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November 09, 2006

US software talent shortage looming?

Steve Hamm

So says Wipro Chairman Azim Premji, who repeated the warning during press interviews on a recent swing through the United States. He says restrictive immigration policies and failings in the US higher education system are at fault. My sense from talking to US tech companies and corporate IT masters is that he's right. In high skill areas, there are talent shortages. And it could get worse.

There's an irony here. Back in 2003, pundits warned that the global offshoring trend would suck millions of software and back office jobs out of the US. One effect of those warnings was that many of the best and brightest US students promptly decided to seek alternative career tracks to software. The number of computer science degree students dropped off precipitously.

US software employment declined sharply in 2001, in the wake of the dot-com bust, and was still depressed in 2003. But by late in that year it had begun a strong month over month climb that has continued until today. In fact, software employment is back up near peak levels.

So demand is fairly strong, and supply is weak. No sooner does one bogeyman go away when another one shows up.

01:24 PM

Off-shoring

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What a JOKE...what do you EXPECT the Wipro Chairman to say??? I mean, Wipros business model is REPLACING American software engineers with low wage, easily exploitable Indians here on H1-b/L-1 visas...DUH!!!

Geez!!!

There is no technical shortage...its a SCAM...and I hope the Congress REJECTS the "skil bill" later this month. I have already contacted my Congressman and 2 Senators!!

Hopefully, the 110th Congress, led by Democrats, will put an end to these SUBSIDIES...to use nobel prize winning economist Milton Friedmans characterization of the H1-B/L-1 visa SCAM!

Posted by: Joe America at November 10, 2006 02:17 AM

I work at a BIG research university and about 3/4 of our students are Asian/Indian, the rest American and European. The immigrants have to fight for the right to stay in the U.S., even the non-American professors who seek citizenship have a hard fight.

As for the public school system, perhaps it wouldn't fall short if there was more money and focus put on the minorities - African Americans and Latinos, who don't get the opportunity to go to BIG university and get the IT VALUABLE degrees.

Posted by: Sally at November 10, 2006 06:06 AM

I am working here with H1B Visa. Yes it is true,

I can quote about an opening,

An Opening came for Company A, three months Back (as full time, should be a citizen/GC Holder).

Last month for the same opening become as for visa holders on full time contract to hire.

This month they are asking for Corp to Corp.

This is actual trend currently going on.

So Open your eyes and look around.

Posted by: GJB at November 10, 2006 11:28 AM

I'm not at all surprised that the first few comments on this post have been very skeptical of the skills shortage.

No matter how you feel about the alleged shortage, you have to acknowledge that the H1B gives the employer a remarkable amount of power over the employee's life. The employer bestows the right to live in the United States upon the employee, and often sponsers the employee's application for a green card. Changing employers is not impossible, but it is tricky and perilous.

As an American, I can quit my job and become a contractor. An H1B can't. If my girlfriend decides to move across the country for a new job, I can quit my old job and go with her. An H1B can't. If I decide I'm tired of programming, I can quit and apply to law school. An H1B can't. And, most importantly, if I think I'm talented and should earn well above market rate, I can go into my boss's office and negotiate with the knowledge that I'm free to find a better deal elsewhere. An H1B can't - unless, of course, he's willing to give up on his wait for a green card and return to his country of origin and start all over again.

While I'm not a protectionist in any way, I view the indenturedness of the H1B visa as an affront to everything America claims it believes about human and economic freedoms. No employer should ever have this kind of power over an employee.

Congress is perfectly capably of creating an employment category for foreign nationals that preserves freedom for the engineer who comes to America. They still haven't. Why? Well, the most likely explanation is that the corporations who lobby for this visa *enjoy* this power over engineers. And this, in turn, leads to work conditions that drive America's best and brightest away, into careers in law, medicine, finance, and so forth, exacerbating the very shortage that the visa was designed to address.

Unlike some of the posters here, I'm ok with the existence of skilled worker visas. But any increase should be off the table until basic human and economic freedoms are preserved for the worker. In America, you have the right to quit your job. Period.

