IT Labor Shortage Myth

There is no IT labor shortage in the U.S. There is no dearth of software developers. Instead, this shortage is reinforced through repetitious pronouncements by industry of the impending labor crisis, and is used as outsourcing ammunition. In reality, organizations outsource because of two simple and related factors:

  • Business believes IT costs are too high and by outsourcing IT labor, cost is reduced.
  • IT doesn’t deliver value-add business software.

I take my vehicle to a certain mechanic. It’s not the cheapest mechanic, but I go there anyway. Why? Because I’m willing to pay the 25% premium knowing that the job is going to get done right and I’m not going to be back at the mechanic with the same problem two days later. That’s a big deal to me. But if the mechanic charging the 25% premium produced the same results as the shady guy down the road offering a 50% discount, I’d likely switch mechanics. Why pay a premium for inferior service? The same happens with software development. Historically, companies have not received the benefit that goes along with paying higher salaries. Why pay someone $90k to deliver crap when someone can be paid $45k to deliver the same crap? As developers, we can blame big business for outsourcing our jobs. Unfortunately, we have to blame ourselves for not producing.

I may be guilty of simplying a complex situation. Certainly, there are other credible factors that influence the outsourcing decision.

  • Businesses may be wise to diversify their resource pool in a way similar to how a financial portolio is diversified. That makes sense.
  • In some cases, specialized talent or skills are required. And that means finding and working with the most knowledgeable supplier.

But these are not the reasons why business is outsourcing IT. While an IT labor shortage is often the reason given, in reality IT is shipped out because the cost is high, and we don’t deliver a product comparable to the price paid. Here are some simple numbers debunking the IT labor shortage myth, with sources cited.

It appears there is no conclusive evidence suggesting either a current or impending IT labor shortage. There is no doubt that the IT boom of the late 90’s influenced many people to major in IT, and is the direct cause of the spike in degrees awarded between 2002 and 2005. However, I’m not convinced that we’ve seen a lack of interest in IT as a major so much as I’m convinced that we’ve experienced an abnormal surge in graduates over a short period due to the dot com era. Recently, we’ve adjusted back to normal levels. Regardless, we are not experiencing an IT labor shortage because the evidence clearly shows there are more IT graduates in the U.S. today than ever before. And these graduates will be in the workforce for the next 25 to 30 years. While industry claims there is a shortage of programmers, what they really mean is that there is a shortage of cheap programmers. Again, why pay premium price for inferior results.

In fact, when comparing the numbers from IT with that of other disciplines, there are some striking parallels.

I don’t find information that suggests IT is in any more dire straights than other occupations experiencing phenomenal growth. I certainly doubt we’ll outsource Healthcare or Education, unless we also want to outsource the ill and our children. Instead, Healthcare and Education reform help address these situations. While we can argue as to the short term success or failure of these reform efforts, the long term affects are positive.

It might sound as if I’m sending conflicted messages in this post. I’m not. To be clear, I cannot blame organizations for wanting to outsource IT. I can easily produce numbers illustrating IT failure. They are not hard to find. I can blame organizations for lying about why they want to outsource IT. Isn’t it quite possible that instead of outsourcing IT, we should instead consider IT reform and fix the mess we’ve created? Instead of feeling victimized and helpless, we can take the first steps toward reforming software development. The best path to reform is through providing a premium service that produces the value-add software business needs. We control our destiny.

Additional information on the IT Labor Shortage is also easy to find. Just Google IT Labor Shortage. Another rather lengthy article you might find interesting is Debunking the Myth of a Desperate Software Labor Shortage by Dr. Norman Matloff.

9 thoughts on “IT Labor Shortage Myth

  1. K^2.

    You are cherry picking on your facts to support no labor shortage. To accurately do it you must first estimate the number of jobs in the US today in IT. Then consider how many are moving on from that role in the next 5-10 years (retirement, advancement, etc). The boomer cycle has a huge impact in state IT staff concerns for example. Once you have models for that you need to consider is IT staff increasing (or not) over time. I suspect it is. You could look at IT spend but that would be skewed by outsourcing companies who are getting 3-4 people for the same spend as a US staffed company.

    Once you nail down a model like that your numbers might be worth pondering more. I don’t think referencing a study done almost 10 years ago (the debunking article) is solid basis either.

    Like your blog. Thanks for the post.

  2. Tim,

    Looking at the estimated number of US IT jobs won’t provide clear evidence since these numbers are intentionally and artificially inflated. These numbers are the outsourcing ammunition.

    I recognize the boomer cycle and the future staffing concerns surrounding it. But the numbers show that we have more IT graduates today than ever before and that IT enrollment was up 10% last year. If the state has future IT staffing concerns, it’s not because there is a shortage of IT labor, it’s because Gen X and Gen Y have different values than traditional state employees, and state IT jobs do not appeal to them.

  3. Not that I disagree with your basic premise, but I would like to point out that the US is, to an extent, outsourcing healthcare. The US imports a huge number of overseas-trained doctors, and the practice of “medical tourism” is starting to take off as well (with insurance companies covering it!)

  4. There’s also a shortage of $2/6 pack micro brews. I think you’re spot on with your observation. You can say there is a shortage of just about anything if you spin it the right way.

    Yea, you can argue about the specific details of what the numbers are and what they say. But, seeing it first hand tells me, at least a gut feel, that there is only a shortage of people willing to accept $45k/yr to deliver crap.

    And yes, the real challenge is trying to sell the true value of our own resources at a rate far above what an offshore resource demands.

  5. Importing skilled labor from abroad is a beast separate from offshoring. Each have a different set of problems.

    I admit not being intimately familiar with medical tourism, but it appears the primary force surrounding medical tourism is cost savings. I believe the primary force behind offshoring IT is a quality issue, but that industry is using the labor myth as ammunition to support the offshoring trend. And this is negatively impacting U.S. IT jobs.

    To this point I haven’t found evidence that medical tourism is impacting healthcare jobs. I’ll have to dig into this a bit more.

    Thanks for the comment.

  6. Fair point K^2 and Randy. You would have to write a 500 page study to nail down to metrics that were tight to something and then what do you have. Probably nothing or a headache.

  7. I was in a Silicon Valley school for computer software in the early 90’s. I ran out of money, and stopped going to classes. Pascal and C were easy, but C++ and MS-DOS were tough. One day a friend told me about a new language class, and I told him I was done trying to keep up with all the new languages. Not thinking any companies would seriously hire anybody just to write code, I left school. The class was Java. Ouch. At the time I didn’t see the support in industry for writing good code.

  8. Wow , it’s Labor Day! I’m happy with my extra day off, and I am planning to make something fun that’ll probably involve a bike ride and seeing something new in South Hadley I haven’t seen yet.
    You write something new on this Monday at the labor day? … HaPpY bLogGINg!

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