Offshoring trend could mean new beginnings

The unemployment rate for U.S. electrical and electronics engineers averaged 6.2% in 2003, a 47.6% increase over the previous year (4.2%), reported the Department of Labor's Bureau of Statistics. And "while overseas outsourcing cannot be blamed for all of the unemployment facing American engineers,

A different perspective

The outlook is hardly rosy for some sectors of engineering in the face of jobs moving offshore, but all is not lost according to a research study by the Information Technology Association of America. Outsourcing creates U.S. jobs through higher productivity, which induces investment and expansion, the study said. Although economists still debate about whether productivity increases from outsourcing high-paying U.S. jobs, work abroad has translated into meaningful economic improvement in the current recovery, in which job growth has been slow. U.S. companies using foreign workers lower costs, increase labor productivity, and produce income that companies can use to expand in the U.S. and abroad-the premise of the Information Technology Association study, which also claims twice as many jobs appear from outsourcing as disappear. This in turn produces wage increases in various sectors.

"Yes people lose their jobs, and that's always a sad scenario," said Roddy Martin, vice president of industry research at AMR in Boston. "But the resilient people, like nature, will bounce back and move themselves into positions with more value added in the new role."

Where's the opportunity?

Martin's theory is that because they outsource manufacturing to other parts of the world, manufacturers are being forced to use technology to improve communication and collaboration with those manufacturers. "You have to learn to manage and collaborate across the supply chain," Martin said. "Productivity improvement will come from companies being forced in these outsourcing scenarios to use their technology investment more effectively-to consolidate specifications."

The goal is to leverage productivity from billions of technology investment dollars, he said. If a manufacturer is in control of processes, it's more cost effective and easier to give the work to someone else to do, so the manufacturer can manage the entire scenario. "If you go into a manufacturing site, how many engineers are programming systems on the sites? They're running production operations more effectively. Instead of being involved in manufacturing they're involved in development work." The offshoring of these "doing" manufacturing jobs will catapult the manufacturers to focus on core skills "rather than peripheral activities like programming," he said.

What about U.S. jobs?

Although the reaction among many in the workforce is one of dismay, Martin said the change will actually raise opportunities by putting pressure on engineers to upgrade their skills-to become knowledge workers in a new kind of economy that controls content and collaboration rather than detail at low income levels. When an engineer in the U.S. loses his job for higher productivity and low-income workers offshore, he'll have to ask, "What can I do to put myself in a position where I'm in an influential management role in the new relationship rather than a doing role?" People who were programmers will need to "up-skill" to become analysts or systems analysts or engineers, Martin said.

"When there's a burning platform to change, people galvanize their behaviors to change," he said. Those who are losing their jobs are taking a step back, "and those resilient survivors understand what role they can play in this outsourcing manufacturing relationship," Martin said. "The only value-added role is of managing and collaborating with these offshore engineersusing technology."