The U.S. IT sector added a total of 32,100 new jobs in June,
according to an analysis of Bureau of Labor Statistics data by technology
industry association CompTIA, and continues to grow at a faster rate than
overall national employment. Indeed, every category except technology
manufacturing, experienced positive job growth.
Tim Herbert, CompTIA’s senior vice
president of research and market intelligence states his views about what this
labor data reveals about the state of the domestic IT services market, digital
transformation as employment driver, why automation is likely to have a greater
impact on American IT jobs than offshoring, and how IT outsourcing job growth
will significantly outpace corporate IT roles.
The IT services sector added 1,900
jobs in June. What does that reveal about the current state of the domestic IT
to Tim Herbert, senior vice president of research and market intelligence,
CompTIA, there are two components to the IT
services figures: custom software development services (such as website or
application design) and traditional IT services (which could include things
such as value-added-reselling, managed services, implement/integration
services, facilities management, or break/fix). Custom software development
services accounts for approximately 44 percent of employment in this category,
while traditional IT services accounts for the remaining 56 percent.
Growth of software development
services has slightly outpaced growth of traditional IT services. Both are
driven by strong customer demand for digital transformation technologies. This
may take the form of modernizing legacy infrastructure such as migrations to
the cloud or improving customer experiences such as through new mobile commerce
capabilities. Software and the IT services supporting implementation,
integration, and ongoing management are front and center in digital
Impact of Offshore Outsourcing
time, there have been concerns about the net impact of offshore outsourcing on
American IT jobs and more recently the effect of increasingly advanced
automation has become a worry. Yet CompTIA analysis says that IT remains a key driver
of jobs and growth in the U.S.
view estimates of jobs displaced or jobs
created due to offshoring and/or automation tend to vary widely due to lack of
reliable data, which makes it challenging to assess the net effect. But the job
losses attributed to offshoring are probably slightly overstated, while losses
due to automation are probably slightly understated.
The U.S. is a major exporter of IT
services. In some cases, what may appear to be offshoring could be more a
function of a U.S. tech company locating its workforce in the markets where it
is doing business.
Prior CompTIA research among small
to midsized businesses that utilize outsourced IT services found that the No. 1
reason for doing so was the need for greater expertise. While this is from the
customer perspective, it is a reminder there are many factors at play [in
outsourcing] beyond simple cost savings.
Level of growth in the remainder of
For the remainder of the year,
overall growth is expected to fall in the two to two-and-a-half percent
range—on par with the growth rates of 2015. Consistent with the growth curve of
the past few years, IT services and software jobs are expected to outperform
overall IT industry job growth, possibly yielding increases double the overall
IT workforce growth rates.
Impact of Brexit on the U.S. IT
According to data from the U.S.
Department of Commerce’s International Trade Administration, the UK was the 11th largest
market for U.S. tech hardware exports in 2015 (the most recent year data is
available) and the number one market for U.S. tech services exports in 2014
(the most recent year data is available).
It is generally expected that the UK economy
will slow to some degree when Brexit gets underway. It’s tough to say exactly
how this will impact spending by UK businesses in areas such as technology, but
cutbacks could certainly impact employment at U.S. tech firms that rely heavily
on exports to the UK.
The other factor at play is a falling British
Pound relative to the U.S. dollar, which makes U.S. goods and services more
expensive to UK buyers.
What Clinton or Trump policies might mean for U.S. tech
According to Herbert it is too soon to
tell. But as we move on from the nominating conventions to the general election
phase, we look forward to increased conversations on technology from both
candidates. This conversation is imperative if we hope to keep America at the
forefront of the technology revolution.
In May, CompTIA joined over a dozen
technology trade associations in releasing the Technology Sector Presidential
Platform to the presidential
candidates. The platform urges the 2016 candidates to consider issues and
implement policies that harness the power of technology, create jobs, grow the
economy, foster innovation and continue to improve the lives of all Americans.