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.


Are we doomed?

Is History Repeating Itself?

About one hundred years ago blacksmiths were considered a highly skilled occupation and like software development, it was labor intensive.  While the blacksmith had been around for centuries, it was the Industrial Revolution that created a rapid growth in employment from 1880 and  1915[1].   The blacksmith was critical to the Industrial Revolution, and the software developer is a critical component of the information and knowledge revolutions.

If, in 1915, someone would have suggested to the million plus blacksmiths employed in the industrialized economies they would be obsolete in less than 50 years, they would have thought that person crazy.  The idea of working with metals, fabricating metals, did not evaporate; it was the role of blacksmith that became obsolete.    The role of blacksmithing turned into ironworkers, and those blacksmiths that did not learn the new skills of ironworkers were not able to find employment.

Instead of creating everything from scratch metal workers (weldings) began to assemble parts and pieces together.  We are seeing this same basic trend in software development today.

As software development rolls down the road of progress, the programmer will become obsolete; and the idea of software developer will continue into the future.  I imagine there are those reading proclaiming, “You will always need someone writing code,” and I am sure there were those blacksmiths who could not imagine a world without them, either.  It will be a combination of automation and outsourcing that will make the Western programmer obsolete.

The story of the blacksmith does not end with the decline of employment.  Today blacksmiths are artists and a novelty profession.  The British Artist Blacksmith Association (BABA) continues blacksmithing as an artist profession as well as offering courses on blacksmithing, and they have regular events..   It has nearly 700 members worldwide and their members create brilliant works of art.

[1] United States Statistical Abstract 1915.  Page 233 Table 158

US Economic News for IT – not so good!

Last week the Bureau of Labor Statistics reported that unemployment remained flat at 9.7 percent.   It seems that government, manufacturing and even construction industries added jobs, but IT jobs lost ground.

Within the very broad information segment of the economy, which includes movies, music, publishing, broadcasting, telecoms, and data processing, the telecommunications industry lost 5,000 jobs, to 943,300, while data processing, hosting, and related services companies cut 600 jobs, to 247,500.

The professional and business services segment, which has a total of 16.35 million people working within it, has some IT-related parts. Companies providing computer systems design and related services cut 9,600 jobs in the quarter, a small portion of the 1.43 million people in this field but significantly nonetheless.

IT Economic News – Mixed Results.

Harry Truman (former President of the USA) once quipped something like, “I want a one handed economist because economist always say things like on the one hand things looked good, but on the other hand things don’t look so good.”

This is especially true with the latest economic figures from the Bureau of Labor Statistics for the IT sector.

The information sector includes publishing, movies, broadcasting, telecommunications, and data processing and hosting, the Telco’s shed 2,600 jobs, down to 951,100, while data processing and hosting companies added 2,900 jobs, to 248,900. In the professional and business services sector, the IT-related segment is for companies that are involved in computer systems design and related services, and in this area there are nearly 1.44 million people employed, and in February the number of people employed in this area rose by 8,700.

Finally, management consulting and technical services – which often has an IT component, given the importance of computing to the running of any business – as a group shed 2,100 jobs last month. So… it is not all good new or all bad news.

Economic Value of A Process

I received and interesting email from Tony Bonn.  Where he suggested that processes have economic value.  Adam Smith argued a wealth of a nation is not based upon its amount of stored money or the total value of assets.  Instead a countries wealth is based upon its ability to produce goods and services.  Does this same concept hold true for an organization?

In the information age an organizations economic value is its ability to produce goods and services not just a summation of assets and cash.   Of course physical assets and cash are necessary, but not as necessary as the processes the organizations utilizes.  The argument goes like this, the better the process the more an organization can produce.  Those organizations with the best processes in place are able to produce the highest value of goods and services. The process, the how, is more important in developing software than the physical assets used to create software.

It seems logical a certain amount of value needs to place on the processes of an organization.  If a processes increases the book value of an organization it increases the stock value too.

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

Published in: on June 25, 2009 at 08:44  Comments (2)  
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Global Software Development: Country by Country


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.


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

[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], Software development blooms in Eastern Europe.  Why the next big thing in software may come from Eastern Europe.


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.