The future of IT in the US

[KerMor 0]

I thought I might share that one as it might be of interest to lot of us ...

www.washingtonpost.com

Intel Chairman Says U.S. Is Losing Edge

By Jonathan Krim
Washington Post Staff Writer
Friday, October 10, 2003; Page E01


One of the founding fathers of the nation's high-technology industry warned in dire terms yesterday that U.S. dominance in key tech sectors is in jeopardy, threatening the country's economic recovery and growth.

Speaking via satellite to a global technology summit in Washington, Intel Corp. co-founder and chairman Andrew S. Grove said that the software and technology service businesses are under siege by countries taking advantage of cheap labor costs and strong incentives for new financial investment.

"I'm here to be the skunk at your garden party," Grove said, noting wryly that his remarks coincidentally fell on the same day as one devoted to promoting nationwide screening for psychological depression.

Grove, 67, singled out China and India as key threats. India's booming software industry, which is increasingly doing work for U.S. companies, could surpass the United States in software and tech service jobs by 2010, he said.

More ominously, Grove said, the software and services industries -- strong drivers of U.S. economic growth for nearly two decades -- show signs of emulating the struggles of the U.S. steel and semiconductor industries.

In the case of steel, U.S. companies never recovered, dropping from nearly 90 percent of worldwide market share to roughly 10 percent. The semiconductor industry, Intel's core business, faced similar challenges in the 1980s, when it began its drop from 90 percent to 40 percent of the world market, Grove said, before aggressive trade and other U.S. policies helped it recover and stabilize at about 50 percent.

Grove said that even as the U.S. economy is improving, tech employment is not.

According to industry data, more than 500,000 technology jobs were lost between mid-2001 and mid-2003. Many of these were due to a contraction of the tech sector in the wake of the bursting of the dot-com bubble in 2000.

But Grove acknowledged under questioning that the tech industry itself is responsible for numerous jobs leaving the United States, as firms take advantage of considerably cheaper labor costs in India and elsewhere.

Grove said he is torn between his responsibility to shareholders to cut costs and improve profits, and to U.S. workers who helped build the nation's technology industry but who are now being replaced by cheaper labor. Grove did not offer a solution, saying only that the government needs to help decide the proper balance between the two. Otherwise, he said, companies will revert to their obligation to increasing shareholder value.

Recent estimates from financial consulting firms paint a stark picture of "offshoring," which allows companies to get software development and other services at one-third to one-sixth the cost.

The Gartner Group, a market research firm, estimates that 10 percent of jobs at U.S. information technology vendors will move offshore by next year.

Throughout all U.S. companies, Forrester Research predicts the loss of roughly 3.3 million jobs by 2015.

Grove said that the move offshore has been aided by the telecommunications bubble of the late 1990s. So much infrastructure for high-speed Internet connections was laid, much of it never used, that the cost of achieving high-speed communication plummeted. As a result, Grove said, "the engineer sitting 6,000 miles away might as well be in the next cubicle."

Grove chided U.S. policymakers for all but ignoring the problem.

"What is the U.S. public policy?" he asked. "I am hard put to find a document" outlining a policy strategy.

He said he had detected no recognition of the problem from any of the presidential candidates.

Grove also criticized the nation's overburdened patent system, which he said is causing an abundance of innovation-slowing litigation.

He said that the inability of patent examiners to handle the workload has led to a backlog of important applications, but also less than thorough vetting of patents that perhaps should not be granted.

Grove also said the country lags dangerously behind in popular use of high-speed Internet connections, funding for science and technology research, and education.

You can't determine the length of your life
- but you can control its height and depth.

[CrazyIvan 0]

__________________________________________
Blue Skies and May the Force be with you.

[PhillyKev 0]

That's why I chose networking over programming. When you're dealing with the equipment being used on site, that's going to continue to grow and people will need to be at the location where it is being used. Software can be written anywhere by anyone.

[McDuck 0]

Time to take up mud farming, I suppose.

Kevin - Sonic Beef #5 - OrFun #28
"I never take myself too seriously, 'cuz everybody know fat birds don't fly." - FLC
Online communities: proof that people never mature much past high school.

[DaMan 0]

Ditto

I'm glad I changed to networking too...

Z-Flock 8
Discotec Rodriguez

Too bad weapons grade stupidity doesn't lead to sterility.

[happythoughts 0]

Quote

Grove chided U.S. policymakers for all but ignoring the problem

.

There is a policy. Years ago, there was not enough C/C++ programmers. There was two solutions, train people or import programmers.

It is cheaper to import programmers because contracting companies make their money on the "margin". Margin is the difference between the money that the companies pays them and what they pay the worker. Indians will work for $10 less an hour. If they complain, home they go.

In another wonderful move, Pres Clinton changed the limit from 35,000 high-tech visas to 100,000. Who do you think made that little donation?

What happened? Not enough jobs for kids coming out of college to get the experience. Maybe a tax-credit to companies that hired American kids would have been better.

No campaign money in doing the right thing for America, I guess.

