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IT outsourcing, especially offshore outsourcing has brought about various changes in both outsourcing nations as well as vendor nations who do the outsourcing work. In US today, IT outsourcing has become one of the hot topics of discussion. While pros and cons of offshore outsourcing are discussed with vigour, surveys to determine its real impact is conducted from time to time. And through all this, the average US IT professional remains a confused self.
Though the whole offshore Outsourcing rigmarole has hardly affected the IT jobs in US, it has resulted in general paranoia among those working in IT related jobs. InformationWeeks (IW) National IT Salary Survey of 10,425 IT professionals found that even though nearly half their companies dont outsource at all and fewer offshore IT work, most of them worry that offshoring will reduce career opportunities even though the moneys still good in IT. Base salaries are barely edging up, but bonuses have total pay on the rise, and tech unemployment last quarter fell below 3%--which in economic terms is about zero.
However, most admit that though they are confident of riding out their uncertain and intensely demanding jobs smoothly, they wont wish it on their kids. With 3.47 million IT people employed today in US, tech employment has risen above the hiring boom that peaked in 2001, according to data from the Bureau of Labor Statistics. Despite that, 64% of IT pros interviewed in IW survey said that outsourcing is eliminating IT jobs, and nearly 60% believe the trend is hurting morale. IT pros are unsure about outsourcings effect on pay. While just 25% thought that existing salaries will be reduced, 49% predict lower salaries for new hires. Which roughly means that though most US IT professionals are confident of their own job security and career growth, they are unsure of future opportunities.
Tony Roberts is typical IT professional. Though generally wary of outsourcing and offshoring he doesnt foresee any trouble for himself. He is an application development project manager for a specialty retailer that buys its major applications and count on internal staff for the integration of those applications, supplemented occasionally by contractors. "I dont feel vulnerable to outsourcing," Roberts says. "Weve got a lean organization. Not a lot of value would be added by outsourcing."
InformationWeeks survey reveals that there are many who think like Roberts. Only 12% of staff and 9% of IT managers feel insecure about their jobs. Half of managers and 42% of staff feel strongly secure, while the rest feel somewhat secure. Among managers and staff alike, feelings of job security are markedly stronger now than they were in IW salary survey of two years ago.
The survey further says that, this year IT salaries are edging up, with total median compensation rising 3% for staffers to $73,000 and 4% for managers to $99,000. Even though, it is too early to say whether offshore outsourcing is seriously detrimental to tech employment and wages in US, a watch can be kept on whether pay rises as unemployment plunges, or whether the threat of offshoring is holding IT salaries down.
Jobs can be Offshore resistant
Though it is presumed that outsourcing routine and menial work will see an upgrading in the quality of work done in US, few IT professionals bank on this scenario. In fact, very few foresee any of the promised career upside of outsourcing: only one in five expects opportunities to work on more innovative projects as menial tasks are moved out, and just 13% see new hires to support outsourcing work.
One in three people in the survey say their employers send work offshore; half do either U.S. or offshore outsourcing, however, most are confident that their careers can survive amid competition with low-cost labor abroad.
But experts say that it is about time people woke up to the realities of Outsourcing and take the necessary steps to avoid layoff. It is seen that, most IT pros may be underestimating how much they need to work at positioning their careers to compete against lower-cost workers abroad. David Foote, president of research firm Foote Partners says that employees should judge how "offshore resistant" they are not by their job titles but by the roles they play.
If theyre working directly with customers or applying specific knowledge of the business, their jobs are unlikely to be outsourced. So the jobs of people doing straight programming are at risk, while application developers who know the technology and the business environment are in high demand. The same holds true with data mining and business intelligence expertise thats combined with knowledge of the business.
Yet a mere 6% of managers and 2% of staff consider "understanding the companys business strategy" an important factor in their jobs. Just 12% of staff and 19% of managers ranked as an important factor that their work is important to company success.
Periodic training and updating of skills can make you layoff resistant
Periodic upgrading of your skills can make you layoff proof. However IW survey reports that just 42% of IT staffers and 43% of managers receive education and training as part of their benefit package. Even fewer gets tuition reimbursement: 30% of staffers and 28% of managers. Many IT pros have to come up with the money and time to keep their skills up to date. But even then, training yourself is important.
Take George William for example. To the 61-year-old, knowledge about his company and industry is critical. William has been in IT for 24 years, the last 15 as a database administrator and the last five at his current employer. Hed like to keep working as a DBA, at least until hes 70.
