Global competition for software engineering jobs

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akratic
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Post by akratic »

Spinoff thread from Create the PERFECT ERE Life...
jacob: The reason for my suggestions, i.e. not computer science, is the risk that anything that can travel via phone, fax, and network is likely ultimately to go the same way as anything that could travel via shipping container.
Eventually, it will even be possible to outsource surgery (via robotic interfaces). I have a harder time imagining it will be possible to outsource plumbing.
I think the middle class office jobs are going to same way as the manufacturing jobs. So the pertinent vocation question is:
Do you foresee global competition?

With regards to software engineering, Jacob, I think you're probably right in the long term, but not in the next 10 years (which is all that's really needed for ERE).
The thing about software engineering jobs is they are half technical ability and half communication. From what I've seen, the global competition is so terribly bad at communicating right now, that it doesn't matter what their technical abilities are. In other words, if they don't understand what they're supposed to build, they're no competition at all. You can't beat this with incredibly detailed specs either, like some people think you can, because software design and implementation is such a collaborative and iterative process.
I remember eight years ago lots of people were arguing that software engineering / computer science would succomb to global competition, but in my experience, the demand for very good software engineers outstrips supply even more siginficantly today than it did back then. My theory on this is that the industry is growing faster than globalization is taking away the opportunities. (That is, demand is rising faster than globalization is increasing the supply.) Who knows how long this will continue. The nice thing about ERE is it doesn't have to continue for long.
In general, I don't think an ERE should be concerned much with increasing global competition and other big projections, because their career timeline is so short.
The big downside to my plan is that invariably people who choose software engineering for money are terrible at it and miserable.


jeremymday
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Post by jeremymday »

Because the list of things one can do to reach ERE is so large one should definitely think about these things.
In the case of deciding what career to choose one has to think longer than a 10 year time frame...
At a minimum it will take 4 years to attain a degree in software engineering. If one works in college to graduate debt free then this may take longer... If you hurry through college and take out loans you first have to pay those off before you can even start your ERE plans...
In either case you are talking a minimum of 10 years before ERE. 15-20 years might be a more realistic time window if you start out with debt and if you are unable to live a very frugal lifestyle for one reason or another...
Which brings up another question...
It is wise for an 18 year old to pick a career that will help them more easily reach ERE...
What about a 30 or 40 year old career changer who never went to college, who has no savings, hopefully no debt, and wants to work more on producing more income rather than becoming more frugal then they already are?


B
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Post by B »

I also reacted to this notion with skepticism. I have long bemoaned the fact that corporations want me to commute from my cozy bedroom workstation to one behind a desk in an office building. However, there is a big reason for this.
Communication. Globalization of the entire engineering job market is not impossible only for the language and cultural barriers that akratic mentions, but also because telecommuting cannot substitute for being in close quarters with your whole team.
I would not count on Asimov-styled magic like holoviewing or universal translators to make globalization of the job market a real threat any time soon.
EDIT and DISCLAIMER: I also want to echo akratic that the main way to have security is to be damn good at what you already know, damn fast at learning what you don't, and perhaps most importantly, damn effective at communicating your knowledge. Communication is the factor that multiplies all your other skills.


dpmorel
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Post by dpmorel »

