Offshoring and Its Impact on US Engineering
Dr. Joel Orr, Cyon Research Corporation

Jobs are moving off-shore at an unprecedented rate. That's not news; we've watched manufacturing move to cheaper locales for decades.

Then it was call centers. We are no longer surprised when people with Indian accents answer the support lines at AOL and elsewhere. In fact, I've often found them to be more knowledgeable--and more courteous--than their predecessors.

But somehow, the idea that engineering jobs might follow suit was little spoken of until recently. And now it is happening.

Why is it happening? Simple: Technology education in other countries, coupled with the rise of the Internet, has made it possible for them to compete for a wide variety of jobs and services. While China is rapidly becoming the world power in low-cost manufacturing, India, the Philippines, and some Eastern European countries now offer call-center services for help lines, reservations, and sales; programming, system design, and even tax preparation assistance.

The migration of jobs to lower-cost economies is not a new phenomenon. But before the Internet, it did not threaten professional workers. The new connectivity makes it possible for engineering work-especially computer-based work-to be performed elsewhere.

Engineers and related professionals in India and the Philippines are often as well-educated as their American counterparts. They are simply paid less, right now. So to remain competitive, US companies must export whatever jobs they can to places where the work can be done more cheaply. If they don't, their competitors will undercut their prices and ultimately put them out of business.

Foreign competitive threats to US manufacturing have taken a variety of forms in the past. In the eighties, the rise of Japanese technology-related industries worried many IT players, who feared that Japan's tremendous improvements in manufacturing would be duplicated in software. But for reasons that are still not well-understood, it never happened; Japan never developed a programming culture to rival that of the US.

China, however, is another story. Its culture is far more heterogeneous than that of Japan, and thus more likely to yield the kind of explosive innovation in software and computer-related products that will challenge US dominance in this arena.

If software is vulnerable, so is just about every other kind of engineering. Moreover, intellectual property in China is not yet very well-protected; software copying is widely accepted. This makes it easier for the Chinese software industry to grow quickly.

Free CAD seats and low-paid operators mean engineering services can be sold very cheaply.

Likewise, India-many of whose citizens have already figured prominently in the US high-tech "gold rush."

What is the trend? It will get worse. The quality of offshore services is improving rapidly. And although prices in India, for example, are rising, it will be years before they catch up to those of the US.

What will be its effects on me? Depends what you do, who you work for, how good you are. If you are an engineering professional who spends most of his or her time in front of CAD systems, your job is clearly at risk. While high-security work is less likely to be outsourced than other kinds, even it is not safe.

How will it affect the US? The majority view is that it is hurting our economy, and will hurt it further. A quick scan of the websites of IEEE, ASME, and other professional engineering societies indicates that this is the feeling of the rank-and-file.

Moreover, with so much of our manufacturing capability elsewhere, we have made ourselves extremely vulnerable in the event of a war-especially since so much of our manufacturing has gone to China, our most likely adversary.

The minority view: We've been in trouble before, and we have always overcome. The American system of government empowers us to innovate more quickly and more effectively than any other nation. If we lose leadership in engineering services as we've lost it in manufacturing, we'll simply become the best in something nobody else does well yet-strategic innovation. You'll find such viewpoints on the sites of McKinsey, Harvard, and other internationalists.

(For a range of viewpoints, though with an internationalist leaning, see www.manyworlds.com.)

What should I do about it? First of all, start paying attention. Find out what your employer's plans are, if you're an employee.

If your job is at risk, consider your options. Additional training? Career change? Start your own business?

Talk to other employees who are at risk. Find out if the employer has planned to make any provision for those whose jobs are going away.

Consider political action. While calling your representative or joining a PAC probably won't save your job, it will give you a sense of having taken a step to stem the tide of "job exports."

In sum: There are no easy answers to these issues. Major economic and political forces are at work, and it is no longer clear who the "good guys" are. You owe it to yourself and to those who depend on you to start your contingency planning now.

Remember: Crisis and opportunity are closely related. Don't panic; use your engineering skills to notice and plan. This could be the start of something wonderful.

Dr. Joel Orr is vice-president and Chief Visionary of Cyon Research Corporation. Write him at joel.orr@cyonresearch.com.