Date: Fri, 24 Feb 2006 23:45:57 -0800 From: Norm Matloff To: Norm Matloff Subject: self-serving study reaches preordained conclusions To: H-1B/L-1/offshoring e-newsletter Enclosed below are two articles on a new study by the Association for Computing Machinery. The findings of the report are that contrary to popular perception, jobs in the computer field are more plentiful than even in the height of the dot-com era. For reasons I will explain below, the ACM had an agenda here, and one could have predicted the outcome of the "study" ahead of time. I'll make another prediction: You're going to hear a lot about this study in the coming months or even years. The ACM is well connected, and it tells the various sectors with vested interests exactly what they want to hear. Politicians of both parties will love it. So, expect to see more articles like the two enclosed below. But you're not going to see many like the first of two, which declines to simply parrot the rosy picture they got from the ACM. The SF Chronicle article uses the word "claims" to describe what the ACM says, and actually quotes a couple of naysayers (Prof. Hira and me). Let me be clear at the outset: Though lengthy, dense and including lots of references, this study IS highly biased. One member of the ACM study team, Rob Ramer (whom I'm quoting with permission here) even contacted me, saying that the atmosphere was such that anyone dissenting from the pro-outsourcing line was gently marginalized. This member said, "Our sub-committee was often seen as alternatively right-wing or anti-business extremists...because we kept raising dissenting voices about the pro-offshoring mantra. It was a pretty much a consensus among the rest of the committees that we were the 'spoil-sports,' even though we repeatedly stated that few to none of us were 'anti-outsourcing' in all situations, all we were calling for was an examination of the problems as well as the glowing success stories. Of course, factual examination is 'spoiling the sport' of spin." And needless to say, many experts in the field were excluded altogether. Even in the rare instances where they do cite someone with a dissenting opinion, the person is chosen because he is known to be mild in his criticism, or the criticism will be couched in some vague terms that it will be missed. (Indeed, since almost no one reads these reports beyond just the executive summary, it doesn't matter anyway.) Well, then, what is the motivation for that bias? First and forement, the academic-dominated ACM is trying to avert loss of their empires. The Chronicle's quote of me is an accurate account of what I said to the reporter: * "The deans and the department chairs are absolutely panicked because * enrollment is plummeting," said Norman Matloff, a professor of * computer science at UC Davis who is a well-known critic of visa worker * programs and offshoring in the technology industry. In fact, it's much worse than the 14% drop in the last two years the Chronicle article cites, because the drop has been steady over the last five years. See the articles whose names begin with CSEnrollment in http://heather.cs.ucdavis.edu/Archive for examples. Typically the numbers over this longer period are around 30-40%, e.g. 2000 applicants to Carnegie-Mellon instead of 3,200 at the height of the boom. The figure for MIT is around 30% too. Our department now has about 500 majors, down from 900 at the height. We rank-and-file faculty love this, because we finally have classes of a decently small size. (Those who are not tenured have reason to worry, though.) But deans and department chairs are horrified, because obviously numbers mean money and power. Empires are crumbling. And, after a predictable lag due to the pipeline effect, the reduction in undergraduate numbers is now beginning to result in a reduction in graduate applicants. That makes the administrators REALLY worried, because that hampers their ability to get research funding. Again, see the articles whose names begin with CSEnrollment in http://heather.cs.ucdavis.edu/Archive for details. The highlight of the study, as mentioned earlier, is that computer-related jobs are more numerous today (actually in 2004) than in 1999, the height of the dot-com. That is highly misleading, first of all because they are including job categories which are not suitable for computer science graduates, e.g. computer support jobs. (Worse, they include such a category for 2004 that didn't even exist in BLS data in earlier years.) But what is more interesting is their reporting that there has been a 50% increase in software engineering jobs since 1999, which the study describes as the peak of the dot-com boom. Those readers of my e-newsletter who are software engineers will consider this finding to be a cruel joke, and will suspect that there is some chicanery involved. What is really going on here? First of all, there is some statistical sleight-of-hand. They chose 1999 as their base, even though the numbers peaked during 2000-2001, with figures about 30% higher than 1999. Slick, huh? More importantly, the increase in software engineering jobs was accompanied by an almost identical decrease in computer programming jobs. Since the industry has been transitioning from the job title Computer Programmer to Software Engineer (same job, different names), you can see that there has been no increase at all. Also, anecdotally I'm finding a lot of people who have Software Engineer titles but really are more in marketing than technical. In spite of their titles, they are not writing code. But beyond all that, the bigger problem is that the ACM doesn't say WHO holds those jobs. The fact is that a lot of those jobs are held by H-1Bs and L-1s. The Federal Reserve Bank of Boston found that in 1999 "Foreign workers accounted for half of all the new jobs created in system analysis, programming, and other computer-related occupations" (Miriam Wasserman, EllisIsland.com?, Regional