Remember two years ago when the sky was falling for software programmers? Not only had the tech downturn thinned their ranks, but Indian upstarts were putting tens of thousands of low-salary coders to work on projects that once would have been done by Americans. Forrester Research Inc. (FORR) predicted more than 3 million U.S. service jobs -- including programming -- would move offshore by 2015. It seemed like the "giant sucking sound" Ross Perot predicted in 1993 was coming to pass for software writers.
Not so fast. The latest data from the Bureau of Labor Statistics contain a pleasant surprise: The ranks of "computer and mathematical occupations," which include many programmers, actually rose in the second quarter by a robust 7.5%, to 3.2 million, compared with the previous year. While software companies themselves boosted jobs by a modest 3.3%, employment at establishments providing custom programming services increased by 5.6%. By contrast, tech manufacturing jobs were up just a tad and telecoms are still cutting staff.
Why the shift? A couple of reasons. High-end programmers' skills are in demand as corporations and tech companies adopt a slew of new technologies from wireless computing to Web services -- pieces of software that fit together like Lego blocks. That makes it easier to add new features and to integrate one program with another. A second factor: While Indian service firms and their Western rivals are hiring lots of programmers overseas, they're also recruiting people with design skills and business knowledge close to their clients in the U.S. and Europe. "You always need programmers on site or nearby," says analyst Gregory Smith of Merrill Lynch & Co. (MER).
This is welcome news for American programmers, but they're not out of harm's way. The pressure is still on to avoid getting stuck in routine programming jobs that can easily be moved offshore, and many likely will be in coming years. "This is going to be a less and less attractive occupation for people with entry-level skills," says David Garlan, director of software engineering programs at Pittsburgh's Carnegie Mellon University.
SMART PACKAGE DESIGN
CMU's elite grads have had little trouble finding jobs. Vermonter Ben Madore, who graduates in August with a master's degree in information technology, landed a plum assignment with tech consultancy Accenture Ltd. (ACN) in San Francisco. He's one of 3,000 programmers the company hired in the U.S. in the past nine months. He credits his good fortune partly to the fact that CMU taught him to design software packages, rather than just routine programming. "I don't want to be the guy who's just hacking out code," he says.
But having the latest coding skills is vital, too. Rick A. Kessler, chief information officer of shipper Horizon Lines Inc., is nearly through a five-year project to retool Horizon's run-the-business applications using Microsoft Corp.'s (MSFT) newfangled Web services technologies. He has been hiring two to three highly skilled developers a month to help get the job done. They concentrate on translating business processes into a software design. Then he gets about 60 contract programmers, some in his offices and some in India and the Philippines, to do the routine coding.
The hot strategy for tech services companies these days is delivering services from around the world. This goes for giants like Accenture and IBM (IBM) as well as the Indian upstarts. They staff software projects with a combination of U.S.-based programmers who make design decisions along with others in Asia, Eastern Europe, or even the U.S. who can produce high-quality programming at a low price. India's Tata Consultancy Services, for instance, has 10 software centers in the U.S., plus eight others outside India.
Software likely won't be a jobs growth engine in the future. Still, so long as U.S. companies continue to innovate and schools produce grads with top-flight skills, many American programmers will find jobs at home.
By Steve Hamm in New York