William is realistic that database administration work can be outsourced, but he believes his situation makes it far less likely. He brings a lot of knowledge about how the company uses the data. And perhaps most important, the work involves much of the companys proprietary mathematical and statistical modeling. "They want to keep that under lock and key," he says.
William also works with software licensing and batch job software, since he doesnt want to be seen as someone with a narrow tech specialty.
Thats a good way to gain more company knowledge or customer exposure, to be seen as someone who can shift outside an area of expertise or job title. William thinks offshoring can create job opportunities for IT pros in the United States, but only for those with complex skill sets and experience.
William has more than two decades of IT experience, but he still takes about two weeks of IT classes every year. Most recently, he completed an overview course on the latest version of Microsoft SQL server. He also has taken classes on statistical analysis to get tips on how to make the companys databases run faster. He attends Web seminars as well as in-person classes. William agrees that its a struggle finding time to study while devoting a lot of hours to a job, but he believes theres no alternative. "The pace of change is intense," he says.
Now, Ian Diaz seems like the kind of IT worker who should be worried about outsourcing. He started in tech support and help desk jobs 10 years ago, straight out of high school, having gotten the tech bug while tweaking PCs to maximize game performance. IW survey finds help desk pay has stagnated in the last three years, with median total compensation at $49,000. Diaz realizes that must expand his skills, though he is not very keen on it.
IT no longer viewed a promising career
When the tech-telecom bubble burst, IT employment slumped, going from 3.4 million to as low as 3.2 million, according to the U.S. Bureau of Labor Statistics. And that disguises the level of turmoil in the US IT job market--for example, there are 220,000 fewer people who call themselves programmers today than in 2000, analysis of the bureaus stats shows.
This means that IT is no longer viewed as the promising career as it was seen before the tech-telecom fiasco. However statistics shows that attitudes toward IT as a career path has improved in the last two years--though most in the profession still are down on it. Back in 2004, only 15% of staffers thought IT was a promising a career path as five years earlier. Today, 29% says that it looks as good as five years ago. As for managers, 38% are as optimistic as they were five years ago, a better mood than the survey found two years ago. Still, 61% of staffers and 53% of managers now think that the IT career path doesnt seem as promising as it did five years ago.
Nicholas Richi is one of the IT pros who has been through the tough times. He thinks that hes got the right mix of skills and the right job to fend off outsourcing. He is a full-time Java programmer, developing front-end systems that make SAP applications easier to access. One current project is for account collection teams.
Richi says that his job isnt very susceptible to outsourcing or offshoring because of the close work he does with users. "If you can find a niche like SAP with specialized business skills, thats harder to outsource," he says. Yet he warns against getting too far from technology, too much in business or project management, because those jobs are dropped quickly when projects slow down.
Security related jobs are largely outsource resistant
Information security professionals need not worry much about outsourcing, as, though companies do outsource some security functions, most are reluctant to outsource major security functions. As researcher Foote says "Companies are crazy scared about outsourcing security".
Talent crunch
Contrary to popular belief that IT professionals are rendered jobless because of outsourcing, most IT executives says that there is a serious shortage of talent in certain IT related areas. E.&J. Gallo Winery is struggling to find integration, business intelligence, and security skills in central California region. "When we post openings for these jobs, we dont get a lot of resumes, so the search criteria is changing a lot, and were providing more training," CIO Kent Kushar says.
Gallo sends some programming offshore, such as a current business intelligence project. But theres little turnover among Gallos IT department of 200 people, and the staff received raises in recent years when other IT shops were holding back on pay hikes.
Most top-level executives are of the opinion that there is a promising future for U.S. IT professionals, despite outsourcing and offshoring. This is attributed to the idea that cost savings in offshoring will eventually be squeezed as countries such as India struggle to keep their workforce skilled in the latest technologies. This is thought to make U.S. workers who understand technology and business even more valuable.
All this does not comfort a lot of IT workers, even if recent data suggests that offshoring hasnt reduced total IT employment or clobbered salaries. Its not yet clear whether the current tight labor supply, marked by 2.5% unemployment, will lead to higher salaries, or whether the offshore alternative will keep a lid on wages. However, its certain that offshore competition will continue moving into new areas of IT work, forcing IT pros to manage their careers well to avoid getting caught in the path of lower-cost labor.
And one thing US IT professionals mired in the uncertainty of the whole offshore rigamarole can do is update their skills constantly and be ready for change. If surveys are any indication, numbers are on their side, for now.
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