IT Job Market May Improve in 2011

CareerBuilder surveyed IT managers in the United States in charge of hiring. The job site subcontracted the interview work with these IT managers out to Harris Interactive, which did surveys from November 15 through December 2, 2010.

When the numbers were all tabulated, 42 per cent of the managers contacted said they planned to add permanent, full-time IT people in 2011, up from only 32 per cent who said they would hire full-timers in the IT department a year ago. Sixty-six per cent said they will be increasing the compensation of their existing IT staff in 2011 – the average expected pay raise works out to 3 per cent – and 56 per cent of those polled said they were worried about losing their best employees as the economy continues to improve. Salaries for new positions are expected to go up by between 1 and 3 per cent.

Who moved my comfortable IT job (who moved my cheese)?

One of the best books on change is Who Moved My Cheese?  The book chronicles what happens to those that anticipate and welcome change and those that refuse to change.   The software industry is changing rapidly and I am sure that many are wondering who moved my cheese?  Who moved my comfortable IT job.   It is no longer about the technology it is about the business and customer.

The first wave of data processing is coming to an end which was internal development and B2B.  The second wave. B2C,  is underway and we are just at the start of this wave .  Business to consumer covers self service software applications deployed to the actual customer.

It use to be interviews with internal customers would suffice the requirements process.  Today, knowledge of the actual customer and the business is critical to the success of the requirements process and the success of a software application.  The big change is trying to understand the business and customer as much or more than the technology.

Read more at Reboot! Rethinking and Restarting Software Development.

Bah, Humbug! A look at IT Past, IT Present and IT Future

Everyone knows the story of the Christmas Carol.  Charles Dickens examines Christmas past, Christmas future, and Christmas present. As perhaps the worlds only Software Economist, I examine IT past, IT present and IT future in this short article.  Like Dickens, I have endeavored in this Ghostly little article, to raise the Ghost of an idea.

1. IT past.
2. IT present.
3. IT future.

All industries have cyclical ups and downs.  There is no reason to believe that the software development industry (IT) will not follow the same up and down cycles like other industries and the overall economy.  When the economy rebounds will so IT.

The more I study, learn and experience software development, the more I am convinced that software development is just like every other industry.   What a Ghostly idea!

The Current State of IT
What has happened in the field of software has happened before and has happened in a lot of other industries too.  The recession in IT is worldwide problem and not isolated to the United States or Western Europe.  An Australian friend who does IT consulting in Southeast Asia wrote, “The few consulting jobs I had planned in 2009 in Malaysia, Singapore, and Vietnam are gone or on hold for the time being.”  Another friend living in Europe wrote, “these are tough economic times and it is a bad time to be looking for a job.”   More than half of IT employees and contractors in the UK express dissatisfaction with their career path.

It seems like there are comments on all the Linkedin groups about the economic woes of IT.

According to a recent CIO survey CIO’s are continuing to put discretionary IT projects on hold, renegotiating IT vendor contracts, and freezing IT hiring.   Nearly 64% of the CIO’s reported they were freezing IT hiring and nearly 43% planned on reducing head count.

Before we get depressed here are some basic economic principles:

1. All industries have cyclical ups and downs. There is no reason to believe that software will not follow the same up and down cycles like other industries.  For those of us with a bit of gray hair we remember the slump in oil industry in the 1970’s and look at the profits of the oil industry today.

2. Recessions are like forest fires because they clear out a lot of the dead and unnecessary wood. Investment in IT needs to be re-examined and carefully scrutinized.   Too much investment was based upon “latest” and “greatest” technology and not on sound cost/benefit analysis.

3. When the economy rebounds so will IT. IT is following the same cyclical pattern as the overall economy.

The unemployment rate for the software development industry rose over the last year.  Overall the unemployment rate for software development rose from 2 percent to 4 percent or it just about doubled.  According to the Bureau of Labor Statistics (bls.gov) during the past year the

– Software Engineers unemployment rate rose 1.9 percent to 4.1 percent

– System Analysts unemployment rate rose 3 percent to 5.7 percent

– Computer and Information Systems Managers unemployment rate rose 2.7 percent to 4 percent

This is just about the same level of unemployment for college educated individuals.  While the overall unemployment rate is just around 9.5 percent,  the unemployment rate for those with a bachelor degree is around 4.8 percent.   The rise in unemployment in the software industry is following the same trend as overall employment too.  The unemployment rate for individuals with a bachelors degree or higher went from 2.4 to  4.8 percent during the same period of time.

