Offshore software development isn’t a burning issue for Kinson Ho. As a software developer, Ho says he doesn’t feel his job is jeopardized by the increased North American interest in sending software development overseas.
Sure, the five years of experience he has from developing software for back-end servers provides some job security. But in today’s marketplace, Ho says he needs to be more than a programmer. He has to make his skills invaluable to his company.
“If, as employees, we only focus on the technical skills that we do, but not the other transferable values such as analytical skills, interpersonal communication skills, domain expertise, leadership or management skills that we can provide for the company, we can easily be drifted along as the work moves offshore or gets outsourced,” Ho says. “I believe that it is time to rethink and reinvent ourselves in this challenging time.”
Citing the need to save money, many application development firms are seriously considering adopting an offshore model and, therefore, hiring developers overseas.
But it’s too early to sound the alarm bells, say industry insiders. They all seem to agree that as long as Ho and other developers continue to push their skills to the limits, adapt and learn new technologies and stay on top of cutting edge technologies, there will be a future for programmer jobs in North America.
A lot of hype around offshore software development resurfaced recently when IBM Corp’s intention to move nearly 5,000 programming jobs from the U.S. to China, India and other countries was unintentionally let out of the bag.
A spokesperson for Big Blue, who said the information was released to the public from an internal company memo, would not comment directly on the information. He did say the company expects hiring in the U.S. to equal or increase over 2003 levels.
“We’re growing jobs and we have to try to impress upon not just IBM but the entire industry that this isn’t a zero sum game. It’s not ‘For every job gained in India there will be one lost in the Americas,'” said Clint Roswell, spokesperson for Big Blue.
But what’s the story for developers?
So far, offshore development is having a bigger impact on U.S.-based developers than those in Canada, said Jim Westcott, senior analyst at IDC Canada Ltd. in Toronto.
“Typically what we’ve seen is that there’s been a lot of pressure on the U.S. market to retain development jobs if they haven’t already gone offshore,” Westcott said. “In Canada what we’ve seen is that there’s been some benefit of that work being shifted out of the U.S. into places like Canada.”
The the U.S. is offshoring jobs doesn’t mean there is pressure on Canadians to do the same, Westcott explained. Also, Canadians tend to be a little more conservative, which is also why fewer Canadian companies are opting to use offshore resources in the same way their U.S. counterparts are.
This will change if the exchange rate continues to rise and there are fewer direct savings for U.S. companies to send development projects to Canada, Westcott said. It’s only a matter of time before Canadian companies begin to experiment with the offshore model and therefore put increased pressure on Canadian developers and the development market to keep application development in Canada.
Even if Canadian development firms aren’t moving as quickly as development firms in the U.S. are, when it comes to adopting offshore models, the word is already on the street. Robert Horwood, president of the Information Technology Association of Canada, an advocacy group that represents 1,300 vendors in the IT sector, says more companies than ever are looking into offshore development.
“I don’t hear a lot of people making use of offshore software development but we see a lot of people coming through here trying to drum up support,” he said.
Future students are being affected. Coupled with the dot-com bust several years ago, enrollment at many college and university computer science courses has been dramatically affected by the increased popularity of offshore development.
Ten years ago computer science programs had to turn students away because classrooms were stretched to the limits and now they have trouble filing all the seats, said Dave Swayne, professor of computing and information science at the University of Guelph. He teaches a joint IT course with Humber College called Distributed Programming and Communications Systems Technology.
Classes are still being attended and numbers are holding, but universities and colleges just aren’t seeing the mass influx of applications they were when software developers graduated five or 10 years ago, Swayne said.
“Already the consumer marketplace — where the students are going — has passed judgement and has said, ‘Offshoring is already here; I guess it’s time to throw in the towel and take a job somewhere else.'”
If the country wants its IT employees to have a fighting chance, Canada needs to place more emphasis on IT training within the educational system, Horwood said. Encouraging interest in mathematics and science at the university level is too late. Training must be gradual and should start at the kindergarten level.
