One of the research projects I am working on is how schools, business and people align themselves to develop the skills needed for the workers we need today, and going into tomorrow. Like most forward projecting projects, the data gets fuzzier as you move deeper into the future, but there are some interesting aspects of current research in the field that points to not just what you should be learning, but the kinds of degrees that people should be pursuing to remain employable and compete on a global scale.
It is hard to image that the American IT worker has to compete for a job; we can look around at the thousands of companies in the USA that use and rely on IT in one form or another and wonder if they have any openings. We can easily bring up Dice.com, Careerbuilder.com, Monster.com and a ton of other job sites that show thousands of open jobs even in the midst of a recession. Throughout the current recession the IT jobless rate kept on floating at about 5% or ½ of the jobless rate of the rest of the USA. IT people were able to if they had current skills that were in demand still demand and get the perks and pay that they wanted to get.
We could reasonably assume that jobs in IT should be plentiful and easily come by, but the reality is that anyone in IT today is competing on a global scale, not just with the IT worker down the street but the IT worker in China, Malaysia, India, Eastern Europe, and every point in-between. While little of this is new, some of the research completed and published by Georgetown University (available here) is an important part of the decision making process for colleges when they are working on what to teach, matched with the Talbee Report from the Computing Research Association. It would be very good for IT workers to read these projections because colleges plan their budgets and course loads on those projections. This impacts the availability of training, the type of training, and how much that training will cost to get.
There are also some predictions that Technology will not drive the next economic boom, we have become in many respects a maintaining factor in a company. As a maintenance routine IT workers are essentially commodities. As a commodity, IT workers are simply going to face the same pricing pressures that any other commodity worker or product has faced and will continue to face. This does not mean that we will not be busy – it means that companies will have a whole new idea of what constitutes IT, and the people who work in the field.
Welcome to the new face of IT, tier 1, 2 and 3.
Over the last 8 years (since 2002) companies have been outsourcing to contractors locally and to overseas contractors in what has become the generally accepted reasoning to save the company money and remain competitive. This is part of the commoditization process, what can be outsourced has been or is in schedule to be outsourced. Two fundamental reports though, the CRA Talbee Report and the Georgetown jobs prediction report are also helping to drive changes in the IT field, and both reports show a trend in IT that current workers in IT need to know about.
Breaking the information down – CRA Talbee Report…
188 colleges were polled as to the total number of Computer Science and Computer Engineering students who were enrolled in degree seeking programs. This poll while a sampling of colleges that produce bachelor’s students in computer science saw a total of 8,100 bachelor level graduates in 2009. Out of a 300 million population, 8.100 graduates a year is not enough to support the IT industry in its current shape or its future projected shape through 2018. This means a major farming of IT skills to where graduates are like China and India. In 2006 (best data available) India graduated 144,070 people alone with computer engineering skills, while China graduated 600,000 in 2006.
We are all familiar with the H1B visa program, and this is part of a system that was designed and developed to help the best and brightest from other countries come to college here, and get employment in the USA. While there are raging debates over the H1B visa project, as intended it was meant to help fill this gap and provide a place for the best and brightest of other countries to come here and do cool stuff. The H1B visa program, for all its long and short discussions about fraud, equity, and the American worker will remain in place, because the original intention was good, regardless of what companies have done to that spirit. Companies are going to seek the best and brightest, 8,100 graduates is not enough to fill the needs of one company let alone the entire American IT industry, and this is not a deep enough pool for the 5% best and brightest. The high number of graduates in India and China makes for a much richer pool of graduates in CS and CE to choose from than the limited pool of American graduates.
Numbers no one wants to talk about or write down
Here are some other numbers no one wants to talk about when it comes to Computer Science or Engineering because it writes off entire populations of workers and potential workers. American companies have been inundated with the idea of the rock star programmer. That one programmer or worker who does the work of 10 people, never complains, and simply does things that no one else can do, does it well, and can raise a company to new levels of performance and efficiency. Stack overflow has an interesting set of commentary on that myth that is worth checking out. Another thing we do not want to talk about is the rest of the population, but if some private academic models hold true the generally held belief model breakdowns a population like this:
1% rock stars (highly productive and creative)
4% True believers (highly productive – but not as creative as rock stars)
20% people with marketable Skills (good technical programmers, not creative)
25% people will skills (need some polish but could become people with marketable skills)
50% of people who went to college but didn’t get it (barely literate programmers, hate what they do, often lost to the industry after 4 or 5 years)
5% of 8,100 is 405 workers who actually have not just the skills, but the creative edge and willingness to work more than 40 a week because they love what they do, they are very productive, they care about what they are doing. This leaves 1,620 workers who will contribute, but not in the same manner as rock stars or true believers. Now look at the numbers from India – 5% is 7,203, China – 30,000 – this is a much richer pool of people to choose from. And this is one of the big drivers for opening up Microsoft China, Google China, along with India outposts from major American based countries. We can look at Eastern Europe the same way; the rock stars alone globally are enough to fill Microsoft and Google’s needs for the foreseeable future. There is enough of a demand for that top 5% of the graduate population that they can go anywhere, work for any company, and do anything they want to do.
