01 Oct Are U.S. Tech Jobs in Jeopardy?
Unfortunately, yes! Advancements in technology continue at an accelerated pace, but the challenge now is to leverage new developments into new tech jobs for workers here in the United States. We need to rethink America’s “value add” in the technology equation. We need to identify what investments should be made to build the proper infrastructure to create the environment that fosters new jobs for U.S. tech workers.
It requires extensive study to make critical recommendations to the federal government and to state governments, especially where technology plays a major role in driving their economy. The government, both at the state and federal levels, needs to become more involved as partners with tech companies, especially startups. This has been a huge wake-up call for the pundits who track the future of where industries might be headed, and what impact it has on U.S. jobs.
Sadly, many high-tech jobs that were once thought safe from going offshore are now doing just that. Customer service and support departments at companies from AOL Time Warner to Sun Microsystems are quickly moving facilities to India, primarily for cost advantage reasons. Software development for U.S. companies has been using Indian companies for the last 15 to 20 years, but now entire projects are being done offshore, in new places including Bangalore, Beijing, Prague, and Romania. Will basic research be next, and where will it all end?
Many Fortune 500 companies are setting up installations in these countries for various tech support and product development functions. The trend will just continue to grow, and more tech jobs will vanish from the United States. And here’s why: a software engineer in Silicon Valley costs $150,000 per year versus about $50,000 for one overseas. Even EDS, the company founded by Ross Perot, the man who talked about the “giant sucking sound” of jobs going to Mexico as a result of the NAFTA agreement, is shipping white-collar jobs offshore to catch up with low-cost competitors.
Technology investments in many companies are still not being fully utilized, and yet there are constant pressures to keep upgrading on a never-ending path! What should technology companies do to attract new customers and create new jobs? There is a need to simplify technology products while saving customers money. With corporate spending on information technology expected to grow slowly in coming years, executives are feeling increased pressures to prove their value to customers before any additional large funds will be committed for upgrades.
In Silicon Valley, since March 2000 when the dot com world imploded, they have lost almost 18 percent of the tech jobs. Recently, job losses are slowing down there, but it’s still far too early to tell if they will pick up again soon. So why is this happening at such an alarming rate? Public companies need a good report card for Wall Street every ninety days, and reducing costs is a constant pressure for executives. Each quarter they fight to meet revenue and expense reduction targets for Wall Street, and if you miss revenue forecast, your stock could drop 10 to 15 percent in a day.
Other pundits say that merging biotechnology, nanotechnology and information technology into a new industry is where the real future of new job creation is for tech workers in the United States. But this idea is years away from making any difference in the current situation. Web services continues to grow, but it’s not going to be a huge technology driver to sustain new jobs by the hundreds of thousands. In the area of telecommunications, recently given up for dead, new smart phones are showing encouraging signs of growth, as are digital televisions. But these are not yet multi-billion dollar industries, and won’t provide big employment gains for years to come.
Larry Ellison, the founder and CEO of Oracle Corporation is quite outspoken and was recently quoted as saying the tech industry will actually shrink. In a recent interview he said the following: “My industry will never come back. Nor should it. Computer systems are still too expensive. They’re too labor intensive.” Comments like this might seem unusual coming from the CEO of a successful technology company, but it’s important to hear opinions that differ from the norm, and not fall victim to complacency of the status quo.
In the coming five years experts predict tech investments in manufacturing, financial services, health-care services, education, and federal government will yield a $140 billion per year cost savings. If these trends do pan out, all of this helps grease the skids for continued expenditures on technology investments, and creates new jobs.
The venture capital community is awash in money, but they are very unsure of where to place new bets. Money “must and will be” invested, but where? New jobs are mostly created by startups, and not from the well-established companies. Larry Ellison, who has invested heavily in biotech startups, and several other venture capital firms, thinks the real big push for new tech jobs will come from biotech startups. But is a very slow process to successfully launch these companies because of all the regulatory hurdles they must get over before a new drug starts generating revenues, and as for profits, they are years into the future!
The United States has always risen to the challenge when faced with a crisis, and once again the country will do just that. But we must recognize the world job structure is dramatically changing. Our survival and economic health depends on effective and decisive actions on the part of the leaders in all levels of government and the private sector.
Effective leadership is being tested as never before in America!
William Dollar is a Senior Contributing Editor for the Wisconsin Technology Network, and has his own consulting company at www.billdollar.com. You can also contact him at firstname.lastname@example.org.
The opinions expressed herein or statements made in the above column are solely those of the author, & do not necessarily reflect the views of the The Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.