The US has a few very big things going for it wrt to software engineering:
1. The money is in Silicon Valley. Most Silicon Valley investors only invest locally. They may setup much smaller funds in India, China, etc (e.g. Sequoia) but the mammoth amount of money still lies in Silicon Valley to be invested in Silicon Valley. Most investors require at least the engineering mgmt is local... trickle down... many engineers are hired locally.
2. The best engineers in the US are still generally ahead of the best engineers from other countries. Mostly due to available experience because of 1. Berkeley students can do internships creating massive new services.
3. The best global software engineers still generally move to Silicon Valley. Most investors right now are pushing hard on the US gov't to open up immigration for the *best and brightest*. The flow is still not the other way around because the best software opportunities are in the US.
4. Its really hard to mimic Silicon Valley globally, many countries have tried to build "the next Valley" and have failed miserably. Culture, socio-economics, weather, money, history, etc...
5. Hosting services & access to broadband is still lightyears ahead of most countries. It is non-trivial to get affordable/reliable hosting + an ISP in India/China. This is generally gated by power which won't be solved soon.
I would NOT want to be an average or bad web page coder in the US, esp somewhere like the mid-west.
I would LOVE to be a good or great software engineer living in San Francisco - the future is incredibly bright. The Internet is only going to continue to grow (much to my chagrin) as many internet services are in their infancy (commerce, communications, mobile, etc). Many, many people don't know about or use skype, gtalk, amazon, etc.
I can't forsee anybody overtaking Silicon Valley in the next 20 years (Israel??), so I think most of the above will hold true for a long time.


jacob
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Post by jacob »

The case can always be made for good communication in any field. Soft skills are simply going to do better when backed by hard skills. They are more generalized and they are abstracted one level up. [ERE/Chapter 3]
I'm not talking about outsourcing "parts" to other countries. I'm talking about other countries simply taking over the entire industry, like how you no longer buy US made TVs, cars, ...
I'm talking about how IBM retail computers became Lenovo.
dpmorel may be right (I don't know) that Silicon Valley has a large moat, but I suspect it's like what Detroit used to have for cars. You'd have to get to Silicon Valley to get those benefits though. A software engineering degree in anytown may be a noflier.


KevinW
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Post by KevinW »

Well, I've done software engineering at a Silicon Valley company full of six figure brainiacs, and at a value company that outsourced almost everything, and IMHO the Silicon Valley company got a better return on their salary investment than the value company did. Yes the California brainiacs were orders of magnitude more expensive, but I submit with all humility that they were more productive by an even larger factor.
There are a lot of busywork tasks in SWE, but the unique thing about software is that master engineers can automate that away, and the productivity boost gets multiplied across all the other engineers in the firm. Besides the busywork tasks, there are highly technical architecture and algorithm design decisions that entry level outsourced engineers seem to be incapable of making properly, or take so very long to make properly that it nullifies their wage advantage.
Education is globalizing, so in the long term I agree that the proficiency gap will close and Americans will get undercut by people in countries with cheaper ground rent. But I see that taking at least 10 years. That's long enough to for an ERE or ER career to play out. But may not be long enough for a college freshman.


EREFan
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Post by EREFan »

Hello everyone, I am new here, but I couldn't stop by and not post part of my story, as I think it might be relevant.

I hail from Europe, and am not from a native English speaking country. I have been telecommuting for the past 8 years, working for the US market solely. I have even been employed by the US Federal Government, just before the economic crisis of 2008-2009 - I was laid off (because of new policy, that they didn't want to keep foreign citizens as employees - outsourced that is - given how the economy was back then, and how rampant the US unemployment was getting) - another 50 colleagues of mine, US Citizens, also lost their jobs along with me.

I am actually more happy now, than I was back then, were it not for all those unfortunate circumstances, I would not be where I am today, no longer underpaid and working in the private sector as a Software Developer for a Chicago, IL based company.

I am sorry I deviated a bit off topic, but just wanted to provide a bit of background about my recent path.

As the previous posters have mentioned, communication is still a key factor, in outsourcing, but in the digital age, movies, TV Shows, video games, such as World of Warcraft, where most content is in English, and players are somewhat, forced into speaking English with their friends, mates, etc, it is only natural that most do bypass the language barrier allot easier, than say pre-internet era.

Hey it happened to me... I only referred video games as a context on where people use English. There are multiple uses of English throughout Europe. But I wouldn't think that it would take 10 years for massive outsourcing to happen, it's already here, now.

On a side note, in the EU, the common language used for pretty much anything, is English.

