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Employment in Silicon Valley |
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Written by Kuldip Pabla
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Saturday, 24 October 2009 00:23 |
As you know the world is becoming flatter and flatter with communication infrastructure like Internet, telephony, VoIP, .... With the cost of communication dropping drastically in the last decade, it doesn't matter (pretty much) where I live and where I work. I could be in the other part of the world while working in a company in Silicon Valley (Bay Area). For example, some of the companies started to promote work from home culture during mid 90s (yes, 90s). They pretty much mandated that if an employee is productive, a manager cannot say no to work from home. Obviously, companies were saving huge money by not providing infrastructure, saving resources like power.
With that in mind, when the dot com era busted, the first thing the CIOs, the CEOs and the CFOs looked into was how to cut cost and improve earnings, like today. The result was off-shoring and out sourcing to developing countries.
Initially, it was a little painful to manage outsourced work due to language barriers, communication bottlenecks, etc. However, over the time, with tools and technology emerging, countries investing into English language, people in developing countries getting smarter, managing of outsourcing became easier. That led to more and more jobs moving to BRIC countries, East Europe and Latin America. Who benefited? Companies and not employees or you can say wall street, not main street.
If a "qualified" engineer can do the same job that a valley engineer is doing, for a small little fraction ( I mean it), why would a company not out source? Over the last decade, I have observed smarter (and expensive) engineers getting Rif'd in the valley to later learn that the project was moved either to India or China, or ... Trend never reversed and I do not see it getting reversed unless and until one of the two things happen:
1) There is almost parity in the world, resulting into similar cost structure and cost of living. This would happen by deflation in the valley and inflation else where.
2) Washington strictly banning out sourcing, not even branches in any other country - which I do not see happening due to various political reasons.
If you look back, there are a very few companies, you can count them on fingers, who have improved their revenues in the last decade. Most of them have improved their bottom line by "cutting cost", mainly by out sourcing jobs. IT has become pretty much production, like auto industry.
The second reason, IMO, is that there has been no innovation happening in the valley. Name a few good innovations for me in the last decade. Valley has thrived on innovation. Solar/alternate energy? IMO, it is unlike valley thing. Web2.0 has yet to make money. All it has promoted is a free culture relying on advertisements to make money. On top of that, with jobs moving out, cost of biz rising in valley (discounting 2009), innovation is also moving out of the valley to other places. IMO, innovation will happen where the work is being done - if not immediately, over the time. Just yesterday, I heard a top executive mentioning "valley is just a bubble."
Bottom line, as long as jobs are getting outsourced and no large scale innovation, I do not see employment scenario improving in the valley.
I jokingly say it: Its an Internet curse.
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