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12.08

The Global Engineer

By Donald Christiansen

Here’s how globalization is supposed to work. All jobs that can be done sitting at a keyboard will move to the global location where those who are competent to do the job at the lowest going wage reside. Then, eventually, wages will equalize and so will the global standard of living. Everyone will benefit. As wages and employment rise in once-poor areas of the world, the previously disadvantaged populace will become customers for goods and services produced both in their own and other countries. With labor costs no longer a prevailing issue, product success will be determined principally by good design, high quality workmanship, and productivity gains.

Wow! If such a utopia is achievable, even in part, the road will be long and tortuous.

Those in Favor

McKinsey Global Institute suggested that offshoring can be a win-win game. Diane Farrell, director of the institute, in 2004 cited the positive advantages to U.S. firms in gaining “outsized returns” from utilizing Indian software developers at $6 an hour as opposed to those in the United States who earn ten times that. Sending X-rays to India for analysis reduces the cost of health care, she noted, and can free money for medical innovation.

Among those looking at the bright side of globalization, Jarad Pincin, of Freedom Works, wrote that “a careful study of the facts shows that the hysteria surrounding the effects of offshoring is just that, hysteria.” The American labor force, he wrote, is one of the most flexible in the world, noting that during the economic expansion in 1999 the economy shed 2.5 million jobs but recorded a net job gain of 1.13 million. Restricting offshoring will cut American jobs and economic growth, and will raise operating costs for U.S. businesses struggling to compete in a global marketplace, he concluded.

Jagdish Bhagivati, author of In Defense of Globalization, wrote that “. . . firms that forego cheaper suppliers of services are doomed to lose markets, and hence production. And companies that die out, of course, do not employ people.”

The Downside

When Fortune’s David Kirkpatrick quoted Farrell and McKinsey’s dismissal of the downside of offshoring, he nevertheless concluded that displaced workers have legitimate gripes. “What they ought to be demanding,” he said, “is not an end to offshoring but better education and retraining to compete in a global marketplace, as well as social programs to cushion the blow of inevitable job losses.” That conclusion was not enough to forestall a flood of unhappy responses, including one from a network engineer, who wrote “I have worked as hard as I could to gain my education, and to earn my certification. Now, due to outsourcing, I have lost my job . . . What do you say to my family when their dad/husband has worked hard and achieved something not many people can, yet fails to provide for them?” A computer engineer laid off in 2002 wrote, “I want to find a political party or movement that will try to save American jobs. I am ready to vote for the Communist Party, the Nazi Party, or whatever it takes.”

Employment analysts tend to think separately about the offshoring of information technology, or “infrastructure management,” under the direction of a chief information officer (CIO), and the offshoring of engineering jobs. Bill Piatt, former CIO for the General Services Administration, addressing the former, noted that “Electrons need no visas . . . Anyone can do this work from anywhere.” Many of those who manage the infrastructure for International Finance Corp., now headed by Piatt, are located in a network operations center in India. In general, U.S. corporations and their CIOs have accepted the outsourcing of information technology infrastructure as appropriate and necessary to remain competitive. Engineers are wondering whether the same attitude will prevail in the near future with respect to their own jobs. Some insist it already does.

In a previous column, I noted that Boeing employed 800 engineers and scientists in Russia, in part because the Russian pay scale for aeronautical engineers was one third that of U.S. engineers. And Hewlett-Packard’s work force, many of whom are skilled engineers, were employed in 178 countries. GE’s radiology system’s components were made in Bangalore, Canada, Korea, Mexico, North Africa, the United States, and some European countries in order to get quality parts at the lowest cost.

Not long ago, a career counselor writing online at careerplanners.com advised that those who wish to safeguard their careers from offshoring should choose one from a list he provided. It included civil engineer, bartender, dentist, security guard, plumber, and roofer. High-risk jobs, many of which, the writer noted, have already started to move offshore, include automotive engineer, computer systems analyst, hardware engineer, network engineer, reliability engineer, and software developer, while jobs at extreme risk (“you would have to be blind not to see that many of these jobs have already moved,” he wrote) include industrial engineer, quality assurance engineer, and reverse-engineering specialist.

