vol. XVII no. 1

				(Some) Things are Looking Up: Technology and the Economy Remember the curse, "May you live in interesting times"? We've just weathered several "interesting" years of economic hardship and technological change. The two — the economy and technology — are closely related, but the relationship is complicated, to say the least. It's very difficult to distinguish cause and effect, and sometimes the bad news and the good news are the same thing. Pick an issue, like overseas IT outsourcing. This cuts jobs for Americans already daunted by the "jobless recovery" And since consumer spending makes up two-thirds of the GDP, employment is a key factor affecting economic growth. U.S. lawmakers are introducing bills to ban or restrict global outsourcing. Yet the people who are getting these jobs are opening up to American culture along with the work. Doesn't that prime them to become regular consumers of American products and services? More importantly, many firms see overseas outsourcing as a necessary tactic if they are to survive in a global marketplace. IT workers in India earn about a fifth as much as those here at home — a cost savings hard to pass up. As a result, most trend watchers see IT outsourcing becoming more common, not less. But there's more to the story than job losses and corporate bottom lines, and it's quite a bit more positive. "We're too shortsighted sometimes, wringing our hands about good jobs going offshore," remarks Mike Ackinson, editor and president of TechLINKS, a resource publication serving the Georgia technology community, "Outsourcing will actually be a net plus because what's going offshore isn't the interesting work. Leaving the lower-level jobs to others will help Americans get back to doing what we do best — innovating." The economy and the tech sector are coupled in less unsettling ways as well. For example, computers are huge energy consumers — they account for an estimated 10 percent of U.S. electricity output. And as always, market forces are at work to reshape technology as we reshape how we use it. Right now, prices on laptops are dropping while demand for wireless technology is heating up. The effect of this tech-econ interplay shows up in notebook sales, which are soaring. Meta Group, an information technology research firm, predicts that portables will account for nearly half of computer sales in just a few years. Exciting things are on the horizon. BUT WHAT ABOUT THE JOBS? "Personnel typically account for 40 percent of expenses," says Jere Drummond, former vice chairman of BellSouth Corporation and current trustee of the Georgia State University Foundation, Inc. "That's where firms make their cuts. Then, as the economy improves, businesses try to absorb increased demand without more hiring by increasing their dependence on technology. Look at the terminals at the airport that check you in now instead of airline employees.'' "The falloff in IT spending had a big impact, but it didn't cause the economic downturn. For instance, it had no effect on airlines' reducing their workforces by the thousands," says Jim Senn, a Robinson College Executive MBA professor focusing on strategy and the IT industry. "That's a structural change. Those workers won't be replaced now that the economic picture is improving.'' Drummond notes the recession's trickle-down effect throughout the supply chain. "When BellSouth's budget decreased, it had an impact on the companies we buy from, like Nortel and Lucent. This was true across industries and sectors — if you had less money to spend, so would the next company down the line. Firms are recovering and budgets are easing, but the negative impact on employment appears to be enduring." Top | Next Page Back to main "A Sign of Four" page.

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