Review, Quarter 4 2000/Quarter 1 2001). Every indication is that that fraction is even higher now. For example, entries by H-1B visa holders were 26% higher in 2004 than in 1999. L-1 data is hard to come by, but all sides agree that L-1 is being used much more today than in 1999. Let's do a reality check here. In the last few months, our department has invited various representatives from industry to visit, to establish mutually beneficial ties. What has shocked my faculty colleagues is the candor of the industry reps regarding the offshoring issue. THEY have brought it up. Some have been making statements along the lines of (a) most entry level software development jobs are going overseas, (b) they've been advising their own children to avoid the field, and (c) they're worried about their own jobs. Related to the exodus of entry-level jobs, look at this aspect of the report, from the CNN article: * But it said the U.S. IT sector's overall growth should outpace that * loss of jobs, expanding opportunities for those trained in fields such * as software architecture, product design, project management and IT * consulting. Those are mainly jobs that people move up to after, say, 10 years in the field, after starting at the ENTRY LEVEL. If the entry-level jobs are overseas, then those other jobs are unattainable. You don't "train" to be a consultant; you spend years gaining experience, building up contacts, and so on, before branching off on your own. Needless to say, the report is very pro-immigration, pro-H-1B. This of course is a major reason why the people of the ACM from industry support the upbeat nature of this report. Some years ago, a faculty colleague suggested that I and the then-ACM president join forces on fighting age discrimination in the industry. But when I told that ACMer that it was closely linked to the H-1B issue (employers hire young H-1Bs instead of older Americans), she flatly refused to get involved. She cited the "international" nature of ACM (as well as personal reasons) for her opposition to anything that deals with immigration. That point about ACM being international is made in the report too, which is baloney. The ACM maintains a lobbying office in DC, with one of its themes being, "Congress, you've got to do something, or we'll lose to China and India." That's an "international" viewpoint? So, there is no discussion of the issue of H-1B as cheap labor (which is central to H-1B), other than a brief statement allusion to Prof. Hira's comments. And even then, that statement makes it sound like the only abusers of the system are the Indian-owned companies like TCS, which is very unfair and, at least to some, racist. There is a mountain of evidence, academic and government, showing that the H-1B program is fundamentally about cheap labor, but you wouldn't know it from this "extensive investigation" (Salon Magazine's words) from the ACM. That selectivity of evidence favorable to the ACM's agenda is evident throughout the report. Of course, the report calls for more efforts in retraining displaced engineers, which is a non-solution. As the Dept. of Commerce study showed, the only thing retraining leads to is lower-level jobs, e.g. technician, for those displaced engineers. (http://heather.cs.ucdavis.edu/CACM.pdf) The report also says that innovation is the answer. It isn't. (http://heather.cs.ucdavis.edu/Archive/InnovationNotTheAnswer.txt You can read the full report at www.acm.org/globalizationreport Norm http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2006/02/24/BUGSVHDJ1E1.DTL&type=business San Francisco Chronicle Tech jobs still plentiful in U.S. Optimistic report calls offshoring's effects overstated Carrie Kirby, Chronicle Staff Writer Friday, February 24, 2006 Sending tech jobs overseas has had a smaller impact on U.S. workers than was widely expected, a report released Thursday claims, but the practice of offshoring will grow in the years to come, posing new risks and challenges. The Association for Computing Machinery, a group of information technology professionals and academics, studied piles of data on the impact of sending jobs to burgeoning tech centers in India, China and other areas overseas. After a year of study, the group arrived at a conclusion that is sure to be welcomed by industry and computer science departments: It's not as bad out there as it looks. "The average high school student and parent thinks all IT jobs have already gone to China or India," said UC Berkeley computer science Professor David Patterson, who serves as the association's president. "People who could have wonderful careers in the field aren't even considering computer science because they've got the wrong facts. If you've got the talents, this is a pretty exciting field with lots of exciting things to do," Patterson said. As evidence, the group uses Bureau of Labor Statistics figures to estimate that new tech jobs are being created in the United States as fast or faster than jobs are being shipped overseas. It estimates that 2 to 3 percent of information technology jobs are being offshored each year, while tech employment has increased annually by 3 percent or more in recent years. The report criticizes reports of widespread job losses to offshoring -- such as Forrester Research's much-quoted prediction that 3.3 million service jobs would go overseas by 2015 -- criticizing the other researchers' failure to provide baseline comparisons and methodology information. The report, like much of what has been written about offshoring, laments the lack of reliable figures showing the extent of the phenomenon. However, the report bases its own estimates on what research it could find. It also quotes Berkeley researchers Ashok Deo Bardhan and Cynthia Kroll, who found that 12 million to 14 million jobs in the United States are vulnerable to offshoring. Kroll and Bardhan told The Chronicle in 2004 that Silicon Valley was at special risk, with 1 in 7 jobs vulnerable to