ASME Initiative on Global Outsourcing

Concern about global outsourcing of jobs and its impact on the domestic engineering workforce has been expressed by a number of ASME members. Ironically, for such an important issue, there are surprisingly few sources of accurate data about the global movement of engineering jobs.

Given the increasing global economy, however, it appears that there may be increased movement of jobs between nations in the future — especially in the area of goods and services. This is a concern for ASME and our members worldwide.

More than half of all Fortune 500 companies say they are outsourcing software development or expanding their R&D centers around the globe. The trend toward global outsourcing encompasses a wide spectrum of jobs, including architecture, engineering, financial services, pharmaceuticals, legal and general office support. By 2015, an estimated 3.3 million more U.S. white-collar jobs will shift to low-cost countries, particularly to India, according to Forrester Research. This phenomena is not limited to any one country.

Recent news stories have covered moves by IBM, EDS, GE, Oracle, Texas Instruments, Intel, J.P. Morgan Chase and Accenture to bolster their global capabilities. India's current focus on software, IT consulting, call centers and chip design is expanding to industrial engineering, manufacturing, drug research and financial analysis. China is becoming a product development center for GE, Intel, Microsoft and other electronics giants. Boeing has used aeronautical engineers in Russia to design parts for the 777 aircraft. Boeing, Nortel, Motorola and Intel now have small research and development centers in Russia.

Recognizing this trend, ASME has been advocating effectively in support of funding for R&D and incentives for education as primary means to enable engineers to stay on the leading edge of technology and innovation. Research and development and early commercialization of new technologies may prove to be one of the best ways to preserve and enhance engineering jobs and value in a highly competitive global economy.

The issues associated with global outsourcing are numerous and complex. For example:

• Hard data are lacking, and much of the available information is anecdotal or contained in private sector studies. Therefore, the potential short- and long-term impacts on the domestic workforce and job market are difficult to predict and subject to different interpretations.

• There are significant intellectual property issues and, increasingly, national security concerns relating to outsourcing of high-tech jobs.

• Jobs and technology are not flowing solely out of the United States; companies such as Toyota, BMW and Credit Suisse have brought numerous high-paying jobs to the U.S. Talent from India is adding vitality to Silicon Valley, where an estimated 30,000 Indian IT professionals live and work, and have become fixtures in the labs of America's top chip and software companies. More than 900 start-up companies in California alone are led by Indian entrepreneurs.

• Limitations on the H-1B visas could have the effect of encouraging offshore outsourcing.

The outsourcing issue is beginning to attract attention from policy makers. Dozens of bills have been introduced in about 30 U.S. state legislatures aimed at protecting jobs by limiting outsourcing on state contracts. Legislation has passed the U.S. Congress to bar companies bidding on certain work done by government employees from moving the work offshore.

The issue is receiving attention in the presidential campaigns, and several industry coalitions have been formed to promote government spending and tax cuts to spur research, improved math and science education, and policies that make building technology infrastructure, e.g., broadband networks, a national priority.

What is ASME planning to do?

Robert N. Pangborn, ASME's vice president of Government Relations, is assembling an ad hoc task force to consider actions the Society should take. A session on outsourcing was held at the Engineering R&D Symposium in March. In May, ASME will host an intersociety forum to gather data, identify data needs, identify and debate policy options, and identify potential partners for an ongoing coalition. In addition, ASME is sponsoring Federal Fellow Michael Molnar at the Office of Science and Technology Policy, Executive Office of the President, to help develop policy to strengthen and maintain manufacturing.

Other possible actions include developing an ASME or intersociety position statement, participating in or promoting Congressional hearings on global outsourcing, sponsoring an ASME Congressional Noontime Briefing on the issues associated with global outsourcing, and engaging the ASME Industry Advisory Board as a platform for discussing outsourcing.

For more information, contact Phil Hamilton, ASME managing director, Public Affairs, at (202) 785-3756, or e-mail hamiltonp@asme.org.

— Reginald I. Vachon
ASME President

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