I feel like everywhere I work, we have this term, and it’s become increasingly more common over the past decade as the USA becomes more and more hateful and aggressive towards the working class people… The offshore team. I really, really hate hearing about the offshore team

…and…

then you see the USA and how We have millions of computer science grads who struggle to find work, can’t get a job

There’s a couple factors in play and depending on how old you are (or how long you’ve been in this industry) some things may not be apparent.

1. IT spending/staffing is cyclical. Boom and bust. This happens every 5-8 years. There is massive spending by organizations in IT for various reasons. This drives up the need for IT staff and as the talent pool is exhausted, salaries rise sharply as companies try to poach from one another. IT workers win in this case. However, when the pendulum swings expensive IT staff are on the chopping block. For the cycle we’re in right now, that started about a year ago and the cuts are still ongoing, but to me, it feels like it will start swinging back in the other direction in the next 8-12 months with hiring picking up again.

2. In-source vs Outsource/ onshoring vs offshoring cycle - Many businesses have short memories and “the grass is always greener” mentality. If they are heavily In-sourced and onshore they look at their budgets and see this MASSIVE number next to the “payroll” line item. They start asking how they can lower this number and save money. Consultants come in and convince them that the company can save money by cutting out a segment of the company’s operations and outsourcing that to another firm that quotes them an attractive rate. The company chooses this option, fires their own staff, contracts out the work. The bottom line is appropriately attractive, and executives get a bonus for making cost cuts. Inertia from the previous staff keeps the org going much as before for awhile. However, the service begins suffers because the contract company is attempting to provide the least amount of resources and money to fulfill the contract. Many times this means using offshore staffing themselves. After a few expensive outages for outright rebellions from the company business departments, the company fires the contracting company hires their own staff again and brings the service back in house. This pendulum swings again for another 8-10 years.

3. International pay disparity - IT workers in the USA are crazy expensive compared to nearly anywhere else in the work. I’m not just talking about a little more, but by a factor of 10 or 15 times more expensive than other nations that provide similar skilled staff. A $150k USD IT worker in the USA can be replaced (mostly) with a $15k USD worker from India with the same level of skill. That same IT worker skill level would earn $75k-$100k CAD in Canada. In Germany that same worker would earn €60-$90. During boom times that USA worker might be able to earn $175k-$300k USD.

As a worker, you can see that working in the USA will earn you the most money when you can get a job. So the trick is to save during the boom times knowing the bust is coming. If you earn $300k for one year, and are unemployed for two years afterward you’ve effectively earned $100k per year for 3 years straight. Being unemployed in IT for over a year is unusual. You can usually find a lower paying job in IT to cover your living expenses and then some until the boom occurs again.