Crisis for tech workers: Life after layoffs?

As the recession deepens, IT faces fears and losses. But there are hopeful glimmers as well.

Signs everywhere point to the plight of the laid-off tech worker. Tech consultancy BearingPoint files for bankruptcy. Hewlett-Packard's profits plummet. Silicon Valley employment falls for the first time in several years. With daily layoffs and few new jobs available, techies have seen their careers careening off track -- and now they need to reinvent themselves or get off the tech train altogether.

There's no question the job market is getting worse: Companies are shifting more IT operations overseas, gutting IT staffs, and replacing seasoned veterans with cheap labor, all in a desperate effort to cut costs. Business survival trumps technical innovation. The sage advice that techies should hone their business skills to make themselves more valuable has taken on a chilling sense of urgency.

[ With more than 200,000 tech workers in the unemployment line, writes InfoWorld's Bill Snyder, the H-1B visa has got to go. | As bad as the tech industry layoffs are, Tom Sullivan discovers actual job losses are not as bad as people think. | And a tech career is still safer than many others, Tom Kaneshige reports. ]

So far some 200,000 tech workers have faced the firing squad, according to TechCrunch. Many are still out of work today. I've spoken to a few whose words are often laced with anger, despair, and occasionally hope. They sift through the wreckage of their careers looking for anything to salvage, such as new skills that might make them less expendable at their next gig or opportunities for consulting work to help companies fill the gaps caused by layoffs.

Then there are the downright fed-up techies ready to leave the profession. They don't see an end to outsourcing, offshoring, and H-1B labor trends driving down job opportunities and salaries. They shake a finger at the shady business practices of tech vendors like IBM, which incredulously suggested to its laid-off workers that they move to India, in lieu of collecting severance. They lament the common mistreatment of tech workers by employers.

H-1B and L-1 visa holders feel the backlash, too, as cries of national protectionism reach a fevered pitch. When Microsoft said it would lay off 5,000 people over the next 18 months, Sen. Charles Grassley (R-Iowa) fired off a letter to CEO Steve Ballmer about Microsoft's "moral obligation" to protect American workers. Microsoft said a "significant number" of the first 1,400 people laid off will be foreign workers here on visas.

One H-1B worker, speaking on condition of anonymity, tells InfoWorld that she sees employers today having "a clear preference to the local population, which I think is the right thing to do." But she worries that she'll be told to pack her bags if the economy continues to slide. "I need to rethink my position in this country and maybe consider options in other countries," she says. A banner ad on the San Francisco Chronicle Web site reads, "H-1Bs, check your expiration date. Alberta, Canada, welcomes you. Permanently."

Cheap foreign labor discourages a veteran techie
Like many U.S. tech workers, Steve isn't a fan of foreign outsourcers. He's felt the sting of offshore outsourcing during his three-decade-long tech career. A technical support technician with three college degrees (including one in marketing), a dozen technical certifications, and stints at Fortune 500 companies, Steve was a recent victim of downsizing. He's had trouble finding full-time or even contract work, and blames foreign outsourcers.

Contract work dried up when India-based outsourcer Tata Consultancy Services moved into Steve's neighborhood last year. Tata gobbled up a massive IT contract from one of the area's biggest employers and transferred the work to foreign workers. "What galls me is that Tata was awarded an $18 million tax abatement for eight years, as long as it created 550 new jobs within three-and-a-half years at its headquarters here, yet that hasn't happened," says Steve, who requested anonymity as he hunts for work and takes classes on the latest technology.

To be fair, Steve says H-1B employees are being exploited, too. He points to a nationwide class-action lawsuit that Tata has been fighting for the past three years. The suit charges that Tata unjustly enriched itself by requiring all of its non-U.S. employees -- that is, H-1B and L1 visa holders -- sign over their federal and state tax refund checks to Tata. "People will have to unite in some way to protect our worker rights," Steve says.

After a particularly harsh blow a few months ago, Steve is now thinking about getting out of the tech racket: The 50-year-old veteran was beat out of a job by a recent college grad. Steve's one of the lucky ones, though, since his wife works and he's not in dire straits economically. He also enjoyed volunteering in Obama's campaign last year and is now considering a job in politics.

As for tech, "I played by the rules, went out, and got the education, and people tell me that I'm smart and easy to get along with," Steve says, "and they ask me why I can't get a job? I apologize if I seem emotional ... but I have lived this IT decline and outsourcing issue."

