Friday, May 26, 2017

The Software Economy: Why Software Jobs Are Taking Over

We have entered what I like to think of as "The Software Economy." Software is everywhere, and the market for software and computer science careers has exploded.
Look at the products and services around us. New cell phones (Look at the Moto X, HTC, Samsung, ...) are largely differentiated by software and user interface design. The MotoX is getting great reviews because you can turn on the camera by rotating it quickly, for example.
Think about automobiles - they are becoming highly programmable devices filled with smartphone and other software tools. The Chevy Volt, for example, has 10 million lines of code, 2 million more than the code in the F-35 fighter jet. The Tesla, which is an engineering marvel in many respects, has among the most advanced software interfaces in the market (shown below).

Fig 1:  Software-based Control Panel in Tesla
Wearable computing is largely software based: the Nike FuelBand, Jawbone UP, and Fitbit are exciting devices which create your own personal "BigData" for exercise and wellness. And of course Google Glass will enable an even bigger market for wearable computing.

Fig 2:  Wearable Computing Devices
Think about how mobile apps have transformed business service-delivery. Apple AAPL -0.18% tells us that 50 billion apps have been downloaded, making "developing an app" one of the most important projects in nearly every company.
When I entered the technology markets in 1978 the software industry was kind of a niche. Software engineers had to work in big companies who could invest in mainframe computers. The discipline existed, but it was a small branch of math or computer science.

Fig 3:  Software Development Environment in 1970s and 1980s
Since then, of course, we've seen the explosion of PC's, the internet, laptops, mobile devices, and now wearable and embedded computers. All these programmable devices need software.
Let me give you some insights on this fast-growing economy for jobs and careers:

1. The Software Industry is Expanding Faster than Other Occupations
Burning Glass Technologies, one of the leading providers of BigData for employment and job dynamics, recently did some analysis for us and found that the from 2007 to 2012 the number of software jobs grew by 31%, three times faster than US jobs overall. IDC estimates that the market for various software products is over $200 billion, and Comptia, the industry trade association, sizes the total IT industry at $3.6 Trillion, 17% of which is software (which would translate to over $400 billion).

Comptia believes there are around 9.2 million technical and managerial jobs in software, and millions more in peripheral industries. If we look only at core IT positions (ie. those in IT-related companies, not general manufacturing and other service industries), the market for software positions is growing at nearly twice the rate of other jobs in the US economy.

Fig 4:  Core IT positions
The unemployment rate in software and IT positions is particularly low, by the way, around 3.8% in the last BLS survey.

2. Software Skills Have Expanded Well Beyond IT Industries
As I mentioned above, software is everywhere.
Getting back to autos: Ford, GM, Chrysler and other automakers are now competing with Silicon Valley for software engineers. In the article "Calling all Codaholics", automaker Ford talks about how most of their most critical positions are now in software and systems engineering, creating a new war for technical talent in Detroit.
Burning Glass data shows that over the last five years software jobs in manufacturing grew at 31%, software jobs in healthcare grew by 72%, software jobs in financial services grew by 40%, and software jobs in retail industries grew by 98%. Retailers need software engineers to develop e-commerce systems, develop apps, and analyze BigData.

3. Software Jobs are No Longer Concentrated in High-Tech Havens
Software engineering used to be focused in Boston, San Francisco, Atlanta, and a few key geographies where software companies were born. Today software skills are needed everywhere and we can hire and manage people from around the world.
The Burning Glass research shows that Detroit, Baltimore, Austin, and Phoenix are all exploding with software positions (significantly higher growth rates than even Silicon Valley and Boston). And cities like Vancouver, Toronto, and eastern European locations are now becoming huge havens for software teams.

4. Software Skills are Easier Than Ever to Obtain
While software continues to be a professional career, more and more data shows that it is turning into a "craft."
You can learn to program online very easily (MOOC-enabled courses in computer science are available from Stanford, Harvard, MIT, and many other top educatinoal institutions) and if you're so inclined you can start writing code at home with no more investment than a laptop.
Back in the 1980s when I entered the tech industry you needed an employer with a huge mainframe and lots of tools. Today all these tools are free, so people with technical minds and enterprising hearts can learn to program themselves.
One of the best developers we have in our company has a history degree. He is just amazingly smart and loves to solve puzzles and learn new things. Many of the most creative new apps are built by people with very little formal software training. So this marketplace will become broader and more dynamic each year.

5. Software Engineers Trained Outside the US are Rapidly Growing in Number
While this is clearly a renaissance for job opportunities in the US, the global competition is fierce. In China, 41% of college grads have STEM degrees (science, technology, engineering, math) - in India it's 26%. In the US it's still only 13%, which is alarmingly low. (STEM research from Accenture.)
Companies are looking everywhere to find these skills, and this is why new marketplaces for technical skills have opened up. Look at Kaggle, which lets you put your data science projects online for competitive bidding. Companies like OdeskElanceFreelancer, and dozens more startup marketplaces are helping connect programmers to buyers.

 6. The Technologies and Tools for Software are Expanding
Software, like all "expanding economies," is a fragmented and disruptive space. Today there are dozens of types and disciplines within software (Burning Glass data tells us that Hadoop "BigData" and security are the hottest skills at the moment), so if you are entering this field it's important to think of yourself as a "continuous learner."
Twenty years ago software engineers learned about client/server technologies. Ten years ago we were focused on Java and the internet. Today the new areas are BigData, mobile, user experience design, search, and mobility applications. Artificial intelligence, machine learning, and gamification are coming next. The range of opportunities in software is broader than ever.

7.  There is a New War for Software Talent, Upping the Arms Race
For those of us who need to find and hire great software engineers, the demand for new hiring and sourcing tools is exploding. Innovative recruitment tools for software talent like Gild, TalentBin, RemarkableHire, and Entelo are transforming the way we recruit.  These new tools use the concepts of BigData in recruiting to search and find great engineers through their social footprint. (Read my article on the 9 Hottest Trends in Recruiting for more.)
The arms race for software talent has changed the way we pay and manage people. Think about the new perks like unlimited vacation, free food, and flexible work environments. Where did they start? Largely among Silicon Valley software companies who had to compete vigorously for engineers.
I'm an engineer and so are many of my friends. Engineers look for companies that give them great projects and an exciting, creative work environment. Companies have re-designed their workplace to attract great technical teams - and much of this work is paying off for the rest of us. (Read Deloitte's Center of the Edge new research on the work environment to learn more.)
The competition to find "great" engineers remains very high. Studies have shown that a top software developer can product 10-20X the output (and quality) of a junior or lower skilled developer. New tools like Agile and Pair development are improving productivity rapidly.
And age is not always an issue. Many senior software programmers who grew up using Cobol (which was object-oriented), for example, have turned into great developers in modern object-oriented programming environments.

You Need to Understand Software to Succeed

We really have entered a new "software economy."  Software has permeated every business function.
Can your VP of Marketing do their job without understanding the role of CRM, SEO, social networks, analytics, and customer segmentation? Can your product management team design great products without understanding information architecture, search, and mobile computing? Can manufacturers design supply chains without understanding how ERP and other forms of software manage data?
Software is now one of the most powerful ways to add value to your product, your marketing, and your business.


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