Electronic Design

Career Paths: Can Anything Be Done About Offshore Outsourcing?

Offshore outsourcing stirs up several important issues for engineers, the companies that hire them, and the U.S. overall. The rippling affect of offshoring initially displaces engineers in the U.S., which is foremost an economic loss. Further outstretches of that ripple reveal a deeper, more troubling trend: The best and brightest students are being discouraged away from the engineering field. Without a highly intelligent, creative force of engineers in the U.S., new products and innovative technologies will become one-way tickets from other countries.

"The reality is, we don't know how to deal with those negative affects very well," says Ron Hira, P.E., assistant professor of Public Policy at the Rochester Institute of Technology and chair of IEEE-USA's Career & Workforce Policy Committee Complicating the situation are industry suppliers who try to downplay the actual offshoring figures. "This is a serious issue that requires immediate attention, but many powerful sources are saying it is not important," says Hira. "No one can evaluate it because we don't have enough information. I try to track it by reading Indian newspapers. For example, Unisys is expanding 2000 positions there, and Shell Oil just signed a large outsourcing deal with an Indian IT firm."

On another front, foreign citizens currently in the U.S. on guest worker visas are also feeling the impact. "The goal is to only bring in foreign workers when you cannot find an American worker to fill a position. Now it is being misused," says Hira. He cited one company with 3700 employees, all on foreign work visas. The principal reason companies prefer foreign workers, he believes, is the willingness of such workers to work for less pay.

Earlier this year, the IEEE-USA raised several objections to an offshoring study by the Information Technology Association of America (ITAA). According to an IEEE press release, that study's conclusions are based on two significant, flawed assumptions:

"The study assumes the U.S. economy will benefit through reinvestment of the savings realized by U.S. corporations that offshore their software and IT services. This assumption ignores the likelihood that many companies will invest those savings into their own overseas operations, or divert such savings into windfalls that benefit only corporate executives and stockholders. It is reasonable to believe that a significant percentage of those savings will flow to other countries, and that many of the new jobs will be created overseas.

"The study also assumes that the new jobs are essentially equal to those being destroyed, and that replacing offshored, high-tech jobs with other support and service jobs will not impact U.S. ability to maintain a technological edge in an increasingly competitive global economy."

The IEEE-USA addresses these assumptions in an official position paper issued this March. It begins:

The offshoring of high-wage jobs from the U.S. to lower-cost overseas locations is currently contributing to unprecedented levels of unemployment among American electrical, electronics, and computer engineers. Offshoring also poses a very serious, long-term challenge to the nation's leadership in technology and innovation, its economic prosperity, and its military and homeland security.

This position paper recommends several steps to take that will ultimately benefit engineers, as well as continue the U.S. present position as a technological leader. Developed by the IEEE-USA's Career & Workforce Policy Committee, the recommendations read as follows:

Prudent steps must be taken to ensure that offshoring, if it does occur, is implemented in ways that will benefit the United States and all its citizens, including high-tech workers. To this end, IEEE-USA recommends that:

  • The federal government must collect and publish reliable statistics on the kinds and numbers of manufacturing and service jobs that are being moved offshore.
  • Government procurement rules should favor work done in the United States and should restrict the offshoring of work in any instance where there is not a clear long-term economic benefit to the nation or where the work supports technologies that are critical to our national economic or military security.
  • New U.S. workforce assistance programs should be created to help displaced high-tech workers regain productive employment and ensure that employed workers can acquire the knowledge and skills they need to remain competitive.
  • The H-1B and L-1 visa programs should be reformed and new trade agreements should incorporate such reforms. These temporary admissions programs for skilled workers are often used to import lower-cost labor and can result in displacement of U.S. professionals, exploitation of foreign workers, and accelerated offshoring of engineering and other high tech jobs.
  • A coordinated national strategy must be developed to sustain U.S. technological leadership and promote jobs creation in response to the concerted strategies being used by other countries to capture U.S. industries, jobs, and markets.
  • Federal investments and tax credits for research and development should be limited to work performed in the U.S. R&D that must, by its nature and content, be carried out offshore is not covered by our recommendation.

The entire position paper is available online at www.ieeeusa.org/forum/POSITIONS/offshoring.html.

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