Why IT Jobs Are Never Coming Back

U.S. IT job loss may level off in coming years, but the likelihood that corporate IT will ever contribute to job creation again is minimal, according to a recent study by the Hackett Group. CIO.com talked to Hackett's lead researchers about what's driving IT jobs offshore, what roles will remain stateside, and why some American IT professionals may have to send their resumes to China.

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CIO.com: You're assuming the big IT service providers will continue to develop such talent in the U.S.

Janssen: When I worked at EDS, we had big corporate training facilities—whole apartment complexes just full of people. Now those are in Hyderabad or Bangalore. They no longer have that kind of scaling availability here in the U.S.—the bulk may be in low-cost geographies—but they still have tens of thousands in the U.S.

CIO.com: You predict that IT job loss will level off at around 115,000 jobs a year, at least until 2014. What happens after that?

Janssen: In the corporate world, it's going to be a grizzly picture here. [Net IT job loss] could continue until 10, 15 years from now.

Padron: Even longer. You know, the Chinese are now outsourcing to South Africa because it's cheaper. [U.S. IT job loss] is going to go on for a long time. It could be 50 years.

Janssen: Companies have to understand the global marketplace. What we have is an asymmetrical talent war. In Asia or India the question is, 'How do I hire 500 people?' In the U.S. it will be, 'How do I hire 5, 10, or 50?' In the U.S., they will be hiring professionals with very specialized industry skills, the ability to manage in the global context, or experience in new technologies.

CIO.com: What happens to those hundreds of thousands of American IT professionals skilled in, say, programming or data center operations?

Padron: I was on a flight to Miami, and I met a 30-year-old QA auditor who had moved to Shanghai from Boise, Idaho. This isn't a high-level management job&mdsah;those jobs are going to some folks in Europe and North America. He was a mid-level manager. This is really becoming a global war for talent.

CIO.com: On the quasi-bright side, you say a weak dollar could mean transformational work will be done onshore. Is limited labor arbitrage really the only reason transformational projects would stay close to home? Are offshore IT organizations capable of handling major corporate change?

Janssen: Labor arbitrage is still really compelling when you're trying to make your budget for next year. It's a challenge when people go back into growth mode to hire someone for $75,000 [a year] when they can get someone for $25,000. The weak dollar does play a role; it decreases the spread. If there's a violent retraction [in the dollar] for multiple years, we could see an end to this conversation.

Today, I'm hiring people with MBAs for $5,000 per year. They're tier two MBAs, so that would be about $55,000 in the U.S. And I do have to move them to $8,000 or $10,000 in two years. There isn't as much of a delta on the management side. For people with 5 or 10 years of experience, there's not a five to ten-fold difference in price points.

CIO.com: But what about management overhead and other hidden costs that can erode those labor savings—have those diminished?

Janssen: It's gotten a lot easier to manage in terms of basic fundamentals. There are two parts to that—problems on the U.S. side [of the offshore engagement] and problems on the Indian side. They are both more mature. But if someone tells you they're having problems with their team in India, it usually means the problems actually exist on the U.S. side. The ability to work on a global basis is more challenging for U.S. [IT organizations]. I have a lot of my research written in India today. They used to only provide charts or data.

Padron: It's becoming a moot point, because you are going to have to manage a global workforce anyway.

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