Software ate the world: A decade later, it's still a very hungry beast

At the close of 2011, venture capitalist and internet pioneer Marc Andreesson wrote a newspaper column to justify his firm’s deep investment position on software companies for the decade to come. ‘Software is eating the world’ was the headline, and it puzzled many. A decade later, the tidal wave of mobile, social and ecommerce apps, cloud, platforms, and tools have indeed eaten our world. A mobile phone is 90% software, 10% hardware.

The burning platform is that every Australian business became digital - even the humble sheep farming operations that dominated our export economy 150 years ago with wool sales are now required to track farm production from paddock to garment, plus manage water and soil sustainability, often with the aid of an app on a mobile phone. Farmers have figured it out, downloaded the app, and got on with agribusiness using agritech. Modern Australian organizations’ problems are now much less about software, and more about growth, surviving disruptive competitive forces, changes wrought by the pandemic, and some of the dark sides of a digital world like cybersecurity.

The evidence for software having eaten our world in just 10 years turns up in Australia’s economic performance - in terms of GDP per capita, nothing contributes clout like knowledge work or a technology job. The market for Australian ideas, products and services is now global in scale, as proven by internet stars like MYOB, REA Group, PEXA, Zip, Envato, Canva, Atlassian, Invoice2Go and Linktree. The market for skilled labour to build those products and services has always been more local, with onshore teams of software developers working in big city offices the preferred model, and herein lies the challenge for the next decade.

If the COVID-19 pandemic has taught us anything, it is how to operate productively with product and engineering teams collaborating remotely from home, instead of trekking into an office every day. Skilled knowledge workers are making big career choices (coming under the banner headline of ‘The Great Resignation’), about going back to the old office ways. Modern, digitally-savvy businesses are exploiting this new remote work capability in combination with access to a new wave of offshore engineering capability to create the next generation of Australian success stories.

Some Australian companies have been using offshore tech workers for a decade or more, focused on exploiting wage and currency differences for cost saving - getting low wage, lower calibre tech process workers entering accounting transactions, answering emails and chat messages, while maintaining applications and servers with patches and bug fixes. High levels of supervision and review of work were required, but that was tolerable. 

As Indian and Chinese middle-classes have exploded, so too have their wages, but the perception remains that offshore = cheap. We know of an Australian company that recently shut down its Eastern European offshore software centre as wages and costs had reached Australian levels after only 5 years of operations.

Wake up Australia! Nobody’s coming.

At home in Australia, software developer wages are now tracking like house prices - there is a massive shortage of skilled people, the end result of a number of factors which have resulted in a fraction of the needed engineers graduating, career-shifting, or immigrating into our organizations.  

Now Australian companies need to learn a new trick. The technical capability of some engineering organizations in China, Thailand, India, (even Nepal) and beyond has grown 100-fold - many are no longer just process workers or code maintainers. The new trick is to combine expertise in remote teamwork, working across time zones, getting access to top-class engineering squads offshore. Forget the cost arbitrage, this is about competitive advantage and growth. This is about ditching avoidance (or delaying investment) in innovation, for the want of spare engineers, business analysts and QAs, and maintaining the global momentum built by Australia’s business pioneers in the 2010s.

This is not about mindlessly sending jobs offshore (the scourge of Australian outsourcing in the 1990s). There just aren’t enough tech-skilled people in Australia to create and manage the software required to make companies successful. Success, which in turn, creates those jobs in sales, marketing, finance and customer service. This is about a combination of the best of both worlds - business savvy and product leadership in Australia, engineering and design from wherever can provide top-class talent.

A recent Thoughtworks-commissioned research project showed that at the executive level, finding enough onshore software developers had not yet reached the Top 5 short-list of business concerns. Perhaps they are hoping with their attention to corporate culture, reasonable wages, almond lattes and some dogs in the workplace they will get more than their fair share of developers? I would suggest this is just ego blinding them to structural failures of the market for digital skills; skilled people able to build software and digital products at the scale and speed required to compete globally.

Providing a feast

Looking towards the future,  let’s not focus on the burning platform. Let’s get in touch with our burning ambition to create Australian businesses and organizations that stand on the world stage, create jobs, and leverage the best talent the world has to offer. 

And while we are at it, let’s get onto fixing the structural problems that contributed to our shortage in the first place - investing in education, and addressing the exclusion of key groups (women and under-represented minorities especially) from technology professions.