Yet there is another population to address, the “other 95%” of graduates.
Sadly many in business are taking the tactic that we need to simply write off ½ of the graduating populations right now, they simply didn’t pay attention to what was being taught, or they are such marginal workers that they will be a net negative to the companies that they are hired by. Over time they might become functional, they might contribute, but a vast majority of them will be spending time doing other work that is easily outsourced to the larger graduating populations at a fraction of the costs that hiring America first will entail. No employer wants to hire a marginal worker of any nationality, they want people who will jump in and do amazing things.
The other 45% stand a chance of being at least a low level or mid level code writer for a company. These are not the people who will be creating new and wonderful things, these are people who will be implementing someone else’s idea. These are your every day performers, and they are going to be found in many companies doing things, but not being creative, not pushing the programming envelope, and generally content to do work. Their work is somewhat easily outsourced, code maintenance, web site maintenance, and other common coding or engineering practices. This population is the population that will be outsourced because someone else in a different country can do the job just as well as an American worker at a fraction of the cost (although this is leveling out and might signal a resurgence of mid level programmer positions in the USA).
Future Forecasting of where the jobs are going to be…
The Georgetown University report shows some interesting trends for the IT community that reflects well with the CRA Talbee report on the raw number of graduates from 188 institutions that took their survey. According to the Georgetown University report, IT workers, those in the Computer and Mathematical sciences together will make up only 2.6% of the total working population in 2018. That is roughly 4.2 million positions in total open in 2018. Today there are some 3.3 million working positions in IT in America. American graduation rates in IT are not enough to fill these positions, let alone the graduates from China and India. This is a true reason for companies to move operations overseas to seek a bigger talent pool. Companies have to tap a wider and wider range of graduate’s worldwide just to fill open positions in companies. This is also one of the reasons that many of the larger companies believe that the H1B visa program is too restrictive, the numbers simply do not match needs.
The effects of the Dot Com Boom and Bust
With only 3.3 to 4.2 million IT workers in the USA, this is where jobs are only going to open up slowly, working in the traditional technology company is going to be harder and harder to accomplish. This does not mean that there will be a lack of need for people with IT Skills, but that they will be working in places other than traditional IT. We peaked with the concept of warm body hiring during the dot com boom. Anyone with a pulse could get a job in a startup or other company working in IT regardless of skills or ability. Companies got burned, employees got burned, and an entire generation moved on to something else putting not just pressure on people who remained in IT and helped set the stage for massive outsourcing of low level IT programming, helpdesk and system administration positions. IT was seen as a job with a lot of pressures with few if any rewards, but it also had some positive aspects on the IT culture. The rise of “Nerd Culture” with its cultural icons like Steve Jobs and Bill Gates, the rise of the Nerd Bible, and the idea of lottery style winnings from working at a company that went IPO or was bought out fueled a near drug craze life style that has not faded from the world. There are today thousands of startups that are still hoping to create the winning meme, the must have product, and there are just enough successes to keep the dot com boom dream alive.
There are some interesting dynamics to the startup scene that are reminiscent of the dot com boom and bust cycle. There is still a large amount of “lottery style thinking” still going on in this space. VC’s are still active in the space, but Angels are starting to play a much bigger role. Former Microsoft and Google millionaires as well as other millionaires from recent successful companies or companies that grew up and were successful in the dot com boom have developed incubators for companies with good ideas but have difficulty finding the time to fund them. These companies usually attract rock star performers because what they are doing is interesting, and there is a promise of huge paydays as some rock stars will work for equity in a company. Some startups want the freemium model of employment because they cannot pay wages, rather people are working for a percentage of a company. This carries its own risks and its own set of rewards by personalizing the company to the employees who suddenly have a stake in what they are doing outside of the paycheck.