I.e. some big companies, such as Google, Microsoft, IBM, are already recruiting and outsourcing software engineering throughout the globe, they branch out, and setup development teams locally in those countries, such as China, India etc. So, it’s only natural that those jobs will move towards those economies instead, because it keeps costs down, returns high, because the Investment is also lower, and those nations, are actually having/seeing a bigger growth in terms of IT graduates - I mean, there’s such a high demand in the field, that jobs working for said companies/industries are almost guaranteed.

So I don't think language is as a barrier as it used to be. It comes down to, a mix of communication, skill and Dedication! That’s right, Dedication with a capital D.

I am just going to be a bit broad, and hope not to offend anyone by saying it, but from my experience, the software engineering market that I have worked on, mostly ex-colleagues, in the US was composed by allot of slackers.

What I am trying to say, is that productivity wise, and from my experience I have seen that US Software Developers, are allot less productive, when compared to people I know, and this relates directly to dedication. Again I know quite a few developers and this is what I have seen and experienced.

So to sum it all up, if you have the technical skill, and are dedicated you can pretty much do anything. AS LONG AS YOU RETIRE EARLY. Hahaha :)
PS: It is not my intention to start a flame war, nor to offend anyone, but this is what I have seen, and to every rule there's an exception.


S
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Post by S »

As a full-time remote software developer, I don't think communication issues simply due to being remote are a huge barrier to writing good software. I'm on a team of 6 developers, only two of whom work in the same office. We meet up in person 3-4 times a year, but do the rest of our communicating via conference call, screen-sharing, and IM. It's really not a problem. I can definitely see the day when equally competent developers from countries with a lower cost of living replace me. The main reason this hasn't happened yet is that the quality of the developers just isn't very good. I don't doubt, however, that foreign developers are studying and improving so they can eventually catch up. Hopefully I'll be ERE before then.
Also, having Silicon Valley doesn't seem likely to prevent offshoring. I've never lived there, yet still managed to work at really creative, cutting-edge startups. None of them were VC funded, however. Those *do* tend to cluster there.


photoguy
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Post by photoguy »

"the demand for very good software engineers outstrips supply even more siginficantly today than it did back then"
This is true for pretty much every field. The demand for the top is very high as the best performers can be orders of magnitude more effective than the average worker.
"As a full-time remote software developer, I don't think communication issues simply due to being remote are a huge barrier to writing good software."
I think it depends on the project and how well defined it is. For example, if you are say following an agile methodology you'd probably want a very high bandwidth channel to your colleagues. That's still possible working remotely but much more difficult.
"Also, having Silicon Valley doesn't seem likely to prevent offshoring"
At my last job the company brought in dozens of workers from India (to silicon valley) and had them as part of the team. Many of these programmers were extremely talented but I suspect they stayed on the India payscales.


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Chris
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Post by Chris »

> Many of these programmers were extremely talented but I suspect they stayed on the India payscales.
Not if they came in on H1B visas. The rules dictate that the pay rates need to be equivalent for the area.
I have a friend who was employed by an Indian subsidiary, but was transferred stateside to work more closely with the client. The visa rules required him to get a salary increase, although his work stayed the same.


photoguy
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Post by photoguy »

They weren't on H1Bs. They came over on a 1 year business visa (I think L1)


ktn
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Post by ktn »

