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IT workers' scarcity and skills

A recent study from the Information Technology Association of America has rekindled argument over whether there are too few, or too many, skilled technology workers in this country, and what role, if any, immigrant workers should play in filling tech jobs.

Software coder Soujanya Dasigi has a hard time believing the latest report on the technology job market from the Information Technology Association of America.

According to the trade group's May study, "Bouncing Back: Jobs, Skills and the Continuing Demand for IT Workers," U.S. companies will be short nearly 600,000 qualified IT professionals over the next 12 months. Dasigi lost her job at software firm Compuware in April 2001, and has fruitlessly applied to between 200 and 250 jobs since then. To the San Jose, Calif., resident, life in the IT trenches and often-grim economic news suggest the ITAA is way off base. "I don't believe there is any kind of dearth of qualified candidates," she says. "I don't think this economy is going to change anytime soon."

With its "Bouncing Back" report, the ITAA has rekindled the debate over the supply of programmers, electrical engineers and the like in the United States. Labor leaders, tech advocates and some scholars argue the U.S. produces enough technology workers, while tech firms and industry associations complain skilled employees are typically hard to find.

The "Bouncing Back" study also raises a related question: What role should immigrant workers play, if any, in filling U.S. tech jobs? The H-1B visa program, which was expanded in 1998 and again in 2000, shrinks from a cap of 195,000 to 65,000 workers next year. "Bouncing Back" is effectively the first salvo in what is likely to be another bruising battle over the need for immigrant tech workers. Stakes are high for both techies and employers. More than 500,000 IT workers were laid off in the U.S. in the past year, by the ITAA's own admission. An army of unemployed domestic tech workers is eager to land new jobs without the added competition of candidates from abroad. Employers, meanwhile, are still struggling to recover from the recession. They say they need access to the top tech talent, including guest workers.

Hiring and firing
In the past year, though, employers have been busier firing than hiring. "Bouncing Back" concludes the IT workforce shrunk by 528,496 from early 2001 to early 2002--a 5 percent reduction to 9.9 million workers.

But the study, which was based on interviews with 532 hiring managers at IT and non-IT companies, says better times are on the way. Employers will be looking to fill about 1.15 million tech jobs in the next 12 months, the ITAA predicts. The study also ranked the hottest tech skills these days. Based on 30,000 technical job postings on the Dice.com job board, the C++ programming language is the skill most in demand, followed by Oracle, SQL, Java and Windows NT technologies.

Hiring managers don't expect to find all the people they need, according to the study. It predicts that about half the projected openings, or 578,711 IT jobs, will go unfilled due to a "lack of qualified workers." That "gap" in supply has remained roughly 50 percent of demand since the ITAA began counting it three years ago.

The size of the gap this year surprised ITAA President Harris Miller, who expected the wave of layoffs to result in a smaller projected worker shortage. But he speculated IT bosses are seeing the wrong skills on resumes, and advised IT job-seekers to learn the skills most needed today. "The marketplace is speaking," Miller said. "All I can suggest is get yourself retooled."

"(The ITAA study is) very misleading. If I can't find a chef at the wage I'd like, it doesn't mean there's a shortage of chefs."
--Peter Cappelli, director, Center for Human Resources, Wharton
The ITAA's study itself ought to be retooled, suggests Peter Cappelli, director of Wharton's Center for Human Resources. To Cappelli, the study's projected shortage stems from managers who set overly high expectations for job candidates and who are unwilling to cough up higher salaries for so-called qualified workers. "It's very misleading," says Cappelli, who analyzed the IT labor market in a paper published in 2000. "If I can't find a chef at the wage I'd like, it doesn't mean there's a shortage of chefs."

Although ITAA studies have found shortages in qualified IT workers for the past three years, the claim repeatedly has been challenged. In September 2000, for example, a U.S. General Accounting Office report about the H-1B visa program concluded that existing labor market studies "do not permit a conclusion as to the extent of any IT skill shortage."

Critical skills
The "Bouncing Back" section on critical IT skills--in conjunction with its labor shortage projection--also has raised eyebrows. Patricia Keefe, editorial director of trade publication Computerworld, pointed out that C++, Oracle, SQL, Java and Windows NT "aren't exactly spanking-new technologies, so you'd think there would be a match with many of our IT unemployed."

Dasigi has about four years of experience coding in C++ language. What's more, she boasts a master's degree in computer science from an Indian university and an MBA earned in the United States. And she has used her time without a job to take classes in networking technology and in the Linux and Unix operating systems. "It hasn't helped so far," says Dasigi, who came to the United States on an H-1B visa but has obtained permanent residency status.

With the annual limit on H-1B visa workers set to return to 65,000 in 2003, Congress is likely to consider tinkering with the visas again. The conclusions in the "Bouncing Back" study could be used to justify another expansion.

The H-1B program works like this: Skilled foreign workers--typically those with a bachelor's degree or higher--are allowed into the United States for a period of up to six years. Most of them come for tech jobs. In a report on the program two years ago, the Immigration and Naturalization Services said 47 percent of those entering on the visa were systems analysts or programmers and an additional 5 percent were electrical or electronics engineers. The report found people born in India reaped the lion's share of H-1B visas--nearly 43 percent.

H-1B pros and cons
The H-1B program has enraged techies and their advocates during the dot-com collapse and overall business slump. To critics, guest workers have no place here when domestic coders are looking for work.

Computer chip giant Intel cut its staff by 5,000 last year to 83,000 yet still hired a few H-1Bs. But those H-1B hires were crucial, said Intel spokeswoman Gail Dundas. The guest workers were highly skilled, often possessing doctoral or master's degrees, she says. "Those are the folks we need to keep us No. 1."

