Engineers as Commodities

by George McClure

Productivity improvements have contributed to the trend to move engineers from the commodity category to the “skilled artist” category. But engineers are interchangeable in many jobs, and jobs are in the greatest danger of being outsourced.

Higher productivity means fewer engineers

When the Apollo program — to put men on the moon — started in the 1960s, major aerospace engineering projects involved acres of desks with engineers and draftsmen working on designs. Less than thirty years later, designers typically sat in front of computer terminals in darkened rooms, designing with a mouse. The draftsmen were gone entirely. The engineering vault had shifted from large paper drawings to digitally stored designs. Designer productivity soared as stored libraries of component and subassembly designs could be brought into the current design with a few clicks of the mouse. Design rules were also stored in the Computer-Aided Design/Computer-Aided Manufacturing (CAD/CAM) terminal. With direct data links to numerically-controlled (NC) manufacturing tools, fewer manufacturing engineers were required. The goal was the paperless factory. More than a decade ago, a U.S. Navy maintenance depot boasted that they manufactured structural aircraft parts from solid stock, as needed, using a library of digital files for the NC production machines.

The transition was less dramatic for engineering product support work — matching part numbers with inventories and shipping the needed replacement parts to the customers, while keeping track of the frequency with which part types were failing so that reliability engineers could analyze the failures and, perhaps, help designers refine their designs for greater reliability. Even though the part numbers and inventory data moved from paper to microfiche to spreadsheet, a lot of handwork was still involved.

With Built-In Test (BIT) features, products (including, today, even your automobile) can do “health checks” at startup and even during operation. Indeed, some critical aircraft avionics, engines and other components are monitored during operation; potential problem areas are detected in flight and a request for replacement parts can be transmitted automatically to the ground while the aircraft is still aloft — another productivity improvement meaning fewer engineers are needed.

Globalization means lower-cost engineers

With globalization at hand, what are the lessons for engineers’ careers?

The big lesson is that, with low-cost computer power and near-zero cost telecommunications, any work that involves only formulas or design rules can be easily outsourced to lower the cost — even performed twelve time zones away. These are the jobs that fit today’s definition of a commodity engineer.

In software development, the overall architectural design — requiring intuition, skill and experience — will not be outsourced, but the development of software modules that plug into the overall design can easily be shipped overseas.

An extreme example may be the Wall Street Journal reporter who wanted a program written for his Palm Pilot a couple of years ago. He advertised the need on the Internet and got bids from around the globe. Most were willing to do it for $50. He finally paid $25 to a programmer in India for it. That's the race to the bottom.

Multinational corporations follow the same path — put the work where it can be done at lowest cost. It is estimated that more than $160 billion in information technology (IT) work is outsourced per year [www.financialexpress.com]. General Electric does all of its financial, accounting and tax work in India, including filings with the Securities and Exchange Commission, using personnel familiar with Sarbanes-Oxley and the U.S. tax code. Many accounting firms ship tax preparation work offshore to cut costs and improve profit margins.

JPMorgan/Chase contracted with IBM to outsource all of their IT work — a $5 billion, multi-year deal, transferring thousands of workers to IBM — but canceled it last year when they merged with Bank One, which had a lower-cost retail network with IT professionals all over the United States. Thousands of workers were rebadged to JPMorgan/Chase.

Intuition, innovation, conceptual thinking means job security

What’s the message for engineers? Use the right hemisphere of the brain, says Daniel Pink, who has written about the differences between the two hemispheres of the brain in his new book, A Whole New Mind: Moving from the Information Age to the Conceptual Age. He reports findings pointing to four key differences between the right and left sides:

1. The left hemisphere controls the right side of the body; the right hemisphere controls the left side of the body
    
2. The left hemisphere is sequential; the right hemisphere is simultaneous
    
3. The left hemisphere specializes in test; the right hemisphere specializes in context; and
    
4. The left hemisphere analyzes the details; the right hemisphere synthesizes the big picture

The new jobs that won’t be outsourced are jobs that require right-brain thinking. The era of left-brain dominance is over — that work can be scripted, done by computers, spreadsheets and other formula-driven activity that can be outsourced easily [www.washingtonspeakers.com].

