In-Depth

Careers: IT Staff in "Legacy" Environments Sitting Pretty

Organizations are having second thoughts about the offshore outsourcing craze

• By Stephen Swoyer
• 06/21/2005

If research consultancy Foote Partners is correct, mainframe programmers and other veterans of “legacy” platforms are sitting pretty—at least when it comes to job security and overall compensation.

That’s one upshot of Foote’s most recent tech skills survey, based on a sample of almost 50,000 North American and European IT workers in more than 170 skill areas, which found that IT pros as a whole—especially those working in “legacy” environments—are benefiting from a surge in pay for both certified and non-certified technical skills.

What’s the reason for this uptick in skills pay? “Probably the most obvious [reason] has been the economy and the return of hiring and concerns about retention of talent connected to legacy systems and critical technology and business initiatives,” said Foote founder and president David Foote, in a statement.

Another culprit, Foote researchers say, is dimming enthusiasm for offshore outsourcing. “More attention is being paid to the risks of losing workers who stuck it out through years of workforce reductions, and for good reason. For one thing, offshore outsourcing has proven to be far riskier and tougher to succeed at than had been anticipated, in part due to employee retention issues, especially when workers tasked with knowledge transfer and vendor management are involved.”

What this means, Foote says, is that management no longer wields a valuable (if implicit) trump card—the threat of sending jobs offshore. “IT decision-makers have lately become somewhat less inclined to play the offshoring or outsourcing card when under pressure. They’re looking for ways to keep go-to ‘A-team’ players from jumping ship,” he notes.

One way IT executives do so is by loosening the corporate purse strings. On the whole, says Foote, pay for non-certified and certified skills inched up by 2.8 percent and 1.6 percent, respectively, in the first three months of this year. Foote found that from April 2004 through April 2005, overall compensation for non-certified and certified skills increased even more dramatically—by 3.6 percent and 4 percent, respectively.

As a result, Foote predicts the return of what he calls “the talent wars”—the pitched battles fought between companies to retain key talent during the late 1990’s boom—albeit on a smaller scale. “Overall, our findings indicate the reemergence of talent wars, but on a smaller scale than in the past, and industry focused, particularly the IT professional services business,” he indicates.

On the other hand, Foote last year published a study that found offshore outsourcing depressed hiring and—in some cases—constrained compensation in the United States. How does the researcher reconcile last year’s study with this year’s tech skills findings?

It doesn’t necessarily see a conflict. The research firm says nearly 60 percent of offshore outsourcing experiments fail to live up to expectations—especially with respect to cost savings. What’s more, organizations are starting to embrace innovation and process improvement—instead of cost savings—as their justification for outsourcing.

Even in this case, though, Foote sees an opportunity for talented technologists. “While this may be resulting in short-term job loss, it is ironically creating job opportunities for multilingual, well-traveled IT workers skilled in specific technical skills and disciplines.”