The software industry is booming and anybody with a degree can be hired on the spot. In India, that is.
The chairman of Intel (NASDAQ:INTC), Andy Grove, warned in a speech yesterday that India's software and technology-service job market could grow larger than the same market in the United States by 2010, because America continues to send work overseas at an alarming rate.
Labor costs overseas can be as little as one-sixth that of similar labor in the U.S., where technology workers are paid generous salaries (and now those salaries are necessary to maintain the standard of living, and perhaps even housing prices, in many tech-centric job markets). In essence, affluence in the U.S. has made overseas labor that much more attractive, which could have dire consequences, Grove warned in today's Washington Post.
What's needed, he argues, is a policy that balances building shareholder value through lower costs (including, he admits, some overseas hiring) with keeping jobs in the U.S., the country that created the jobs in the first place. Grove laments that he does not see this issue on the government's radar and has not heard anything on it from policymakers even as jobs leave for India and China in record numbers.
The two key drivers of the U.S. economy the last 20 years -- tech and services -- could face a fate similar to that of the U.S. steel industry, which had 90% of the world's market share before falling to 10% and never recovering, Grove points out. In a more recent example, the nation's 90% share of the world's computer chip market fell to 50% in the 1980s after Japan took advantage of weaknesses in U.S. strategy. Today, most computer chip manufacturing remains overseas.
Buttressing his argument, Grove reminded that the U.S. economy is improving, but the tech job market is not, as hundreds of thousands of jobs have gone to other countries the past two years, and millions are expected to exodus during the next 10. One in 10 jobs at U.S. information technology vendors is expected to move offshore by next year, according to the Gartner Group and the Post.
Matt Richey has a contrarian take on this heated issue, arguing that cheap labor overseas ultimately leads to new-job creation in the U.S.
One thing seems clear: More study is needed to determine whether the U.S. needs to institute protective policies to keep jobs at home, or if we should let the world market do its work.
