Welcome the "Post-Offshore" World

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Offshoring -- the practice of shipping professional business services to regions of the world where wages and other business costs are a fraction of those in the United States -- has routinely made headlines in the national press and is looming as an issue in the upcoming presidential election. The House of Representatives held hearings on the subject last fall. More recently, the Senate overwhelmingly approved a bill that would restrict work that sends federal dollars overseas.

Most of the attention paid to this topic in the past several months focuses on information technology (IT) workers: programmers, computer engineers and the like. Gartner Inc., Stamford, Conn., projected last summer that 500,000 IT jobs -- 10% of overall IT employment -- would go offshore between then and the end of this year. Many commentators call the loss of such professional jobs a dangerous trend for the future of the knowledge-based U.S. economy.

It's one thing for a textile plant or an auto parts factory to be relocated to another country; such manufacturing jobs always have been vulnerable to competition from lower-wage workers elsewhere. However, it's entirely another thing to export high-paying, high-value professional jobs. A recent political cartoon captured the mood: A group of economists who had been talking about the positive effects of offshoring suddenly panicked when they learned that India had an abundant supply of well-trained economists who were willing to work for a fraction of U.S. salaries.

Chemical engineers looking at this situation could justifiably have a hard-bitten response: "Been there, done that." For the past three years, the industries that employ the majority of chemical engineers have suffered through a painful downturn. While business is on the rebound, employment is not expected to jump. The U.S. Bureau of Labor Statistics (BLS) projects "little or no growth" of jobs in the profession through 2012. There will, however, be a fairly steady demand for new engineers to replace those retiring or moving into other occupations.

As noted in this month's story about collaborative engineering, it is now standard practice to perform engineering tasks at locations around the world. Advancing software tools have made this collaboration faster and easier.

There was a wave of engineering offshoring during the 1970s and early 1980s, as many energy and petrochemical projects were developed outside industrialized nations. Now, we're well into a second wave, reaching places such as India, China and Eastern Europe, and approaching a "post-offshore" world in which engineering work is thoroughly international.

What does this world look like? One hallmark is that the world market brings work back to the United States, as international companies site some of their engineering work here. "We've recently completed a project in India where the front-end engineering design was performed here, and the detailed design in India," says Vic Edwards, engineering manager at the Houston offices of Aker Kvaerner (whose home base is in Norway). The major U.S. engineering firms, including Bechtel and Fluor, among others, have regional engineering offices in many parts of the world and routinely share projects among these offices. In this kind of dynamic environment, it is hard to say where the work "belongs," in the sense that it was supposed to be performed in one place but wound up in another.

Another hallmark is that the work tends to flow to where it can be performed most efficiently. So, the more routine, detailed engineering work often goes abroad. However, more sophisticated work is sent to U.S. offices -- when the expertise is there. "Right now, we're looking for experienced electrical, mechanical and power engineers for our project work," says Jeroen Snijder, vice president of engineering for Technip-Coflexip's Claremont, Calif., office. That office handles, among other things, the engineering design work for industrial gases plants that Air Products builds around the world. "We do the work here because this is where the expertise is," Snijder says. "We've gained considerable operational experience from our partnership with Air Products, which we believe gives us a competitive advantage."

Operating companies today must strive to be low-cost or differentiated producers, which fosters the adoption of advanced technology. Developing that technology, in turn, rests on the willingness and commitment to keep forging ahead with R&D. Competing for the best technology is woven into the United States' market-driven economy. Winning that race will be a more reliable form of job security than economic or legislative barriers.

By Nick Basta, Editor at Large

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