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Exporting IT Jobs

By Thomas Hoffman and Patrick Thibodeau
April 28, 2003 12:00 PM ET

Computerworld - The writing is on the wall. If you are a programmer or an application developer, or work on the IT help desk or in data center operations, your IT job is in jeopardy, and here's why.

In an unrelenting push to lower IT costs, more and more companies are tapping cheaper offshore labor to handle routine tasks such as application maintenance and help desk support functions. Even companies that farm out IT work under pay-as-you-go and other hosted computing models to U.S. outsourcers—such as IBM and Hewlett-Packard Co.—are contributing to the loss of jobs, because these domestic service providers are also shipping IT work abroad. IBM Global Services, for example, is India's fifth-largest employer.

By 2015, 3.3 million white-collar jobs—472,632 of them in IT and mathematics—and $136 billion in wages are expected to move offshore to countries like Russia, India, China and the Philippines, according to a November 2002 report by Forrester Research Inc. analyst John C. McCarthy.

In March, 212,000 U.S. computer and mathematical professionals were unemployed, according to the U.S. Bureau of Labor Statistics. Looking ahead, Meta Group Inc. analyst Maria Schafer predicts that up to 50% of U.S. IT employees could shift to contract work by 2007, as outsourcing in all forms continues to increase and as more salaried U.S. IT employees opt to work as contractors to take advantage of the flexible schedules and the opportunity to work on a variety of projects.

Some industry experts draw an analogy between the thousands of U.S. manufacturing jobs that were sent overseas 20 to 30 years ago and the impact that offshore outsourcing is now having on U.S. IT jobs. Still, there are subtle but important differences between the two. Among them is that the forces behind the shrinking IT workforce go beyond companies seeking lower costs. IT managers are also struggling to strike a balance between the skills they want to have in-house on salary and the talent they can contract for on an as-needed basis.

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"It's not just about low cost. CIOs are interested in specialization and reliability," says Mark Hauser, CEO of Cap Gemini Ernst & Young's Americas division. Going forward, CIOs say they want a different mix of skills. They want their salaried IT employees to include experienced project managers and business/IT liaisons who can effectively communicate and broker IT project requirements between business units and IT departments.

Packaged Software Improving

Another factor contributing to IT job loss in the U.S. is companies' growing preference for a buy-vs.-build approach to software development. Purchasing software means that fewer in-house programmers and developers are required than when systems are created from scratch—even when a fair amount of customization is done to the off-the-shelf software. Sophisticated software development techniques and improved global bandwidth and communications are making it possible for companies to have various pieces of development or integration projects conducted in India or China, with the final assembly completed in the U.S. That's why there will continue to be demand for superdevelopers and top-notch integration experts who are adept at managing and coordinating different phases of a development project and pulling together the various components into a cohesive package.

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