As technology changes

According to an industry report, Indian’s information technology (IT) outsourcing industry is facing a difficult time as the market is slowing down and many programmers are being laid-off. In the past twenty years, the Indian’s IT industry had grown quickly and reached over $200 billion U.S. Dollars annually in revenue. However, since last year suddenly the market slowed down and almost stopped and that brought crisis throughout the industry.

For many years, Indian IT industry leaders were so confident about their success even when technologies and markets changed. An executive lamented: “We were so busy with our financial success but did not think about the future and failed to invest in our workers. Most of our workers were programmers who did well in developing software applications but with cloud computing, many companies are moving everything to the cloud, and do not need a large number of programmers anymore. Many software applications are now standardized by the cloud service companies like Google, Microsoft, Amazon, and IBM so they do not need to keep a lot of IT workers for in-house development anymore. The problem is we do not see it, we are happy with our success, we do not anticipate that the market has changed so quick.”

India’s IT outsourcing exploded during the Y2K crisis of the late ’90s because there was a need to fix the information technology systems. As Indian programmers were known to be technically good and relatively inexpensive, many companies have adopted the outsourcing model of sending works to India to reduce costs, and billion-dollar contracts were signed which opened a new opportunity to millions of young people who were eager to work. In a matter of few years, companies like TCS, Infosys, Wipro, Satyam, and Mahindra have grown to be giants in the industry competing with IBM, Microsoft, Oracle etc. in the last two decades, India was considered the “Information Technology center of the world” with hundred thousand new jobs created each year.

However, as new technologies are emerging and many software applications are being standardized, companies realize that they can get access to better software applications than their own in-house developed applications. With cloud computing, companies can get what they need faster, and better so they begin to reduce their IT staff members and outsourcing contracts. As technologies companies like Amazon, Microsoft, and Google can take over most of the IT functions, the advantage of IT outsourcing become obsolete, and the billion-dollar outsourcing business suddenly collapses.

Today, most applications are standardized by technology giants like Microsoft, Google, Amazon etc. As cloud computing business is growing quickly, the IT outsourcing business is declining and almost stand still. An Indian IT manager complained: “We are helping these companies to modernize and improving their works at a lower cost so they can invest in future technologies. Now they get rid of us. We are in the same situation with the Chinese when they outsource manufacturing works to China to improve their infrastructure technologies. Now they have powerful robots, and artificial intelligence machines so they can bring works back to their country. The result is there are millions of unemployed Chinese labor and hundred thousand unemployed Indian’s IT workers. That is the cost of globalization and over depending on foreigners for our economy.”

China is well aware of the threat to its industry and quickly jump into modernizing its factories with robots doing most of the work despite the huge number of unemployed labor workers. But Chinese robots are still many years behind the American and German’s robots due to their low quality and reliability. As many manufacturing works are being brought back to the U.S. and Europe. Chinese factories are closing down and millions of workers are left with no job and no future.

However, there is an issue. As the U.S. and Europe are automating their factories with robots and artificial intelligence, many companies find that they do not have enough technical workers to manage these complex machines. There are not enough skilled workers who could build and repair robots fast enough to meet the high demand. There are not enough software people to work on the new technologies such as Big Data analytics, artificial intelligence etc. There are not enough technical people who could optimize their supply chains and inventory management or manage manufacturing-plant operations remotely. These are newly created jobs that require new skills and pay higher than the traditional software development works.

Currently, there are plans to build fully automated factories, more self-driving cars, more smart homes, and smart cities with sensors monitoring every aspect of a city’s functioning, from parking, traffic congestion, lighting, waste management, pollution and clean water control. These ambitious plans require a large number of highly specialized technical workers with new computing skills and analytical skills etc, Many of these skills are being developed to meet future demand. According to the study, the world will need at least 4 to 6 million technical workers each year to support these ambitious plans.

As technology is changing many things now and in the near future, do leaders of education systems know about it? Are they ready to seize this great opportunity by quickly changing their systems to focus more on science and technology? Or they will miss this opportunity again? If nothing happens, their economy will decline into chaos and oblivion.


  • Blogs of Prof. John Vu, Carnegie Mellon University

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