Freeman Spogli Institute for International Studies Program on Energy and Sustainable Development Stanford University


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Offshoring and the Future of U.S. Engineering: An Overview

Lecture Paper

Authors
Rafiq Dossani
Martin Kenney

Published by
The Bridge: Linking Engineering and Society, Vol. 35 no. 3, page(s) 5-12
Fall 2005


Engineering as a profession in the United States and other developed nations may soon face a crisis. As a result of sophisticated telecommunications and the digitization of engineering work processes, increasing portions of engineering work can be done without close proximity to particular persons, places, or other processes. In principle at least, this work can be done anywhere in the world that has access to (1) global telecommunications networks and requisite software packages and (2) adequately trained personnel. Undergraduate engineering students in relatively advanced developing nations, such as India and China, follow a curriculum roughly comparable to the one taught in developed nations. Thus, even as barriers to performing conventional engineering work remotely are eroding, a global pool of conventionally trained engineers is growing. This means that U.S. engineers are now in global competition with engineers in developing nations whose wages are 40 to 80 percent lower than ours.

In this paper, our discussion is limited to work that is relocated but still services markets in developed countries (rather than work done to meet the needs of local markets in developing countries). Offshoring of this work can not only directly replace existing workers, but can also capture jobs that would have been added to the U.S. economy, especially for fast-growing entrepreneurial ventures that must lower cash expenditures and speed up product development. Recent examples include Silicon Valley high-technology start-up companies that establish offshore subsidiaries very early in their life cycles. In these cases, offshoring does not reflect direct job displacement but redirects job growth to lower cost developing nations, at the same time making the start-up more competitive.