Posted by: Beth Cohen
IT futures, IT Innovation, IT job creation, Off-shoring
Question: As we came out of the dot.com bust of 2001, there was an increased number of interesting technology jobs coming from promising startups. As the Great Recession recedes will we start to see more technology hiring in the coming months and years?
With a nod to the old Pete Seeger song, “Gone to other countries, every one…”
Historically, new small businesses and entrepreneurs have been the engine that has generated many new jobs, even in a prolonged down economy such as this one. According to the US Department of Labor statistics, firms with fewer than 500 employees accounted for 64 percent (or 14.5 million) of the 22.5 million net new jobs between 1993 and the third quarter of 2008. Since smaller companies represent over 50% of the total national employment; any shrinkage or flattening of job creation in this sector is significant. Yet, despite the recent expansion of the economy, job creation has remained stubbornly flat.
Why aren’t all those start-up technology companies generating huge numbers of new jobs? The answer is that it is not that technology companies of all strips aren’t generating new jobs; they are. What has changed for Americans is that the new jobs are being created in India, China, Russia and pretty much any other technology center in the world. This is happening for two reasons. One, the venture funding folks frequently pressure new companies to outsource development very early in the business cycle because they assume it will be cheaper, and two, more significantly, the new technology leaders are no longer based in the US. After years of overseas investment in technology education and workforce training, following the massive off-shoring of development, the Chinese and Indians quickly realized they didn’t need the American knowledge workers except as consumers.
I hear lots of IT executives talking about the need to move more development off-shore to reduce costs, while at the same time they bemoan the shortage of good local talent. This has in turn has created a vicious cycle; students entering the workforce are not choosing technology careers (I wouldn’t if I were them either) so the American pipeline of emerging talent has rapidly dried up. As jobs continue to disappear off-shore, never to return, the American technology job market now has a severe shortage of jobs and little future for the industry.
To pick up where we began, “When will they ever learn, When will they ever learn.”
About the Author
Beth Cohen, Luth Computer Specialists, Inc.