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Offshoring of IT Jobs Expected to Accelerate

  |  November 19, 2003   |  Comments

Analysts predict that, despite any social and political outcry, IT jobs increasingly will move offshore.

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.

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 the 2003 Computer Digital Expo 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.

Currently, 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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Susan Solomon

Susan Solomon is the executive director of marketing and public relations for Memorial Health Services, a five-hospital health system in Southern California. In this capacity, she manages promotional activities for both traditional and new media. Susan is also a marketing communications instructor at the University of California, Irvine; California State University, Fullerton; and the University of California, Los Angeles.

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