or . . . how do i expect to land a high-paying job when most it work will be performed in india?

D E P A R T M E N T O FCOMPUTER SCIENCEAND SYSTEMS ANALYSIS

SCHOOL OF ENGINEERING & APPLIED SCIENCEO X F O R D O H I O MIAMIUNIVERSITY

Is IT Moving Offshore?Is IT Moving Offshore?

Or . . .

How do I expect to land a high-paying job when most IT work will be performed in India?

F. Edwin Harbach

Partner, Accenture

October 3, 2003

D E P A R T M E N T O FCOMPUTER SCIENCEAND SYSTEMS ANALYSIS

SCHOOL OF ENGINEERING & APPLIED SCIENCEO X F O R D O H I O MIAMIUNIVERSITY

Is IT Moving Offshore?Is IT Moving Offshore? HistoryHistory

The year 2000 situation artificially increased demand for IT services in the late 1990s.

– Fix to legacy systems– Accelerate replacement of legacy systems to

avoid date issues

D E P A R T M E N T O FCOMPUTER SCIENCEAND SYSTEMS ANALYSIS

SCHOOL OF ENGINEERING & APPLIED SCIENCEO X F O R D O H I O MIAMIUNIVERSITY

Is IT Moving Offshore?Is IT Moving Offshore? HistoryHistory

The dot.com phenomenon increased IT expenditures.

D E P A R T M E N T O FCOMPUTER SCIENCEAND SYSTEMS ANALYSIS

SCHOOL OF ENGINEERING & APPLIED SCIENCEO X F O R D O H I O MIAMIUNIVERSITY

Is IT Moving Offshore?Is IT Moving Offshore? HistoryHistory

The robust economy further increased demand.US Gross Domestic Product 1990-1999

1,000

3,000

5,000

7,000

9,000

1990 1993 1996 1999

Source: IMF (International Financial Statistices Yearbook, 2000)

US

$B

n

D E P A R T M E N T O FCOMPUTER SCIENCEAND SYSTEMS ANALYSIS

SCHOOL OF ENGINEERING & APPLIED SCIENCEO X F O R D O H I O MIAMIUNIVERSITY

Is IT Moving Offshore?Is IT Moving Offshore? HistoryHistory

The offshore movement was still in its infancy.

Size of Industry

Service Line

Delivery Model

Industry Structure

Peak Contract Size

Customer Profile

Industry value to customers

Under $1 billion

+ E-biz, ERP, Y2K

Staff Aug., Onsite

Big 5 increase share and SME growth

= US $5 million

Large Fortune 500

+Quality, productivity

Phase II1995-00

Negligible

App development & Maintenance

Staff Aug., Onsite

Large # of startups

< US $5 million

Large Fortune 100

Lower costs

Phase I1985-95

Period

Source: NASSCOM

D E P A R T M E N T O FCOMPUTER SCIENCEAND SYSTEMS ANALYSIS

SCHOOL OF ENGINEERING & APPLIED SCIENCEO X F O R D O H I O MIAMIUNIVERSITY

Is IT Moving Offshore?Is IT Moving Offshore? HistoryHistory

This “perfect storm” resulted in a seller’s market for IT professionals.

– Multiple job offers for new graduates– Signing bonus the norm ($5K - $10K)– Escalating salaries– Tuition reimbursements/relocation bonus– Focus on workplace incentives

• Concierge programs, casual dress, pool tables at work, bring your pet to the office, etc.

D E P A R T M E N T O FCOMPUTER SCIENCEAND SYSTEMS ANALYSIS

SCHOOL OF ENGINEERING & APPLIED SCIENCEO X F O R D O H I O MIAMIUNIVERSITY

Is IT Moving Offshore?Is IT Moving Offshore? Current RealityCurrent Reality

Most of the factors driving IT demand in the late 1990s are gone . . . or significantly reduced.

D E P A R T M E N T O FCOMPUTER SCIENCEAND SYSTEMS ANALYSIS

SCHOOL OF ENGINEERING & APPLIED SCIENCEO X F O R D O H I O MIAMIUNIVERSITY

Is IT Moving Offshore?Is IT Moving Offshore? Current RealityCurrent Reality

In retrospect, Y2K seemed “much ado about nothing”.

