Structural Industry Change

The local financial pages have been awash with news of the Australian car industry needed a serious financial injection for several of the manufacturers to stay here. This means jobs are threatened, which means votes are threatened.

This little play sparks up every year or so: Mitsubishi has been threatened to close their South Australian plant for at least ten years, and Ford or Holden seem to think seriously about it every three or so. But each time, the state or federal government steps in with some sort of financial incentive for them to stay.

For someone in IT, why does this matter?

Low Skill IT

I look at the auto industry, and I see striking parallels to the IT industry. The medium to large corporates in Australia are heavily reliant on humans to do the construction work of IT: Racking servers, installing operating systems and databases. This is, in many ways, manufacturing.

And this kind of manufacturing suffers the same sort of competitive threats: it’s much cheaper to have someone in Bangalore install Windows 2008 on a server. It’s even cheaper to have a robot do it, once you’ve bought the robot.

As operating systems and basic application software has gotten easier to install and use, the skill required to get the basics up and running has been reduced. This turns what was previously a ‘craftsman’ style job into a low-skilled job. Putting in a CD and typing out exactly what’s on this piece of paper here doesn’t require years of training. If that’s all you’re doing, and a company can get someone in India, or China, or the Philippines to do the same job for half the price, why wouldn’t they?

It’s not quite as simple as that, but it’s easy for a manager to ignore the complexity when a 50% budget saving is staring them in the face, particularly if that manager’s end-of-year bonus is on the line. And it’s already happening. The Indian consultancies (Tata, Wipro, Infosys, etc.) are all winning business at major Australian corporates, and the IBMs of the world have offshore staff in play as well.

Differentiate or Die

What I see is a gradual structural change to the local IT industry. There will always be some work for system admins, sure, but not as much. Wages will get squeezed, and there won’t be as many roles in the big companies like Telstra where you can just settle in to a long career herding tin. Again, it’s already happening.

Instead, you’ll have the low-skill work being done by two tiers of (probably contract) workers: rack and stack by locals, and install and configure remotely. At first, it’ll probably be handled by cheaper labour offshore, but eventually, those jobs will completely disappear because they’ve been automated. We’re still in the early stages of the automation/orchestration hype cycle, but mark my words, it’ll happen.

Which means those people who currently herd tin for a living will need to learn new skills. If you’re a contractor, better start now. If you’re permanent, I’d be making sure my development plan includes some sort of insurance policy against the coming outsourcing.

And for the team leaders/supervisors/low-level managers: I’d be very, very worried. Less coalface employees means less need for supervisors. If you’re not already getting your house in order, then be planning your exit strategy.

No Safety Net

Because, unlike the auto-industry, there’s little to no government support for the IT workers in Australia. Quite simply, you earn too much. You’re white-collar, not blue-collar, and you’re not in a union, so traditional Labor MPs aren’t worried about your votes. Liberal MPs love your company bosses (and their donations) more than they love you. The Nationals worry about farmers and miners, because there’s no IT to speak of in central Queensland. Small business is ignored by all sides unless it’s “battlers” like the corner fish-and-chip shop, and then it’s only for the length of the photo-op.

Cynical? Perhaps. But if I’m right and all that stands between you and being outsourced onto the dole is the hope government will step in… well, I’d hate to be in that position.

There will be no bailout for IT workers when the tin herding jobs go. You will be on your own.

Prepare yourself.

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