Because all these CEOs and wannabe businesspeople think quality doesn't matter so why pay an American $50/hour when I can pay an Indian $20/hour? It's all about getting work done as cheaply as possible, and who cares if it's all a big pile of crap because it kind of maybe works.
Even startups have this idea; I'm currently working for a guy who has 3 or 4 business ideas he wants to do at the same time, and all of them involve like 2-3 guys locally who decide what needs to be done, and all the work gets shipped overseas to India to save a buck over hiring local workers.
IT is getting ruined in America due primarily to the fact that the oldtimers at the top have no idea how important technology is to them, and this burning desire to save money wherever possible by giving the work to third world countries.
Between the Lines
Larry Dignan, Sam Diaz, Andrew NuscaResearch paints ugly IT employment picture: Almost 2 million jobs gone in 14 years
Summary
The Hackett Group reports that 300,000 IT jobs have disappeared in 2009, a spike that will translate into nearly 2 million eliminated technology positions between 2000 and 2014.
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Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CNET News.com. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism and the University of Delaware.
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Andrew J. Nusca is an associate editor for ZDNet and SmartPlanet. As a journalist based in New York City, he has written for Popular Mechanics and Men's Vogue and his byline has appeared in New York magazine, The Huffington Post, New York Daily News, Editor & Publisher, New York Press and many others. He also writes The Editorialiste, a media criticism blog.
He is a New York University graduate and former news editor and columnist of the Washington Square News. He is a graduate of the Columbia University Graduate School of Journalism. He has been named "Howard Kurtz, Jr." by film critic John Lichman despite having no relation to him. A native of Philadelphia, he lives in New York with his fiancee and his cat, Spats.
The Hackett Group reports that 300,000 IT jobs have disappeared in 2009, a spike that will translate into nearly 2 million eliminated technology positions between 2000 and 2014.
In a report, Hackett notes that IT is taking the brunt as companies cut back-office jobs. In 2009, 630,000 back office jobs will be lost at the world’s largest companies. Overall, there’s an “extended jobless recovery” in “IT, finance, procurement, HR, and other general and administrative (G&A) areas.
Hackett reports:
Longer-term, Hackett’s research estimates that nearly 3.6 million G&A jobs in North America and Europe will have been eliminated between 2000 and 2014. More than half of these losses, or nearly 2 million of these jobs, are in IT, making it the largest back office area to be hit by a wide margin.
Hackett researched 4,000 global companies with $1 billion in revenue.
Also see: TechRepublic’s IT Training Directory · Career management blog · IT leadership blog
The underlying trends behind these job losses are well known. In a nutshell, companies need to keep improving profit losses, jobs are going offshore, outsourcing and process improvements. In a report, Hackett writes:
Hackett’s analysis of close to 4,000 large (over $1 billion in revenue), publicly held companies reveals that as a result of efficiency gains made through automation, process improvement, outsourcing and offshoring, G&A functions cost approximately $333 billion less to run in 2007 than in 2000 for this group of companies. However, these improvements have come at the cost of 1.4 million net back-office G&A jobs at these companies. This job loss occurred despite average annual economic growth of 2.2% during this period, which offset a portion of the jobs eliminated through efficiency gains. On balance, the pre-crisis years showed a healthy trend for an increasingly knowledge-based, industrialized economy, modest net declines in lower-value-added jobs, and net creation of higher-value-added jobs elsewhere in the economy. However, the current economic downturn has disrupted this trend. In order to protect margins in the face of declining revenue, companies have been forced to accelerate G&A cost take-outs.
Here’s a chart of the IT job losses in context of other positions:
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Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic.
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Larry Dignan
Larry Dignan has nothing to disclose. He doesn’t hold investments in the technology companies he covers.
Biography
Larry Dignan
Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CNET News.com. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism and the University of Delaware.
For daily updates, follow Larry on Twitter.
More from “Between the Lines”
Related Discussions on TechRepublic
Did you know you can take part in these discussions with your ZDNet membership?Talkback Most Recent of 37 Talkback(s)
-
wayne6268211/20/2009 04:40 AM -
wait it will comeback
have you call for services and support to dell
or adobe .... what do you get Indian ... so you
filed a complain to those company that there
services is wack ..... Soon they will be back
here.
have a bit of patient life is a pendulum its
gone one way it will comeback ....
look at the mattle scandal for Chinese made
toy with lead paint on them ..... mattle will
comeback soon in american soil ....
Quebec-french11/20/2009 06:01 AM -
Patience guys the good time are comming
with the boomer closer and closer to retirement
the ball game will change .
have 2 once of faith but be careful when its
will start jesus it will be a roller coaster ride.Quebec-french11/20/2009 06:04 AM -
I cannot even pity at you.
who told you "An Indian", cannot do the job Good or better.
Wait till the next revolution begins, and yours truly will show the FIRST WORLD what India is made up of !.
Oh and BTW, check out who run the Engineering Division in Microsoft and Google.
IGNORANCE IS BLISS.
bhasinusc@...11/20/2009 09:29 AM -
We can't pity you, either.
