SAP Career Outlook

Throughout the election year, the word "outsourcing" will be thrown around like a political football. But for those of us with a stake in the SAP consulting market, outsourcing is anything but a seasonal concern. Economists might talk about "supply and demand in the global labor pool," but as any SAP consultant will tell you, outsourcing isn't theoretical, it's downright personal. 

The first time I realized just how personal outsourcing was going to get was a few years ago, when I got an email from an irate ABAP programmer in Texas. I had known this guy for about ten years. He was a bona fide top-rate coder with "Big Four" credentials. He never had trouble finding work; the SAP market had treated him pretty well. He probably should have gone independent a little sooner, but you can only second-guess yourself so much when the money is flowing. In recent years, however, he had started complaining a bit about declining rates and the amount of jobs going to H-1 visa holders. But his first email about outsourcing was different: "My ABAP career is over!!!!" he wrote. "I can't feed my family for $30 an hour!!!!" Turns out, he had just been let go from a huge technical project that was being outsourced to India in its entirety. And there was more: "Some of my team members are being asked to train their replacements!!!!! This project is going to hell!!!!!" 

I think there were actually more exclamation points in his email, and more profanity, but the message was clear. Since that time, I've heard from a lot more angry, displaced ABAPers. Their emails are disheartening. I've placed many of these folks on projects in years past; I consider many of them my friends. I can certainly understand their anger. They feel they've been sold a bill of goods. Think of the countless analysts in the late '90s who breathlessly projected "massive shortfalls in IT workers" extending well into the twenty-first century. Now, those projections have all been revised downward, and no apologies for the hype have been issued. 

Ugly trends don't bring out the best in people. As the backlash against outsourcing continued, I ran into a few out-of-work programmers who held Indians specifically responsible for their plight. In the underbelly of the outsourcing debate, there is still a lot of anti-ethnic feeling out there. I decided that if I was ever to speak out about SAP outsourcing, I would need to balance my support for out-of-work Americans with a "no tolerance" policy regarding any kind of ethnic blaming or bigotry. 

Eventually, I started writing features on mySAPcareers.com with the theme of "responding to outsourcing." I included comments from SAP consultants and their suggestions for staying marketable in the midst of these powerful economic trends (the articles are still available in the mySAPcareers.com archives). I also started answering outsourcing-related questions in my career column on SearchSAP.com, trying to offer some practical advice to SAP consultants on "how to make yourself outsourcing-proof." Of course, there's no such thing as foolproof advice on this matter, but after watching many consultants attempt to stay afloat, I've reached the conclusion that a "whatever it takes" attitude and a commitment to constantly improving one's SAP skill set does make a difference. That's not to say that political solutions aren't needed to address some of the employment gaps that outsourcing has created, that's a matter of debate, but my focus has been on helping consultants in the cross-hairs with some practical ideas. 

Recently, we published a multi-part interview on mySAPcareers.com with Chris Carter, president of CCI. Chris is one of the few SAP managers I know who has shaken up the outsourcing debate with an innovative approach. Chris creates positions for American SAP consultants by bidding on outsourcing projects and keeping the work in the United States. Talking to Chris, this seemed like such a practical idea, I wondered why more consulting firms weren't doing it. Chris said that most of them can't afford to. The large firms simply have too much overhead to be competitive when bidding on outsourced SAP projects. In fact, some of these big firms are now in the outsourcing game themselves, winning U.S.-based projects and shipping the work to their subsidiaries and partners across the globe. 

Chris and I both feel that functional outsourcing is going to happen more and more, but that there will be limits to what companies are able - or willing - to outsource on the functional side. Outsourcing your HR operations is one thing, but outsourcing "mission-critical" financial and manufacturing processes is a harder trick to pull off. This is where the critics of outsourcing are correct: the more complex and important the business process, the more the disadvantages of outsourcing come to the fore. 

We got some good feedback on the interview, and we also got our share of questions and criticisms. I think some SAP consultants were a bit offended by some of our talk about the role of attitude in the SAP market. But it's a fact that sometimes Americans take our opportunities for granted. I just happen to feel that it's hard to succeed as an SAP consultant in today's market without a "whatever it takes" mindset, and I have a hard time accepting that consultants from India have spoiled our party. Nobody forces the hand of U.S. companies. They outsource work to other countries because they want to, and because they can. Whether that is right or wrong is a matter of intense (and healthy) debate, but it is still a fact. 

