Alex Zhurakovskyi's Blog

IT is the 21 Century Industry

Several years ago, I read a WWII memoir book. It contained letters of Soviet soldiers, to and from home, recovered from the front line. It was a fascinating, if sad, read that revealed the details of everyday life in early Soviet Union. One thing struck me.

Many letters contained a recurring theme: "Life is hard in our village, but little Ivan/Vassily/Petya managed to move to the city and found a job at a factory. He is paid a lot and supports all his relatives." How come factory work, which today is considered menial and low-to-average paid, could be so different in 1930s? I have an idea.

In the world of predominantly manual labour, factories (and industry in general) represented a true paradigm shift: machine production allowed to generate goods at unbelievable speed. These goods were easily sold at the market (still mostly unsaturated) generating unseen profits. And when some industry generates lots of money, everyone in that industry gets paid more – for any task.

What about today? The assembly line and robotic production permeated all industries, boosting the productivity but also leveling the market. As the result, we have more goods now than in 1930s but factory workers are no longer significantly better off than others. Who are then?

I think that IT companies are the factories of 21 century. Digitalization is today what Industrial Revolution was to 1850-1950s. Modern IT and early industry have a lot in common: (1) ability to create value at high speed + (2) high demand for workforce = (3) disproportionately high wages. The aspirants of industrial careers have now shifted their sights to Silicon Valley. Russian IT freelancers can afford prolonged vacations in Thailand, Bali, Sri Lanka or other exotic countries – a liberty unavailable to the majority of their compatriots. In 2015, tiny Belarus has generated around $1 billion in exports of IT services. The field grows rapidly and there is constant demand for IT specialists. The internet is peppered with ads "learn how to program", while mid-level software engineers, with barely a college degree, earn salaries comparable to PhD-level positions in other fields.

I think the situation will continue to persist in next 20-60 years, until another paradigm shift sidelines IT industry.