But in today’s job market, students who are currently enrolled in computer science courses will likely do quite well. “The dedicated will still get jobs because there isn’t a flood of poor-quality people trying to become programmers. There will be good jobs for those that do want to become programmers,” Swayne said.
It’s a catch-22 situation. If Canadian kids aren’t being trained for programming careers, then the country will lack professional developers. And, if there aren’t any software developers in this country, what happens to the jobs that require software developers? Perhaps they will have to be offshored, or moved elsewhere, Swayne explains.
Development jobs disappear
Evgeny Taranda, a Chicago-based independent consultant in development and offshore development who has moved into consulting related to intellectual property, said knowledge workers are the equivalent of skilled workers two centuries ago and, as such, a similar fate awaits many of today’s IT workers and developers.
“The programmers and the developers are affected today because they are the bottom layer in the development structure and incidentally, we mostly see that the actual programming jobs are the ones that are exported today,” Taranda said.
Does it make sense to follow in this direction?
From one perspective, Swayne said offshore development is part of globalization, and that Canada shouldn’t put up protectionist barriers against developing countries. At the same time, he asks whether we want everyone to be a medical doctor or to have a masters degree. Or do we want the odd computer programmer? As a country, Canada needs to examine its own view of things, Swayne said.
“I mean, are we all going to sell each other hamburgers?” Swayne added.
The future for both Canadian and American developers hinges on how they embrace new and emerging technologies. “You see a lot of manufacturing still happening here; it’s just in more specialized areas,” Taranda said. “In order for a developer to be successful, they will have to keep their skill set much sharper and more up-to-date than developers elsewhere in the world.”
Students entering into computer science and mathematics courses should keep that in the back of their minds, he added. “One big advantage they have is access to the cutting edge technology in Canada and the United States.”
Right now, Canadian companies that send development projects offshore say there has not been any change in the job market in Canada as a result of their decisions.
Jean Depelteau, senior associate at Montreal-based Sopratech Inc., said that in order to compete and to have the ability to do very large projects, software development companies need to send development projects to such places as China. But managers, technical architects and designers need to be hired and based in Canada in order to maintain close contact with the North America-based customers.
Dmitri Buterin, president of Bonasource Inc., a Russian offshore development company, said his firm might not employ software developers in Canada, but it does require local, higher-skilled employees that can manage and design the project before sending it to Russia.
With one office in Toronto and another in Moscow, the company needs to have strong lines of communication, he explained, but the jobs that are available in Canada are more complicated and better paying.
Western developers won’t leave
Ho said, by reinventing himself, he’ll be in a better position for a higher-level job. If development jobs move overseas, he said he has no plans to return to his native Hong Kong. This is a key issue as far as offshore consultant Taranda is concerned. Also, it isn’t financially beneficial for a Western developer to work for an offshore company in the capacity of a developer. So there likely won’t be a mass exodus of software developers leaving Canada or the United States to work in China or India.
Instead, those developers in Canada and the United States will have to focus on how they can differentiate themselves from people studying the same skills in India, or other offshore countries, he says.
And that’s exactly what’s Ho’s plan of attack will be.
For now, Ho said he doesn’t see his job being offshored to China or any other popular software development destination. But he firmly believes that if developers want to keep their jobs in today’s market, they need to consider how they can increase their value as employees in order to remain indispensable for their companies.
Forrester Research Inc. predicts the loss of some 3.3 million American jobs, including 500,000 jobs in information technology, to offshoring by 2015.
Recent research from McKinsey Global Institute’s (MGI) analysis shows that U.S. firms have more to gain from offshore development. Companies move their business services offshore because they can make more money, which means that wealth is created for the United States as well as for the country receiving the jobs, a McKinsey report concluded.
Of the US$1.45 to US$1.47 of value MGI estimates is created globally from every dollar that an American company chooses to divert abroad, the U.S. captures US$1.12 to US$1.14 while the receiving country captures on average US$0.33. In other words, the U.S. captures 78 per cent of the total value.