2010: The Future of Jobs and Innovation

The future of IT jobs and innovation in the U.S. could go one of two ways, depending on how things play out over the next few years. Scenario one? The U.S. stays on top. Scenario two? Americans need not apply.

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Busch is currently trying to increase IT’s presence in emerging economies while continuing to invest to a certain extent in his U.S. workers. "We have to compete with highly skilled IT workers in very sophisticated companies with lower cost structures. But simply substituting lower cost resources to reduce spending or deciding to solve a weak IT organization by sending the work someplace else is thoughtless," says Busch. Rather, CIOs must concentrate on improving efficiency, taking the risks necessary to innovate, and investing in tomorrow’s leaders.

"CIOs who focus exclusively on chasing cost savings around the world will have short careers," agrees Sun CIO Howard. "What matters is smart sourcing that looks at the [total cost of ownership] over the long haul and the many other factors like security privacy, [intellectual property] protection, geopolitical risks, and the potential cost of having to bring it all back in."

Investing in R&D will also be important both in the government and private sector. A lot of IT innovation came out of the space program, for example. "We wouldn’t have computers or the Internet had the U.S. government not invested in the research," says Ron Hira, assistant professor of public policy at the Rochester Institute of Technology. Homeland defense, security and military technology are all areas where federal funding could spur future innovation.

"But we can’t wait for the government to address these issues," Busch says. CIOs in the private sector can do their part by bringing the R&D spend back in their own companies.

Putting a greater focus on R&D and continuing to recruit the best and the brightest into IT are crucial to maintaining our competitive edge as a nation. But bear in mind, the United States has a built-in advantage when it comes to innovation: As a capitalist democracy, it is relatively free of the excessive government regulations, bureaucracy and corruption that stymie IT innovation in other countries.

"The free flow of information and the freedom to develop products is really the U.S.’s ace in the hole," says Maria Schafer, a program director at Meta Group. "That doesn’t exist in China or in Russia, or even in India. It’s why the U.S. has always been the innovator. There’s a tremendous strength in the way IT is done in the U.S."

Scenario Two: Americans Need Not Apply

If we continue to move jobs offshore, the U.S. IT professional could become extinct

It’s 2010. TaTa Consultancy Services has made New York City its de facto worldwide headquarters and opened more than 100 satellite offices around the country. No longer simply a provider of lower-level application development and maintenance work based in Mumbai, India, TaTa now provides high-level consulting and business process improvement, overtaking IBM Global Services as the leading IT services provider in the States -- and the world. The company has hired a recent Nobel Prize winner to head up its burgeoning R&D business, and rumor even has it that a recently out-of-work Sam Palmisano, formerly CEO of IBM, was sniffing around for a position there.

Such a scenario might scare the dickens out of most CIOs (and probably a few CEOs), but it’s perfectly plausible. Offshore companies have made no secret of their wish to compete with the likes of IBM Global Services and EDS. Changing the base of operations to the United States is possible, particularly if the U.S. government does not rein in the L-1 and H-1B visa programs that encourage the hiring of foreign workers here to oversee work done abroad.

"If Indian firms set up shop in the U.S., that’s where the real threat happens," says N. Venkatraman, Boston University School of Management’s IS department chairman. "You no longer have to fly someone over from India. You now have someone who’s worked for the EDSs and Accentures, and now just carries a TaTa business card."

If offshore providers transform themselves into multinational corporations, watch out. They’ll develop talent at all levels of IT operations. "The U.S. IT professional could become extinct if we continue to import foreign labor," says Norman Matloff, computer science professor at the University of California, Davis.

Increased standardization of IT tasks that once required localized, human skills will further the export of the American IT function. And improvements in real-time communication could boost the use of staff around the world as well.

A lack of entry-level IT employment might dissuade U.S. students. It already has. Although America saw a rise of IT college degrees awarded in the late 1990s (from 37,500 in 1998 and 1999 to 52,900 in 2001, according to the Digest of Education Statistics), enrollment has begun to decline again. Fairchild Semiconductor CIO John Watkins understands why. "If it looks like America is just chasing the cheapest source of labor, why would anyone want to go into IT?" he says.

Ron Hira, assistant professor of public policy at the Rochester Institute of Technology, saw the effects last fall. The new IT major at RIT missed its hoped-for enrollment figure by 200 students.

Without new entrants in the domestic labor supply, the United States could lose its competitive edge. In a 2003 report on workforce policies, the National Science Board predicted dire consequences if the United States depends primarily on foreign talent. "If you don’t have a critical mass of people, you won’t get innovation." says Matloff. "Companies that offshore all of their entry-level positions will be shooting themselves in the foot." They’ll be forced to look elsewhere for IT talent, perhaps at higher costs.

Remember the leaked tape that came out of IBM last summer? IBM Global Employee Relations Director Tom Lynch said IBM had to accelerate the shift of white-collar services jobs, including software design, to markets such as India and China because "our competitors are doing it, and we have to do it."

Once one big name in IT does it, nearly every other CIO will too. "It’s the most destructive characteristic of large enterprises, that we’re like herd animals and just do what everyone else is doing," says Intel CIO Doug Busch.

Once the number of jobs available to skilled U.S. IT workers dips below a certain level and the salaries being offered hit rock bottom, "Americans just aren’t going to go into the profession anymore," Matloff says. And that bodes ill for CIOs’ ability to get the job done at their companies and for their own future clout in corporate America. Wholesale offshore outsourcing would also be a disaster for America’s leadership in IT innovation.

"I’m not certain that the U.S. can retain its reputation as the leader in IT innovation. The leadership we’ve had in the past could move offshore if we’re not careful," says Nancy Markle, president of the Society for Information Management. "As CIOs, we have to make sure that that doesn’t happen."

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Copyright © 2003 IDG Communications, Inc.

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