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Home/Magazine Archive/April 2016 (Vol. 59, No. 4)/Are We Headed Toward Another Global Tech Bust?/Full Text
Communications of the ACM
Are We Headed Toward Another Global Tech Bust?
Enrollments in computing-related undergraduate degree programs are booming, about to establish a new record in North America. There is also a growing demand for computing courses by students who are not computing majors. In the U.S., President Obama recently announced a new $4 billion initiative "to empower students with the computer science skills they need to thrive in a digital economy." Of course, this popularity does not come without costs. The growing size of computing degree programs is clearly stressing academic units and putting pressure on the quality of education provided to students. In response to the insatiable demand, academic institutions are raising their level of investment in computing programs, but academic hiring is agonizingly slow!
What is driving the computing-enrollment boom is undoubtedly the global technology boom, epitomized by the global rise of "unicorns"—tech startups with a valuation of at least $1 billion. Fortune magazine recently wrote "The billion-dollar technology startup was once the stuff of myth. Today they're seemingly everywhere, backed by a bull market and a new generation of disruptive technology." In January 2016, more than 170 companies were on the unicorn list. It is the dream of joining a unicorn that probably attracts many students to study computing.
We must remember, however, we have witnessed such booms in the past; the history of computing education is a history of booms and busts. Computing-related degree programs were introduced in the mid-to-late 1960s, and grew slowly during the 1970s. The introduction of the IBM PC in 1981 made computing a household phenomenon and triggered the tech and enrollment boom in the 1980s. That boom was ended by a recession of the early 1990s.
By the mid-1990s, the Internet and the World-Wide Web had become household names, launching the dot-com boom; the growing popularity of the "Web" led to the founding of many Internet-based companies, commonly referred to as "dot-coms." The NASDAQ Composite Index, a U.S. stock-market index that includes many tech companies, more than quintupled between 1995 and 2000. The excitement about the new technology and the demand from the job market led to a growing popularity of computing education; enrollments in North America nearly tripled between 1995 and 2000. Surging enrollments were stressing academic units, forcing institutions to increase staffing in those stressed units.
But by 1999 it was becoming increasingly clear the boom had become a speculative bubble. The NASDAQ Index peaked on March 10, 2000, declining almost 80% over the next two years. Numerous start-up companies went under, bringing down with them several telecommunication companies. The stock-market crash in the U.S. caused the loss of $5 trillion in the market valuations from March 2000 to October 2002.
At the same time, the Internet and the Web enabled the globalization of software production, giving rise to the phenomenon of offshore outsourcing. There were daily stories in the media describing major shifts in employment that were occurring largely as a result of offshoring. Combined with the impact of the end of the dot-com boom, these reports raised concerns about the future of computing as a viable field of study and work in developed countries. Computing enrollments in North America went into a steep dive, declining by more than 50% between 2004 and 2009.
I believe it is important to remember this history as we celebrate the rise of the unicorns. There are already some indications the current tech boom may be nearing its end. The media has started commenting "The signs of a new tech bubble are everywhere: easy money, widespread exuberance, hidden leverage, and mass participation by amateur investors." What turns a bubble into a bust is a change in investors' psychology. History tells us it does not take much for such a change to occur. The decline of stock markets around the world over the past few months suggests such a change may already be taking place. It is quite likely, also, that a tech bust would bring with it an enrollment bust.
So we should brace ourselves for another global tech and enrollment bust, but also keep in mind the long-term trend. At the trough of 2009, computing enrollments were higher than they were in 1995, before the start of the dot-com boom. Furthermore, a computing degree positions a graduate for solid career opportunities in almost every sector of the global economy, and not only in the tech sector. In the long term, computing is ascendant and will continue to shape the 21st century. Between booms and busts, up we go!
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Moshe Y. Vardi, EDITOR-IN-CHIEF
The Digital Library is published by the Association for Computing Machinery. Copyright © 2016 ACM, Inc.
Comments
Shelley Jeltema
Having been in IT for more than 25 years, I agree with Mr. Vardi that there will be another IT bust. I also see the IT programmer with just a computer science degree becoming less and less important as more and more people are learning programming skills as a part of their non-IT degree programs. The key to long-term success in IT is to either be on track to eventually become a Systems Architect, Systems/Software Administrator, or specialize in a business, science, or engineering specialty. There are so many thousands of Computer Science graduates coming out of colleges every year, you have to find some way to set yourself apart.
IT has become part of mainstream business and as a mainstream business component, there will be higher expectations of accountants, sales, and other business departments to be good programmers and have good IT skills. This is not unlike what we saw in the 1980s and '90s where people who could use word processing and knew how to operate computers for even basic business tasks had an advantage over those who did not. In today's world, if you cannot use a computer, you won't even be able to find and/or apply to most jobs.
The more you have to offer an employer, the more likely it will be that you can ride out the coming bust.
Joshua Grochow
"It is the dream of joining a unicorn that probably attracts many students to study computing." Is it? While unicorns may garner visibility, I think the rise in enrollments may be more about the idea that having a CS degree is a much surer way to a good-paying career (not necessarily billion-dollar level, but, say, still in the top 1-2% of wage-earners) than many other degrees, and that it is becoming increasingly important no matter what career you pursue (as Shelley Jeltema commented). I wonder if there is any source of (survey?) data that could reveal the true motivations for students pursuing CS degrees, and tell us the real sources of the rise in enrollments.
The ability to get a good-paying job became increasingly important after the 2008 downturn, when people were seriously concerned about the possibility of getting a job after college (especially if they are faced with the prospect of paying off significant student loans, as more and more graduates are). Major tech companies - the most visible perhaps being Google and Facebook - continued to hire at (relatively) incredible rates even through the 2008 downturn. The bedrock success of these companies seems to depend on their advertising revenue, which is much less volatile (as far as I can tell) than the booms and busts of investment cycles.
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