But where does that leave SAP consultants? After all, as we noted in the beginning of this piece, SAP consultants have a personal stake in these matters that cannot be put off while political scores are settled. My feeling on outsourcing is that, for all its negative hype, in terms of the average SAP consultant, outsourcing is just one factor that has contributed to declining rates and fewer project opportunities. In the big picture, it's the overall demand for a particular SAP consulting skill that dictates the rate, and it's the supply of SAP consultants with a particular skill that moves those rates up or down. There are a number of reasons for the tightening rates we've seen the last few years. I believe the overall decrease in corporate IT spending is the biggest reason rates have gotten tighter. Companies just don't believe in (and invest in) IT miracles anymore. They spend cautiously, project by project (no more "big bangs,"), and pull back whenever the return on investment is questionable. This has a major affect on consulting demand. Add to the mix an ever-increasing amount of people with significant SAP experience, and you have a major shift in the supply –and demand curve from the late '90s to today. Outsourcing plays a role here, but it's just one of a number of factors that makes the SAP labor market more of a pain for everyone involved. In sum: first, companies cut their IT (and SAP) budgets back, and then that demand for "senior consultants" was further diminished by the increase in low-cost consulting alternatives (like outsourcing). This leaves a much smaller amount of "well-paying" on-site positions that are contested by an ever-increasing amount of senior SAP consultants. The only way to buck the supply and demand curve is to stay one step ahead, anticipating the demand for a new SAP skill before it hits. 

The good news is that SAP still has a huge user base of customers, and many of them are eventually going to go with NetWeaver, ushering in a new round of consulting opportunities. SAP is still complex enough and robust enough to require a lot of human intervention, and that's where the best SAP consultants come in - bringing together business know-how with the requisite SAP technical expertise. That kind of expert on-site work is *not* going away. 

I do need to acknowledge an important exception to this analysis, and that is the plight of the ABAP programmer. Although I just said that outsourcing was only one factor amongst many affecting SAP consultants, for the ABAP programmer, it has probably been the biggest factor. All SAP consultants have to stay on their toes to keep landing projects, but for ABAPers, the challenge of finding good work at decent rates is severe. I have written extensively on my recommendations for ABAP programmers before, but the nutshell version is that it's much harder to outsource a cutting-edge ABAP programmer with experience using iViews and the Portals Development Kit, than it is to outsource an ABAP programmer who is mostly doing data conversions and R/3 reporting. The most successful ABAP programmers I know are doing one of two things: either they are relentless about keeping their skills right on the edge of where SAP is going technically, or they are transitioning into team lead roles where programming skills are just one component of an emerging project management skill set. 

Of course, these transitions are easier said than done. Let's be honest: some ABAPers have just had enough and moved on. I even heard from one who has become a real estate agent. As for the livid ABAP programmer who emailed me with all his exclamation points, he is still in the game, still in the SAP market, though it's not a real sexy lifestyle anymore. He has a full-time job which combines team lead and "advanced" ABAP. I think he's been learning more about Java and BW, and he's worked a fair amount with the APO-CIF tool. These new skills have helped him to feel more marketable, but he doesn’t dare risk his perm job to take a chance on a contract. It's not the ideal situation. 

Today's SAP market still offers rewarding careers, but there's a lot less stability and sizzle to the SAP consulting lifestyle. Traveling Monday through Friday for $70 an hour is not the same as Monday through Friday for $175 an hour. But there are always surprises. Recently, I've heard from several consultants who were happy to report that they've raised their rates for the first time in several years. 

In the end, I don't think I can have the final world on SAP outsourcing - I have to leave that to the consultants who are most affected. I hope that those most affected by outsourcing find a way to provide for their families that takes full advantage of their best skills. It goes without saying that I have faced similar challenges in my own career path. I had some great years as an SAP recruiter, but the market pulled the rug out from under me as well. There's no way to spin it: the hard knocks are hard, but I like to think I emerged as a better businessperson, and even more determined to make a contribution to the SAP market. Perhaps if we all speak up enough, some good things will happen.