Would a US Recession Hammer the Indians?

Would a US Recession Hammer the Indians?
Posted by: Steve Hamm on February 11
The threat of a US recession looms large globally. There’s no question that as America’s huge and hungry consumption machine starts to sputter, other economies around the world will suffer. My colleague, Nandina Lakshman, writes in a BusinessWeek Online story published today that some of the Indian outsourcing companies are preparing for a recession by cutting salary incentives and otherwise tightening up on expenses. I actually don’t expect a US recession to do much harm to the top Indian software services outfits. It’s true that they got hit hard by the US recession of 2001/2002. But I think that was a very different situation. For starters, TCS, Infosys, Wipro, and the others were not that well known or credible five years ago. But that has changed now. They’re trusted by US and Northern European clients—depended on, in fact. Another factor: There was a lot of uncertainty in the immediate aftermath of the 9/11 attacks. Business spending stalled. This time, it’s consumer spending that is faltering. Businesses will want to cut costs to deal with the effects of the consumer slowdown. I believe they’re likely to increase their use of low-cost Indian services, rather than cutting back on them.

US IT Jobs: Which Way is the Wind Blowing?
Posted by: Steve Hamm on February 13
US software programming jobs took a real wacking at the end of the last recession, but bounced back since—in spite of the offshoring trend and the rise of the Indian tech services industry. Now we’re heading into another recession, it seems. Will US software programmers lose out again? I’m betting no. The reason: The impending retirement of the babyboomers. Already, a lot of federal government programmers are retiring, since they’re reached the retirement age of 55. This factor—combined with low graduating rates for computer science majors—is already causing a shortfall in US programming talent. I believe that whatever cost cutting that’s done by companies during a recession will be more than offset by the software talent shortfall. Five years from now, US programmers will be in even greater demand.
New data supporting these conclusions came in this week from the IT Governance Institute. In its IT governance Global Status Report-2008, the ITGI reported the results of its survey of global IT leaders. Fifty-eight percent of the respondents said "insufficient number of staff" was a big problem--putting it at the top of problems they listed. That's a substantial increase from 2005, when 35% said they face staffing shortages. Remember, this is a global survey, so the shortage isn't just in the U.S. John Lainhart, the principle advisor on IT governance to the ITGI, told me that the baby boomers retiring is the big culprit. With newly trained programmers in short supply, he said, "We'll have to retrain people coming out of professions that aren't doing so well."
I noticed that President Bush's budget proposal slashes the labor department budget, so there isn't much hope for federal retraining programs stepping into the breach.
Lainhart mentioned an innovative program at Penn State that seems like it's on the right track. They're teaching computer science students to be consultants rather than coding grunts. People in the program have to study a foreign language in addition to the major programming languages. In their course work they operate as teams and work on creating technology solutions for customers. Their exams are team-based, too.
This type of program seems sure to appeal to students, and also will give people the skills they need for sustainable, high-pay careers. But, to fill the staffing gap, we'll need a lot more of this kind of thing.