IT Past
Not too long ago, there were companies testifying in front of congress saying there was as shortage of IT workers and they need more H1B visas.  During the early 1990’s many proclaimed that the IT industry was recession proof.   Some experts proclaimed there would be a shortage of IT workers by the year 2010.   IT turns out these experts were wrong.   It seems that IT is following the same economic trend as the overall economy.  I feel like I am repeating myself.

Many in the IT industry were fat and happy and did not continue to improve skill sets or learn about the business.  It seems like few in IT actually study the core business.

IT Future
The software industry will return and be healthy again.   Will the software industry be exactly the same as before?  No, this much we know for sure.  It will emerge and become healthy again, but the shape and especially the location is not known for sure.

Those individuals that take the time during a recession to sharpen skills and increase their skill sets will prosper.   There will be many individuals that will leave the software development industry for good and look for career options elsewhere.  This same thing happened in the late 1970’s with the oil industry.

This is the time to polish skills and sharpen your tools.  The internet provides an avenue for individuals to self study without outlaying any cash.  The library offers a lot of online resources and current technology books too.

Specific Trends

Continuation of Offshore Development
Clearly a lot of IT jobs are being exported and this trend will continue. Other industries like textiles moved completely offshore and the design and marketing jobs remained in the USA.    It appears the same is going to be true of software development.

The number of graduates in computer science continues to plummet.  The number of those choosing to major in computer science has fallen about 50% since 1999. BUT the number of PhD’s getting computer science degrees continues to grow.  The percentage of non residents (international students) getting PhD’s in Computer Science rose from 20% in 1985 to nearly 80% in 2008.  Most of these doctoral students are from Asia.   These PhD’s return to their home countries and teach computer science.  This means the instructors for off shore developers are being trained at schools in the US.

The next round of off shore developers will be better trained than the first round of developers.  It will be increasingly difficult for US and western European developers to compete on skills and on price.

Specialization
As industries mature they specialize.  Software development is still an immature industry.   There are a variety of industries that have been around for a few centuries like  engineering, medicine, law, architecture and textiles and they all have specialists along an industry line.

In the early nineteenth century a skilled seamstress performed all the roles necessary to make a dress. All dress making was customized. The industry matured until several specialists performed all the roles once performed by the seamstress. Designing, planning, and marketing became a specialization too.  There are some designers who specialize in men’s clothing and others that specialize in just designing wedding dresses. This trend is already starting to happen in software development.

Less Technical Skills and More Business Skills
The long term trend is away from technical skills and towards business and design skills.  When the only tool was a needle and thread it took a lot of skill to sew something.  With the invention of the sewing machine, less skill was required of the seamstress. Clothes were first worn for very functional purposes and new we use them for both a functional and design purpose. The same was true with software development and especially with developing websites.    The first software programs were for functional purposes only and now design does matter.  Not long ago it took a strong understanding of html to develop a website but as tools improved the necessary technical skills diminished.  (a nice graph here).

While the number of computer science degrees have plummeted the number of degrees in human factors design continues to grow.  This is going to be a driving force toward understanding the business and understanding the user.

Summary
I have a heard a couple of themes from software developers for a number of years.  The first is software development is somehow different from all other industries.  No one can really give me a reason beyond “just because it is different.”  As things shape up it appears that software development is just like every other industry.

The second thing and more to the point here is I have heard from many software developers they are better than their counterparts in India, China or eastern Europe.  When I push and keep asking the question, “What are you better at?” They answer, “I am better at requirements, design and knowing the business.”  This is true!   Americans and western Europeans need to focus on what they are better at and move away from technical skills because there is no long term future in it.

The number of developers in Asia and eastern Europe continues to grow.  They are becoming better educated too.  It is going to be harder and harder for an American or western European to compete on skill and especially on price.

Hot Jobs in Software Development, Try Specialization.

speak and write a lot about specialization in Information Technology and the idea of specialization relates to the original question by Sharon.  It turns out that software is like many other industries such as textiles, metal working, medicine and architecture.

During the past centuries the evolution of modern societies has moved vigorously in the direction of increasing specialization of labor, knowledge, and expertise. It would be quite astonishing if software development did not follow this same path.  The idea of specialization is nothing new, and it is not limited to a specific industry or a field of study.

Specialization in software development seems to be following a specialization along a specific phase.  There seems to be a clear divergence between technical skills (.net, COBOL, and other languages) and business acumen.

