Posted on 03/02/2004 3:55:47 AM PST by ZeitgeistSurfer
As corporate America becomes increasingly comfortable with offshore development, it's sending substantially more sophisticated IT work overseas. Companies such as Google Inc. are turning to foreign workers not for their willingness to work for lower wages but for their technological prowess.
Google is advertising for highly skilled IT help at its recently opened research and development facility in Bangalore, India. These employees will be involved in all aspects of Google's computer engineering work: conception, research, implementation and deployment.
"Bangalore is the so-called Silicon Valley of India, and there is a large pool of talented software engineers there," said Krishna Bharat, Google's principal scientist.
R&D is core to most companies. They guard it carefully, and their brightest people work on it. But as offshoring becomes increasingly commonplace, companies are moving up the value chain, using foreign workers in ways that make them a more integral part of the corporate identity.
Silicon Valley venture capital firms are encouraging start-ups to send their product development work overseas, said Marc Hebert, a vice president at Sierra Atlantic Inc., a Fremont, Calif.-based outsourcing firm that specializes in R&D. While Google was explicit about talent rather than cost being the driver of its offshore move, most companies are equally keen to tap the lower wages, which enable them to hire more people to bring products to market faster.
Hebert said that although idea generation and funding are still coming from the U.S., more and more of the R&D work needed to actually bring a product to market is being done offshore. "That's the really interesting trend," he said.
What that means for the future of Silicon Valley and IT development in the U.S. is unclear. But while overseas firms are hiring, the IEEE-USA said last week that the 2003 U.S. jobless rate for computer scientists and systems analysts has reached an all-time high of 5.2%.
The Asia Connection
Although the number of R&D jobs that have moved to Asia doesn't yet approach the number of low-end IT jobs that have moved, such as those in programming, the gap is bound to narrow, said Bob Hayward, an Australia-based senior vice president at Gartner Inc.
"There's a certain amount of inevitability about it," Hayward said, noting that the highly skilled Asian workforce and the leading role taken by those countries in developing cutting-edge services and technologies, such as broadband Internet access and flat-panel technology, have attracted the attention of U.S. IT vendors.
Just in the past three to four years, U.S.-backed investments in Asian R&D operations have increased dramatically, Hayward said. He noted that those investments have soared while IT vendors, faced with a global slowdown in demand for their products, have held back investments in other areas.
Several of the largest U.S. IT vendors started building R&D centers in China in 1998. Intel Corp. and Microsoft Corp. have opened facilities in Beijing. Intel has 40 researchers; Microsoft has 200 Ph.D. candidate interns and 170 researchers.
Some governments provide economic incentives to attract U.S. companies to invest in R&D operations in their countries. In Taiwan, for example, foreign firms can deduct 35% of their R&D investments from the income tax owed by their profit-making operations.
Still, some IT development work can be done only in the U.S., said Richard Brown, associate vice president of marketing at Via Technologies Inc. in Taipei, Taiwan. For example, the design and development of Via's PC chip-set products is done in Taiwan, but the company's CPU and graphics-chips products are designed by teams in the U.S., reflecting the dominance of the U.S. in those product areas, he said.
'Big Picture' Question
But the trend is clear. About half of the IT R&D done by Stratex Networks Inc. takes place overseas, some at its New Zealand subsidiary, and some in India. That has included development of a network configuration tool, said B. Lee Jones, vice president of IT and CIO at the San Jose-based company.
Jones has eight data centers to run on five continents and offices across 22 time zones. Like many U.S. IT executives, he wonders about the big picture: the long-term impact on the U.S. as more work is shifted offshore. But Jones said he believes the U.S. will remain dominant in IT.
Though he has some hesitancy about moving high-level work offshore, along with a desire to keep core development in the U.S., Jones said that "as the comfort level goes up and we are able to take advantage of having comparable quality for smaller prices, people will naturally migrate there."
Lemon is the IDG News Service correspondent in Taipei.
