Just to provide some support for point 1 in my last post:
Cringely: A lesson on IT labor economics from Memphis
When ServiceMaster announced its decision to cancel its contract with IBM and to in-source a new IT team, the company had to find 200 solid IT people immediately. Memphis is a small community and there can’t be that many skilled IT workers there, right? ServiceMaster held a job fair one Saturday and over 1000 people attended. They talked to them all, invited the best back for second interviews, and two weeks later ServiceMaster had a new IT department. The company is reportedly happy with the new department whose workers are probably more skilled and more experienced than the IBMers they are replacing.
Read the whole thing. No, really, read it.
Labor costs represent a very high percentage of IT support costs. Managers who note this usually think the solution is to find cheaper labor. This is invariably wrong.
Cringely is absolutely right, H1-B’s are hired because they are cheaper not because there aren’t enough IT people. I’ve been writing/lobbying about the H1-B abuse issue since the mid-1990’s. Contrary to what his article implies, an employer does NOT have to prove that a US resident can’t be found, in order to hire an H1-B.
To protect themselves, US IT workers need to organize and to get politically active. Join a professional association, demand that it lobbies against H-1B (and L-1) visa increases.
That’s a depressing story, although consistent with his earlier ones on IBM.
In general, I suspect it’s easier to save money by having smart folks focus on the product offering/process improvement (which may include automation) than it is by finding cheaper bodies (which I would call “cheapsourcing”).
There was a recent Freakonomics podcast called “A Cheap Employee Is … a Cheap Employee” that pointed out that even in retail, it pays to pay more and have better employees.