Posted by: Geoff B at November 10, 2006 11:59 AM

So jobs are now nearly where they were 6 years ago. Given that a few years additional supply was in the pipeline this means there are still fewer jobs for workers than there were then. Most importantly, job growth in this area has been below that of the economy meaning it is shrinking in importance. Software has a bright future, but not here in America. It can easily be done abroad and they will never ever be able to compete with the low cost of living there. Go east young man, or get in a different line of work.

Posted by: Lord at November 10, 2006 12:46 PM

America will be in crisis technologically if the current trend continues. Science and engineering has become professions of the geeks. American youths are staying away from them because they are not cool and require a lot of study. Even if the immigration door is wide open to technology workers, it still won't solve the problem because those who come here from India and China will eventually go back to their home countries when there are more opportunities there. We are already seeing it happening today. In fact, it will make the situation even worse because it fosters a temperary environment where we don't have any pressure to produce more native technologists, until it's too late of course. While the heros among China and India's young people are Bill Gates and Albert Einstein, for their contributions to human progress, Americans worship Hollywood celebrities and sport stars. This culture of self-indulgence and cynicism is an extremely powerful force that drives young people away from science. Whatever advantages that the US has today on technology because of her highly developed infrastructure and research facilities will evaporate soon once China and India develop their own. They will have far more brain power than the handful of American "geeks" who are not appreciated and recognized by their society.

Posted by: Jordan at November 10, 2006 03:14 PM

What 'right' to stay in the U.S.? They have no more 'right' to stay here than I have to move there. It is the right and duty of sovereign nations to set the terms and conditions for immigration and they should do it in order to safeguard the best interests of their existing citizens.

Posted by: Barb at November 10, 2006 05:08 PM

If people don't want to believe this comment let them not believe. I have seen lot of comments towards this such statments and against such statements. There are lot of research done on this subject. I worked for Top Statistical Research center in US for some time. There are ways by which people can skew the data and publish data supporting on both sides of the spectrum.

The actual fact will be with the big and small companies who wants to hire people in the field of Science and Engineering. They know how tough it is to get US citizens in these areas. I did my Masters in Electrical Engineering at Cornell University and I have lot of friends who studied at such reputed universities. So I know how the situation is in the Master's and Ph'd programs in Science and Engineering in this country regarding what is the percentage of US and International students. So when the companies wants to hire people in engineering, then you should know who they will be able to find more

Posted by: Karthik at November 10, 2006 05:25 PM

I am not sure who the two characters are who have made comments suggesting that there is no shortage of IT workers in the US. The fact is that I know many American IT workers in major Corp and they all say the same thing. In fact even in India I hear there is a shortage of skilled workers coming real soon. India as a nation can only handle so many jobs being shipped their from US and other EU nations. They are very close to reaching that cap.

Overall this is good news for IT workers in US & India as this will stabilize salaries or even increase them as the demand for skilled IT workers increases.

Posted by: Chandra at November 10, 2006 06:59 PM

This is part of the global coordinated PR Machine of multinational corporations. Constantly talking about a shortage, no matter what. It is a one note wonder that corporate media just want to keep playing.

Posted by: Marcus at November 10, 2006 07:09 PM

Mr. Hamm, you seem to lack the most basic understanding of the Wipro business model, the same model used by Infosys, TCS, Cognizant and Patni, etc. They simply don't hire Americans. How can you write a book lionizing a company and ignore a key foundation of the way it operates? I can only conclude that you have your own pocketbook in mind when you write such unthoughtful pieces.

Posted by: Ron Hira at November 10, 2006 08:25 PM

Yeah! Wipro is sucking America dry. Hope the Democrats kick his indian ass back to the stoneages.

Posted by: Ken & Barbie at November 10, 2006 09:01 PM

Overseas talent is cheaper. There is no shortage of software developers here, but large companies abuse the H1B visa program to hire foreign workers for less, and ship work overseas do be done for much less. Bottom line, American pay scales are much higher than the world as a whole. It used to be $8/hr Korean steel workers replacing $40/hr American workers. Now it's $20-60K Indian, Eastern European and other programmers replacing $60-120K American programmers. As an American, I may not like it, but that's the fact. Artificial barriers have kept American wages higher than the rest of the world for decades, but now they have fallen. This has been going on for a while, and isn't going to stop, any more than water flows uphill. Americans need to reevaluate and adjust to the situation as it really is.