The next-generation worker will be a business-tech hybrid
It's probably fair to say that Steve wouldn't get along with Andre Gold, president of consultancy Gold Risk Management and former vice president and head of technology risk management at financial services firm ING. Gold used to travel to India annually to evaluate tech outsourcers, until he was laid off from the financial services giant last fall.

"Quite candidly, I looked at commoditized tasks that I could outsource to an Indian provider that could to do it cheaper and perhaps better," Gold says, adding that he would regularly receive dirty looks from his IT staff. His experience has taught him that offshoring and outsourcing are here to stay, and thus tech workers wanting to stay in this career had better change their ways -- that is, they must make themselves non-outsourceable.

Gold says he has a strong technical background with little business acumen, which was part of his problem. Over the past few years, he realized that he wanted to make more money than the salary technical skills commanded. Tech salaries have been under assault from cheap foreign labor for years. Even worse, Gold figures a majority of technical skills are now easily commoditized and able to be shipped elsewhere. "The day of the IT expert is a thing of the past," he says.

Yet this doesn't mean the end of the tech career, rather a change in the skill sets that make it up. Gold believes business skills coupled with technical ones can guard against offshoring, outsourcing, and even H-1B competition. "Very few IT people can tell you the business strategy, and they are good candidates for the outsourcing model," he says.

And so Gold has been pursuing his MBA for the past three years and plans to earn the coveted business degree this spring. "The U.S. tech worker is going to have to become a lot more cognizant of the underlying processes of the business that it supports," says Gold.

If the next-generation tech worker becomes business-savvy, says Gold, IT can still be a good career choice. "When our economy comes out of this, I think you will see a shortage of IT skills," he says. Even today, in this historically dismal job market, tech jobs continually beat the soaring national unemployment average, according to the U.S. Bureau of Labor Statistics.

Silicon Valley colleges like Stanford University and San Jose State University haven't missed the signs, either. They are helping to shape the next-generation techie by melding business and technology courses. "Business analysis and systems analysis jobs are really the target," says Jeff Gaines, lecturer of management information systems in the college of business at San Jose State University. "Because our students have a business degree, which includes a background in IT concepts, they are suited to work in the IT or business side."

Has tech innovation left the building?
But new college course offer little comfort to today's afflicted tech veteran. Like trying to change horses in midstream, these workers face the daunting task of reinventing themselves while continuing to make money and support their families. It's a challenge, for sure, but not impossible. The key is to find opportunities in the carnage, turning disadvantage into advantage.

At the upper echelon of IT, Tony Bishop, former chief architect and senior vice president at the Wachovia bank, is finding opportunities to fill gaps caused by layoffs and project cuts. He now runs a 30-person consultancy, Adaptivity, that boasts more than a dozen clients across the globe.

Of course, Bishop had a big head start working in tech in the finance sector, a hotbed of IT innovation and intellectual property. Even as finance companies took the hit from the recession dead on, IT continues to play an important role in their survival. "Where is the most extreme type of work? It's in anything that has an instantaneous market where you have to make adjustments and accommodate fluctuating volumes," says Bishop. "That's why [financial services] has the most innovation in IT, because it needs it the most."

Bishop helped build a state-of-the-art SOA architecture for Wachovia's corporate investment arm before departing. That's the kind of proprietary intellectual property that pays off in good and bad times. "We built a pretty good sustainable model," says Bishop, "I think [Wachovia's] integration with Wells Fargo is going to be a lot easier on the investment banking side than it would have been."

After Bishop left Wachovia, he surveyed the state of tech in finance. Bonuses for tech execs had been cut, resulting in a 40 percent reduction in total compensation. Three out of 10 tech workers were let go, including folks in strategic functions like design, architecture, change management, transformation, and optimization. Many basic operations were being outsourced for the first time.

"Companies aren't looking toward the future, they're looking at survival," Bishop says. "I also see a lot of senior [tech] people leaving the sales side like the Merrill Lynches, Morgan Stanleys, and Goldman Sachs, and heading to the buy side like the Fidelities and Vanguards" that were less exposed to toxic assets. He believes finance firms that cut strategic functions are going to be behind the competition when the economy returns 18 months from now.

Amid the chaos, Bishop saw an opportunity to provide services to companies that no longer have programs in place to create this intellectual property. "There's going to more opportunity in helping companies institute governance and create new products and services to help drive liquidity, transfer risk, and capture more market share," Bishop says. "Companies may not be able to invest in technology the same way, but they still need it -- that world is not stopping."


Copyright © 2009 IDG Communications, Inc.

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