The ITAA has been a steady backer of the guest visas. Miller insists his organization is focusing on other lobbying issues now, but says he would personally like to see the cap on H-1Bs eliminated entirely.

H-1B critics, on the other hand, would like to scrap the program. They point to studies finding visa fraud and outright exploitation of visa holders, who have been dependent on an employer as they seek a permanent residency "green card." The legislation expanding the cap in 2000 meant to fix some of the program's problems.

But computer science professor Norm Matloff at the University of California at Davis argues the system still allows employers to take advantage of guest workers. Matloff, who has opposed the visa program since the early 1990s, says an employer sponsoring a guest worker for a green card can foot-drag in the initial stages of the process. And even without foot-dragging, foreign workers are still effectively beholden to a firm for at least three to four years, he estimates.

Visa critics and supporters have divergent views of what would happen without the program. If U.S. companies can't find employees with the right skills and be able to hire them at reasonable wage levels, the firms will be forced to send IT work overseas, Miller says. With increasingly skilled operations in lower-wage regions like Asia, Eastern Europe and Latin America, the United States must adapt, he adds--which includes ensuring a healthy IT labor supply to keep wages from skyrocketing. "You can't just raise the salaries to an infinite level and still be competitive."

In Asia, countries like Singapore, the Philippines and Malaysia have begun to attract IT projects that were once executed in the United States and other Western countries. Another hot market for back-office projects is India, which has a large, English-speaking workforce. NASSCOM, India's main association for software and IT service companies, said in a report issued on June 10 that India will employ 4 million people and earn $30 billion from IT services exports by 2008. The Economist of London last year cited a study by the Electronics and Computer Software Export Promotion Council in India which "sees the industry's exports to the U.S growing from $264 million in 2000 to over $4 billion in 2005."

Already, outsourcing is becoming more common. According to "Bouncing Back," outsourcing of IT work grew 17 percent among non-IT companies last year as a way to cope with a lack of skilled workers. Cappelli, though, doubts a major chunk of IT work would sail overseas without H-1Bs. He suggests collaboration tools like the Internet already make shifting work to other countries possible, yet it's not widely done. H-1B visas, he thinks, are little more than pork for employers. "The industry (shouldn?t) expect the broader society and the government to solve all of its labor problems," he said. "No other industry expects that."

"(H-1B is) a program that employers use when they need it. It's not a cheap labor program."
--Harris Miller, president, Information Technology Association of America
Meeting a need
ITAA's Miller counters that the guest worker program has served a real need. The numbers of visas used in recent years show as much, he says. During the tech boom years of 1999 and 2000, employers hit the visa cap of 115,000. But during last year's slump, the expanded limit of 195,000 was not reached. What's more, for the first half of the 2002 fiscal year, just 44,500 H-1B visas were granted that count against the cap of 195,000. (H-1B visas approved for institutions of higher education, nonprofit groups affiliated with them and nonprofit or government research organizations don't count against the expanded cap.) "It's a program that employers use when they need it," Miller says. "It's not a cheap labor program."

Matloff sees a very different story in the statistics. He notes that in 2001, the total number of H-1B visas given out was 202,000 thanks to visas given to exempted organizations. In other words, amid massive tech layoffs, U.S. employers brought in nearly twice the number of guest workers than the previous two years. And he argues that even if this year's final tally is 90,000, it will be close to the boom-time H-1B allowance of 115,000 workers. "You don?t have to be a rocket economist to see that the H-1B program is being overused," he says.

Underpinning this debate are questions about the U.S. education system, workplace training and the fate of older technical workers. Industry leaders say U.S. colleges don't turn out enough tech grads, while H-1B visa critics claim tech enrollments have risen in response to demand. The two sides also spar over whether IT employers provide enough training for tech workers.

On the older worker topic, Miller says IT professionals remain in the field as they age but go into management positions. Matloff argues that a large population of older workers is forced out or quits the field in frustration. By studying a database of college graduate surveys, he found that only 19 percent of computer science grads are still in that field 20 years later--compared with 52 percent of civil engineers. Civil engineers become managers too, Matloff says, and seem to do so at a higher rate than computer science engineers. Data from the national survey he examined show that among those who have been out of school 16 years or more, 13 percent of computer science graduates were managers, while 18 percent of the civil engineering graduates held management positions.

Cappelli has cited Matloff's research on IT attrition, and argues that employers are largely to blame for the problem. The industry has managed technology professionals woefully, Cappelli says, adding that IT work is often broken up into small, disconnected projects that result in a lousy work experience. "This approach to work organization violates basic principles of job design by creating narrow tasks where workers cannot tell what the overall goal is," he wrote in his paper.

The "Bouncing Back" study itself points to a culture of poor techie retention. Surveyed companies said the "average acceptable time to retain their IT workers is just over two years," which is down from an acceptable tenure of 33 months the year before. ITAA's Miller concedes job churn is a problem but says companies began pushing to improve their IT employee retention a few years ago.

For laid-off workers such as Dasigi, though, retention efforts don't mean much. And this former H-1B visa holder has her own criticism of the guest worker program. Dasigi wishes the standards were raised for obtaining an H-1B visa. Conceivably, that could prevent foreigners with low skills from entering the U.S. job market and dragging down both wages and the quality of work done here.

For now, Dasigi is as likely as any other permanent U.S. resident or citizen in the tech field to be affected by a glut of H-1Bs. During her long job drought, the possibility of abandoning coding for teaching or retail sales has crossed her mind. But so far she's toughing it out in technology. "I've been a programmer," she says. "And hopefully I?ll be a programmer in the future."

 
To read more articles like this one, visit Knowledge@Wharton.

All materials copyright © 2002 of the Wharton School of the University of Pennsylvania.

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