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Offshoring blamed in part for IT's jobless recovery

TechServe says only 600 IT jobs created in U.S. in November; consultant says back office IT jobs in U.S., Europe will be cut in half by 2014

December 6, 2010 06:00 AM ET

Computerworld - WASHINGTON -- The latest government labor report shows lower-than-expected job growth in the U.S. last month, along with a rising unemployment rate, and experts say that IT workers were not immune to that trend.

TechServe Alliance, an IT industry group based in Alexandria, Va., said that its analysis of the U.S. Department of Labor report released on Friday found that IT employment increased by only 600 jobs in November on a base of 3.9 million jobs. Overall, U.S. employers added 39,000 jobs last month, according to the Department of Labor.

TechServe, which conducts its own monthly analysis of government labor data, said IT employment has increased by 2.5% so far this year.

Why the anemic jobs growth in IT?

The Hackett Group, a business advisory and consulting firm based in Miami, places at least some of the blame on offshore outsourcing, which it calls a contributor to a "jobless recovery."

Using data from its own clients and other sources, Hackett examined IT hiring trends among U.S. and European public companies with annual revenue of $1 billion or more, and concluded that by 2014 there will be only 2 million back-office IT jobs in the U.S. and Europe, down from 4 million today.

The Hackett Group defines a back-office job as a position that directly supports corporate IT by running data centers and business information systems. Commercial technology product developers, consultants and the like are not included in the IT workforce subset.

Michel Janssen, Hackett Group's chief research officer, called the projected reduction in IT staff employment "the new reality. It's not good if you are an employee looking for a job, but [offshoring] is what is required for survival" by many companies, said Janssen.

"If you are not competitive on a global landscape and your cost structure is too high and you are paying premium rates for your staff, then you're not going to survive," he added.

Offshoring is so pronounced that companies "have taken that whole bottom level off the rung," said Janssen, referring to the lower-level IT positions. He added that by doing so, though, companies are creating a new problem by losing much of their pool of future senior IT managers.



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