Steel, stereos, tvs, software.

[SkyDolphin 0]

I lost my IT job and was replaced by 2 Indians. 2 for the price of one.

Rhonda

[Katzeye 0]

*ouch* Just like at fuckedcompany.com

I think I'll learn to grow lavender.

Is a chicken omelette redundant?

[CrazyIvan 0]

I 'retired' programming back in 86, doing support, data recovery & networks even since, but things are kinda hard nowadays.

__________________________________________
Blue Skies and May the Force be with you.

[McDuck 0]

You aren't kidding. I had to take a job at a local ISP just for networking table scraps. On weeks when I"m lucky, I get to do DSL installs for home and business.

Kevin - Sonic Beef #5 - OrFun #28
"I never take myself too seriously, 'cuz everybody know fat birds don't fly." - FLC
Online communities: proof that people never mature much past high school.

[happythoughts 0]

Quote

When you're dealing with the equipment being used on site

As long as they don't move the server farm to India.

I worked for a company that was bought out. They moved all the software development to Texas. Packed up the machines too. To the user, it was just a different toll-free number to call.

When I worked for GTE Data Services, we had the largest hardware site in the southeast US (including govt and military). The bottom floor of a building was just disk, another floor was CPUs.

GTE bought ConTel. All their machines showed up. Bell Atlantic bought GTE, all the machines left.

It's a sad thing. What industry is going to be left that gives our kids a future?

[mailin 0]

haha

So much for this programming degree

Jennifer

Arianna Frances

[KerMor 0]

Quote

It's a sad thing. What industry is going to be left that gives our kids a future?

I have no worries about that ... biotech and other novel industries will soon take over. Some of the best research center are still here, they will drive things forward and that cannot be taken away from the US before a long time.

And industries in the US are ultra flexible, if there is an opportunity, it will be taken.

You can't determine the length of your life
- but you can control its height and depth.

[happythoughts 0]

Quote

...and that cannot be taken away from the US before a long time.

Sure... I forgot that there are no biologists in India.

They started a nuclear weapons program a while back. They have a big software industry. Complexity isn't really a stumbling block to them.

[ianmdrennan 2]

Yeah I write software for a biotech company. For now, it's piece of mind as clients are opposed to the idea of doing work in another state sometimes, let alone another country.

These things work in cycles. The movement from the US brings about a new set of issues, which I believe will eventually bring work back.

Time will tell I guess.

Blue skies
Ian

Performance Designs Factory Team

[billvon 2,435]

> have no worries about that ... biotech and other novel industries will
>soon take over.

India is catching up to us there as well. From BioCentury:
--------------------
The alignment of a vast pool of scientific talent, a worldclass information technology industry, and a vibrant generic pharmaceutical sector are positioning India to emerge as a significant spot on the global biotech map.

India is home to the largest number of English speaking scientists outside the U.S. and in the U.S. Indians are well represented on the boards of startup high tech companies and in academic research laboratories. India's success in IT - the south Asian country grew its computer software and services industry from zero to more than $7 billion in exports over the last decade - may lend credibility to its biotech aspirations, as do the strong business and cultural connections between the subcontinent and Silicon Valley.
--------------------

>And industries in the US are ultra flexible, if there is an opportunity,
> it will be taken.

I agree - but we are ultra expensive as well. If a company can get results 90% as good as a US lab for 50% of the cost, they may choose the cheaper result over the better result. If anything, it will be the inevitable rise in standard of living in India, rather than anything we do, that will make them less competitive.

[riddler 0]

Quote

If a company can get results 90% as good as a US lab for 50% of the cost, they may choose the cheaper result over the better result.

Corporations will always choose cheaper over higher quality. The people making those decisions don't understand technology well enough to really know what is higher quality, and you can be sure that some marketing person is putting a positive spin on anything that comes out of the foreign sweatshops, making it seem like their idea to outsource was just as good and saved the company X million dollars. At the same time, users expect software to be poorly written and fail - consumers don't demand even reasonable quality of software, so we don't get it, and poorly written software that comes from India is just as good as poorly written software from Silicon Valley.

I moved to project management because as a software person, I can't compete with anyone billing 1/5th of what I do, no matter what the quality is. But the same American companies will always put an American "face" (i.e. project manager) on the foreign-built applications, so there is still (very little) room in PM.

If the US wants to keep tech jobs, there are only two things that can happen.

1 - The government steps in and regulates off-shore development. This will never happen because the lawmakers are in the pocket of the same corporations that save money on overseas outsourcing.

2 - Everyone in IT unionizes and sends a message to american corporations that workers won't put up with it. It worked for the auto industry 50 years ago. But it's not likely to happen, due to the logistics and the fact that IT people don't really have a history of forming unions (a few companies like Boeing are an exception).

So there really is no answer, and American workers will continue to suffer globalization growing pains. The best thing an American IT person can do is learn to speak Japanese, and go to work in Japan, leveraging the same exchange rate that Indians, Chinese, etc use to our disadvantage.

Trapped on the surface of a sphere. XKCD