Since you are deeply in the American IT sector, my questions shouldn’t be to hard to answer. - Now that the US is running an IT trade deficit, what is that indicative of in the American IT industry? - Now that Bangalore India has more IT workers then Silicon Valley (I know, it’s true) does not India have a bigger external economy of scale, and thus even cheaper to do it there within this decade? - What can an American do, that an Indian can’t within this decade? What justifies maintaining 89K salries when a Indian can do it for 25K? I think they'll get 'em, as the economy booms. The question is, is this boom sustainable? Taking into consideration the hikes in the interest rate? You think the employers will laugh in their faces and ship the jobs overseas or just cut their pay or hire a cheaper replacement (right?). That would seem logical, if the person in India for instance has the same technical knowledge, slightly lower productivity, but substantially lower wages; it would be illogical not to move. Of course the heart of the American economy is not the big corporation, most people are hired by small, and medium sized business that find it better to utilize American labour, but eventually to their own detriment. IMO that stops working at some point because the replacements aren't there and the job can't be shipped overseas. Not all jobs are going to be shipped overseas of course not, I suspect that much of the R&D will be in the US, and very advanced technological work as well. But the meat and potatoes of America is at threat from excessive labour costs, and the American govt’s inability to offer universal healthcare, and better education.
Well, I would say that it's indicative of lower salaries for the same positions. Programmers that were getting hired for $60-80k are getting hired now for $40-60k. And there are fewer programming positions. On the flip side, people know this, and aren't going into programming with the same zeal as before. If you take a look at what the school are turning out, both at the high end institutions (Georgia Tech, MIT, etc) and the local colleges and universities, you see that programming isn't really a popular subject anymore. Students today are taking courses in IT management, decision support, expert systems, human-computer interaction, and of course the all-popular buzzword of 21st century computing: Security. 20 years ago when I was a freshman at Georgia Tech, everyone was going to become a programmer. Everyone. Today that's really rare. You also have the interesting influence of the new private, for-profit institutions cranking out entry-level programmers in a year (career changers with previous college credits) or two (high school graduates). These folks are taking entry-level programming jobs that your GT/MIT grads are passing on, or staying in only briefly. For this particular student, that's a new career job, and they're likely to stick with it a while -- they see it as a plataeu position, not a launching point. Either way, wherever those programmers come from, they're not like programmers from 20 years ago. They can do more with less knowledge because the tools are better, and the expectation of productivity is much higher. In other words, the whole nature of the industry has changed. By the way, one thing that hasn't changed since the Bubble is that companies still feel they have to "hire knowledge". Technology changes very fast, and once an employee has been with the company a while an employer feels that they know that employee and their knowledge set is already part of the company knowledge pool, so they don't have any further knowledge to offer. Want the latest security technology? Gotta hire it. They still haven't grasped the fact that you can do that internally through training. But where a company would pay double the appropriate salary to hire that knowledge five years ago, they won't do that now. But I digress. Sure, more competition for the same jobs means lower pay. Until all of those people are employed, that is. Then the situation changes. We saw this in the 1990s when labor was in demand. The situation was so out of balance in favor of labor that you had to actually quit and go to work for another company in order to get the wage that others with similar experience and responsibility were getting. Nothing. We're not supermen, we're just people. We've never done anything that another country couldn't do just as well, IMO that's not what makes America great at all. Anyway, the bar slides up and we have to keep pace or we get left behind. (BTW, if we're talking about programming, the Indian doesn't do it for 25, he does it for 40.) Well, at least you're not saying that jobs are a right and wages should be fixed and "living wage" should be the rule. (grin) That seems to be what the left wants us to believe these days. But we've seen the "meant and potatoes" threatened before. Look at how imports and robotics threatened the car-making business starting around... what... the 1970s? If the doom and gloom you heard back then had held sway then unemployment certainly would not have fallen to 4% during the Clinton administration! AND average wages CLIMBED during those decades, so they obviously weren't all getting jobs at McDonalds. Obviously those people found something else do to. Now we'll just have to do it again.