Posted by: Music at November 10, 2006 09:15 PM

The only reason that outsourcers like Wipro continue to lobby for more H-1b visas is that they refuse to hire American workers. They are the reason that corporations are constantly begging for more of these visas -- because as soon as more visas become available, the big outsourcers use them to import as many cheap laborers as possible, further depressing the market for American technology workers.

If the market truly is improving, then let wages rise, and long underemployed IT workers will come back to the market. Until then, stop monkeying with the free market.

Posted by: Walt Crosby at November 11, 2006 12:01 AM

What a joke! You have got to be kidding me. I work at a company that REQUIRES all software development and IT operations support resources be procured exclusively from overseas venders. That?? called taking advantage of the massive hole in our legal system for cheap labor. It just makes me sick to see the doors slammed on our IT youth.

Posted by: Get The Facts Right at November 11, 2006 12:52 AM

"??failings in the US higher education system are at fault."

Is that statement a joke or is it fraud?

Fraud - A deception deliberately practiced in order to secure unfair or unlawful gain.

Lol??The US higher education system is the best in the world.

Posted by: max at November 11, 2006 09:46 AM

America produces an abundant supply of Lawyers. I've heard law school is difficult and only the brightest students are accepted. This abundant supply of bright students comes from guess where, the American educational system. So why is this country short of Engineers and not Lawyers? Well let me think... maybe engineering doesn't pay crap and there's no future in it. I've been blessed with two bright children and I would never tell them to follow in my footsteps and become an Engineer. All these CEO's lobbying for even more H1-B's and L1's are greedy, self-serving liers.

Posted by: Jack at November 11, 2006 06:15 PM

Long ago I sided with the spotted owl versus loggers because man adapts better than bird to changing environment. Loggers can learn new skills, owls'll just die.

When corporations began to outsource software engineering jobs to India, I took my own medicine and switched career.

What an American can do, an East Indian can do just as well or better. What an East Indian can do, a Chinese can do just as well or better. And so on with an East European, a Russian...

There is a vast, vast highly skilled and low cost software engineering pool beyond the border. And as long as corporations can cost-justified outsourcing software jobs, they will do so.

In the end, those who failed to learn from history are doomed to repeat it. I now make sure that my children avoid software engineering and choose only outsource-resistant careers. All other professional parents that I know do the same.

Posted by: ronin501 at November 11, 2006 06:29 PM

Yeah - we have a shortage of cheap programmer. That's what all the companies want - cheap engineer that make minimum wages.

Posted by: DAve Bang at November 12, 2006 04:58 AM

Software product development employment still hasn't recovered, and we've still got a huge glut of capable people who are unemployed and under-employed. None of the signs you'd expect to see of a temporary shortage are present: compensation hasn't kept up with executive compensation; the Conference Board's Help-Wanted Advertising Index is at 30, down from 100 in the late 1980s; specificity of requirements hasn't moderated, hyper-credentialism still reigns; full-time long-term employment hasn't made any headway as against body shopping; employers remain unwilling to make counter-offers to retain talent; US citizens are turned down flat in favor of H-1Bs with no consideration of capabilities (as demonstrated live to congress by Sona Shah).

If you want to turn around students' unwillingness to enter a field with such poor long-term employment prospects, the best things to do would be to cut back on the body shopping and offer US citizens long-term careers, again; start advertising your real job openings in the USA and in those ads include a human contact name (or names), and that person's e-mail address and voice telephone number (the ads should be placed in both a dozen or so print publications and a similar number on-line job sites in additionn to ones the employer owns); cut out age discrimination; go back to offering to cover interview costs, relocation assistance, and both new-hire and on-going education and training; end the whole "best and brightest" scam by reducing the numbers of H-1B and L-1 visas issued each year to something closer to 2,000 instead of the current "cheap and plentiful" practice.