1) The self-employed are not calculated into the 2.6 million jobs lost since 2000. 1.7 million are said to be a consequence of 9/11. The rest in my opinion are a product of the internet bubble bursting, not outsourcing. That figure is a survey of employers, asking them how many people are on their payrolls. Then there’s a household survey, asking people if they’re working. That reports that about 500,000 jobs have been created since 2000. That number includes those “low paying” self-employed.
2) If the numbers were wrong, they could be proven wrong. And our political opposition would nail us on it. (If not the Democrats, the Greens or the Libertarians) Here in the Florida Keys, it’s nearly impossible to find a good contractor. Everyone who’s occasionally sober works. But it’s not a magnet for depressed areas because housing prices are too high to buy something more than a trailer on a $70k salary. The numbers are right, but if you listen to enough losers and Democrats, you’ll buy their swampland.
Which is exactly the use almost every person arguing against free trade has made on this thread . You just won't admit it.
- To protect against state sponsored or otherwise illegal competition, like Japan subsidizing auto manufacturing in the early 80s, and their automakers colluding to share technology and marketing information.
Which is what I am advocating here, as well. I have argued successfully that nations who do not recognize the basic rights of their citizens are competing illegaly.
- To persuade other countries to open up their markets.
Again, you make my point. India, China, South Korea, and other "free trade" partners impose tariffs on US manufactured goods. China has a 100% tariff on Japanese-brand cars assembled in US plants, along with many other tariffs. I worked for an auto parts mfg., and the Chinese tariff on our product was 25%. Your "free" trade is an illusion. I advocate tariffs, you seem to support the status quo, which is for the US to go begging the WTO for fair trade.
In a series of posts I’ve tried to show you that other legal powers can be abused
We're not talking about other legal powers, we're talking about tariffs.
Just getting you to understand that this is not a discussion of trading with a military rival or that any tariffs could possibly be an abuse is too time consuming
But it is a discussion about trading with rivals, both military, and economic, and about America being able to retain its position as defender of the free world. If the manufacturing base is lost, that is precisely what is happening. If you think a tariff battle is the worst thing that could happen to the world, wait until our "trading partners" starting dictating the internal and foreign policy of a toothless America drowning in debt.
To make it worse, you’re too quick to attack personally (now my intellectual honesty) just because of my sarcastic tone. Perhaps I employ sarcasm too quickly.
You are correct on both accounts. I was too quick to attack personally, and you did use acidic sarcasm very early in the debate (in your very first post to me, if I remember correctly).
we don’t have a relationship that would allow us to move into any greater depth with this. Perhaps another time.
The debate over free trade is a hot one, and I have had both reaonable debates and arguments with people who's sole repertoire consists of calling people a commie. I would say our debate devolved quickly, but even in that state we both tried to maintain some semblance of reason, and so I have enjoyed it. It's too bad names were called, but that's the way life is sometimes. I admit I get more enjoyment from a debate than I do from an argument, but smug sarcasm is a button of mine that will get me going right away, and I admit I enjoy a good flame war once somebody pushes it. But I do hope you'll reconsider on another foreign trade issue thread sometime. Regardless of what has happened here, I am sure I will enjoy a good old fashioned debate, argument, flame war, or whatever happens in the future. I have not taken anything too personally, and I don't hold grudges.
I told you that you’re too emotionally explosive to be read on this subject. This one statement is proof, and I’m not going to read beyond it.
I’m not going to endure someone who can’t or won’t process the most fundamental aspects of common sense (that power can be abused) making the most juvenile attempts to insult me over and over again. Don’t write to me, I won’t read it.
But of course you can’t control yourself, and you’ll have to have the last word,… go ahead.
No, I am looking at it from a realistic and historic perspective. The current "free" trade/income tax economic model is a huge failure. "Propserity" is an illusion purchased with massive debt and inflation of the money supply. Measuring the greatness of a nation using the consumption rate of cheaply made goods as an indicator is a fool's errand
You would also have supported the steel protectionism. That helped the steel workers, but hit the steel consuming industries hard.
