Offshoring-New hope for U.S. or inevitable as death?

"Outsourcing is a natural process that's gone on in other industries; we've just given it a name," said Dennis Brandl, president of BR&L Consulting in Gary, N.C.

Despite the practice's ubiquity, the engineering sector is becoming more concerned with growing unemployment in America due to jobs moving offshore. That and other issues remain worrisome for American companies, according to the latest study by Hewitt Associates, a global human resources outsourcing and consulting firm. Short-term cost reductions leading to long-term reduction in demand for goods, political instability, supply chain problems, quality issues, and loss of control are among the top tier of concerns.

Out of 500 senior finance and human resource leaders surveyed, 92% said cost reduction was the primary driver in offshoring American jobs. Yet the issues manufacturing and information technology (IT) groups worry about are the same concerns Americans in the farming industry faced nearly one hundred years ago, Brandl said. "We had a significant number of people in farming (about 40-50%). Now that's down to 2-3%. The same thing's happening in manufacturing."

However, the study also said leaders are more often than not overlooking the people-oriented costs involved in the transition. Most companies (88%) look at labor costs, and 79% consider return on investment. But less than half analyze tax environments. A mere three-quarters look at the impact on supply chain costs, and 34% consider plant or office shutdown costs.

"It seems from everything I've read, people who are benefiting from offshoring are saying it's good. And those who aren't say it's bad," said Bill Radin, president of Radin Associates in Cincinnati. Some experts say the only way to combat offshoring is through more education and training. "But isn't that what we did last time that was going to protect us from losing our jobs? I'm not sure training and education will make much difference, because that's what people got years ago to be more employable," Radin said. "And guess what? Their jobs have gone to Bangalore."

Other people-related expenses include training and cultural issues, skill and language requirements, and change management.

Joblessness builds creativity?

Yet this reduction in engineering jobs might just prove to build different opportunities for the U.S., Brandl said. "There are a lot more people in the U.S. to do other things. Because we have a strong economy and ability to innovate, we have the ability to recreate our economy," he said. The changes won't occur overnight, though. "Normally these changes take one or two generations to occur, but as everything moves faster, it's now occurring in the working generation of people," he said. "It used to be your grandparents could get a manufacturing job and keep it forever. And in farming, you had five or six generations of farmers. And as the changes occurred, they'd occur slowly."

Today the changes are occurring faster. People who started their careers in one thing may end up in a completely different career when they retire. These changes occur on a ten-year life cycle instead of forty years, Brandl said. So workers have to adapt and be able to change as rapidly as possible. The study said the percentage of jobs taken offshore will nearly double in the next three years.

Does quality suffer?

As we move to a global marketplace, people will still end up paying for the quality they want to receive, Brandl said."As we go through transition times, new companies are springing up around the world. Many don't have quality in place. People are going to get burned until finally you end up with companies that do have quality processes and are accepted."

The offshoring trend is all part of what Radin calls our "degradation of life; and we're just going to have to get used to it," he said. "Gas will never go back to full service. Steel workers won't get their jobs back in Pittsburgh. We'll never be able to go meet our children at the gate at the airport; we'll have to wait until they wind their way through security. Wasn't the income tax something that was temporary back in the 1930s? That's the way it is with offshoring. As long as somebody in Bangalore will do the job functionally or perform the basic minimum services, no matter how angry you get, there's nothing you can do about it. It's like death; it's inevitable." "It's not something that comes for free, but we need to live with it," Brandl said. "Yet it also gives us opportunity to apply innovations elsewhere."