March 1, 2010 at 12:19Passion for programming. Part 1. Advice 2. Supply and demand
Not even two months have passed - I am posting the second section of the first part of Chad Fowler's book “Passion for Programming”. A new PDF is also available
via the old link .
<- Start, lead or die 3. Coding is not everything ->
When the web was just starting its way, everyone could earn a lot of money by making simple HTML pages for companies. Each company wanted a page on the Internet and relatively few people knew how to make them. Companies were prepared to pay a lot of "experienced" web-designers, who were required only basic knowledge of HTML, links and site structure.
Making HTML pages is quite simple. It's hard to make beautiful pages, but the basics are pretty easy to learn. Over time, people noticed how great demand there was for web designers and began to buy and study HTML books more and more. The market was very hot, salaries and hourly rates were high and supply in response to this began to grow.
The market was filled with designers and they began to divide into truly creative personalities and simply applied. Moreover, competition began to lower prices. As a result, more companies were able to afford to take the first step and start flickering on the Internet. Perhaps they could not afford to pay $ 5,000 for the first site, but they could pay $ 500.
Of course, some offices were still ready to part with impressive amounts for an unrealistic site. And some web designers could still count on serious rewards.
And then the flow of web-designers in the initial and middle segment decreased. Not too talented designers were replaced by advanced users and other comrades from IT who did not necessarily specialize in HTML design. At this time, the demand, supply and price of working with HTML reached equilibrium.
This little theoretical story about the life path of a web designer shows us the economic model that you probably heard about - the model of supply and demand. For most of us, the concepts of supply and demand are more associated with determining prices for which a product can and will be sold. The more the quantity of goods on the market exceeds the number of people who want to buy it, the lower its price. The more the number of buyers exceeds the amount of goods on the market, the higher the price will be at this competition of customers.
In addition to predicting prices for goods and services, a supply and demand model can predict how price changes will depend on the number of buyers and suppliers. Usually more people buy a cheap thing than an expensive one.
Why is this so important to us? The fashion for offshore development has injected a large number of cheap IT specialists into the market. And while we worry about losing our work at home, low-cost programmers have already increased their overall supply in the market. And as supply rises, prices fall. Competition in the market of goods and services with high supply depends on the price. In the case of work, this is reflected in the salary. You cannot compete in price. You just can’t afford it. So what to do?
Cheap offshore programmers focus on a relatively narrow set of technologies. Java and .NET programmers in India are dime a dozen. There are also many Oracle DBAs in India. Less massive technologies are represented by offshore programmers much weaker. When choosing the technology in which you will develop, you must be aware of the impact of increasing supply and lowering prices on your future career.
When programming for .NET, you will have tens of thousands of times more competitors in the labor market than if you programmed, for example, in Python. This can lead to the fact that the average price for .NET programmers will decrease significantly, possibly increasing demand (thus increasing the number of jobs in this area). Ultimately, finding a job may not be difficult, but it is unlikely to be well paid. The offer on the Python programming market is much lower than on .NET, but there is also a demand for it.
In the Python programming market, where prices for programmers are much higher, people may be tempted by a higher price range and begin to offer their services, thereby lowering prices on average.
Thus, everything is balanced. But one aspect is obvious. India serves only already stabilized IT markets. You will not meet an average offshore company moving to some unusual technology. They will never be pioneers. They never take risks. They wait for the equilibrium in the technology market and then blow it up with their super-cheap programmers.
Based on these observations, you can choose the market segment in which demand is not so high as your arena. No matter how absurd this sounds, if you are afraid of losing to offshore programmers, then one of the possible options is to avoid the types of work that they do. Offshore companies are engaged in those industries in which demand is high. Therefore, by focusing on fairly niche technologies, you probably will not reduce competition (since there is less work in this market), but this will allow you to switch from price competition to ability competition. And this is exactly what you need. You cannot compete in prices, but in abilities - completely.
It should also be borne in mind that with lower prices for programmers in dominant technologies, demand for them will increase. So for example, a general increase in demand for Java programmers may well lead to an increase in the number of jobs (of a certain type) in this segment, but certainly not to a decrease. The growth of the offshore market for low-cost development can cause demand growth, including for the most expensive developers.
This usually happens. Many companies come to the conclusion that for the normal development of offshore development it is necessary to have high-quality developers who set standards, control quality and lead the project in technological terms. The general increase in the demand for Java programming naturally led to an increase in demand for this category of workers as part of java. Low-level work can be performed in the offshore, but there are much more available high-level tasks than before the advent of offshore development. As in niche markets, in this tier of the Java development market, competition is shifting from price to ability.
Learn the current demand for technical skills. Check out career and job sites to find out which skills are high and which are in low demand. Find several sites of offshore companies (or talk with employees of such companies if you work with them). Compare what they offer with the list that you made. Mark those that are in high demand, but almost not provided by outsourcers.
Make the same comparison among the latest technologies and skills that outsourcing companies provide. Take a closer look at those areas that are not much affected by offshore developers. How long will it take to fill these gaps? And will they do this at all? In this period, the market will not be balanced.
via the old link .
