“Universities are wrestling with a contradiction. How can there be both a dire lack of IT skills and poor employment prospects for computer science graduates? Does the blame rest with teaching, a lack of industry training or something else entirely?” …
The article is mostly about the UK but there was this interesting tidbit:
The educated are no longer insulated from wage competition brought on by globalization.
My son was a computer science major, and he has never had difficulty finding jobs. The last time he found himself without a job, he got another job so quickly that he only lost one month of pay. (And he had no lead time to prepare; he was laid off unexpectedly.)
If you have good enough skills, the jobs are there. It may help to have good credentials (e.g., a degree in computer science from a good program) because that’s a marker for good skills. But there are also plenty of people who are succeeding in this field without exactly the right credentials; the skills are more important.
The jobs that are being sent offshore are not the really good ones.
Because they’re over 40?
These jobs would be good enough for the large number of Americans.
My group has junior engineers in India and I have to train them. They are young, pretty smart and eager to learn but I would prefer to train Americans. Digging the grave for myself and other US people.
@Marian, when you extend to IT (where an awful lot of CS majors end up working, probably the majority of them), that is just not true. I work as an IT project management consultant, and I have watched multiple company’s bring in H1-B visa holders to get training here in the US, then take the jobs back offshore and the people who trained them get laid off. These are software engineers making at least $70K. They ARE good jobs. The tech companies who insist they need these visas because they can’t find the talent onshore are blowing smoke. They don’t want to PAY for the onshore talent. But it exists.
It is a disgrace that out politicians allow this abuse of our visa system. And lest anyone tout the benefits of having the jobs offshore and cheaper labor costs, my experience is that the quality of work is generally terrible; it easily takes 3 times longer to get something done correctly with offshore resources. And an agonizing amount of time is need to spell out to the gnat’s eyelash in writing what is needed due to the language and cultural barriers, so that runs up the cost and time for the onshore and business resources.
“My group has junior engineers in India and I have to train them. They are young, pretty smart and eager to learn but I would prefer to train Americans.”
Why?
“And lest anyone tout the benefits of having the jobs offshore and cheaper labor costs, my experience is that the quality of work is generally terrible; it easily takes 3 times longer to get something done correctly with offshore resources. And an agonizing amount of time is need to spell out to the gnat’s eyelash in writing what is needed due to the language and cultural barriers, so that runs up the cost and time for the onshore and business resources.”
I have advised several companies to move jobs offshore. It doesn’t take 3x the time. It does require detailed documentation. The cost is more than 4x less in many cases. The ROI on these offshoring projects is, to quote Trump, “Uuuuuuuge!”. Companies are not idiots. If there was no financial reward at comparable quality and service (albeit with more people offshore than onshore, and with additional process changes that are needed to support the move), they wouldn’t do it.
^^^^ @1Wife1Kid , I have substantial experience working with outsourced coding firms, particularly the one named in this thread, and in my experience the quality is terrible.
The problem is the bean counters who measure a skilled resource like a coder as a commoditized asset in an MS Project Resource Chart, exchangeable for any other.
The benefits get to be claimed and booked, even if they are not real, because the assumption is that the project would take just as long if not done offshore.
And that is often just not true.
Unskilled jobs like data entry or scanning documents, sure. But creating something worthwhile, and making logical decisions while doing it? Nope. If you are hiring a company to write your code, without explicitly knowing the talent and abilities of the folks doing it, then you are doing it 100% wrong. And if you are advising that to your clients you are doing them a disservice.
One skilled coder CAN do the work of 10 or more.
Agree with #7.
However, lots of companies outsource to the cheapest at all costs, so the result is not surprising.
Note that H1-B visa use is mostly by outsourcing companies who pay much less than those hiring H1-B visa employees directly. The latter are the intended use of these visas, but are crowded out by the bottom feeding outsourcing companies. A reform to get outsourcing companies out of the H1-B visas would fix that problem.
Before my life as a “bean counter” as I was just referred to, I spent a decade in the US software industry. I started as developer and climbed the ranks to just short of VP and then left for an MBA. As a result, I have quite a bit of experience over the Y2K period with outsourcing software development though I have not been involved in that since then. It was absolutely not true at that time that outsourcing led to more than 4x deterioration in project duration measured in person weeks, and end quality was just fine, so the financial ROI held pretty well. Lately I have been involved at a Board level with many Silicon Valley startups who do 100% development offshore. The quality argument is absolutely not true in my experience.
