LAST YEAR IT consulting firm Kenexa quoted an average $100 to $150 an hour per high-level IT professional. Today, Kenexa competes with shops offering similarly skilled labor at $40 to $50 an hour. Anita Sakura, executive vice president in the company's Boston office, says the cut-rate competition comes from body-shoppers -- companies that primarily employ highly skilled H-1B workers as contractors and consultants.

   ADVERTISEMENT
  

Free IT resource

Virtualization Insights from Top Experts - Learn how virtualization gets real!

Sponsored by Dell

Free IT resource

TechNet: More ways to know it, share it, and keep it running.

Sponsored by Microsoft

RELATED LINKS
»  AT&T buys high-speed wireless spectrum for $2.5 billion
»  Update: Sprint chief Forsee resigns
»  IT trainer offers master's degree for hackers
»  Wireless RSS feed 

IDG ENTERPRISE NETWORK
• More Network LAN/WAN News...  (ComputerWorld)
• Wireless EV-DO on board  (ComputerWorld)

TOP NEWS 


IT SOLUTION SEARCH

As a result, Sakura still quotes the same rates, but will offer discounts. "We have lost a lot of business to the body-shoppers," says Sakura.

Sakura, like other IT contractors and consultancies, also faces competition coming from offshore. "Not everything is done in the United States," says Sakura. "As more businesses look to cost-effective countries [to do the work], prices will drop significantly over the next few years."

And with more businesses looking to fill their IT labor and development needs abroad, Sakura is one of a growing number of IT managers who expect that fewer H-1B workers will be brought into the United States.

Mike Gildea will be watching to see if this anticipated trend pans out. Gildea is the AFL-CIO's executive director of the department of professional employees, in Washington. "H-1B workers undercut American's wages -- particularly in the high-tech industry," Gildea says. "There are American workers out there not being hired in deference to the H-1B."

According to Gildea, "Employers have no incentive to hire Americans when there's an open pipeline to cheaper, more docile workers. From our perspective, there are insufficient protections for American workers. And we see some fundamental problems with [the H-1B] guest worker program. It is becoming anything but a short-term solution."

Last year before Congress raised the cap for H-1B workers from 107,500 to 195,000. Gildea says the Department of Labor estimated annual job openings in the high-tech sector to be 200,000 by the end of this calendar year, but organizations like the Information Technology Association of America (ITAA) say the IT labor shortage is much higher -- more like 900,000. Chief economist Ron Bird of the Washington-based Employment Policy Foundation agrees, based on the numbers he has been crunching since the beginning of the dot-com bust. "We have a labor market in flux," says Bird. "The layoffs I'm seeing are affecting traditional manufacturing more than the information technology sector."

Kenexa's Sakura says what's really happening is that employers are shifting their business models. "In the last few years, the need for programmers related to dot-com technologies was high. As a result, companies overhired these programmers."

With the economic slowdown, Sakura says, "the unfilled jobs are the ones considered to be more value-added, where someone needs to understand the business as well as the technology." Based on the requests she gets, the jobs in demand include positions for project management, business processes, and re-engineering.

According to Sakura, "If you look at the buying patterns of our customers, they spent money if they had it. Some would say, 'I have a million dollars in my budget which I need to spend.' This year their hiring patterns are not based on the money they have but rather on the actual need."

That need, says Sakura, means employers are looking for ways to lower costs, initiating hiring freezes, and sending IT development and back-office work offshore.