Posted by: jgo at November 13, 2006 06:41 PM

Why cant it happen?

Posted by: Preshit Mulay at November 14, 2006 03:13 PM

I don't want to think of engineering outsourcing from an employment perspective because almost all professions are vulnerable to economic factors. I can't and won't argue against outsourcing simply to keep my job. But there is a much larger issue at stake here. The United States became a superpower not because of our population size or human physical strength or even our democratic form of government. We are on top of the world today because we are and have been the engineering powerhouse of the world for the past two centuries. American engineers invented the modern computer, software compiler, the internet, and countless other great technologies that altered human history.

By outsourcing engineering jobs, Corporate America (with the help of politicans), is destroying the very foundation on which the whole nation stands tall today. It is already creating a vicious cycle that turns young people away from engineering, which in turn presses corporations to outsource more, which in turn discourages more people from going into engineering.

The only way to stop America from bleeding away its technological prowess is for the government to apply the same rule to all businesses and protect the country against this massive brain drain.

Posted by: Jordan at November 21, 2006 10:38 PM

What Wipro chairman said is true. Even if Wipro wants to hire american, there are not many available. I work in a SAP Implementation project where 70% percentage are foreign workers. All the americans working in the project are more than 40 years old. I am surprised to see no americans of my age (less than 30). About the comments posted by others about the salary, it is going to come down in IT area through out the world in the coming years. Nobody will be able to stop it. There might be a short time period where salaries will go up in India by 20-30% in an year. But it is not going to continue. There are armies of young fresh guys coming out every year from Indian Engineering colleges. Also China is fast catching up with India which will put a pressure on wages in India. US Salaries will continue to deteriorate just like US Dollar. Now the technology is grown to such a level that IT work can be done anywhere in the world with 100% user interaction. Work can be wired to any part of the world and completed in a matter of seconds. So there is no way to stop offshoring IT jobs.

Posted by: Daydreamer at November 25, 2006 08:44 PM

Azim Premji, the chairman of Wipro is a visionary who definitely knows more than any of the comment makers here about the current scenario in the tech industry. Shortage of skilled workers in the US is a reality. Lets face it. Shortage of skilled workers in India is also becoming a reality. Azim Premji himself recently said that he is looking at setting up Philippines and Vietnam operations as the costs of operations in India are squeezing margins. The Indian Finance Minister recently said in the press that India produces 300,000 qualified engineers a year. And out of this, more than half get employed in the top 5 Indian IT firms. More than 80% of the engineers no matter whatever discipline of engineering they specialize in, get placed in the IT industry creating a drastic shortage of engineers in the Indian manufacturing sector which has started outpacing the IT sector in recent times.

The IT firms will face serious competition from the manufacturing firms in the next few years as far as hiring of engineering graduates is concerned.Thus the IT sector is already charting out alternate plans of hiring simple science or commerce graduates to meet the supply demand gap in the future.

This is a vicious cycle which cannot be avoided but future course of action must be contemplated. Some morons here who are asking for put a ban on immigrant visas have no sense of reality. What needs to be done is to create a much large network and cooperation amongst educational institutions in US, India, China and other nations which can continually produce a global pool of skilled graduates who can deployed where the demand is.

Posted by: krossfokus at December 1, 2006 08:10 AM

This is really a joke from Wipro. He can make Indian employees to work for less pay and get a big money out of it.

Posted by: prasad at December 2, 2006 02:14 PM

I for one wish that American programmers would start uniting and starting software companies. I would buy their products and boycott Indian ones. I am so sick and tired of seeing jobs sent overseas. Every time we use offshore labor by buying products or services we support it. People need to become aware of which domestic companies use or do not use foriegn labor and boycott those to do. I am not anti foriegner, I am PRO AMERICA

Posted by: Carl at December 14, 2006 08:56 PM

Should the whole world stop drinking pepsi, coke, stop buying motorola phones, windows OS, dell PCs, stop filling gas from exon, shell, stop buying ford, GM cars. All of the above also have a local market presence in all the countries, but people still buy AMERICAN stuff. Yes, I agree the current offshoring strategy is only for cheap labor, but just think about how America can save money out of that and put that money back into something which can generate more money. If people in america boycott stuff from outside US, then just imagine america with no oil.

