Oh Where, Oh Where Have Software Jobs Gone?
Here is an interesting analysis by the Economic Policy Institute in Washington, DC.
Software jobs, which pay some of the highest wages in America, have fallen sharply since 2000. These jobs have disappeared despite the fact that software sales to U.S. businesses in 2003 were up 4% over 2000. Comprehensive data on the number of U.S. software jobs that have moved overseas is hard to come by, but persuasive indirect evidence points towards the significant movement of software jobs to India (the most prominent of many countries to which U.S. software work is being moved).
There are two ways to look at software employment: software-producing industries and software occupations. Software-producing industries (software publishing, custom software and computer systems design) employ many people who actually work in non-computer occupations, like sales or accounting. On the other hand, software occupations (e.g., programmers and software engineers) are also found in a range of other industries, such as finance, manufacturing, and professional services.
Domestic software-related jobs, however measured, have declined significantly in recent years. U.S. jobs in software-producing industries declined by 128,000 (10%) between 2000 and 2004, while jobs in software occupations shrank by 154,000 (5%) from 2000 to 2002 (the last year data were available).
The story in India is quite different. In February, India's industry association of software and related companies (NASSCOM) published an analysis of recent trends indicating that the professional jobs in India's software export sector rose by 150,000 from 1999 to 2003. Given that 67.7% of its software exports go to the United States, this growth implies that Indian software jobs servicing the U.S. market have increased by roughly 100,000 over the last four years.
More here.
posted by Don Iannone, D.Div., Ph.D. at
Saturday, September 04, 2004
1 Comments:
Hi Don,
Interesting analysis, but....
I don't buy into the line of reasoning put out by the EPI. I have so many points of difference with their report, where do I start?
First, creating software is not like manufacturing widgets. As a software industry veteran, I can tell you that it's a royalty-based business model, rather than a production-based business model. You create a piece of software and re-license it over and over. Programmers don't keep re-creating it anew, like a factory worker churns out widgets. Programmers provide support, enhance the software, yes. But that does not involve the same level of effort as writing the app from scratch. Thus, right off the bat, an organization like EPI that is top-heavy with union leaders, is bringing a fundamentally-faulty analysis to this industry because they are trying to analyze it like a production-based industry from their traditional union backgrounds. You can't measure software industry revenues in production terms.
Second, the software industry has undergone productivity improvements just like other industries. In 1999, I purchased a Web content management system and spent nearly $100,000. Content management systems were a revolutionary and new thing then. Five years later, I use a blog by Blogger for zero dollars, that provides 75% of the functionality of that expensive content management system. How can this be? Is it because India has flooded the market with cheap software? Not at all. Blogger was created right here in the good ole USA. The reason has a lot to do with the maturation of the software industry. The industry (including companies like Microsoft and "unemployed" programmers working in open source) has created tools from which software is now built. Five years ago many of those tools didn't exist, so every time a company built a piece of software they had to start almost from square one. Every single time. Now, instead, they start with the tools and can build applications in almost no time, with far fewer lines of code. These blog sites you and I have created for free and with absolutely no programming help, we would have had to pay programmers and web designers big bucks to do only a few years ago.
To add another twist to this, consider that those same American programmers who are building free stuff using open source, may not even be employed and may not show up on the Payroll reports, but they keep churning out Linux-based and other open software for free or very little money. Why would they do something that seems so counterintuitive, we ask ourselves? You'd think they would insist that everything be proprietary and that they be paid for the fruits of their work, but they don't. And not only don't they, but they positively rail against capitalistic companies that do make money from software, like Microsoft. It has to do with the culture they've established, which values open software more than the value of their hours in it -- it's a very complex set of motivations. And I know the EPI report does not take into account all the unpaid labor devoted to the open source movement, and factor in how that has affected the "official employment" situation and all the free or very low cost software available on the market that either replaces new fee-based software or minimizes demand for it.
Don, let's have lunch one of these days and delve into this subject further. I enjoy your blog very much. Keep up the great work.
Best,
Anita
By
Anita Campbell, at 5:37 PM
Post a Comment
<< Home