Which is exactly what happens when the "steel consuming" industries get hooked on government subsidized foreign steel and illegal dumping. Inefficient foreign steel plants get propped up, our steel consuming industry gets lazy, and our own production capacity (required for national security) gets wiped out. If I have to choose between steel consuming industries and steel producing industries, I will choose the producers.
Now, your method may have some direct, visible benefits, but the indirect, invisibile benefits would hurt a lot more and the overal effect would be negative.
Again, I have stated facts, and you make another unprovable assertion. Explain in detail (the way I just explained how our steel producing industry is getting wiped out by illegal dumping) how the overall effect is negative. If you post a comeback that ignores my detailed explanation without providing your own, I will take that as an admittance of your defeat.
That's too bad, beuase you missed the olive branch at the end of the post. And you call me juvenile and emotional? Ha! Ha! What a laugh!
Power can abused, therefore tariffs are an abuse of power. Sorry, that's not common sense, that is a non sequitur.
Talk about having to endure. Since you refused my olive branch, I might as well tell the truth. I've endured all of your histrionic nonsense from the very beginning of this thread, and will continue to do so. And now that I've negotiated you into proving my points, you "refuse to read further".
2. See number 1.
I don't doubt that, and never did. You are absolutely correct. Whatever the immediate effect the tariffs had on the steel consuming industries is unfortunate. But your statement does nothing to address the fact that government-subsidized steel was being dumped on our market at below cost, which was wiping out our steel PRODUCTION. You've said nothing at all about this. I'm waiting.
Jobs! Bah! We don't need no stinking jobs! We got cheap stuff, that's better.
Take a look at the economies of the pre civil was north and south. In the south while labor had to compete with low cost slave labor. The result, dirt poor while people. In the north where was no low cost slave labor to compete against, the result, was much more prosperous society.
Conclusion? If the us government does nothing to protect usa labor from competition from low cost third world slave labor, then we like the poor whites of the old south will all be dirt poor. And you will be to blame for abject poverty that you are leaving your children.
The conclusion is that “outsourcing” jobs to the South that could be done cheaper there did not damage the North’s economy (although I’m sure there were plenty of fearful people predicting its end).
And despite these “unfair labor practices” and the “grossly unequal labor costs” and everything else that people think will destroy us today in Asia, the North’s prosperity and Industry breed by freedom left it able to field an army large enough to invade and crush the South after it rebelled.
Thanks for bringing that to my attention, I’ll use it next time I feel like entering one of these “sky is falling” threads.
I hope you are a young person and will be forced to live with the consequences of your stupidity. It just doesn't seem fair that only your children suffer.
And oh by the way, your economic mind set is also killing the GOP and conservativism in the usa, that you will get to experience first hand in this election. Thanks alot neocons, you're killing the right.
Sure they were where! Tens of millions of jobs, mostly farming, whatever could be done by slave labor. And the North thrived.
" I hope you are a young person and will be forced to live with the consequences of your stupidity. "
There’s a new one… I expect protectionists to snap into name calling when they have nothing of intelligence left to say, but you take it a step further and want me to suffer as well. Impressive…
Nope wrong again, are you ever right about anything? Can you provide any proof (none exists) to support your contention that the northern states exported tens of millions of jobs to the south?
Re suffer? Yup, I firmly believe that people should suffer the concequences of their actions, free traders in particular since folks like me have spend years, explaining and demonstating how stupid our trade policies have become. What is unfortunate is that yall are going to make everyone suffer while yall persue a marxist utopean economic policy that the world is nowhere near ready for yet. You are going enpoverish your children, destroy the republic and likely cause the death of many hundred of millions of people once the usa is no longer able to defend the west. Good job, you are doing what hitler, stalin and king George never could. Way to go.
I didn't say it was!!!!!!!!!?????!!!????!!!!!!!!!!
Duh. Government-subsidized steel imports would imply the subsidy came from the foreign government. The steel being dumped in our market at below cost is heavily subsidized by the countries of origin. BTW, I would have forgone the "Duh" had you not used four exclamation points. My subsequent ridiculous punctuation is intended to highlight the ridiculous nature of ridiculous excess punctuation.
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