Posted by: di at December 26, 2006 11:04 AM

If American Companies were self sustained, there would not be a need for outsourcing. So it is better to embrace the culture and look at outsourcing objectively than emotionally.

Posted by: samy at January 5, 2007 03:45 PM

I've been a software contractor for over 15 years and what I'm seeing is very scary. I've worked with companies like National City Bank, Bank of America, Progressive Insurance, and alot of smaller companies and the number of work visa developers is out of control. Is it ok for the goverment to legislatively bow to corporate Americas desire to lower it's costs by lowering US programmer wages. We've all seen the radical decline in programmer wages and why? I'll flat out tell you it's work visas from India. We have more than enough talent to satisfy the software industry. It's corporate Americas desire for lower costs and the goverments lack of backbone that is destroying this industry. Is this what our free economy is all about? It's the same problem as Mexican immigration. You always hear that "Americans won't do that work", try doubling the rate and an American will do anything. We in the IT industry better wakeup organize and fight back or our industry will be destroyed the same way Mfg. jobs were in the 70's 80's and 90's.

Posted by: Dee Bert at January 9, 2007 01:18 PM

This is not speculation. It is fact.

I haven't been able to hire anyone who was actually born in the US or can communicate competently in English. I will likely offshore all of our software development and maintenance roles within the next 12 months. There is simply no valid reason to pay these high salaries AND have to deal with cultural/communication issues at the same time.

Posted by: Bob at January 31, 2007 05:01 PM

Offshoring does work sometimes....... With economies all over the world shrinking and expanding. Wherever raw talent can be converted into skilled labour at the best minimal cost. Global corporation whether Indian, Chinese, American or south American companies will outsource the works where talent is available at the best available rates. Job done at LA can be outsourced to Bangalore. If bangalore gets costly it could land up at Shanghai. If shanghaied it could be outsourced to Mexico. There are no boundaries to stop globalisation at the cost of localization. Companies should understand that jobs are meant for livelyhood and not for profitability

Posted by: Anand at February 3, 2007 12:55 PM

Bob,

You intend to outsource jobs at your company because you won't pay a decent wage to your software people. Perhaps it's time for you to move to India and stop receiving the benefits and security this country offers. You obviously don't care about the people of this country only your self interest and greed.

Posted by: Mark at February 8, 2007 11:38 PM

I totally understand the fear of outsourcing and the resultant job loss.Everyone targets H1 B Visa holders ,but if you take a close look at the situation ,you can see a totally different picture.

Following are the true facts:

1) H1B workers are getting paid the same/similar salary as the Americans,They can't go for a less salaried position as they have to meet the minimum wage requirement as specified in their labor clearance.

2) The people who directly replace american workers are the L1 Visa holders who can work for any low wages

3)Unlike the H1B category ,these L1 Visa's do not have any annual cap numbers.

4)The dependants of H1B (So called H4's) are not allowed to work where as the dependants of L1 are allowed to work

5) So if you see, in net effect ,if you are bringing in a talent on L1,Not only you are losing one job,You are actually losing TWO JOBS!

I don't know why people always fail to see the bigger picture and always go about blaming the H1'S ,If you really want to stop outsourcing GO AFTER THE L1'S NOT THE H1'S...

Posted by: VKM at February 9, 2007 08:51 AM

I am an american citizen from India and I agree with most of the comments here. Indian companies and large US companies used H1b as an excuse to import cheap labor. I have seen indian programmers getting paid 20 dollars an hour. I can not work for 20 dollars an hour. I would rather not work. how will you explain this.

How come the big comapnaies dont say we are short of doctors. Lets bring the 65000 doctors every year from outside.

Get used to it. this will further deteriorate the standard of american living while fulfilling the pockets of CEO's.

Posted by: Swapnil Deshpande at February 9, 2007 01:20 PM

I read the following sentence from one of the comment.

