we cannot afford to lose votes in. This trend could be Hillary's ticket to the White House in 2008. Somebody better wake up.

[oceanperch]

I noticed some new sheets I bought from an American Company (distributor) came from India.

Also now that I have been avoiding Made in China products I have been seing a lot of Made In India. Clothes and bed linen.

[EGPWS]

I guess all Americans will have to become politicians to find work.

But then we would ALL be taking and nobody giving. It wouldn't work. It however would never stop the Dem's from trying though.

[garbanzo]

We're giving countries like China and India the support they need to build up their technology industries, and the result could disadvantage us in the long run

Yes let's treat the C++/C# and Java languages as national security technology. No one else outside the borders of the US should learn to program or even read for that matter.