This argument against outsourcing is not new. There was a time when offshoring started in manufacturing, and everyone said that quality will deteriorate. Quality did not, though wages did. That same argument is now being made in software development. It’s a global world and wages will normalize to global levels. USA and EU enjoying higher wages that the rest of the world was an abnormal event. It would not be sustainable in a global world. It is better to accept that reality and prepare for it than fight against the tide. YMMV.
Also, all professional services sooner or later will see the same globalization effect. There is just too much inexpensive talent sloshing around the globe.
PS: I also think US college graduates should start to think about working outside the USA. That’s where the jobs are. While the salary levels are lower, the cost of living is far lower, and the overall standard of living is much higher. However that would mean putting far more emphasis on learning foreign languages, and not just the ones from the Old World.
My point was that the way ROI is measured is highly flawed. Measuring a single number of hours against two dramatically different hourly rates is always going to benefit the lower hourly rate. But it neglects every other variable.
We don’t want to derail this thread with the flaws in funded startups and what the sand hill road community insists on to ensure their position in the shell game.
Another reason for that is it’s much easier to single-source than to build and manage your own technical team. There aren’t as many domestic software services companies as there used to be.
I am not an economic nationalist and I understand and accept globalization. My experience is from partnering with and using offshore development myself.
What @ucbalumnus said.
I have observed sharp contrast between people brought on H1B visas ~10 years ago and the newly imported talent. People being brought to the US now by “bodyshops” are much lower caliber. Their only plus is that they are cheap, even after the staffing company takes their cut. In government contracting, the client requires a certain number of butts in seats and awards to the offeror who quotes the lowest price.
I think that quality workers prefer to stay in their home countries where they can take outsourced jobs, create businesses to serve the local market, and enjoy a much lower cost of living.
@1Wife1Kid, it often takes three (or more, I remember one incident that took FIVE attempts) tries to get something done that historically took one with onshore resources. And time is money – while you are messing around taking multiple attempts at getting something installed so you can get your product to market, you lose ground to your competitors and have opportunity cost where you could have done more work with your resources.
There are also shadow costs. For example, offshore QA has notoriously bad quality. So bad that it is useless – you get people testing who have no concept of things like SSNs and TINs,. They don’t understand what they are testing. So shadow testing springs up – onshore resources add testing cycles to make sure they get the needed quality. Management THINKS they have done something brilliant and cost efficient when they outsource. But they have actually sacrificed quality and speed to market – and are too dumb to know it.
And by the way, Y2K was simple. I worked on it, too. It was just a frigging big pile of programs to review and remediate. A lot of projects are much harder than that. You can’t base everything on that example, it is fairly unique.
“My point was that the way ROI is measured is highly flawed. Measuring a single number of hours against two dramatically different hourly rates is always going to benefit the lower hourly rate. But it neglects every other variable.”
I didn’t say that. Please allow me to try to present the economic argument more clearly.
Consider two teams, and let’s assume one is more efficient than the others. Whether the gap in efficiency is due to skills, procedures, attitude, or timezone/location differences is irrelevant. The efficiency gap can be measured and is real, regardless of the reason. Now, the less efficient team will of course take more number of person hours to complete the job. But if their rate per person hour is lower, the total cost of the project may still be lower (and in the case of offshoring/outsourcing is indeed lower). So no one is comparing a single number of hours. Companies are not that stupid. They are comparing total program cost, as measured in total person hours times hourly rate.
What does this mean? It means that if US workers want to be paid, say, 25% more than H1B workers, and 300% more than foreign workers, they have to have 25% and 300% more efficiency as well. If they can’t demonstrate that, the job will go to the H1B or the foreign worker. That’s what is going on today. In fact, H1B workers are routinely getting replaced by foreign workers, so it is not just US workers who are suffering. It’s just hard to show a 300% efficiency gap.
The usual argument is always one of quality. I personally saw no quality gap in the final output. You may have, but then our experiences differ. I do believe that if the marketplace as such saw a quality gap, then outsourcing/offshoring wouldn’t survive. That is does indicates that there is no quality gap at all.