Even if the immigration door is wide open to technology workers, it still won't solve the problem because those who come here from India and China will eventually go back to their home countries when there are more opportunities there.

Its absolutely true, I work in NY and its matter of time, I can decide to go back to India and work for Oracle/Microsoft/Sybase.

In the world of true globalisation its is not wise to stop outsourcing.

Posted by: KRV at February 9, 2007 02:56 PM

The vested interests are just raising false alarms of software shortages. They have their own agenda. The US cos. are becoming cheaper and cheaper. Often the line between L-1 and H1 becomes blurred over a period of time. As L1 can be converted to H1, and H1 can be convered to green card and so on. Similarly, dependents (spouse, etc.) of H1 who get H4 visa can over a period of time can get a green card, and then can enter job market. More often than not, these spouses of H1 are well educated too. So, all these recently imported here are competing with US born or those who have lived here for many years. Also, I know for a fact that these H1 guys are taking work home, from where they manage work in India, and this is possible due to the time diference. So, actually one H1 (and L1 too) does the work equivalent of several American workers. So, it cuts in two ways. Why would not the greedy corporations would love that? Also, H1 visa is called temporary work visa, but mostly it is anything but temporary. It can be renewed, or even converted to green card. Actually H1 visa program has opened the flood gates for imported skilled labor, and they are considered easily manageable, meaning liable to be exploted, often willingly because they get rewarded multiple times more than they would if they worked in their home country. So, essentially, whether it is L1 or H1, it results in imported labor, and also export of work, which will eventually hurt Us job seeker, if not already hurting. Greedy CEOs should stop that, and tap the immense talent that is already available by doing whtever needs to be done.

Posted by: ITPro at February 10, 2007 04:24 PM

Having been an electronics/software engineer in aerospace up until about 1990, when aerospace shrank considerably (again), I have no sympathy for the whining companies who now fret about the "shortages" in engineers. They made the shortages with their past short-sighted policies of treating engineers as expendible "meat" and "the market will provide". Then they complain and cry for more H1B visas as a soltution when the market doesn't provide (at least not for what they pay and how they treat the "debris" after a project ends). I won't go back after how I was treated. I saw that the industry treated its "debris" with little good will. Why become an engineer with an almost certain "recycling" (or more than one) in one's future when a lawyer gets paid more and there is always a market for lawyers? And we wonder why so few students become engineers and so many become lawyers!

The real problem here is that there is a scarcity of U.S. engineers. Why is this?

There are several reasons: 1) The job does not have enough glamour; 2) The pay is not enough for the lengthy and hard training; 3) There is constant change and therefore retraining (particularly in software engineering); and, 4) The job does not have enough security. Let's look at these.

Job Is Not Glamorous! - There is no great public glamour for the basics of engineering, i.e. science and thinking and building things for other's use. As a direct result, there are fewer engineers than we need. If the respect paid to some other professions was paid to engineers, there would be more engineers. Doctors are respected because they save lives but the engineers who design and build the doctors' newer tools are not respected (seen a dentist's office lately - they now use electronic displays for their x-rays because the computers can more clearly show cavities). Rock stars and athletes get more attention. Even lawyers and politicians get more attention.

Actually, let's take a quick look at what makes up "glamour". Glamour is basically societal attention (let's measure it in "attention units") and respect, usually measured in whatever the society values. In our U.S. society, money or good-looking members of the opposite sex or numbers of hangers-on (each is a type of "attention unit") is the main way that is measured. Initial pay in money is not the main consideration but potential pay is (because that attracts more members of the opposite sex or more hangers-on!). How many engineers make over $200K per year? Very few! And how well are the big-time engineers publicized? OK, engineers at this time are not glamourized.

Pay vs. Initial Training - Let's face it- people are generally lazy. If a field of study requires more work, fewer people go into that field. Because the curriculum requires harder subjects, like math, physics, etc., engineers are usually the among the smarter and harder working people. Engineering students generally do more hours of work per unit in school than those in English, etc., so it takes more work to get trained in the field. Higher initial pay often compensates for this greater amount of work before one starts. But higher initial pay is only one consideration a student goes through in choosing a field of endeavor (see glamour, above).