overseas replacement, compared with 1 in 10 nationwide. Those numbers should be looked at as "at best, an upper limit on the number of jobs at risk," the report said. As for this latest survey from the association, some observers criticized the report's emphasis on the positive as a self-serving attempt to boost sagging computer science enrollment at universities. Enrollment in undergraduate computer science program has declined by 7 percent in each of the past two years, according to the Computing Research Association. "The deans and the department chairs are absolutely panicked because enrollment is plummeting," said Norman Matloff, a professor of computer science at UC Davis who is a well-known critic of visa worker programs and offshoring in the technology industry. Matloff says satisfying jobs in computer science are still on the decline, and he routinely warns high school students of that. "I think the report was a bit overly optimistic," said Ron Hira, an assistant professor of public policy at the Rochester Institute of Technology, who has studied offshoring. "I find it strange that although they admit there's no good data, they come out as very optimistic that this isn't that big a deal." Hira provided a briefing for the report's authors and reviewed one chapter before publication. Despite the optimistic tone, the report did include some cautionary notes about the offshoring trend: -- While most economists agree that offshoring can benefit both developing and developed countries, some argue that the practice could actually cause a technology leader like the United States to lose its dominant position. -- Offshoring can create new threats to national security, intellectual property and personal privacy. -- Higher-level jobs are beginning to be offshored, posing a job-loss risk to a wider variety of IT professionals. E-mail Carrie Kirby at ckirby@sfchronicle.com. http://money.cnn.com/2006/02/23/news/economy/jobs_it_offshoring/index.htm Your Job 2006 [plus_green.gif] Full coverage Study says U.S. tech hiring grows Trade group reports that domestic increase in technology jobs offsets the work being sent overseas. February 23, 2006: 8:19 AM EST NEW YORK (CNNMoney.com) - Demand for technology workers in the United States continues to grow in spite of American companies shifting more technology work overseas, according to a new study. The Association for Computing Machinery, a professional development organization that includes academic, government and industry officials from the information technology field, released a study Thursday that said that shifting IT jobs to countries like India or China is not nearly the threat to workers here that is commonly believed. The study cites estimates that between two to three percent of IT jobs will be lost annually to lower-wage developing countries through the process known as offshoring. But it said the U.S. IT sector's overall growth should outpace that loss of jobs, expanding opportunities for those trained in fields such as software architecture, product design, project management and IT consulting. "Despite all the publicity in the United States about jobs being lost to India and China, the size of the IT employment market in the United States today is higher than it was at the height of the dot.com boom," said the report. "Information technology appears as though it will be a growth area at least for the coming decade, and the U.S. government projects that several IT occupations will be among the fastest growing occupations during this time." And even with greater globalization, the report argues that the lower wage scales in India and China are not pushing down pay for U.S. IT workers. Citing information from the U.S. Bureau of Labor Statistics, it said that IT workers have seen steady gains in average annual wages for different fields in the sector of between about two to five percent a year. The study suggests that there are several factors in the continued growth in demand for IT workers here. The report said part of it is due to the use of offshoring by U.S. companies, including start-up firms, to limit their costs and thus grow their businesses. That, in turn, creates more opportunities here even as an increasing amount of work is done overseas. The study also said that companies from a variety of sectors in the economy continue to discover greater efficiency and more competitive operations through investment in IT. The study therefore argues there will be continued growing demand for IT as underserved fields such as health care, retail trade, construction, and certain services make greater investment in technology. The study said while there has been a lot of technological progress in recent years, such as low-cost broadband links with India and China, there are still a number of reasons U.S. companies will want to keep some IT jobs at home, including job processes that are not routine or the need to have face-to-face interaction for a specific job. One of the greater threats to IT growth in the United States is the belief by many parents and young people that the field does not have good job prospects, which has resulted in a decline in students choosing to study various IT fields. It also sees tighter visa restrictions forcing more IT work offshore because fewer foreign students will be able to come here to study and provide the skill workers companies are looking for. "In the past, one of the great advantages of the United States has been its higher education system. The United States still holds some significant advantages over India in the higher educational system," said the study. "For many years, the United States has been considered the place of choice for advanced degrees for people throughout the world, but this seems to be changing. Because of visa tightening and attitudes towards the United States in the post-9/11 era, the number of foreign students applying to graduate school in the United States has plummeted."