Here is what I found in the job scene: IT Industry: There still are plenty of needs for low level programmer jobs such as Java developer, Report writers etc. But they are divided into tools area. People are looking for experience in specific tools such as Cognos, Business Objects, Microstrategy etc not to mention Peoplesoft and SAP. In the past, companies were switching from legacy systems to new client server systems and hence there was a lot of activities. Now, most people already implemented SAP, Peoplesoft etc ERPs and CRM packages. The only need is for updates and twiks. People still needs DBAs and network adminstrators but that jobs dry up fast. Non-IT sector: Non IT sector jobs are basically business and MBA type jobs that is slowly drying up because most companies either went belly up or went offsourcing/outsourcing. So, this is a depressed market. I have strong and successful International Marketing experience, yet no body even looked at my resume for the last 8 years. That is perhaps because, we do not produce anything for export - we import.So, I moved to IT staying a step ahead of the market. Your experience counts only for the last 3 years. Anything before that, most companies ignore it, no matter how great you were. As a result, there are very few people who are multi disciplined and hence can not solve complex systemic problems. Yes, the salary has dropped 15 to 20% but that is for low to mid level people. Salary for VPs and Directors are stable.At the same time the quality of these VPs and Directors are at the low point. These are the people that are technology and business dynamics ignorant. But companies are making profit. This happens because, the companies no longer are growing and in fact shrinking.Some make temporary profit and others operate on a smaller scale. There is nothing wrong in operating in a reduced size except, the big guy catches all the fish and soon you get smaller and smaller until you are no more. Such is the wonder of neuroeconomics....Please Register or Log in to view the hidden image!
Well, I would say that it's indicative of lower salaries for the same positions. Programmers that were getting hired for $60-80k are getting hired now for $40-60k. And there are fewer programming positions. Well Pangloss you have a good synopsis for a question I didn’t necessarily ask. Who are getting hired for $40K now is the point I was trying to make. In 1998 the US ran a huge surplus in technology trade, today it is in a huge hole. Why is the US importing more technology based products then it exports? Something must have happened btwn 1998-2003. Sure, more competition for the same jobs means lower pay. Until all of those people are employed, that is. Then the situation changes. But that’s impossible and that’s the point, in India the number of people who could be hired is infinite. India’s labour force is 406 million persons (labour force not population) that is 4x as much as the US. I can hire 15 Indian labours to make a computer and it would still be cheaper then to get one American to make that same computer. Thus I push down the productivity and keep costs low. Nothing. We're not supermen, we're just people. We've never done anything that another country couldn't do just as well, IMO that's not what makes America great at all. Ok so then why as a corporation should stay in the US? What makes the US competitive? Surely not her education system, Canada is a much better place (I should know), India has high educational standards, or Russia? I am at pains to imagine where the US has a solid comparative advantage. Anyway, the bar slides up and we have to keep pace or we get left behind. (BTW, if we're talking about programming, the Indian doesn't do it for 25, he does it for 40.) 50% less then a American no? Well, at least you're not saying that jobs are a right and wages should be fixed and "living wage" should be the rule. (grin) That seems to be what the left wants us to believe these days. No I don’t want to go back into the situation of stagflation, where wages and unemployment were artificial. In order for the US to do what those “leftists” want trade restrictions would be necessary, and totally distort the Global economy. Look at how imports and robotics threatened the car-making business starting around... what... the 1970s? In response American productivity has went up in those industries to remain competitive, but they still lag behind the Japanese in terms of productivity. American industry in the 70’s and before was artificially propped up through trade restrictions, and American consumers were paying more for less. AND average wages CLIMBED during those decades, so they obviously weren't all getting jobs at McDonalds. Obviously those people found something else do to. Which is true, they did new industries emerged. But back then the transition was slower, and globalization simply didn’t exist.
But back then the transition was slower, and globalization simply didn’t exist. Good thinking. That is a dynamic behavior most people do not get it including a friend of mine who writes high profile articles for Business Week.
I am not kidding. People get so bog down in "now" that they forget the interactive variables and time factors. Companies spend millions of dollars to build what is called Performance Management Systems, yet choose the criterias that they have no or little control over it. I see that all the time. May be when you get your education and join the business world, you could make a difference. We need smart people to lead us from the coming disasters.
