Why U.S. IT jobs aren't coming back

As the economy recovers, the jobs are going to India and other cheap-labor nations

The recession may be technically over and IT spending may rise slightly in 2011 and beyond (per Gartner and IDC projections), but U.S. and European IT workers won't benefit. The technology jobs created and reinstated by the economic recovery will be in India, China, and other countries witth cheaper workers. In fact, an additional 600,000 American and European jobs in IT will disappear in the five years from 2010 through 2014, on top of the 500,000 lost in the 2008-2009 period.

That's according to bleak research released today by the Hackett Group, a consultancy specializing in helping companies save costs through techniques that, ironically, include outsourcing. "There’s no end in sight for the jobless recovery in business functions, such as IT and corporate finance, in large part due to the accelerated movement of work to India and other offshore locations," the report says.

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A key reason is that as companies have moved to digital processes, those processes aren't tied to specific physical locations. "Another driver is the ongoing standardization and commoditization of work, making it more portable. In conjunction with cheaper bandwidth and technology that enable 'digitization' of work and automation of workflow, standardization has made execution of many business support processes entirely independent of the physical location of assets and resources, along with the origin and destination of the work," the report says.

If there's a bright spot, it's that IT offshoring appears to have leveled off. Instead, companies are accelerating the offshoring of financial jobs, such as accounting and procurement, and Hackett predicts that by 2014, the annual number of finance jobs offshored will for the first time exceed the number of IT jobs offshored.

But the reason that the annual number of job losses from IT offshoring is stabilizing is because companies have spent the last four years moving IT jobs offshore in vast numbers. It now appears to be financial jobs that companies are looking to offshore en masse, the report says, hoping to duplicate the savings achieved in IT operations.

And IT (as well as finance and HR) face another job-destroying trend, Hackette says: increased automation. "Full transactional process automation and enablement of self-service options will eventually eliminate much HR, IT, finance, and procurement work altogether and will continue to be the most sustainable strategy for structural efficiency improvement," the report says. So at some point, Indian and other offshore IT workers will go through what U.S. and European ones are now.

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