SaaS migrations put the squeeze on in-house software developers

The number of software developers in the workforce is up from last year, but jobs in enterprise IT may become harder to find as more companies turn to cloud-based services.

On the face of it, software development jobs should be easy to find. The software developer workforce increased by 132,000 jobs last year, to 1.235 million, according to the U.S. Department of Labor.

And the demand for application developers may be raising pay. Employers offer premiums, or cash bonuses, to workers they want to retain, and those premiums have increased 9% over the last two years -- 4.8% last year alone, according to Foote Partners, an IT labor research firm that gathers data from some 2,600 employers. That's about double the rate of increase for premiums for all IT skills.

But that rising tide isn't lifting the boats of all application programmers. In a recent survey of about 200 midsize to large organizations, IT research firm Computer Economics found that programmers make up just under 20% of IT staffs this year, compared to just over 22% in 2012. That's not a big change, but the trend reverses what was once an upward course.

The decline could be blamed on a shift away from mainframes, but it may also be part of "a significant move to embrace SaaS applications," said John Longwell, vice president of research at Computer Economics.

As IT shops increasingly drop in-house systems in favor of software-as-a-service offerings, Longwell said, they have less need for programmers. "On the other hand," he added, they do "need programming skills to maintain, support and integrate enterprise applications."

While the number of programming jobs may be declining in enterprise IT shops, there might be new opportunities at providers of hosted services. They're growing, and many have long lists of job openings for programmers. But moving from an IT department to a vendor may not be easy.

'Scary' transition

Dane Atkinson, CEO and founder of analytics firm, said he welcomes applicants from corporate IT departments. SumAll has openings for front- and back-end engineers, and for data and platform engineers. But he acknowledged that moving to a startup like SumAll could be "scary" for IT veterans.

computerworld cartoon by john klossner june 2015 John Klossner

"Sadly, the SaaS startup world often isn't where those developers end up. It's not that we wouldn't want some of them -- it's more that, for an engineer, it's like leaving the Royal Navy for a pirate ship," said Atkinson.

SumAll does have workers who came from IT departments at large companies, and Atkinson said their qualifications include the fact that they have "leadership and political skills" in addition to technical expertise, but he added that the company also needs people with entrepreneurial inclinations.

Some jobs in the cloud just might not be the right fit for enterprise IT people. For example, Formotus, which offers a cloud-based platform that nondevelopers can use to build business forms for mobile devices, primarily hires developers who have experience building platforms, and they typically don't come from IT departments, said CEO Adriana Neagu, herself a software engineer.

Formotus, which uses Azure and .Net, is hiring people who specialize in back-end databases and performance tuning. Most of its hires are internal and -- notably -- 70% of its engineers are women, said Neagu. The company deliberately works to attract people who "need to find the right balance in their life between work and homes," she said.

But the shift to SaaS may be creating its own set of opportunities, said John Wigginton, vice president of global IT at Fleetmatics, which provides hosted GPS tracking services.

"One way to stay relevant and employable," he said, "is to [acquire] skills in development tools packaged with SaaS technologies such as Salesforce and NetSuite. Not all SaaS apps fit all businesses out of the box, which is why most offer a robust ability to customize."

Despite shifts in the market, workers hoping to remain in corporate IT may find this year better than last. After surveying large employers in the U.S. and Europe, The Hackett Group, a management consultancy, said it expects IT department hiring to increase 3.3% this year, up from a 1.3% increase in 2014. But that's not exactly a surge, and Hackett has regularly reported an overall decline in IT jobs due to offshore outsourcing.

Explaining this year's outlook, Scott Holland, practice leader of Hackett's IT executive advisory program, said companies want better business-IT alignment, so they're looking for people who understand the impact technology has on an organization's success.

Outsourcing persists

While other changes may be afoot, offshoring continues to affect the job market: The number of CIOs who plan to send work overseas is up from last year, according to a global survey of 4,000 IT executives by recruiting firm Harvey Nash, in association with KPMG.

And it's not just offshore providers of IT services that tech professionals have to worry about. Recruiting firms like Toptal make it easier than ever for U.S. companies to tap overseas talent. Toptal recruits freelance developers globally -- about 80% are outside the U.S. -- and runs a rigorous vetting process that includes interviews and technical testing.

"Only about 3% of the developers pass," said Taso Du Val, Toptal's CEO.

Du Val acknowledged that U.S. companies might save money by using overseas workers, but he said his firm's ability to deliver quality talent is more important. One of the goals of Toptal's vetting regimen, he said, is to ensure that customers get exact matches for the services they need.

Copyright © 2015 IDG Communications, Inc.

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