Sure, more good work is being done overseas. It's called competition. You don't need someone with 20 years in IT to tell you that. (grin) Right, we've already established that this is your position, and I respect your points, but disagree. Like I said the other day, these countries are going to begin telling US what's possible and what's not possible. But I see no reason why you can't ramp things up to the next level. You have ten times as many people writing software, sure, but ten times as many people BUYING software. Everything steps up. Sure, those are good questions, and I'm sure the big companies ask themselves this question all the time. I'm not MBA type, so if you're looking for an expert opinion you're asking the wrong guy, but I would imagine that there is an answer to this question, and it's been analyzed to death. I would also imagine there's a point at which the question is answered with "it's time to move overseas". We should endeavor to find out what point that is. Yup. Well I could nitpick about that, obviously we had imports and we've seen how that can go. The automobile industry found ways to compete, but the domestic television manufacturers, for example, did not. But certainly the pace has quickened and education is poorer (at least relatively, if not overall). So that's the $64,000 question. Of course, if we knew the answer to that one we'd both be worth a lot more than $64,000. You know what the Chinese word for "danger" is the same as, right?
I am not kidding. People get so bog down in "now" that they forget the interactive variables and time factors. Well I guess they never heard the axiom: “no pain, no gain.” Yes individually a person can be smart, but in a collective the “tyranny of the majority” really shows its face. So very Enron…. May be when you get your education and join the business world, you could make a difference. We need smart people to lead us from the coming disasters. LOL! I’m not dumb, do you honestly think I am going into that horror zone called the private sector! Economics is merely a sideshow for me. Become a proletariat, or petty bourgeoisie, lol! Pangloss Sure, more good work is being done overseas. It's called competition. You don't need someone with 20 years in IT to tell you that. Or can it because foreign companies and subsidies are more competitive then American industry, and since trends continue what makes us think that Silicon Valley won’t become the next Detroit? Like I said the other day, these countries are going to begin telling US what's possible and what's not possible. But I see no reason why you can't ramp things up to the next level. Well let me tell you what I think will happen in India and China, because inside these countries within the next 20 years there will be regions that exceed European states in GDP, but there will also be provinces within those nations whose GDP still resembles that of African nations. As I told you before China alone is the size of the entire western OCED nations population. Let me get hypothetical here for a second: Let’s say in India Bangalore which is the tech capital of the country grows and achieves a sizable external economy of scale (this effectively negating comparative advantage). The province in which Bangalore is located which is Karnataka, then assume that the GDP of Karnataka is $800 billion (the size of South Korea’s economy) and approximately the same population, 52.7 million. The GDP per capita of Karnataka would be around $15,000. But let’s take the most populous non-nation in the world, Uttar Pradesh whose economy is traditional Indian, no hi-tech. Cotton, agriculture, and light industry. Let’s say her GDP is around $500 billion, now by face value that might seem like much right? But let me throw in some numbers, Uttar Pradesh’s population is 166 million, so her GDP per capita would be around $3,000. (Here I’m not factoring in India’s huge population growth rates). Now what does this mean? India itself is a mini-world economy. Because Karnataka is so much richer, and Uttar Pradesh so much poorer do you think it is really all that possible to have prices increase that much. If prices were at Uttar Pradesh levels Karnataka market would be underperforming, and if prices were at Karnataka levels Uttar Pradesh would suffer from very high levels prices, so what happens? The Uttar Pradeshi’s move to Karnataka to bring down their per capita rate and bring it within Uttar Pradeshi’s levels. This migration happened in the Industrial revolution in England, the US, Latin America (Argentina and Uruguay mostly), and other developed states. The poor flock to the rich areas to find work, and we are still omitting India’s overall population of 1,065,070,607. We haven’t discussed the ramifications of about 847 million persons. Same goes with China, imo it would take a VERY long time for wages and prices to go up in the entire nation. You have ten times as many people writing software, sure, but ten times as many people BUYING software. Everything steps up. Are there? If ten ppl make the software in India at .74/hr, that’s $7.40 per hour for ten people. I can decrease prices but to relative levels of course. I still want to make the same if not more in profit. With influxes from let’s say good ole Uttar, prices for labour decrease significantly. Supply and demand, that’s why I don’t buy that wages and prices will increase too much in these nations because you forget about migration. We should endeavor to find out what point that is. Indeed…. The automobile industry found ways to compete, but the domestic television manufacturers, for example, did not. But should we have sustained those inefficient TV manufacturers? Are you suggesting protectionism? But certainly the pace has quickened and education is poorer (at least relatively, if not overall). Welcome back potter.
God no, we have no choice but to compete now. Interesting points about the poverty levels of India and China lengthening the growth process. I hadn't thought about that.