<- Start, lead or die 3. Coding is not everything ->
2. Supply and demand
When the web was just starting its way, everyone could earn a lot of money by making simple HTML pages for companies. Each company wanted a page on the Internet and relatively few people knew how to make them. Companies were prepared to pay a lot of "experienced" web-designers, who were required only basic knowledge of HTML, links and site structure.
Making HTML pages is quite simple. It's hard to make beautiful pages, but the basics are pretty easy to learn. Over time, people noticed how great demand there was for web designers and began to buy and study HTML books more and more. The market was very hot, salaries and hourly rates were high and supply in response to this began to grow.
The market was filled with designers and they began to divide into truly creative personalities and simply applied. Moreover, competition began to lower prices. As a result, more companies were able to afford to take the first step and start flickering on the Internet. Perhaps they could not afford to pay $ 5,000 for the first site, but they could pay $ 500.
Of course, some offices were still ready to part with impressive amounts for an unrealistic site. And some web designers could still count on serious rewards.
And then the flow of web-designers in the initial and middle segment decreased. Not too talented designers were replaced by advanced users and other comrades from IT who did not necessarily specialize in HTML design. At this time, the demand, supply and price of working with HTML reached equilibrium.
This little theoretical story about the life path of a web designer shows us the economic model that you probably heard about - the model of supply and demand. For most of us, the concepts of supply and demand are more associated with determining prices for which a product can and will be sold. The more the quantity of goods on the market exceeds the number of people who want to buy it, the lower its price. The more the number of buyers exceeds the amount of goods on the market, the higher the price will be at this competition of customers.
In addition to predicting prices for goods and services, a supply and demand model can predict how price changes will depend on the number of buyers and suppliers. Usually more people buy a cheap thing than an expensive one.
You cannot compete in price. In fact, you simply can not afford it.
Why is this so important to us? The fashion for offshore development has injected a large number of cheap IT specialists into the market. And while we worry about losing our work at home, low-cost programmers have already increased their overall supply in the market. And as supply rises, prices fall. Competition in the market of goods and services with high supply depends on the price. In the case of work, this is reflected in the salary. You cannot compete in price. You just can’t afford it. So what to do?
Cheap offshore programmers focus on a relatively narrow set of technologies. Java and .NET programmers in India are dime a dozen. There are also many Oracle DBAs in India. Less massive technologies are represented by offshore programmers much weaker. When choosing the technology in which you will develop, you must be aware of the impact of increasing supply and lowering prices on your future career.
When programming for .NET, you will have tens of thousands of times more competitors in the labor market than if you programmed, for example, in Python. This can lead to the fact that the average price for .NET programmers will decrease significantly, possibly increasing demand (thus increasing the number of jobs in this area). Ultimately, finding a job may not be difficult, but it is unlikely to be well paid. The offer on the Python programming market is much lower than on .NET, but there is also a demand for it.
In the Python programming market, where prices for programmers are much higher, people may be tempted by a higher price range and begin to offer their services, thereby lowering prices on average.
Thus, everything is balanced. But one aspect is obvious. India serves only already stabilized IT markets. You will not meet an average offshore company moving to some unusual technology. They will never be pioneers. They never take risks. They wait for the equilibrium in the technology market and then blow it up with their super-cheap programmers.
Based on these observations, you can choose the market segment in which demand is not so high as your arena. No matter how absurd this sounds, if you are afraid of losing to offshore programmers, then one of the possible options is to avoid the types of work that they do. Offshore companies are engaged in those industries in which demand is high. Therefore, by focusing on fairly niche technologies, you probably will not reduce competition (since there is less work in this market), but this will allow you to switch from price competition to ability competition. And this is exactly what you need. You cannot compete in prices, but in abilities - completely.
It should also be borne in mind that with lower prices for programmers in dominant technologies, demand for them will increase. So for example, a general increase in demand for Java programmers may well lead to an increase in the number of jobs (of a certain type) in this segment, but certainly not to a decrease. The growth of the offshore market for low-cost development can cause demand growth, including for the most expensive developers.
This usually happens. Many companies come to the conclusion that for the normal development of offshore development it is necessary to have high-quality developers who set standards, control quality and lead the project in technological terms. The general increase in the demand for Java programming naturally led to an increase in demand for this category of workers as part of java. Low-level work can be performed in the offshore, but there are much more available high-level tasks than before the advent of offshore development. As in niche markets, in this tier of the Java development market, competition is shifting from price to ability.
Use market imbalance.The most important lesson we can learn from the supply and demand model is that increasing demand increases price competition. The time-tested strategy of following the market will put you in the framework of price competition with offshore developers, because your skills will coincide with those that are popular in attractive balanced markets for them. To compete in the market of popular technologies, you must move to a higher tier. Or you can use the imbalance in the technology market - go wherever offshore companies go. In any case, it is necessary to understand the balance of power and skillfully respond to its changes.
Act!
Learn the current demand for technical skills. Check out career and job sites to find out which skills are high and which are in low demand. Find several sites of offshore companies (or talk with employees of such companies if you work with them). Compare what they offer with the list that you made. Mark those that are in high demand, but almost not provided by outsourcers.
Make the same comparison among the latest technologies and skills that outsourcing companies provide. Take a closer look at those areas that are not much affected by offshore developers. How long will it take to fill these gaps? And will they do this at all? In this period, the market will not be balanced.