Offshore Outsourcing Mostly About Lower Salaries? No Kidding!

There’s a new study out by Duke University challenging the belief that a common reason businesses go to China and India for engineers is because the United States doesn’t graduate nearly enough of them. The main reason businesses offshore outsource, the study concludes, is because the salaries are lower. Well, no $#*&!

I’m not criticizing the work of the researchers of this interesting study. In fact, I’m glad they’re debunking numbers thrown out by the Department of Education and in reports to Congress: that India graduates 350,000 engineers each year compared with the United States' 70,000, and China graduates 600,000. I’ve always been suspicious of these numbers. But policy makers bought them, and Democrats about a year ago proposed an “Innovation Agenda” that called for graduating 100,000 more engineers and scientists annually.

Full disclosure: I see logic in both sides of the argument over offshore outsourcing, but I tend to sway toward the free-market, global economy point of view that a business has the right to hire anyone, anywhere, as long as it follows the laws, pays fair wages, treats people ethically, and doesn’t put kids to work in sweatshops. But it's counterproductive when businesses tiptoe around the truth or claim they’re going offshore because of a lack of talent here. Duke University’s study shows that lack of U.S. talent is a concern among some of the businesses it surveyed, but it’s farther down the list. Mostly, it’s about money. Period.

Consider that a U.S. company can increase its operating margin by $14 million if it pays 200 engineers a $30,000 salary instead of $100,000. Once everyone can agree on (and admit) that it’s about money, then we can debate the pros and cons of offshore outsourcing as a nation. Does offshore outsourcing hinder our competitive advantage? Or could a U.S. company throw that $14 million back into research and development and create the next-big-thing that will lead to thousands more jobs in this country?

• “U.S. graduation statistics are readily available from the Department of Education’s National Center for Education Statistics. Extensive data on engineering education are also collected by the American Society for Engineering Education and the Engineering Workforce Commission. In order to collect similar data for China and India, we initially contacted more than 200 universities in China and 100 in India. Chinese universities readily provided aggregated data, but not detail. Some Indian universities shared comprehensive spreadsheets, but others claimed not to know how many engineering colleges were affiliated with their schools or lacked detail on graduation rates by major… What we learned was that no one was comparing apples to apples. In China, the word 'engineer' does not translate well into different dialects and has no standard definition. … A motor mechanic or a technician could be considered an engineer, for example. Also, the numbers included all degrees related to information technology and to specialized fields such as shipbuilding. It seems that any bachelor’s degree with 'engineering' in its title was included in the ministry’s statistics, regardless of the degree’s field or associated academic rigor.”

• "In India, data from NASSCOM were most useful. ... However, NASSCOM’s definition of engineer includes a wide variety of jobs in computer science and fields related to information technology, and no breakdown is available that precisely matches the U.S. definition of engineer, which generally requires at least four years of undergraduate education."

• “…we surveyed 58 U.S. corporations engaged in outsourcing engineering jobs. Our findings include:…India and China are the top offshoring destinations, with Mexico in third place. The top reasons survey respondents cited for going offshore were salary and personnel savings, overhead cost savings, 24/7 continuous development cycles, access to new markets, and proximity to new markets.”

• “Respondents said the advantages of hiring U.S. engineers were strong communication skills, an understanding of U.S. industry, superior business acumen, strong education or training, strong technical skills, proximity to work centers, lack of cultural issues, and a sense of creativity and desire to challenge the status quo. The key advantage of hiring Chinese entry-level engineers was cost savings, whereas a few respondents cited strong education or training and a willingness to work long hours. Similarly, cost savings were cited as a major advantage of hiring Indian entry-level engineers, whereas other advantages were technical knowledge, English language skills, strong education or training, ability to learn quickly, and a strong work ethic.”

We are realizing the benefits of outsourcing in the short term in corporate profits and reduced cost of goods. In the long term it will spell disaster because America is losing its technical and industrial self-sufficiency.