We saw technical jobs  either disappear like blacksmithing or be exported to Asia like textiles.  What remained in the USA were business, requirements and design jobs.

As the software development industries matures there will be more and more individuals that specialize in a specific business.   A problem is that many software developers have no desire to learn about core business.   For the most part software developers do not study their customers, the core business or their companies competition.  If software development does not understand the core business, how is it possible to understand what functionality needs to be included or not included in any project, upgrade, or release.

I could go on and on this subject.  I devote an entire chapter to this in my online book Reboot! Rethinking and Restarting Software Development.  The book is free and online at http://www.RebootRethink.Com.

David Longstreet
Software Economist
http://www.SoftwareMetrics.Com

Cloud Computing rhymes with Mainframe

It does not matter if we are talking about fashion, movies or even IT, things repeat.  Tie-dye, peace signs and 3D movies are making a comeback. Besides 3D movies there are a lot of  sequels and prequels movies too.  It seems like information technology (IT)  is repeating itself too.   Maybe not repeating but at least rhyming.   The latest trend in IT seems to be Cloud Computing.

In a land far far away and a long long time ago there were these things called mainframes.  A mainframe was  centralized processing.  These mammoth computers were housed in large rooms with big air-conditioners and ran by men with black horn rimmed glasses.  Then there was a movement towards distributed processing and everyone would keep a copy of everything on their individual workstations.  There were proclamations that the mainframe was dead.

Don’t get me wrong here folks because there have been a lot of improvements from mainframes to Cloud Computing. All the talk about Cloud Computing sounds familiar.  Cloud computing succeeds where the mainframe failed.

With Cloud Computing I get to keep a copy of my files on my workstation.  This allows me to work when I am not even connected to the internet.  With mainframes everyone had a dumb terminal.  It was called dumb because it did not really do anything unless the terminal was physically attached to the mainframe.

Everything is automatically backed up!  Woo hoo!  I don’t have to worry about backing up critical files because they are in the “cloud.”

Since my files are synchronized across more than one workstation,  I can access my files from my laptop, my desktop and even someone else’s computer.

Since I am a self professed Apple head, I use a product called MobileMe.  MobileMe is classic Cloud Computing.  My wife never understood why the calendars on all our computers could not be synchronized, but now with MobileMe my wife can check or update calendars and contacts on any computer or device.  My iphone, my wife’s iphone, my laptop, all my iMacs and even my PC’s all stay perfectly synchronized just like a bunch of synchronized swimmers.

In the end the rumors of the mainframes death were greatly exaggerated .  They seem to be making a come back with a new name (cloud computing).   Cloud computing does offer much more than a mainframe and it succeeds in ways the mainframe failed.

Wait a second!  Tie-dye, Peace Signs, and Mainframes are all from the late 60’s and early 70’s.  What’s next miniskirts, flower power, and an energy crisis?

Read more at Reboot! Rethinking and Restarting Software Development

Global Software Development: Country by Country

China

It is estimated that nearly 500,000 new software related jobs were created in China[i] between 2003 and the end of 2006.  Software related employment in China is growing at 20% per year. China wants to add about 250,000 jobs per year over the next 4 to 5 years. At the present time, there are about 1.5 million employed in Chinese software development.   By 2010, there will be nearly 3 million software developers will double in China.

India

Growth in IT software employment in India is amazing.  In 2000,  there were only 284,000 software developers jobs in India.  By the end of 2008, the number of software developer jobs was around 2 million.  In only eight years, employment in the software industry in India has grown nearly 7 times.

India achieved an employment in software development level in 8 years what it took the USA to attain in 28 years.[ii] There seems to be no end to the growth in software development jobs in India.  Tim Sullivan of the Associated Press reports that “Tata Consultancy Services, India’s largest software company, hires around 3,000 people per month.  The consulting firm Accenture, a USA firm, plans to hire 8,000 in the next six months, and IBM, another USA firm, says it will bring on more than 50,000 additional people in India by 2010.”

In 2008 software exports from India were worth 35 billion dollars.  Of those exports, over eighty percent were to the USA and UK (sixty-seven percent were to the USA and fifteen percent to the UK).    What all this means is there are a lot of US firms and UK firms using India to write code.  The movement of programming jobs outside Western Europe and the USA to India is going to continue over the next several years.

Eastern Europe

Jeremy Roche, Chairman of the European Software Associations believes “there will be a shortage of software labor in Europe.”  In the next four years, nearly 1 million software development jobs will be added to the 19 EMEA countries[iii].

