The 2006 ACM report on Globalization
and Offshoring of Software—a report
to which Andriole contributed—finds
no evidence to support this view. If
anything, the opening of the offshore
labor market in computing seems to
have increased the number of computing jobs in the U.S., as illustrated by the
following paragraph from the Executive Summary: “The economic theory
of comparative advantage argues that if
countries specialize in areas where they
have a comparative advantage and they
freely trade goods and services over the
long run, all nations involved will gain
greater wealth.…This theory is supported to some extent by data from the
U.S. Bureau of Labor Statistics (BLS).
According to BLS reports, despite a
significant increase in offshoring over
the past five years, more IT jobs are
available today in the U.S. than at the
height of the dot-com boom. Moreover,
IT jobs are predicted to be among the
fastest-growing occupations over the
next decade.”
The reality is that the shortage of people with the expertise industry needs is so
severe that companies will go anywhere
in the world that can provide workers
with the necessary skills. If those people
exist in Bangalore, Moscow, or Shanghai,
then companies will hire them there.
And if those people exist in the U.S., those
same companies will hire them here.
Unfortunately, all too many people
seem to believe that companies always
seek to minimize labor costs, typically
by employing workers at the lower salaries that prevail in developing countries.
That view, however, represents a fundamental misunderstanding of labor economics. Companies are not primarily
concerned with minimizing costs; after
all, they could accomplish that goal by
shutting down. Companies are in the
business of maximizing return.
A simple thought experiment will
make this difference clear. Suppose you
are Microsoft and are looking to hire
people with stellar software development skills. One of the candidates you
u.S. degree production and annual employment projections.
Ph.D.
Master’s
Bachelor’s
Projected job openings
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
engineering
Physical sciences Biological sciences Computer sciences
source: Adapted from a presentation by John sargent, senior Policy Analyst, Department of Commerce, at the
CRA Computing Research summit, February 23, 2004. original sources listed as national science Foundation/
Division of science Resources statistics; degree data from Department of education/national Center for education statistics: Integrated Postsecondary education Data system Completions survey; and nsF/sRs; survey of
earned Doctorates; and Projected Annual Average Job openings derived from Department of Commerce (office
of Technology Policy) analysis of Bureau of Labor statistics 2002–2012 projections.
see www.cra.org/govaffairs/content.php?cid= 22.
even though the statistics in the figure are derived from surveys taken several years ago, there is no reason
to believe the situation has changed in any qualitative way. Comparing the 2002 and 2006 reports from the
Bureau of Labor statistics suggests that employment demand may have shifted by as much as 10% percent
in certain categories. The fundamental message of the figure would not change even if the numbers were off
by a factor of two.
are considering is a recent graduate from
a top-notch Silicon Valley university; given current salaries in the U.S., the cost
of hiring this candidate might be, considering benefits and structural costs, approximately $200,000 a year. You have another candidate in Bangalore who will cost
you only $75,000. Both candidates seem
extraordinarily well qualified and show
every sign of being extremely productive
software engineers, capable of generating
perhaps $1,000,000 in annual revenue.
What do you do?
The answer, of course, is that
Microsoft hires them both. Although
the software engineer in Bangalore
might be more cost-effective, what possible reason could there be for throwing
away $800,000 a year? As long as qualified candidates are scarce and capital
is plentiful, companies will hire anyone
for whom the marginal value exceeds
the marginal cost. The value that a company can recognize from the services
of talented software developers vastly
exceeds their costs, irrespective of in
which country they reside or in what
currency they are paid.
The only way software development
jobs will move entirely overseas is if the
U.S. abandons the playing field by failing
to produce students with the necessary
skills. As the New York Times editorial
page observed on March 1, 2006, shortly
after the publication of the ACM globalization report: “Perhaps that explains
what the report says is declining interest
in computer science among American
college students. Students may think,
Why bother if all the jobs are in India?
But the computer sector is booming,
while the number of students interested in going into the field is falling. The
industry isn’t gone, but it will be if we
don’t start generating the necessary dynamic work force.” Andriole’s failure to
understand that the computing industry extends far beyond enterprise software and his perpetuation of the myths
that drive students away can only make
it more difficult to generate the dynamic
work force the U.S. needs to remain competitive in the global marketplace.
Eric Roberts ( eroberts@cs.stanford.edu) is a professor
of computer science at Stanford University, co-chair and
principal author of the computer science volume produced
by the joint ACM/IEEE-CS Task Force on Computing
Curricula 2001, and past chair of the ACM Education Board.
