How is it that the U.S. Gross Domestic Product sizzled with 7.2% growth in Q3 while EE employment fizzled, falling from 386,000 to 349,000 jobs? The unemployment rate for EEs climbed from 6.4% in Q2 to 6.7% in Q3, according to IEEE figures. To me, the story behind this seeming incongruity is no deep mystery. Look no further than "global outsourcing." In the not too distant past, "globalization" meant that manufacturing jobs were moving abroad while service and white-collar "information economy" jobs were fueling the "new economy" at home.
Suddenly, thanks in large part to our amazing communications infrastructure, it seems services of all sorts are for hire from any part of the planet. Need customer service reps, software development, or help with a piece of your hardware design? A project manager can contract custom software development from Bombay as easily as he can hire a developer in Boston. As electronics manufacturing continues to move offshore to original design manufacturers, electronic design jobs are beginning to follow.
Is there anything we can do to stem this tide? The IEEE is pushing for tax incentives to create and retain high-value jobs in the U.S. Much of the IEEE's job-protection focus has been on limiting H-1B visas (for foreign engineers applying for temporary work in the U.S.). The IEEE believes engineering outflow is exacerbated by H-1B visas granted to foreign workers. According to recent IEEE Congressional testimony, these foreign workers outsource work to overseas colleagues, or they return home and use their connections to bid for outsourced work.
I applaud efforts to protect U.S. engineering jobs, but the IEEE is battling a very strong current. In reality, U.S. electronics manufacturers have led the charge to global outsourcing. They have pioneered the electronic manufacturing services model to keep ahead of their global competition. Large electronics manufacturers are under enormous pressure: Be first to market, or next up with a lower price, or get out of the game.
The personal computing and consumer electronics market segments are the front line of this high-voltage competition. With international competitors waiting to knock off any and all new products, manufacturers must make design and manufacturing decisions on a worldwide playing field.
Look at the recent news about Sony. Who would have predicted Sony's characterization as a company behind the market curve on displays? Now Sony is trimming 20,000 jobs while launching a $2 billion joint venture with Samsung to develop LCD panels, a move deemed necessary to stay competitive in the global display market.
But Sony also announced a redoubled focus on innovative engineering. For example, it's developing "smart card" chips for cell-phone-enabled e-commerce. Sony will take advantage of outside partnerships but will tune internal engineering talent to develop products to leapfrog the competition. The same formula is applied by U.S. leaders: Keep U.S. engineering focused on emerging technologies while partnering with global players offering efficiencies for "commoditized" goods and services.
As cutthroat as the consumer electronics market may be, two of the largest U.S. PC makers, Dell and Gateway, are moving into this arena at full speed. The companies aim to spearhead the convergence of PCs and consumer electronics with innovative product ideas and better business models. And, yes, they're outsourcing where needed to get to the price points required.
Dell will apply its direct business model to new rollouts, including a digital music player, an LCD television/computer screen, and a handheld computer. Gateway aims to be one of the top sellers of plasma televisions. At the same time, Gateway has for the first time taken the third-party manufacturing route with its 310 line of budget-priced PCs, a move that Gateway says is essential to returning the company to profitability.
My thought for engineers who are wondering how to map their own career paths in the face of this outsourcing monsoon: Use the strategies of these electronics giants as macrocosms for your own career. How can you position yourself to offer high-value engineering services, knowing that "commodity" engineering services are likely to be outsourced to the lowest bidder? (Perhaps our new job board at www.elecdesign.com/jobs can help you in your search by matching your qualifications to positions available.)
The IEEE is lobbying Congress to support EEs along this path as well, pushing for tax incentives to help underemployed workers to pay for lifelong learning and to offer credit for employers that offer training or retraining in high-demand technical skills.
In this month's cover story, "Distributed Design Teams: Survival Of The Best Connected," Ron Schneiderman, our Professional/ Careers Editor, suggests offshore engineering may no longer be something you are competing against, but more likely cooperating with. Aside from just cutting costs, he writes, outsourcing speeds time-to-market and provides specialized design services. Engineers must master the tools for coordinating distributed design projects and evolve new design flows that integrate cutting-edge innovation with the global economies of scale.