When emergent China starts testing us militarily, first in proxy contests then later more directly, circa 2030, the American ability to spin up its industry and war technology will not exist. All the neat net-centric warfare and smart weaponry will be dependent on Chinese chips and display screens, Indian software, Korean heavy fabricators, and third-world manufacturing techniques subject to Chinese hegemony.

In World War II we were able to convert auto plants to producing tanks and planes, electronic companies to the tools of warfare like radar and radio, universities to nuclear physics and weaponry, shipyards to carriers and submarines, and good old American knowhow and resourcefulness to innovation and production. We have since sent all those assets overseas so we can have $900 plasma TVs at WalMart.

If we had a similar confrontation today, our skill banks are filled with people who can’t do anything but sell stuff to each other, manipulate stock prices, and make lawsuits.

A future Yamamoto will not have to worry about awakening a sleeping tiger - there will only be self-absorbed little kittens to fight back.

UK: New diploma ‘may leave youths fit for nothing but cheap labour’

http://www.freerepublic.com/focus/news/1814242/posts

And,

http://abcnews.go.com/Business/CareerManagement/story?id=2582776&page=1&CMP=OTC-RSSFeeds0312

‘Cover Letters from Hell’ Expose Poor Quality of College Grads

By KATE KLONICK

Oct. 19, 2006 — If recent college graduates apply for a job at Killian Advertising in Chicago, they’d better mind their grammar, spelling and punctuation — not to mention their sentence structure, syntax and diction — lest they end up in the company’s “Cover Letters From Hell” that it posts on its Web site.

Six years ago, Bob Killian, owner and founder of the agency, began posting anonymous excerpts from poorly written cover letters he received from those asking for employment.

The World’s Worst Cover Letters
http://abcnews.go.com/Video/playerIndex?id=2582846

The mistakes ranged from unfortunate omissions (”I am seeking a new position as i have recently been laid” and “I also have a degree English which serves me well in editing text for poor grammer or typos”) to nonsense sentences and topics (”It is through the innovational process, as well as media, that the features of an image can be highlighted and brought to the forefront for the consumer viewing” or “The colors red, blue, and lavender are those that I identify with the most. I feel they accurately describe my personality. I choose red because I turn red when I get embarrassed …”).

Some candidates even try their hand at poetry — one girl rewrote “’T’was the Night Before Christmas,” editing herself and the advertising company into the story and substituting presents for a job.

The goal of putting the letters online, Killian said, is to show job seekers that, “Hello! This is not a recognizable form of communication!”

Ridicule Not the Point

Recently, Killian went through 100 letters that arrived at his agency from applicants requesting jobs and interviews. Of the 100, not one was without some kind of spelling, grammar or syntax error.

At first, Killian thought that a personal approach was best. When one of the letters came from a senior graduating from a fairly prestigious college and did not contain a single sentence without an error, Killian drafted a “gentle note,” advising the student to get some help with his writing.

What Killian got in response was an angry four-page reply.

“That really set him off,” Killian recalls. “We haven’t done it since. We don’t want to have to change the locks on the building.”

Unfortunately, in the 19 years of the company’s existence, the problem seems to be getting worse, which Killian attributes to changes in technology and everyday communication.

“There are a whole lot of people that can’t speak in an authentic voice,” Killian said. “We’re not a generation that writes a lot. Colleges don’t seem to be very demanding.

“Texting is making it worse. We’re getting printed letters with the letter ‘U’ standing for ‘you.’ And this kid wants to be hired in a communications position!”

While the site started off as just a joke within the company, its popularity has helped Killian find business clients and literary agents find him. A small book is currently being compiled with “Cover Letters from Hell” excerpts the company has collected over the years.

Though the site’s commentary pokes fun at applicants, Killian insists that ridicule is not really the point of the compilation.

“Quite a few [potential applicants] are intimidated from applying, or sending a cover letter at all, but all that they should do is exercise some care,” Killian said.

“I think if people just absorb what’s in there, they’ll at least be able to write clearly and express themselves in a meaningful way.”

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