Artists, storytellers and inventors are examples of right-brained people. In other words, activities that require broad thinking, innovation and synthesis, customer interface, business development, project management, team-leading and motivating will be the future jobs that stay here. Routine programming, product support, help desk work will be — is being — offshored. Spec development for new products meeting customer requirements (which engineers will have to analyze) will likely stay here. Product managers will stay here, too, since they need to interact with customers, even if the detailed product design to the specs is offshored. It has been pointed out that in India and China, an assignment will be followed to the letter — even if it is, what some might call, illogical. In the United States, such an assignment will likely get a quick response questioning the direction and noting that there is a better way.

Commodity engineers are the interchangeable ones that can be plugged into a program assignment — the logical left-brained ones — without peripheral vision or business sense, who look at the work placed before them on their desks and do it. Turning the crank. They likely don't offer up innovative new ways to do their job better/faster/cheaper. The need for security clearances (and hence citizenship) may keep some jobs in the United States, but commercial assignments can be outsourced overseas. Almost all "back office" IT work in financial services will wind up overseas in places like India and China, because it is left-brained work. Indeed, Dan Pink (who took off from law school for a year and went to India) says that accountants in the United States are an endangered species.

Some critics have vocalized that the senior engineers doing system design, architecture and customer cultivation need to get junior level experience first, but those jobs may be hard to come by in the future — unless they go overseas themselves, or works on classified defense programs or on a state-funded job that, by law, can't be offshored.

One innovative approach to the problem, reported by the New York Times, was employed by a new computer science graduate who went to India to find his first job out of school. Pay was low, but so were living costs, and he was gaining experience.

Three questions on job security

Pink has three questions for you about earning a living:

1. Can someone overseas do your job cheaper?
    
2. Can a computer do your job faster?
    
3. Is what you offer in demand, in an age of abundance?

If you answered 'yes' to 1 or 2, or 'no' to 3, you could be in deep trouble.

Be your own boss?

You can avoid having your work outsourced by working for yourself. Dan Pink explored the prospects for free agency in an earlier book, Free Agent Nation: The Future of Working for Yourself. He estimates that there are 13 million microbusinesses operating in America today, by free agents taking advantage of low-cost digital technology. Computer makers now target small businesses as a separate large market. When the means of production required a mainframe, gaining the requisite technology on a personal level was not possible, but now everyone can afford PCs, cell phones, wideband or wireless, and Blackberries. Young mothers who dropped out of the nine-to-five job market to raise a family can telecommute or work at home. The merger of Working Woman magazine into Working Mother magazine bears witness to this segment's growth. Today's free agent avoids the “glass ceiling,” because it is the individual contribution that matters — not corporate policies on promotion.

An early predictor was business professor Charles Handy, who wrote in 1989 about the “shamrock organization” that hired services only when it needed them. In The Age of Unreason, Handy foretold of the free agent phenomenon. He called them portfolio workers — who carry a portfolio of work when visiting prospects for future business. This is aligned with Pink’s soloist — a highly talented individual contributor in the free agent category. The speed of change can be seen from Handy to Pink — the fax machine is the only new technology indexed by Handy. Pink is a contributing editor for Wired magazine.

References

Daniel H. Pink, A Whole New Mind: Moving from the Information Age to the Conceptual Age, New York: Riverhead Books, 2005

Daniel H. Pink, Free Agent Nation: The Future of Working for Yourself, New York: Warner Books, 2002

Charles Handy, The Age of Unreason, Boston: Harvard Business School Press, 1989

Heritage Foundation, “Challenges Facing the 21st Century Workforce” - a seminar held 4 August 2005, featuring Dan Pink and others. Video and PowerPoint slides available at www.heritage.org/Press/Events/ev080405a.cfm

George McClure is chair IEEE-USA's Communications Committee, a member of the IEEE-USA Career & Workforce Policy Committee, and technology policy editor for IEEE-USA Today’s Engineer. Comments may be submitted to todaysengineer@ieee.org. Opinions expressed are the author's.