Y2K

D E P A R T M E N T O FCOMPUTER SCIENCEAND SYSTEMS ANALYSIS

SCHOOL OF ENGINEERING & APPLIED SCIENCEO X F O R D O H I O MIAMIUNIVERSITY

Is IT Moving Offshore?Is IT Moving Offshore? Current RealityCurrent Reality

The dot.com craze has moderated.

D E P A R T M E N T O FCOMPUTER SCIENCEAND SYSTEMS ANALYSIS

SCHOOL OF ENGINEERING & APPLIED SCIENCEO X F O R D O H I O MIAMIUNIVERSITY

Is IT Moving Offshore?Is IT Moving Offshore?

GDP Growth from 1995 through 2002

0

1

2

3

4

5

CAGR 1995-1999

2000 2001 2002

% G

row

th

United States Japan France Germany UK

The US and several major global economies are in a recession.

Current RealityCurrent Reality

Source: OECD August 2003

D E P A R T M E N T O FCOMPUTER SCIENCEAND SYSTEMS ANALYSIS

SCHOOL OF ENGINEERING & APPLIED SCIENCEO X F O R D O H I O MIAMIUNIVERSITY

Is IT Moving Offshore?Is IT Moving Offshore? Current RealityCurrent Reality

Labor arbitrage is significantly impacting service industries, including IT.

Indian Software and Services Market ($USD M)

2,9364,011

5,539

8,2989,958

12,455

0

4,000

8,000

12,000

16,000

1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

Source: NASSCOM

D E P A R T M E N T O FCOMPUTER SCIENCEAND SYSTEMS ANALYSIS

SCHOOL OF ENGINEERING & APPLIED SCIENCEO X F O R D O H I O MIAMIUNIVERSITY

Is IT Moving Offshore?Is IT Moving Offshore? Current RealityCurrent Reality

India is particularly attractive due to many reasons:– Enormous English speaking labor base– India can turnaround work while US

businesses are closed at night– Cost advantages relative to other

countries– Attractive career path for skilled

workers– Experience and exposure to US

business culture– Regulatory support

Average Annual Salary

US ($) India ($)

Software Programmer

66,100 10,000

Mechanical Engineer

55,600 5,900

IT Manager 55,000 8,500

Accountant 41,000 5,000

Financial Operations

37,625 5,500

Source: PayScale Inc.; the Paaras Group (Extracts From Time, 4 August 2003)

D E P A R T M E N T O FCOMPUTER SCIENCEAND SYSTEMS ANALYSIS

SCHOOL OF ENGINEERING & APPLIED SCIENCEO X F O R D O H I O MIAMIUNIVERSITY

Is IT Moving Offshore?Is IT Moving Offshore? Current SituationCurrent Situation

An estimated 3.3 million jobs will move to offshore by 2015.

Source: Forrester Research. Nov 2002.

D E P A R T M E N T O FCOMPUTER SCIENCEAND SYSTEMS ANALYSIS

SCHOOL OF ENGINEERING & APPLIED SCIENCEO X F O R D O H I O MIAMIUNIVERSITY

Is IT Moving Offshore?Is IT Moving Offshore? Looking ForwardLooking Forward

We will not return to the good old days.

– Economy may recover but labor arbitrage is here to stay.

D E P A R T M E N T O FCOMPUTER SCIENCEAND SYSTEMS ANALYSIS

SCHOOL OF ENGINEERING & APPLIED SCIENCEO X F O R D O H I O MIAMIUNIVERSITY

Is IT Moving Offshore?Is IT Moving Offshore? OptionsOptions

Assuming I don’t decide to exit the IT field, how can I improve my chances of having a rewarding career?

1. Don’t Panic – there will always be a need for technology expertise in the US

2. Expand your capability beyond the common, repeatable technology skills

3. Combine technology with other subjects (i.e., business, chemistry, biology, education)

D E P A R T M E N T O FCOMPUTER SCIENCEAND SYSTEMS ANALYSIS

SCHOOL OF ENGINEERING & APPLIED SCIENCEO X F O R D O H I O MIAMIUNIVERSITY

Is IT Moving Offshore?Is IT Moving Offshore? OptionsOptions

Assuming I don’t decide to exit the IT field, how can I improve my chances of having a rewarding career?

4. Develop specialized skills (i.e., Security, R&D)

5. Learn how to sell! Most IT work continues to be sold in onshore locations (software, hardware, consulting, BPO, BTO, etc.)

6. Consider positions with the US Government