How offshore outsourcing has devastated the high tech sector — part deux

Six months ago I posted on how the IT sector seemed to be thriving as of late despite the rise of offshore outsourcing. Here’s some more evidence from Thomas Hoffman at ComputerWorld:

A strengthening U.S. economy that’s fueling increased IT spending and creating a tighter labor market has led to moderate pay gains for technical workers such as application developers and database administrators, according to new research and interviews with IT executives last week. “There is a noticeable wage increase” for technical skills, said David Myers, director of project management at Solo Cup Co. in Highland Park, Ill. Myers said he believes that the pay gains are the result of a general rise in IT capital spending, which has resulted in more projects being launched and a decreasing supply of available domestic IT labor…. A report released last week by Foote Partners LLC, a New Canaan, Conn.-based market research firm, found that pay for noncertified and certified technical skills has risen 3.8% and 1.3%, respectively, through the first six months of this year. Pay raises this year have been particularly strong for people with skills in operating systems (up 8.2%), networking and internetworking (up 5.1%), and databases (up 4.3%), the report said. The results, which are based on a survey of 1,800 North American and European organizations from April to July 1, suggest that the notion that lower-cost offshore outsourcing led to wage deflation for IT workers may have been overblown, said David Foote, president of Foote Partners.

Here’s a link to the Foote Partners press release that’s discussed above. It’s also worth noting that beyond offshore outsourcing, there was an excellent reason for the drop in wages that did take place among IT services between 2000-2003: reduced demand. According to the WTO’s report on offshore outsourcing, the annual percentage change in the U.S. IT market in the early part of this decade was as follows:

2001: -4.5% 2002: -6.3% 2003: 0.4%

So it’s a funny thing — as demand has picked up in the US, the number of IT jobs and the level of IT wages has increased. Oh, and for those IT readers of danieldrezner.com who complain about no jobs, I’ll close with some anecdotal want-ads from the ComputerWorld story:

A tighter job market is making it particularly tough for Harrah’s Entertainment Inc. to find experienced IT project managers, business systems analysts, data warehousing managers and other specialists, said Tim Stanley, senior vice president and CIO at the Las Vegas-based gaming and hospitality company. Harrah’s is looking to fill 25 to 35 IT positions, he said. Allan McLaughlin, senior vice president and chief technology officer at LexisNexis Group, a research provider in Dayton, Ohio, said hiring requests for IT workers are getting more specific — another factor contributing to competition for technical skills. LexisNexis has an increased need for networking specialists and plans to expand its five-person IT security team to nine or 10 people over the next six months, said McLaughlin.