5 Replies Latest reply on Mar 7, 2012 1:24 AM by pchadha@deloitte.com

    Is the Outsourcing Job Vacuum real?

    arenasolutions Apprentice

      I recently read that a lesser-known consequence of outsourcing is the  “outsourcing-induced job vacuum.” Essentially, as assembly jobs move  overseas, technical jobs such as design and engineering do too. (The  linked-to article explains this in more depth w/an infographic.)

      Do you think this is real? Engineering follows assembly? I'd love to  get people's thoughts on this subject, and am curious if anyone has  experienced this at a company, or thinks its a real threat.

        • Re: Is the Outsourcing Job Vacuum real?
          jwesterveld@kinaxis.com Apprentice

          Hi Alex...


          Certainly I would expect that some of the engineering jobs, especially those centered around process or industrial engineering will shift with the assembly jobs because there is an affinity between those roles and the manufacturing process.  I don' think design and product engineering would necessarily move with the jobs.  I think what is being shown is a general trend of outsourcing higher level functions.  We've seen similar trends around outsourcing IT and software develpment and even planning.  So what this means is that the manufacturing jobs may get outsourced to China but the design could be outsourced to India and that these decisions could be completely unrelated with the exception that the company is looking for cheaper sources for manufacturing and design.

          That being said, companies must look beyond the lowest cost alternative but instead look at the true costs of sending everything oversees but the profits...but that's a conversation for a different time.

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          • Re: Is the Outsourcing Job Vacuum real?
            Duncan Klett Elite

            I am afraid that I would have to agree that engineering will follow production.


            First, the production engineering jobs move close to production. Then, over time, more and more of the design will follow (especially if these workers are available close to production and their salaries are lower).  I think there is hope that sales and marketing functions will stay, or at least stay close to their respective markets.  Leading-edge (novel designs, novel production processes, etc) design is best done close to production so the communication as to what is wanted and what can be done is most efficient.

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            • Re: Is the Outsourcing Job Vacuum real?
              pchadha@deloitte.com Expert

              I think it depends on products or services in context, if engineering job will get outsourced or not. Ability to engineer a product is function of  three things  1.Relevant Education of Engineers- Pertinent and of Quality kind

              2. Service or Usage experience of the product or service in question and

              3. Manufacturing process.

              Only #3 is getting influenced by outsourced, but developing world where most of the things are outsourced still falls behingd on #1 and #2, and I see no catching up on it.

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                • Re: Is the Outsourcing Job Vacuum real?
                  Janice Kakazu Expert

                  Hi Pradeep,


                  In reference to your point #1, evidence seems to indicate that the developing world is still far behind in education of engineers based on the number of foreign students (particularly from Asia) that are in the advanced engineering programs at US universities.  Up to now, it would appear that many of those engineers have stayed in the US after graduating and have greatly helped US industry in their roles as engineers.  However, I have also seen comments about the draw of the homeland as these countries develop and provide more opportunities for those recent graduates.  What do you think of the likelihood of engineers from developing countries being educated in the US and going back to their homelands to take design engineering positions there, supporting US companies?  Seems like US companies might view that as a win, having someone on the ground with the same cultural background, close to production, with a US engineering education.



                    • Re: Is the Outsourcing Job Vacuum real?
                      pchadha@deloitte.com Expert

                      Hi Janice,

                      That is a very valid observation, with the developing economies-

                      1. Getting more and more capitalist type;

                      2. Improving quality of living for its citizen; and

                      3. Better economic growth rates

                      People are moving back to grow their careers and be close to their family and culture. They will influence the education system and business setups there and will enhance it but I think the process will be slow; may take a generation or plus. Most of the cutting edge international products , software, noble prizes, superior military hardware etc. will continue to come from developed world. Developing economies GDP will overtake several developed economies because of services they provide, but innovation and engineering skills will need some more time to catch up.


                      Pradeep Chadha