“Management THINKS they have done something brilliant and cost efficient when they outsource. But they have actually sacrificed quality and speed to market – and are too dumb to know it.”
Are their competitors taking market share away from them? If not, why should management care?
I believe you underestimate corporate decision making. People in IT, in my experience, always want a Cadillac when a Hyundai would do.
Going to low income countries, whether for manufacturing, call centers, or software development, one can choose “cheapest at any cost”, or one can actually look for quality. The former usually ends up getting less than what they pay for. The latter can be more difficult to do effectively. In software development, the latter may be more effectively done by internal offshoring (i.e. company opens its own office in some other country and directly hires there, applying the same standards for hiring as used in the company’s home country), rather than going through outsourcing companies that mostly cater to the “cheapest at any cost” customer companies.
So the CSuite, Compliance, IBanking, Consulting, HR and really all but the mailroom could potentially be outsourced to the lowest bidder assuming measurable efficiency can’t meet an X% gap? Even though the education, contacts, soft skills and knowledge base might not be the best, they would be good enough? Might not a Hyundai do for them as well?
Ok, maybe that sounded ridiculous and I know Boards of Directors and indeed shareholders (I mean fund companies and large shareholders, not 401K and IRA participants) might disagree but they are pretty good at taking care of themselves so I don’t care. Besides, who says corporate decision making is always correct? People (corporations) frequently make mistakes, it’s how we learn. Might not the pursuit of short term cost savings come at the expense of long term growth and the loss of customer trust and loyalty that comes with it? Reputation and corporate goodwill doesn’t seem like something that is negotiable or easily replaced, so that the damage control could eat into any savings from offshoring.
Keeping the jobs here and the dollars they represent seems more practical in the long run. We don’t have to deal with political unrest (current season notwithstanding), currency fluctuations, questionable infrastructure, war (hopefully), coups, human rights abuses (hopefully) and other variables out of our control because the work is being done in another country. The tax dollars stay here as well as the consumer spending power all to get reinvested in our country in a way that benefits everyone, especially management and shareholders, which then allows our wealth to better benefit the global economy.
Then again, maybe it doesn’t work that way, I don’t know, I am not an economist. I’m asking questions and opining because you all seem pretty smart and civil. I figure maybe I can learn something because this is a subject that could have an impact for my child and I’m concerned for her future.
It depends a lot on the project. High stress, time limited, mission critical projects are best developed in a single location close to the stakeholders. Ongoing maintenance projects are often globally sourced and utilize multiple development centers for round the clock development.
morkatmom, Having been part of many discussions about replacing US labor and manufacturers with foreign counterparts, in my experience everything that you talk about that can put the company at risk is always considered. If outsourcing and offshoring was harmful for company profits, no executive would ever make that decision.
What is not considered is whether that puts the country at risk. That makes sense, as corporate executives are supposed to manage the microeconomics (company profits) if you will, and political leaders the macroeconomics (welfare of the country). Just as US consumers will shop at retailers that sell cheap foreign made goods, companies have a budget too.
No force is bigger than the market (the Russians realized this after a long, poorly thought experiment which caused massive pain for their citizens), and the market in a global economy will inevitably lead to normalization of wages and standard of living across the globe. It is just a matter of time.
If this was an economic and political discussion forum, perhaps we could have gone into more details. But it is a college forum, so I would rather keep my post confined to what today’s kids should do. They should look into emerging economies that are on the upswing and prepare themselves for a career there.
I think it’s a bit more subtle than that, in the future (10-30 years) we’re not about to start exporting millions of Americans and Canadians to “emerging economies”.
Instead, our kids are much more likely to be put into positions where they report directly to someone in another country, and/or have folks working for them that are based in other countries. Globalization isn’t a one way street. Many foreign based companies are also expanding into North America.
However, that’s a completely different subject than H-1B visa abuse. Not only does that impact domestic workers (see the recent Disney fiasco), but also often the workers brought here on H-1B visas (work for us at these #$@! wages and we may eventually sponsor you for a green card).
I’m a proponent of the H-1B program, but the law needs better safe guards, and more importantly, the federal government needs to ENFORCE it.