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You Vs. Offshoring

U.S. tech pros are surprisingly upbeat, and pay is on the rise. But the job outlook is anything but warm and fuzzy.

The IT pro sure is a conflicted soul. As a group, tech professionals in the United States don't think IT's the promising career path it once was, yet most are satisfied with their jobs and feel reasonably secure. The money's good, but they worry that offshoring will reduce career opportunities--even though nearly half of their companies don't outsource at all and fewer offshore IT work, according to InformationWeek's National IT Salary Survey of 10,425 IT professionals. Base salaries are barely edging up, but bonuses have total pay on the rise, and tech unemployment last quarter fell below 3%--which in economic terms is about zero. For the most part, IT pros paint a picture of an uncertain and intensely demanding existence, and one they might not wish on their kids, but one they themselves expect to ride out nicely.

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Look at the numbers. With 3.47 million U.S. IT people employed today, tech employment has risen above the hiring boom that peaked in 2001, according to data from the Bureau of Labor Statistics (for details, see "More U.S. Workers Have IT Jobs Than Ever Before"). Despite that, 64% of IT pros in our survey say outsourcing is eliminating IT jobs, and nearly 60% believe the trend is hurting morale. IT pros are ambivalent about outsourcing's effect on pay. Forty-nine percent see lower salaries for new hires, but only a quarter predict reduced salaries for existing employees. In other words, the majority don't believe global IT competition will hurt the pay of people now working, and they're divided over whether it will hurt entry-level people.

Outsourcing isn't keeping Brookstone's Chuck Firth up at night.

Outsourcing isn't keeping Brookstone's Chuck Firth up at night.


Photo by Mark Ostow
Chuck Firth is typical. Outsourcing and offshoring make him uneasy, but he doubts they will affect his job and career directly. He's an application development project manager for specialty retailer Brookstone, which tends to buy its major applications and count on internal staff for the integration of those apps, supplemented occasionally by contractors. "I don't feel vulnerable to outsourcing," Firth says. "We've got a lean organization. Not a lot of value would be added by outsourcing."

Is Firth in denial? If so, he's got plenty of company. Only 12% of staff and 9% of IT managers feel insecure about their jobs. Half of managers and 42% of staff feel strongly secure, while the rest feel somewhat secure. Among managers and staff alike, feelings of job security are markedly stronger now than they were in InformationWeek's salary survey of two years ago.

Of course, it's too early to say definitely how this megatrend of global IT competition ultimately will affect tech employment and wages. A key figure to watch is whether pay rises as unemployment plunges, or whether the threat of offshoring will hold IT salaries down. This year, pay is edging up, with total median compensation rising 3% for staffers to $73,000 and 4% for managers to $99,000, according to our survey. (For detailed salary analysis, see "Average IT Manager Makes $99,000, Staffer $73,000, InformationWeek Survey Finds".)

Offshore On Their Minds
U.S. IT pros appear increasingly confident their careers can survive amid competition with low-cost labor abroad. However, very few foresee any of the promised career upside of outsourcing: Only one in five expects opportunities to work on more innovative projects as menial tasks are moved out, and just 13% see new hires to support outsourcing work.

Primary reasons for bonus

Personal performance

63%
Staff

64%
Management

Company profit sharing

41%
Staff

42%
Management

Maybe many of them work for bosses like Ron Strachan, CIO at HealthEast, a health care provider, who has yet to be sold on the idea that outsourcing or offshoring would pay off for his company. "I'm not a strong proponent of outsourcing and even less of offshoring," Strachan says. One in three people in the survey say their employers' send work offshore; half do either U.S. or offshore outsourcing.

Some IT pros may be underestimating how much they need to work at positioning their careers to compete against lower-cost workers abroad. Employees should judge how "offshore resistant" they are not by their job titles but by the role they play, says David Foote, president of research firm Foote Partners.

If they're working directly with customers or applying specific knowledge of the business, their jobs are unlikely to be outsourced. So the jobs of people doing straight programming are at risk, while application developers who know the technology and the business environment are in high demand. The same holds true with data mining and business intelligence expertise that's combined with knowledge of the business.

Yet a mere 6% of managers and 2% of staff consider "understanding the company's business strategy" an important factor in their jobs. Just 12% of staff and 19% of managers ranked as an important factor that their work is important to company success.

Buy Your Own Training
Tom Andrix is an exception. To the 61-year-old, knowledge about his company and industry is critical. Andrix has been in IT for 24 years, the last 15 as a database administrator and the last five at his current employer, hedge fund George Weiss Associates. He'd like to keep working as a DBA, preferably at George Weiss Associates, at least until he's 70. "I'm happy in this work," he says.

Andrix is realistic that database administration work can be outsourced, but he believes his situation makes it far less likely. He brings a lot of knowledge about how the company uses the data. And perhaps most important, the work involves much of the company's proprietary mathematical and statistical modeling. "They want to keep that under lock and key," he says.

Plus, Andrix wears "three or four other hats," including working with software licensing and batch job software, since he doesn't want to be seen as someone with a narrow tech specialty. "My job has expanded from DBA to also doing other things," he says.

That's a good way to gain more company knowledge or customer exposure, to be seen as someone who can shift outside an area of expertise or job title. Andrix thinks offshoring can create job opportunities for IT pros in the United States, but only for those with complex skill sets and experience. "Offshoring is upping the ante," he says.

That leads to another harsh reality: IT pros must keep their skills up to date and may have to do it on their own dime.

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