http://m.economictimes.com/PDAET/articleshow/9999056.cmsITUS jobs data suggests fears of Indian IT firms taking away good American jobs may be exaggerated 16 Sep, 2011, 0701 hrs IST, SHRUTI SABHARWAL, INDU NANDAKUMAR & RITUPARNA CHATTERJEE, ET Bureau MUMBAI | SAN FRANCISCO: After years of bad press in the US, Indian IT firms finally have some reason to cheer. Data released by the US Bureau of Labor Statistics suggests that fears of Indian tech firms taking away good American jobs may be exaggerated, with the IT industry having some of the lowest unemployment rates in the world's largest economy.
The US IT unemployment rate dropped from 4.7% to 3.8% between March and May this year. In the same period, total unemployment rose from 8.9% to 9.1%, according to the US Bureau of Labor Statistics.
The unemployment rate in computer and mathematical occupations (which includes IT) came down from 4.3% in August last year to 3.7% in August this year. Indian tech firms have borne the brunt of negative public sentiment — an outsourcing backlash led to states like Ohio banning outsourcing of government projects; cost of H-1B visa (temporary work visa) getting doubled; and companies like Infosys being referred to as "chop shops" by US politicians.
But now, with unemployment in the technology sector only a third of the US average, IT firms see a ray of hope. "Around 3-4% of unemployment in a sector actually means that there is a shortage of the right people to hire and not a shortage of jobs.
Technology companies in the US are hiring because the sector is doing well and because these companies are undergoing a transformation as they move towards cloud computing, mobility and virtualisation etc. The issue about outsourcing and visas is misplaced," Nasscom President Som Mittal said.
Finding Good Talent Tough
According to Mittal, the US should be looking to attract more highly-skilled employees and some of the bills in the offing like the Entrepreneurship Bill are aimed at this. Technology companies in the US say finding good talent at the right salary remains as tough as it was two decades ago when large American corporations started sending work to countries like India.
The number of US employers reporting difficulty in filling open positions jumped from 14% last year to 52% in 2011, according to global workforce solutions firm ManpowerGroup. US start-up Credit Sesame interviewed 15 local, pre-screened and qualified candidates for the post of a web developer and still could not close the hire.
"After looking for over two months, we just had to cast our net wider and opt for talent from abroad," says Connie Bianco Weisman, a recruiting relationship manager at Plug and Play Tech Center who has spent 20 years in Silicon Valley incubating start-ups and helping them recruit.
"The web developer finally came from Bosnia on an H1 visa." Despite the higher costs of H-1B visas, companies are resorting to this and are hiring talent from wherever they can. India is among the largest talent pools sending tech workers to the US on H1 visas and also offshoring IT services from the US to India.
"Companies in Silicon Valley would like to have someone inhouse, somebody who is readily available, but it is getting harder and harder to find them, and to pay them," she adds. That creates an economic rationale for offshoring tech jobs. An IT job is the sixth-hardest role to fill in the US compared with the eighth hardest globally, according to an earlier 2011 survey by ManpowerGroup.
Industry watchers say engineers in the US are either looking for compelling technologies to work on or they are opting for the lucrative financial sector jobs instead. This distaste for IT services, perceived to be a repetitive job, is among the reasons for the talent shortage in the US. The available IT workers (in the US) may not possess the skills that businesses are looking for, according to Manpower-Group.
There is a supply of workers, but technology is evolving so fast and product lifecycles are so short and often local skills have not kept pace. "Many job seekers have now been out of work for a long time and their skill-sets have become antiquated in the interim," a ManpowerGroup spokesperson said.
The war for talent in the US, experts say, is such that large companies are hiring one year before they are actually deploying recruits. The demand is not limited to the technology sector alone. "There is a huge demand for computer science students.
The banking industry is looking for people with IT skills. So are pharmaceutical companies," Rick McClintic, director of engineering career resources and employer relations office, Penn State College of Engineering, said. "The next career fair at Penn State University is scheduled to take place later this month and over 550 companies have already registered — majority of them from the tech industry." A triage of US academia, political fraternity and tech industry have been striving to generate greater interest among students, positioning technology as a premier career option.
But experts believe a significant change in the demand-supply situation is at least a decade away. McClintic, however, says there has been some shift in perception since the recession. Indian IT companies have also been stepping up their recruitment in the US as they emerge as global players with a global workforce.
But most of them are hiring for client-facing, front-end roles. Infosys, for instance, is hiring more consultants than IT staff in the US. The company plans to increase its headcount in the US by 1,500 this year.
