Want Tech Jobs? Read and Heed

Tech jobs are moving offshore. Not new news you say. True. But do you know the possible extent of this trend? The research firm Forrester estimates that 3.3 million service-sector jobs will leave the United States for countries such as India, Russia, China and the Philippines by 2015, including about 473,000 positions in the computer industry.

What does this mean for tech meccas like the Silicon Valley. "It's no longer economic to do low-end software development in Silicon Valley," said AnnaLee Saxenian, a professor of regional planning at UC Berkeley who has studied Silicon Valley's development. The valley will continue to grow, she said. But "we will not see employment growth on the scale we saw in the 1970s, 1980s and 1990s."

Is this just a short-term blip, or a long-term trend? "Offshore is going mainstream," said Frances Karamouzis, an analyst with Gartner, a Connecticut technology research firm. "Companies are jumping on the bandwagon."

Is cost part of the problem? Yes. In Silicon Valley, salary and benefits for a programmer with a few years' experience run about $75 to $80 per hour. A third-party provider in the United States charges about $125 per hour for the same service, according to Karamouzis. Leading Indian firms, such as Wipro, ask only $20 to $25 per hour, she said. And second-tier Indian companies can be found that will do the work for as little as $15.

Observers say that the financial pressures created by the recession have prompted a big acceleration in the flow of technology jobs offshore. In India, big U.S. tech companies are rapidly expanding existing operations.

Not all agree that this is a permanent shift. Despite the current rush overseas, experts say moving technology operations offshore frequently doesn't make sense. "There's just a fad mentality now," said University of Southern California business school Professor Ravi Kumar.

Where does this leave community, regional and state efforts to bolster their tech economies? It squarely pits them against their international competition. Prior to the the 2000 recession and the events of 9/11, many areas like Boise, Phoenix, Salt Lake City, and other places were seeing a nice flow of new tech companies. Now, these areas suddenly find themselves trying to compete against regions in India, China, and Singapore that they had never heard of before. My recommendation is to get out your world atlas and go to school on what these areas have to offer. Also, explore the potential to "partner" opportunities with these emerging centers across the world--just make sure you cut a deal that you can live with in the long term.

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