1. It's not our fault the media mentions "India" more than other countries. It is about lowest costs. India is a scapegoat. Or a victim of reverse-racism, if corporations think all Indians are better than everyone else. Anyone with certain God-given talents can do some things better than everyone else.
2. Do a web search for "Americans train their cheaper H1B replacements".
3. Corporate CEOs are on record saying it is about being cheaper. Web search "Steve Ballmer offshoring profits makes American labor more expensive" for more.
4. Given Windows Vista, the bugs in Expression Media 2, the false hype in Flight Simulator X, how "Windows 7 is what Vista should have been", and so on, now is not the time to be hyping up how great India is.
5. Back to point 4, have we seen what India is made up of? The tech support calls I've put in never got resolved or passed on by the people who responded. Their names were "Mick" and "April", but the electronic resonance on the occasions someone was masking their true voice couldn't mask that they weren't very educated on the subject at hand, or the protocol for transferring the issue appropriately. (web search that, too, voice altering software exists and is used to shroud the truth. If somebody wanted me to have my voice shrouded, I would find it insulting.)
Ignorance, indeed. If you're going for a sales pitch, understand the medium first. (In short, check your grammar and spelling too...)
HypnoToad7212/02/2009 09:39 AM -
Depressing...
So much innovation happened in America in the 90's. Alot of what we have now was accomplished by American engineers, and now we are not being included anymore because of what? Arbitrage. Sad, Sad, Sad....
bmonsterman11/20/2009 04:56 AM -
I am seeing the exact opposite
At least in my part of the country (between Baltimore and Washington) IT jobs are plentiful. Lots of companies looking to hire but not enough qualified candidates. Positions remain open seemingly forever because HR can't find anyone. In addition if you also happen to have security clearance, well then you are set.
Salonikios11/20/2009 05:54 AM -
Quebec-french11/20/2009 05:57 AM
-
They are all government jobs that's why H1B holders can't get them.
Meanwhile the private sector is not creating any jobs so you will be living
in USSR not USA very soon, comrade.
Zukuzu11/20/2009 07:44 AM -
USA in decline
Maybe one day the government will realize that fostering a thriving economic ecosystem is just as much a national security issue as fighting a war with tanks and missles.
Instead, successive governments, both Republican and Democrat, have created an environment where companies can suck as much money out of America as possible.
Maybe after the second world war it made sense to give private companies free reign. They ramped up production to help win the war, and what was good for free enterprise was good for America because all the factories were located here.
Now? Giving them free reign means letting Nike charge the middle class $150 for shoes that are made in China and cost $10.
Profit isn't a dirty word, but 30 years ago, the worker, the company, and country all profited from those shoes. Now the worker is in offshore, the factory and materials are offshore, and some American's after-tax dollars directly finance the economic infrastructure in a foreign country.
Doesn't seem like a good national security environment to me, but then what do I know? I'm sure some Wall Street type can set me straight.
croberts11/20/2009 06:23 AM -
The report deals with North America and Europe.
You need to get a larger perspective (or read better reporting on issues) as these job losses are for 2 continents and not just 1 country.
B.O.F.H.11/20/2009 07:44 AM -
Europe has stronger internal policies
to slow the outsourcing free-for-all that is all the rage in America. But you are right, the report does pertain to America and Europe.
I'm not sure what your point is. If Europe continues down the path of outsourcing like America has, you'll face the equivalent of an economic nuclear bomb.
America is simply further ahead in that regard(if you can term it that way), and therefore easier to comment about.croberts(Edited: 11/20/2009 08:15 AM) -
Part of the problem is how to quantify IT returns.
A business looks at ROI, an investor looks at quarterly results and long term planning appears to be long gone (at least in the current economic climate). How do you quantify the IT ROI on a quarterly basis, how do you show that it has added value (in the eyes of management or he investment community)?
If your IT staff can automate their jobs well enough, you need less of them (so no drive for that internally). If they are still doing things in a manual fashion, they have become inefficient and a cost center, thus you can find people who will be more efficient (or outsource to a ROC) and lay off those that are not (thus reducing the staffing needs to a few "remote hands" for hardware issues).
IT jobs go where it costs less, so if you think your $60K (or better) IT job is safe, keep in mind that they can farm it somewhere for half that (and lower than your cost of living) or use the SaaS model. With several companies providing IaaS (Infrastructure as a Service), local IT people can be replaced by a service provider, thus (in theory) reducing cost. Doesn't matter what country it is physically located in.
We went through this before (around 2000 or so) and this is part of a cycle.B.O.F.H.11/20/2009 08:42 AM -
dcolbert@...11/20/2009 08:47 AM -
Trend since 2001
What I think is interesting is who will companies get to buy their product if they send all jobs overseas and poeple here dont have work and thus no money to buy the product?
It is easy to get a quick profit margin to send work overseas for small cost, but in the long run how much profit can a company have when we(US) has noone to buy the products because jobs are lost overseas.
Without a big profit margin, stock holders want more profit margin and sales are not up, only recourse the company has is let more people go thus creating more of a job lose. The companies need to embrace a lose of 6-9 monhts and hire US workers back and get the money back to people who will buy the products and get margins back to acceptable levels.
fku2@...11/20/2009 06:54 AM
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