According to Eastern European Times, software development is blooming in Eastern Europe.  The targets for software development include Russia, Romania, Praque, Budapest, Bratislava, and other Eastern European cities in search of programming talent.  Not only is Eastern Europe a destination for outsourcers, some really cool software such as Skype, UPEK and Netbeans was developed in Eastern Europe.  Bulgaria-based Ivanka Panayotova of MindFusion Ltd said, “The software industry in Eastern Europe, as a portion of the entire business sector, is larger than in most other countries worldwide  -definitely bigger than one would find in a developed country.” Panayotova believes that “gradually, with the expansion of the European Union, the computer sector will start to move ahead—not in quantity, but in quality—and it shall meet its Western counterparts as equal to equal.”[iv]

Eastern Europe is expected to have a significant growth rate in IT over the next several years, and many countries are expecting double-digit growth.   Over the next 5 years, the average growth rate of Russian IT is expected to be twenty percent per year. [v]

South America

Countries like Brazil, Costa Rica, and Argentina are also developing healthy software development economies. Brazil boasts of having over 150,000 software professionals and plans to add about 15,000 per year.

According to Carlos Palotti, president of Argentina’s Chamber of Enterprise Software and IT Services,  Argentina’s software companies are growing so fast that they could hire 15,000 more qualified IT professionals through 2009.  It is estimated there are about 50,000 individuals employed in software-type work in Argentina.   Argentina aims to have software development represent 3% of its GDP by the end of the 2010.  The current rate is .7%.

Part I

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[i] IDC, Table 1, IT Market Growth and Local and International Contributions.  “The Contribution of Software and IT Services Industries to the Chinese Economy, John F. Gantz, IDC – Chinese-Economy.pdf.

[ii] Information Technology Annual Report, Government of India, annualreport2006-2007.pdf

[iii] Austria, Denmark, France, Germany, Ireland, Italy, Netherlands, Portugal, Spain, UK,

[iv] http://eetimes.eu/industrial/199600117, Software development blooms in Eastern Europe.  Why the next big thing in software may come from Eastern Europe.

[v] http://eng.cnews.ru/reviews/indexEn.shtml?2006/10/09/213301

It’s a small world after all – Global Software Development I

When I was a young boy my parents told me to eat all of my food because there are people in China and India who are starving.  I tell my kids and those college students I speak to study hard and to work hard because there are people in India and China that want your job.  They are smarter than you, and they are willing to work harder than you too.

Everyone who has had an economics course knows that success attracts competition and software development is no exception.   Many countries are predicting large growth in employment in software development.   Country after country expects to utilize software development as a key industry in hopes of accelerating job growth and positively impacting the entire economy.

It is not just a few countries making software anymore. The idea of software development begins simultaneously in several countries.   In the middle of the 1990’s most software was created in only seven countries Canada, France, Germany, Italy, Japan, United Kingdom and the United States.  These seven countries are known as the G7.  Based upon published government reports I estimate employment in software development in the G7 was about 2 million in 1990.  The current number employed in software development in G7 countries is around 5 million.

No one knows the exact number of those employed in software development worldwide. The current employment levels in software development in India are around 1.5 million, and in China, they are around1.3 million. The remaining world (Eastern Europe and South America) about 2.2 million employed in software development. In 2008, there were about 5 million employed in software development outside of the original G7 countries and about 5 million in the G7 countries.  Based upon all these official, government reports I estimate it to be around 10 million.

The G7 countries went from 100 percent of the software development industry in 1990 to 50% by 2006.   Right now it is a tie game, but most of the G7 countries are predicting steady 5 to 7 percent growth rates while India, China, and Eastern Europe are predicting 20 percent growth rates.  In less than twenty years 70 percent of software will be developed outside G7 countries.  Only about 15 percent of software will be developed in the USA.

We have seen these same patterns before.  A few countries dominated the auto industry, the wine industry, and steel industry.  There was rapid growth, a period of no growth, then decline.

Software does not have to be put onto a ship and transported across an ocean.  Countries have established import fees (duties) on many goods and services.  This will not be possible with software.   Software can be moved from one side of the world to the other in a blink of an eye.   Software does not have to stop at shore’s edge and be counted.    Even if it did stop at shore’s edge what would inspectors count?  How would they size the amount of software crossing a border?  It is easy to count the number of cars, tons of steel, or bottles of wine.

Tomorrow I will shed some light on software development country by country.