Pay vs. Change and Retraining - Again, people are lazy and this and the next area (enforced job churn) are major blocks for a lot of people. There are very few other industries with as much consistent change in them (perhaps doctors and dentists) but most other such industries at least have a way for those with older skill sets to be continuously valuable and there is usually an easy way to update those older workers. A software or computer hardware engineer out of the market for five years is essentially "worthless" regardless of his/her past experience in general problem solving, leading others, and his/her past of learning and relearning his/her trade. Other engineers also face this problem but their fields generally are not moving as fast as software or computer hardware engineering.

Also there is a dynamic to handling an industry which goes through constant rapid change and the software and computer industries (probably electronics, too) don't seem to have learned to deal with that. The companies don't really put enough money into handling that. And part of that money required is to keep the older guys around who have seen failed projects to help guide away from repeating those mistakes.

A better solution would be paid training/ retraining. Putting excess engineers into training in a new computer language (the usual reason an engineer is unemployed is that after he gets laid off he doesn't know the "langauge of the week") could be done as OJT (On the Job Training). A proven engineer who just doesn't know the language is easier and faster to train in a new language than what it takes to get a new engineer to be experienced in the pitfalls of the engineering discipline. However, if the el-cheapo companies can fool the government into letting them do it initially cheaper with foreign labor who themselves pay to get that training, the companies will choose that method. There are a couple of problems with this.

One major problem is that these companies are only "renting" these brains. The companies then become dependent on these cheap, limited-life brains (limited life because they eventuallly go back home if they have H1B visas). So what happens when these brains go home? Then the companies have to again resolve that old training/ retraining issue, or they "have to have H1Bs" again because "there are no US workers with the skill sets we need". For another problem ... what happens when the management stays in place but the lower level workers are replaceable H1Bs. Guess what happens as the managers age and then retire? There are no new trained local talent to replace them. Now they need H1Bs to go into management slots due to "no qualified U.S. nationals".

Job Has Insufficient Security - This is created by companies' dislike of having high-priced workers not being as fully productive as possible (managers have have been experiencing this same pain for the last twenty years or so, now). Partially this is the result of having projects that do eventually end and the people have to go somewhere (often out the door). Since the engineering field has lots of highly trained and therefore expensive personnel, there then occurs lots of "churn". This is also a method to keep the "high-priced" older worker from having as much security (as is appropriate for his experience in avoiding problems, having survived them). Avoiding those higher "costs" goes straight to the bottom line of a company's financial results. Unfortunately the lack of those older trained engineers is a direct cause of many of the problems we see today.

So why would any sane young student go into engineering when he/she has seen massive engineer layoffs over the years, especially in the well-publicized ups and downs of aerospace. If he has listened over the years, he has heard of "another layoff of engineers" or personally knows of one such. Managers are now starting to experience the same type of insecurity with the many well-publicized layoffs. At least with acting, rock music, sports or politics, one knows the road is fraught with ups and downs (since they are usually avocations and not just a job).

In summary, these companies are giving away their futures in several ways. One is that the personnel "shortages" resolved by the many H1Bs just postpones the inevitable wall of lack of experienced workers. The many H1Bs hide the real problem: lack of U.S. workers trained in the field (the why of so few US workers is below). Another way is that these companies then get dependent on operating this way because it gave them a momentary cost advantage. That locks them into this method of operation and their avoided costs are then an "asset" but they don't own or control that asset! And they scream when this "asset" is threatened. But these companies helped to create that shortage by so often dumping their older workers. Why would any sane new person get into engineering when the industry tendencey is to recycle the older workers out the door so quickly?

Posted by: Don Sturgiss at February 12, 2007 12:46 PM

Very good analysis Don. I totally agree. Engineers and scientists are the people that made America great, yet they get very little respect in this country. The James Bond mentality is deeply ingrained in our culture. People admire superficial action figures like Bond, but never the inventors of the tools that make the heroes, like Q. Sadly, we live in a superficial society that cannot keep talented problem solvers and scientific discoverers who move the country forward. Outsourcing is only a small part of the problem, as much as I dislike it. The rise of China and India is the perfect reflection of our shallow existence that will very soon lead to the demise of a once great superpower.

