Offshore Threat To IT Jobs: Overblown Or On The Money

Offshore Threat to IT Jobs: Overblown or on the Money?

Ann All
Posted by Ann All on November 17, 2008 at 2:10 pm

TechRepublics Jason Hiner pulls a stat or two from a Society for Information Management report on tech spending that I referenced in a post last week to lead off a discussion on whether companies are having trouble filling IT positions and whether offshorings impact on U.S. IT jobs is overblown.

While the IT leaders surveyed by SIM plan to spend more on outsourcing (both onshore and offshore) next year, notes Hiner, it still accounts for just over 5 percent of projected 2009 budgets. The amount of money allocated for outsourcing peaked at 4.2 percent of budgets in 2006 and declined the past two years. Offshore outsourcing will account for 5.6 percent of 2009 budgets, less than the 6.2 percent earmarked for domestic outsourcing and 33.7 percent that will go to internal staff. (This is by far the biggest line item, dwarfing software in second place at 16.3 percent.)

Not only that, says Hiner, but many companies are struggling to fill IT jobs. He quotes incoming SIM President Peter Whatnell, Sunocos CIO:

Theres the attractive companies like Intel, Google, and Sun that have to beat people off with a stick, and [then theres] the rest of us who have to work to find people.

Jerry Luftman, SIMs VP of academic community affairs, faults the media for making it sound as if massive numbers of IT jobs are being offshored. Christine Bullen, a senior lecturer at the Stevens School of Technology Management who has participated in past SIM research projects, took a similar stance when I interviewed her in September 2006. Enrollment in university IT programs hasnt been as strong as it should be, she said, due to pessimism following the dot-com bust and negative hype about offshoring, especially from vocal commentators like CNNs Lou Dobbs. She said:

Together these issues communicated to young people that there were no career opportunities in IT. However, these knee-jerk reactions were nave, as they were not based on really understanding the needs of the marketplace.

Like Luftman, Bullen stresses the importance of working with universities and even government entities to promote IT career opportunities. But based on some of the comments following Hiners post, maybe itd also be a good idea to work with employers to promote the idea of recruiting with a relatively open mind and willingness to provide training in desired skills.

Many of Hiners readers dont believe there is an IT labor shortage. In a poll of 818 readers that appears after Hiners post, 55 percent of respondents say there is no legitimate shortage of IT talent. Not only that, but several readers who posted comments say that potential employers are seeking highly specific capabilities rather than good all-around tech skills and ability to work with a variety of platforms. Writes a reader called Arsynic:

HR and management have no idea what they want. They create all of these insane requirements and wonder why they cant find anyone qualified. I see a lot of Cisco shops like this. They want to see experience on one specific piece of hardware when youve worked with much more complex hardware from the same vendor.

This echoes my March post about a Baseline article that implied the IT labor shortage was a self-serving myth. Among the folks cited in that article were the Urban Institutes Hal Salzman, who has produced research that indicates that Americas universities produce a more-than-adequate number of science, technology and engineering students to meet available job demand. Salzman told Baseline that the industry is experiencing hiring difficulty due to unrealistic expectations rather than a true shortage. A money quote from Salzman:

I once had a manager talking about difficulty in finding a Java programmer with ten years Java experience and who he wanted to come into a mid-level Java position. Javas been around for what, 12 years now? There are probably not a lot of these folks around who have that much experience and who are willing to work at that level.

Hard statistics on offshoring are hard to come by, as I wrote in August, and several academics have conducted research that seems to support Hiners conclusion that the IT offshoring trend is greatly exaggerated.

What do you think?