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12:10:45 PM

Two posts that I read today seem related to one another. The first is by IBM's Irving Wladawsky-Berger: IT Jobs Migration: Fears vs. Reality which expands on a recent ACM study that extensively analyzes the outsourcing situation in IT, and presents statistics that show that question the conventional wisdom about effect of outsourcing on US IT employment levels and salaries. Wladawsky Berger asks

If there is indeed such a historical change going on in the US and all around the world with IT as its catalyst and if technical talent is needed more than ever to address the new problems and opportunities, why is there so much consternation about IT jobs in general and outsourcing in particular?  There is no simple answer to this question.

The closest that Berger comes to answering his own question is in the next paragraph

The vast majority of the new jobs are no longer developing the technologies in the labs but putting the technologies to work in the marketplace.:

As someone who has spent portions of his career in the labs, and now is primariliy in the field putting the technologies to work, I agree with the observation but don't find it to be a satisfactory explanation for the overall consternation about IT outsourcing -- or for my own personal feelings and concerns about it.

The next article, found via a link from Nicholas Carr is, I believe, much closer to the explanation. The title Middle-aged and Stranded By The New Economy tell a lot of the story. Here's an excerpt.

For this slice of society, stagnation has become intertwined with insecurity. Work has taken on a new character in recent decades for people in the middle; its risks are especially evident among those whose fortunes are tied to the “new economy” – cutting-edge, global businesses such as financial services, media and high-tech. They account for no more than 20 per cent of US and 15 per cent of British employment but in them, modern capitalism has concentrated its energies and defined its ideals.

Carr's summary of the article is really on point:

Sennett's subject is the "middle" - the middle-aged, the middle class, the moderately smart and moderately ambitious. They're the ones losing their pensions and their health-care benefits and watching their salaries slowly erode, the ones shunned by the "cutting-edge businesses [that] want young employees who can work long hours." They're the ones who get fed nice-sounding but empty platitudes about "retraining" and "career flexibility."

I disagree (a lot!) with the "moderately smart and moderately ambitious" bit, but he's got the point. He's got the gist of the answer to Wladawsky-Berger's question. There is so much consternation about IT job offshoring because despite the numbers that show employment and salaries going up because that is not the experience of the people that Sennett calls "the middle". The overall IT employment and salary statistics are not fine-grained enough to reflect or refute this impact, but anecdotal observation is convincing enough, IMHO.

In the IT business, the people in the "middle" are veterans of several booms: the minicomputer boom, the PC boom, the Internet/dot-com boom. They worked in the labs, and they worked in the field. They were trained on the technologies that employers needed -- in a large part on-the-job by their employers. Today, though, employers need fully-trained employees. Rather than investing in employees, they lay off and outsource, or lay off and buy a startup that has a supply of trained employees -- most of whom are not part of the "middle". Sennett gets to the reason for this:

The new economy has reformulated workers’ experience of time. Long service and accumulated experience do not earn the rewards that more traditional companies once provided. Instead, cutting-edge businesses want young employees who can work long hours; the “youth premium” works against older employees with multiple responsibilities. Dynamic companies have also shortened the time-frame of work itself; jobs are defined as short-lived projects rather than permanent functions. In media, mid-level employees can expect increasingly to work on six or even three-month contracts, if there are contracts at all. Throughout the “new economy”, companies are rapidly changing business focus and identity in response to shifting global market conditions.

The "middle" is also vocal. They have spent a large part of their careers being told by their employers that they are supposed to be "empowered", and while many were skeptical of what that meant (and rightly so!), when the empowered find themselves out in the cold -- or in fear of it -- there's going to be consternation.

Was it the "middle"'s employers' job to prepare the middle for globalization? No, it wasn't -- and employers didn't foresee it anyhow, so it makes no difference whose responsibility it was or was not. Is it a reasonable to expect big companies like IBM to go counter to the trend and re-train their own "middle" employees rather than engaging in the layoff and acquisition game? Maybe not. Probably not. One can't stop the world from turning, but let's not hide away, either. I think that a lot of problems in the general economy and in the IT industry are going to result if the problems of the "middle" are not resolved, and waiting for the invisible hand to do it may not be healthy for the US IT industry in the short term. As Sennett observed:

After the breakdown of the Bretton Woods agreements in the early 1970s, a sea of capital flooded the world and it was “impatient capital”, in the words of Bennett Harrison, the economist, capital looking for short-term returns on share prices rather than longer-term dividends on profits.

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Comments :v

1. Irving Wladawsky-Berger03/08/2006 04:29:19 PM

Richard, the whole question of jobs in general and IT jobs in particular is a very complex and important issue, and I appreciate your thoughtful comments on the subject. Let me just clarify that the primary answer I gave to the question as to why there is so much consternation about IT jobs and outsourcing is: "There is no simple answer to this question. As has generally been the case in the past, the effects of such technology-based economic disruptions are uneven. Some jobs are easier to outsource than others - those that are labor-intensive or becoming more standardized - and many jobs will disappear altogether through increased automation. If it is your own job that gets outsourced or disappears, the fact that this is ultimately good for the economy is little solace to you, your family and your community. It is very painful indeed, and there are plenty of such painful stories for the media to focus on."

In other words, I totally agree with you that regardless of the fact that in general, good new jobs are being created, especially "up the stack" in the applications of technology in the marketplace, the disruption to workers losing their job is very painful indeed.

I do think that it is very important to focus on what the US and other countries need to do to improve their competitive position in the increasingly global marketplace we live in, namely invest in education and training and invest in research and development. At the end of the day, these are the best ways to make sure that you get as high a share of the new jobs as possible.

2. Richard Schwartz03/08/2006 06:55:27 PM

Thank you for dropping by, Irving. I had noted that you specifically said there was no simple answer, but I cut that from my post here in an attempt at brevity. I do hope you followed the links, or had already seen the Carr and Sennett articles. Their thoughts are more clear on this than my own.

I do share your concern about education, training and R&D. You are absolutely right about their importance in global competitiveness. The main question that I ask is: who? Who will lead the way? Who is willing to invest in global competitiveness? Who will train the "middle"? Startups will not, and given the impatience of investors it seems unlikely that large established corporations will either. That leaves the government, or the people in the "middle" themselves -- and I doubt that we can count on the government.

3. Bruce Perry03/11/2006 12:59:56 PM

Thanks for posting that. I found a reference to it a while back, lost it, and spent way to much time trying to relocate it. Thinking it was from IEEE instead of ACM didn't help.

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