On a different note, lawyers and doctors have more stability because they are mostly business owners of their practices. I think American software engineers should really think more about being business owners rather than employees. If you have the domain knowlege and deep experience, there are many opportunities that require your skills. Engineering, like medicine and law, can be a practice too. Partner with fellow engineers to form a business and sell your talent. I know it is a big mentality change to go from an employee to an owner. But when a society does not appreciate the very people that made it great, money is the only thing that speaks the truth.

Posted by: Jordan at February 13, 2007 04:48 PM

Cheap labour is the goal of any orgnization let it be Indian org like wipro or US based org like IBM.Many IT jobs of these kinds of Organizations are moving elsewhere.

Posted by: siva at February 24, 2007 02:43 PM

This is the free market, capitalism, globalization at work.

Americans and Europeans need to get real. We only like it when it works for us? We've shoved free markets (along with farm subsidies, expired, useless goods - dumping, despots that we prop up, etc) down the throats of other countries - Asian and African countries most particulary - for over half a century. We've dictated what price they should take for the raw materials we buy from them by direct threats and indirect subsidies here at home.

Well now the chickens have come home to roost and it's time to pratice what we preach - capitalism and free markets.

What's been good for the goose should now be good for the gander.

How'd do we like it now?

Posted by: elo at April 9, 2007 12:29 PM

I think one should not blame foreigners for the current trouble in regards to off-shoring or out-source/off-shoring. I think foreigners are just trying to make a living. That?? all.

I think a correction in the leadership structure of American corporations would dummy down the wave of outsourcing going on right now. I think US executives are given too much incentive to maximize profits. Because their bonus (traditional bonus, stock options, exchange options, stock incentives, etc.) is directly tied to how much they make or how much they make in the future (stock valuation), and their monetary incentive is not ??apped? they are given too much incentive to maximize profits. If you look at Europe or Japan it’s not like this. Salaries of corporate executives are lower, or “capped” and they don’t have the incentive to maximize profits like the executives in the US. Therefore, jobs in Japan or in Europe tends to be more secure.

In Japan, even if a company is relatively large (comparable to a Fortune 500), it would be rare for a CEO to make more than a million. On the other hand, in the US, CEOs of S&P 500 companies made $14.78 million on average in 2006.

Source: http://www.aflcio.org/corporatewatch/paywatch/

Posted by: JSA at April 12, 2007 10:38 PM

Some moderation of the current flood of outsourcing is good. But it should not be quota based because it interferes with business to much. Congress should instead reward those who keep jobs here in the US, especially intellectual based jobs. US corporations can still outsource to foreign countries, but they won't get the same tax benefits that are given to companies to hire Americans. I do believe that CEO's should be for maximizing profits for shareholders. We just need to create incentives for them to consider American workers first. Outsourcing is one of the tools for American businesses to be competitive and should not be taken away outright.

Posted by: Jordan at April 13, 2007 12:46 PM

Its all about merit.. Indians are not getting jobs because they are cheap. It's because they are skilled. If US citizens want to live in their fool's paradize that jobs are getting outsourced, because companies find cheap labour offshore, its their choice. But if you would see the reality, companies send busieness to offshore, because they are not able to find resources in U.S., as teenagers in U.S. are happy enough to sell Pizza and earn their living rather than getting into serious education. Infact even in US, average salaries of Indian software engineers are much higher then their American counterparts... If you still think that outsourcing or hiring people on H1 B is the trend because it saves cost... It still doesn't matter.

Posted by: Makrand at April 21, 2007 11:59 PM

Let the best people survive. If Americans are so much confident that corps like WIPRO are surviving because its a planned move to save money by Amrican companies, I'll challange Amricans to take an aptitude test with their outsourcing parteners and then realize which species is the best fit for software development..

If we loose we would accept that Indians are cheap bastards and are getting jpobs just because they are cheap, but if not Americans should stop whinning about the jobs going to India.

Posted by: Makrand at April 22, 2007 12:11 AM


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