Demand for U.S. IT workers remains soft, survey shows

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September 23, 2002 (Computerworld) -- Although the U.S. IT workforce has grown by 1%, or 85,000 jobs, since the beginning of the year, the short-term hiring outlook continues to remain bleak, according to an updated report being released today by the Information Technology Association of America and Dice Inc.

Telephone interviews conducted in July and August with hiring managers at 84 IT vendor companies and 216 non-IT companies revealed that "the original optimistic hiring forecast at the beginning of the year has been tempered by the economy," said Scot Melland, president and CEO of Dice, a New York-based provider of online recruiting services for technology professionals.

Many unemployed IT workers are shifting the blame elsewhere. Computerworld regularly receives letters from disgruntled IT professionals who claim that they have in-demand skills such as C++, Java and Oracle training and yet haven't been able to find work for months. Many of them point the finger at H-1B visa holders and offshore programming outfits, where a growing number of companies are shifting their development and maintenance work to reduce costs.

Influence From Overseas

Earlier this month, the U.S. General Accounting Office (GAO) announced plans to study whether and to what extent the H-1B visa program is costing Americans jobs (see story). The results of that study are due out next year.

But some IT professionals say offshore outsourcing is having a more significant and longer-term impact on U.S. IT workers.

Outsourcing not only leads to job cuts; it also allows corporations to avoid paying unemployment taxes when demand for labor slackens, said Norman A. Lane, president of Aztech Professional Services Inc., a Phoenix-based consulting and contracting firm. Lane contends that to prevent tax losses to the federal government, U.S. companies that engage in offshore outsourcing should pay a levy "on every outsourced job to compensate U.S. taxpayers."

ITAA President Harris Miller has been a lightning rod for H-1B critics, since the Arlington, Va.-based trade association is largely made up of technology vendors such as IBM, Cisco Systems Inc. and others who have made extensive use of foreign IT specialists. While he said he believes the economy has been the biggest culprit, even he acknowledges that offshore programming "is having an impact" on the U.S. IT job market.

"The real challenge is offshore programming—not the few thousand [IT workers] that come to the U.S., but the workers in Ireland and South Africa and India that are paid much less to do the work," said Miller. "I think there is more work going offshore in part due to the pressure to keep costs down, and there's huge downward pressure on software vendors to keep their labor rates down," he added.

"So much work is going offshore, we're putting ourselves at a substantial [intellectual capital and security] risk," said Linda McInnis, an independent contractor and head of the hiring initiative at BostonSPIN, an Acton, Mass.-based group of 1,200 Boston-area software professionals.

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