Information Technology, Investing

The Return to Program Hiring

If you live long enough, everything comes around again. Well, hopefully not leisure suits, but it appears some things from the 70s are making a comeback. In this case it is mass hiring of tech workers from college.

During the 60s and 70s there was a massive software development effort under way. There, quite literally were not enough programmers to go around. Large corporations needing order entry, inventory, accounting, warehouse management, payroll and any number of systems people just think “exist” were being written for the first time at most companies. Programmers at many companies belonged to a group called SHARE  which helped develop much of the early IBM mainframe software.

Please do not confuse SHARE with the Linux Open Source groups of today. While SHARE was sharing source with members the focus was on creating maintainable business class software for production environments. This is a completely different mentality from the “hurl it and burn it” mentality of most Linux distros. If you have used Linux distros for about a decade, you are all too familiar with the vast quantity of single release packages. These packages are rolled into one release then are simply never maintained – or – they get completely rewritten by someone else because nobody wants to maintain someone else’s code, especially the tweens and teens writing most of those packages.

Corporations were forced to manufacture the programmers they needed. Many developed internal training programs where they would hire 30-100 college age kids and run them through various programming courses teaching them how to develop software for this particular corporation. At the end of the training program those who did well would be given full time jobs within various units of the corporation. For most corporations these were not unpaid training courses, they were actual salaried positions which lead to hire paying positions within the company. In today’s world, most corporations are intent on replacing all of their U.S. workers with H1-B or other visa workers in a race to the bottom.

It is actually very telling if you can find out just how many visa workers a corporation has because as that number climbs the well being of the corporation seems to directly decline. It is also next to impossible to identify just how many visa workers are at a company without interviewing the token few U.S. citizens they still have employed. You see, most subcontract these visa workers through various services firms.

Before you paint the previous paragraph as a slam at visa workers and those who employ them, you should take a look at this recent article.

Companies which are Wall Street darlings today have massive program hiring practices. Facebook, Intuit and many others have brought back forms of this practice with gusto. Conversely companies like IBM and HP who have massively embraced off-shore workers are headed down the soil pipe and into the sewer.

The lesson is clear. You can either race to the bottom and an inevitable bankruptcy (ala the GM bailout of several years ago after they massively chased off-shore IT workers) or you can build what you need and rocket over the top.

Do not just lay this at the feet of the visa workers though. Management at companies pursuing this path to riches are simply incompetent. This seems like a “quick fix” to “cut costs” for a short term bonus, and it might well be. The trouble is this line of thinking sacrifices any future the company might have had. In truth, the race to embrace visa workers is a red flag for investors that upper management is routinely making horrible decisions. Those decisions might not yet show in the financials or the stock price, but, when they do it will be like trying to hide an ocean liner in a bath tub.