Covid-19 had a huge impact on workers all over the world with thousands of people losing their jobs in a variety of industries.
However, due to the shelter in place and work from home, large technology companies continued to prosper with Microsoft, Amazon, Google and Netflix turning larger than ever earnings and exponentially increasing the number of customers on their platforms.
We would expect the demand for IT workers should be growing faster than ever before for many years to come. As long as you have experience and skills there will be hundreds of companies all over the world that should be competing for your services. Right? The answer may not be what you would expect. Let’s deep dive.
This decade has seen an extremely rapid transformation in the information technology industry like we have never seen before and the biggest driver for these changes is the migration to cloud services lead by three giants Amazon, Microsoft and Google.
To understand why this is happening we need to understand the difference between CapEx and OpEx or capital expenditure vs operational expenditure.
Any modern company today requires some form of IT infrastructure even if it’s just for their internal employees. This infrastructure can be roughly divided into two broad categories compute and storage. Compute usually means a set of machines performing some business functions such as serving content, or extracting and transforming data in some way. Storage simply means storing data to be retrieved when needed. Sounds simple enough right? Well, not exactly. This infrastructure requires network, like routers and switches to connect these servers in various sites and to connect to the internet. We also need to be concerned about security, redundancy to make sure our services are still available if the hardware fails, our ISP has issues or some other unexpected events happen. And they always do. May be a load balancer and an alternate ISP for backup? We also need a group of people who know how to maintain our servers, who understand databases, network engineering, security and the list goes on. We’ll need to have support contracts with our network and server vendors, which are very very expensive. What about compliance with various standards like The Payment Card Industry Data Security Standard, Health Insurance Portability and Accountability Act, or Europe’s General Data Protection Regulation (GDPR) just to name a few. By the way, the expensive hardware we bought a few years ago depreciates and otherwise becomes outdated as our demand for performance and capacity goes up. Let’s not forget about space and power needed for all that hardware, those aren’t cheap. As you can see, there is a whole lot of capital or CapEx that needs to be spent constantly to keep our infrastructure and people happily humming along.
Luckily for a lot of businesses there is an alternative called cloud. All this compute and storage and anything else your business may need along with all the supporting infrastructure we described above are available as a service from the public cloud providers. And by the way, availability, security / privacy, redundancy, compliance and performance are guaranteed. Amazon, Google and Microsoft will likely do a better job of taking care of business data and services than most small, medium and even large companies have capability to do on their own. It’s hard to match their data center footprint, as well as resources and level of expertise. All you have to do is sign a contract and pay your bill for the amount of compute and storage you use. This is called OpEx. As you can see this is a much simpler and often more cost effective proposition for business managers and owners.
It is not surprising that cloud adaption and migration for businesses of all sizes has been absolutely massive and will continue growing in the future. In fact, Covid-19 has accelerated this trend even further.
This is great for both business community and certainly for the large public cloud service providers. But is this good news for millions of people who are a part of the information technology workforce around the world?
There are a few things that happen when business IT infrastructure and services move to cloud. The three large players in cloud we keep mentioning — Amazon, Microsoft and Google are able to be highly profitable because of the concept called economies of scale, which wikipedia defines as “cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale”. Simply put, they are able to do a lot more with much less people per same amount of compute or storage than a smaller company would. They also have a lot of capital to invest in innovation to drastically increase automation and reduce their spend on expensive vendor hardware, allowing them to use much cheaper commodity machines, while leveraging highly sophisticated software to perform complex logic that would normally require super elaborate and costly hardware vendor solutions, as well as personal to operate and maintain it.
As this adaption and migration continues at even faster rate, an interesting picture is starting to emerge. The overall number of people required to manage world’s IT data and services won’t increase as quickly as the demand for these services, since it will be largely served by a small number of large public cloud providers, who enjoy tremendous economies of scale advantages which will only become more pronounced in the future.
Also, the skills required by these providers are different that those of traditional IT staff that would be hired to maintain your standard enterprise networks and systems. The demand for and the value of traditional network engineers and server admins goes down, while the demand for advanced software and systems engineers, AI, big data, cloud architects and security experts who can work on massive scale infrastructure will still be there.
It is inevitable that thousands in the IT workforce who are not able to quickly adapt to this revolution that is rapidly changing the landscape as we know it, will end up losing their jobs and find themselves struggling to find their place in this new paradigm, now and in the years to come.
For those in the IT field, it is important to recognize these trends and adapt quickly with a sense of urgency or risk being caught in the wind of change.