The Dilemma

It seems that offshoring and global engineering are here to stay and inevitably will accelerate, and that, in aggregate, the populations of many countries will benefit. It is also a certainty that the phenomenon will impact many highly trained professionals in the United States, and perhaps elsewhere, as their jobs are transferred.

It may be useful, if a simplification, to identify two opposing schools of thought regarding globalization and its impact on U.S. employment. The first would identify and encourage ways to control, and perhaps even avoid in certain cases, the export of jobs and technology. The other approach would encourage it, or at least allow it to proceed with few controls, and instead generate ways to aid those who are displaced in the process. What will happen will probably lie somewhere between the two extremes.

While politicians and pundits are giving more attention than ever to the topic of globalization, little is devoted to its effects on individual U.S. engineers, the engineering profession itself, and the role that engineers play in the technological leadership and competitiveness of the nation. Some attempts are underway to change this. Unfortunately, none of them seem to involve all of the stakeholders, nor do they result in detailed proposals or ways to promote sustained studies and serious evaluation of the ideas that are put forth.

Since the consequences of ill-considered actions may be far-reaching, elected officials and others charged with making difficult decisions need to be sensitive and well informed. Globalization in its many aspects will be in contention for decades.

Resources

For more on globalization and offshoring:

• Hira, R. and P. E. Ross, “R&D Goes Global,” November 2008,
  www.spectrum.ieee.org/print/6929.

• Bivens, L. J., “An Introduction to Offshoring,” May 2006,
  www.epi.org/content.cfm/issueguide_offshoring.

• Bivens, L. J., “Truth and Consequences of Offshoring,” August 2005,
  www.epi.org/content.cfm/bp155.

• Foote, D., “Offshoring IT Jobs? Consider the Risks, Not Just the Rewards,” June 3, 2003, www.searchcio.com.

• Kirkpatrick, D., “Rage Against Offshoring Is Off Target,” February 16, 2004, at CNN.com.

• Kirkpatrick, D., “Rage Against Offshoring Is Very Real,” February 23, 2004, at CNN.com.

• Robinson, M. T., “The Offshoring of America’s Top Jobs,” www.careerplanner.com.

• Pincin, J., “Is Offshoring a Problem for the U.S. Economy?,” May 20, 2004,
  www.freedomworks.org/processor/printer.php?issue_id=1773.

• Farrell, D., “Exporting Jobs: Offshoring is the Way to Go,” February 7, 2004,
  www.iht.com/articles/2004/02/07/edfarrell_ed3_php.

• Overby, S., “Outsourcing: The Pros of Offshore Remote Infrastructure Management,” March 18, 2008, www.cio.com/article/print/198450.

• Christiansen, D., “Make or Buy?,” Today’s Engineer Online,
  www.todaysengineer.org/2006/Feb/backscatter.asp.

• Friedman, B. M., The Moral Consequences of Economic Growth, Alfred Knopf, 2005.

• Friedman, T. L., The World Is Flat, Farrar Straus and Giroux, 2005.

• Will, G. F., “How to Kill Jobs,” The Washington Post, February 19, 2004.

• Morgan, R. P., “Offshoring and the Future of the U.S. Engineering Workforce and Profession,” www.todaysengineer.org/2008/Jun/opinion.asp.

• Morgan, R. P., “The Impact of Offshoring on the Engineering Profession,” The National Academy of Engineering, September 2006.

• The National Academy of Engineering Workshop on Offshoring of Engineering, October 2006.

Donald Christiansen is the former editor and publisher of IEEE Spectrum and an independent publishing consultant. He can be reached at donchristiansen@ieee.org.

Comments may be submitted to todaysengineer@ieee.org.