Employers have latched onto this not just through stock options and bonuses but also by a focus on youth, a focus on continually hiring for new skills rather than retraining people (although this might be a myth as well, a significant portion of education dollars is spent by corporations on their employees), as well as a focus on making big bang products like the Ipad, Xbox 360, Android and other gee wiz products. This takes an impressively dedicated pool of people to bring the vision to reality. We have remarkable leaders in this space, but like most rock stars they are few and far between.
Three Tier employment in IT
This is where three tiered employment in IT comes into mind.
Tier 1 – these are the rock stars and this is where companies are going to focus their efforts on, these are the FTE’s (full time employees) of the future as cost cutting, efficiencies and other business processes begin to latch into having only the creative top 5% of any population as the core human asset of a company. These are the people who will have the largest ability to go create, solve difficult computer problems, and help design the next set of software, hardware, and mobile systems that we will be using.
Tier 2 – these are the simple performers – people who can carry out the vision of Tier 1. This tier might be graduated (Tier 2 – A, Tier 2 – B) based on the potential or output of a particular employee. This tier is working on becoming commoditized today. These are the code writers who are revising and working on stub code, some QA, some testing functions. These are also the point people for particular sets of technology like cloud computing infrastructures, or specific to the company programs or systems. Odds are highly likely that these are also the legions of contractors that provide spot support to companies like Google and Microsoft are going to be working in.
Tier 3 – these are the outsourced – this is help desk, this is system administration, payroll processing, low level programmers, and others that fit the commoditization package. This is the work that can be done anywhere in the world for less than hiring anywhere else. Tier 3 has already been outsourced in major ways to countries across the planet, not just India and China. American IT workers simply cannot compete in this space, we are too expensive overall. Tier 3 is the commoditization of IT, and where the pricing pressures will continue to lower wages globally for IT.
Where does college fit into all of this?
College is a proving ground for want of a better way of putting it. We prove we can learn skills against a set of measures. We have our 4.0 students and we have our average middle of the bell curve students to go along with that. Not everyone is a 4.0 student much like not everyone is a rock star developer. If the focus on companies is the statistical anomaly at the upper bound of the bell curve, there are few meaningful IT jobs where the work is sexy in large companies. This does not mean that there are no sexy jobs, it means that people will have to take risks to get those sexy jobs, like work in the startup world. Colleges in many respects have one thing that is needed to open doors for employees, and that is the bachelor’s degree.
Of immediate value the bachelor’s degree opens doors that would be otherwise closed. The Georgetown report spells this out clearly, there will be no jobs open for high school dropouts or high school only educated people in the IT field. Some jobs will be open to people with an AA or AS, but it is the Bachelors and Masters level degrees that open doors. And these have to be honest degrees from honest colleges with accreditation. You can see some companies further narrowing the scope of acceptable education to include IT specific accreditation packages like ABET.
Most of this process is designed to graduate people with skills, people who are in the upper 50% range that companies want to hire. According to Department of Education statistics though, 100 people start in a computer degree field, and only 26 will graduate four or five years later. One of the reasons for a very small graduation pool. Sadly as the debate over K-12 education continues, a similar crisis is happening at the college level. We are getting in students that are seriously not prepared for college, or the demands that college work will place on a student. Add to that work, life, school balance and you have an immediate setup for failure for some students. This simply feeds the three tier employment model that if not apparent today will be deeply apparent by 2018.
This is the uphill battle for students, getting a degree in an industry that carries significant risks of outsourcing unless you are a top flight 5%’er.
No wonder other types of jobs look so appealing right now.
Sales and office support, health care, community service, all of these are less risky positions because they are tied to a physical space. These jobs happen where people are, in hospitals, offices, cities with high density populations. These are jobs that are hard to commoditize and remote (today, things will change in this respect by 2050) offering at least a chance of stability in the work force. It is still possible to work 20 to 30 years at the same health care provider. Federal jobs, some state jobs in critical services are also semi-secure or face a less possibility of being laid off depending on taxes and political will.
This leaves the IT worker in their dwindling numbers and opportunities in a difficult position. There are solutions though to this process, but it will require a very large change in how we do things. We cannot undo the last 10 years of commoditization in the IT industry, but what we can do is be more effective at inspiring and supporting future IT workers throughout their educational process. This starts in elementary school and on through college. We can make attempts at making IT more stable, but that is unlikely as the IT industry is structured today. We can try to make IT sexier, but we have to deliver on that sexiness universally to have an influence or impact on CS graduates. There are many things we can do, but like many professions we need to mostly attract the best and brightest with a love for technology to have an effective knowledge working IT work force.
How we develop that is anyone’s best guess.
(Cross-posted @ Managing Intellectual Property & IT Security)