the past four years, most offshore economies have experienced rapid job creation and wealth increase. As the demand for skilled workers in those developing nations increases, so do salaries; while in the United States, IT pros are adopting more of a "take what I can get" attitude. As the global economy begins to merge (thanks to the Internet), it will also tend to equalize. A recent Business Week online article 2 stated that six months ago, hourly rates for highly-skilled American contractors averaged $100 per hour, while their counterparts in India averaged $15 per hour. The article went on to say that in January 2004 rates are more like $35-$50 for the American programmer and $25 for the Indian programmer.
However, even with the playing field leveling, the hourly cost of offshore work will remain substantially less for years to come. In order to survive, organizations in the business of software will need to adapt as the auto industry did. One way to do this is to offer consistent productivity advantages (hourly rates mean little the work can be done in 1/10th the time). Companies can also compete on something other than price, such as quality or specialization. Dramatically lowering defect rates could give U.S. software manufacturers an edge. Well-documented, easy-to-understand, easy-to-change systems could be a niche to hone, or IT companies could partner with global groups, working across boundaries to focus on what each entity does best.
The next twenty years of IT will be no free ride, but, then again, neither were the last twenty. Just as when the mainframe left and the desktop arrived, the U.S. IT industry must adapt or die.
1The Handbook of Software Quality Assurance, 3rd Edition contains a longer explanation of the history of the quality movement in Japan.