@photoguy: L1 or H1B, the market economy usually evens out pay rates even if the law does not stipulate it. Demand for good talent is high enough that good software engineers can and will bolt for better pay. In my experience this takes only 6-12 months to play out.
My Indian friends on L1s save far more than I because their employers (in this case, Indian outsourcing giants) continue to deposit their home salaries to their accounts back home + offer accommodation + a per diem + a location based cost-of-living adjustment. They also get to visit their home country every few months on tickets paid by their employer. Some of these engineers have done incredibly well thanks to the stock options they have been accruing over the years. Needless to say, most of them don't want to work for their clients here directly. The downsides, as far as I have observed are very long working hours, a mostly single life on the road, and willingness to take on pretty much any task the client throws at you.
I do think the kind of software that is being developed makes a big difference in the inshore versus offshore debate. Over the last 8 years, I have watched conservative and somewhat nationalistic European corporations outsource their core ERP and other IT systems over to low-cost locations. When done right, the quality of what they have received in return has been higher than what they received from their higher-cost European/American staff. Some companies are now trying the same with R&D. If you work in IT and your company's core business is not a software product, I'd say the risk of having your job relocate in <10 years is high.
My personal strategy to survive this shift has been to move out of software development and into IT management, strategy and architecture. Hopefully some of these higher-level roles stick a bit longer before taking flight too.


dpmorel
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Post by dpmorel »

I think we also overestimate the pay scale gap/cost savings. One problem is that people see it as a tit for tat problem and compare the price of a single developer at an hourly rate.
Average outsource dev shop prices:

India - $25-$35

China - $15-$25

US (NY & SF) - $50-$75 (though you get some *upscale* dev shops that are charging at $125)
I was outsourcing a lot of development to China at $60k-$70k/month with about 20 people working for us. I was able to replace that in the US for <$40k/month with 4 people working for us, and we were waaaay more productive.
The problem is that if you use dev shops you need someone to manage them. So you have more management overhead, often on both sides. This can be as high as 30% premium depending on team size. A bilingual chinese/english engineering manager that is good is not easy to find.
You also have a problem with body count. Outsourced dev shops in China/India can be notorious for creeping body counts, soon wiping out the expected cost saving (but you get more value... yeah!).
And then you also get into the whole turnover issue, re-training software engineeers is not easy/cheap. Turnover is higher in India/China... more cost.


jmed
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Post by jmed »

Work for the government, and in a position that requires a clearance. Poof, no more global competition.
That said, my experience echoes akratic's -- there is way more demand than supply in IT, and outsourcing has been a huge failure.
@jacob: Maybe some software products will be made overseas as you say with the comparison to IBM->Lenovo, but that doesn't seem as applicable to managing server rooms or building/configuring internal software & web services, even outside of govt work.
But you never know. Hence why I'm working on three other income sources at the moment.


dot_com_vet
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Post by dot_com_vet »

I felt like I was in direct competition with H-1B employees earlier in my career. It was difficult to compete right out of college.
Now that I'm at a senior career level, I haven't had any competition. Employers seem to desire experience & communication skills over saving money at this level. That's my guess, or the entire IT economy has changed as my career progressed. :-)


Chad
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Post by Chad »

I agree with dpmorel. There are hidden costs to significant outsourcing that many companies (in all industries) are finding. From higher overhead to a lack of quality (Boeing found this out the hard way on the 777).
Also, as other "poor" countries become more prosperous the wage gap will shrink a little.
Energy costs will be another factor, though much less for programers.
Outsourcing will always be around, but I don't see it being the main reason the American middle class gets its back broken.


Piper
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Post by Piper »

I am not a software engineer with a BS degree in Computer Science or higher. I have a BA degree, am self-taught and do web development. I am trying to fill in gaps in my understanding of programming with some community college coursework. I DO feel that outsourcing is a problem for me. Also, when it comes to the web, it seems that a good quantity of the jobs don't even offer money as compensation. They like to offer play stations, pizza and beer or "looks good on your resume" for compensation. I wish I had become a computer engineer, but my life didn't unfold that way.
Even if I can somehow catch up or make do, I definitely see both sides of this. It's folly to think that Americans are the only smart people on the planet and that just because you are a computer scientist you are safe from outsourcing. At the same time, I am often valuable to my employers because I can be communicated with easily. They can tell me what they want and I can give it to them without a lot of communication barriers.
There may always be a demand, maybe even a growing demand, for computer programmers in the US, but the salaries will probably go down. Heck, my own salary is pretty laughable. And I'm on furlough.


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