An IT Crash is coming. And its not going to be pretty.

I am not being pessimistic here. I just think that there are various trends that, when combined, would ultimately lead to a crash. I believe a perfect storm is brewing.

No room at the top

When I joined the IT industry 13 years ago, a 2 year experienced guy would be considered a senior – most likely onsite returned. A 4 year experienced person would be managing a project, while a 10 year experienced person would be heading a client account. A 15 year experienced person was pretty rare and considered close to God.

This has changed a lot in past 10 years. A person may not go onsite even after 5 years of experience, may not become a project manager after 10 years and pretty rare for him to head a client account even after 15 years of experience.

And hey – no one is retiring!!! In any mature industry, there are retirements and fresh hirings maintaining the balance. IT industry is currently only hiring. No retirements. Well almost no one.

There is simply not enough room at the top to accommodate everyone.

Rise to the level of incompetence

Every person rises to his or her level of incompetence. In the Indian IT context the push has rarely been technological development. It has always been managing others. Especially the big service companies had to push people to grow quickly. And by “growth” it always meant “Manage more people”. Look at any service company. There is a well defined career track for managers. But not for technology focussed individuals. This prompted people (who were good developers) to switch to project management. Unfortunately a good developer has not translated into a good manager. The skills required are completely different.

This has resulted in a lot of people rising to their level of incompetence. With hardly any room at the top, they are stagnating.

Newer methodologies like Scrum completely do away with managers for the day to day executions. Instead of a dedicated project manager, the focus is on a self-organised team.

We have already got a peek into what companies might do with mid-level managers that they feel are not performing.

With great salaries come great responsibilities

Today, I earn almost ten times of what I used to earn as a fresher. Even considering the inflation, this is way more than what any other industry pay hikes are. Even the same IT industry in US does not have such huge increments. Currently an entry level developer gets 3-4 Lakhs on joining, 5 years experienced gets 10L, 15 years wants 25L and after 25 years he probably demands 35-40L.

(Disclaimer: I am not into HR or recruitment, so these numbers may be completely wrong. Believe them at your own risk. Don’t sue me.)

Currently, companies are paying these  salaries as the demand is more than supply. But what happens when the supply increases – as it will – in the next 10 years? Does a 25 year experienced person really give an output of 10 freshers? Can he give an output five times of a 5 year experienced person?

On the other hand the client billing has not increased. The client keeps paying the same amount in dollar terms, while the salary of the developer is increasing. Every Indian IT company keeps talking of margin pressures in their quarterly results.

The current salaries are simply not sustainable.

When the cash runs out, guess who will be the first one on the block?

Frameworks, Automation and Cloud

The IT industry is fast maturing. Newer and newer frameworks keep simplifying the repeatable and mundane tasks needed. For e.g. the following Spring Data code creates all necessary CRUD operations plus adds a findByCode method.

public interface CategoryRepository extends MongoRepository<Category, String> {

    public Category findByCode(String code);

}

All this without writing a single SQL query. The same would have needed a whole day for a software developer 10 years back. With this framework that developer is no longer needed.

The automation space has exploded. Once configured, each commit can trigger build, test and deploy – right up to push to Prod. Where a company would early need a dedicated team  to build and deploy, the same can now be done with a click of button by the dev team itself.

Cloud has revolutionised the infrastructure management. I have absolutely no experience in infrastructure management or hardware provisioning. But I can now commission and decommission servers on AWS with just a few clicks.

These are exciting times. But it comes at a cost. Everyone is investing in automation. No one’s talking about hiring people.

Highly Leveraged

 

A majority of Indian Software developers, especially at my age, are heavily into debt. It could be in the form of a Home Loan, a Car Loan, a Personal loan or all of the above. EMI constitutes a majority of the monthly expense. In my discussion with them, I have realised that losing a job would be devastating for them. There are very few who said they may be able to sustain for 6 months without a job. A layoff would cause them to take another job quickly – even with reduced salaries.

Though this won’t be a factor for the crash, this would result in a domino effect.

Increased Dev Supply would result in Layoff – which would result in people ready to work for lower salaries – which in turn would result in more supply –  resulting in more Layoffs and so on.

Conclusion

 

I don’t know when the crash may happen. It may be ten years away or it might be next year.

But Winter is definitely Coming. Are we prepared for it?