Prior to the emergence of offshoring, the U.S. engineering profession was already wrestling with significant challenges, not the least of which were the dot.com and telecom busts, which led to major contractions (estimated at a half-million jobs or more) between 2001 and 2003 in the high-tech sector, particularly electrical engineering. These busts came on the heels of the major downturn in the U.S. aerospace industry after 1998, another engineering-intensive sector. Other structural issues in the profession are contributing to the problem:
The post-WWII/Cold War technology boom that fueled America’s high standard of living was based on amazing improvements in productivity that drove the nation’s economic growth, while at the same time automating and streamlining many engineering-intensive tasks. Engineers joke, and with good reason, that they are the only professionals who work hard to put themselves out of a job. That translates into professionals who are, by necessity, highly mobile, moving from assignment to assignment and employer to employer.
Engineering is a profession whose members are challenged to keep up with the latest developments in technology, and continuing education has become critical for engineers in mid/late career. At the same time, employers are becoming less and less likely to invest in training or to support time off for professional activities. Electrical and computer engineers increasingly face early obsolescence (as early as their mid-30s or early 40s) unless they continually reinvent themselves. With most engineering Ph.D.s leaving school in their early 30s, the productive lifespan of a research or design engineer is shorter than ever before, making the opportunity-cost calculation less than compelling for bright students weighing their career options.
The educational barriers to entry in the engineering profession are constantly getting higher and more expensive as more and more content is squeezed into traditional four-year degree programs, which typically take nearly five years to complete. Recently, the National Council of Examiners for Engineering and Surveying voted to amend the model state engineering licensing law to require “30 credits of acceptable upper-level undergraduate or graduate level coursework from approved course providers” in addition to a B.S. degree as a prerequisite for licensure. The change would not take effect until 2010 at least. The additional work, however, does not seem to be paying off in terms of future compensation. According to the National Association of Colleges and Employers, beginning salary offers for electrical and computer engineers at both the B.S. and M.S. levels were flat, or actually fell, between 2001 and 2005. In other engineering disciplines during the same period salaries varied. Some underwent seesaw fluctuations, some remained flat, and some experienced modest growth.
We are also facing a demographic issue. As the U.S. engineering workforce ages, a high percentage of baby-boom-generation engineers will reach retirement age in the next 10 to 15 years. The losses will be felt most strongly in mature engineering sectors, such as aerospace and power. The National Science Foundation’s most recent Science and Engineering Indicators reports that 29 percent of all science and engineering (S&E) degree holders and 44 percent of all S&E doctorate holders in the workforce are now 50 or older. Among S&E doctorate holders in the labor force, 44 percent are over 50. We see the same demographic trend in IEEE, where the average age is now 47 for regular members (up from 44 in 1997). Employers taking the long-term view are looking to secure labor resources to meet future needs (hence their interest in tapping the global services market), as well as to shed pension and other overhead costs that make it difficult for them to compete.
As engineering labor becomes more and more of a commodity, the fundamental relationship between engineers and employers is changing. As a consequence, a significant percentage of the U.S. engineering workforce is becoming increasingly apprehensive about their careers and the future of the profession. Some feel they have been used and discarded. Many want or need to keep working in their later years but feel the environment is neither receptive nor enabling. A small percentage is challenging apparent discrimination in employment.
Against this somewhat troubled backdrop, the offshore outsourcing trend gained high-profile attention after 2001, on a par with the related trends of guest workers and domestic outsourcing. Many companies have reduced their engineering payrolls and moved engineering work to services firms, thus creating new jobs in those services firms, but often at lower pay, with fewer benefits, and with less job security. Some of those firms rely almost exclusively on in-sourced guest labor (with H1-B and L-1 visas) as their business model, using labor arbitrage to gain a competitive edge. In many instances, in-sourcing has been used to facilitate planned offshoring of business operations; in other cases, it had that consequence as in-sourced managers used their business contacts to offshore engineering services. Nine of the top 10 engineering-services firms that use L-1 visas to bring foreign high-tech workers to the United States are also engaged in offshore outsourcing.
In the three years since offshoring in the information-technology (IT) services sector began in earnest, the whole IT industry has been transformed. Virtually all bids for commercial work now include an offshore component, and the