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Is outsourcing services killing careers?

Is outsourcing services killing careers?

Is outsourcing services killing careers?

Hello, I came across this article which is discussing the average salary of chartered engineers in the UK (£63,000), there seems to be a debate about the accuracy of this figure but the statement chartered engineer spans a rather wide spectrum. What I found interesting however, is that one of the comments states:

"one of the secrets to earning a decent income is working on stuff that cannot be easily outsourced"

I understand this is once again a broad statement, but I would like to see if people think this is accurate? I am talking in relation to services specifically, I know manufacturing and labor etc. can be outsourced relatively cheaply, but can services such as analysis, design, even project management? I hear the CAE industry is growing rapidly in India for example.


RE: Is outsourcing services killing careers?

Well, I won't necessarily jump on the explicit question in the title but...

My US employer has been for some time reducing direct engineering/technology employee levels.

Currently emphasis is on outsourcing/offshoring to 'low cost regions' & this translates as:
  • Trying to get a design house in India (head office in the bay area) to do a lot of 'non core' hardware CAD work
  • Another company based in the bay area with SW facilities in India & manufacturing in Vietnam to do design build of major 'super modules' & also provide SW code writing
  • An additional slew of SW consultants some in the office (we've re-hired a number of former employees this route some of whome had actually been laid off not just quit for greener pastures).
Basically it's all a bunch of BS/shell game to show off to Wall Street as far as I can tell.

Grossly inefficient, certainly the CAD house in India is pretty much useless in terms of quality of work & I'm not so confident in the others and we don't even have the infrastructure set up for good data exchange etc..

Please note I'm not making an across the board statement that all outsourcing/off shoring is bad, or that darn foreigners don't know nuthin.

Just saying the way were' trying to do it doesn't make much sense to me.

Posting guidelines FAQ731-376: Eng-Tips.com Forum Policies http://eng-tips.com/market.cfm? (probably not aimed specifically at you)
What is Engineering anyway: FAQ1088-1484: In layman terms, what is "engineering"?

RE: Is outsourcing services killing careers?

Quote (jd90)

I understand this is once again a broad statement, but I would like to see if people think this is accurate?

As far as broad statements go, I'd rather say "one of the secrets to earning a decent income is working on stuff that is in demand"

But you have to keep your skills current. Your job may not be going abroad, but became obsolete. For example, search Google for "robot lawyers" smile

"For every expert there is an equal and opposite expert"
Arthur C. Clarke Profiles of the future

RE: Is outsourcing services killing careers?

Can outsourcing work? Yes
Does it have impact on careers? Yes
Outsourcing has changed engineering considerably, some things good, other things bad.
It is one reason I do not promote engineering as a career, but I do enjoy being an engineer.
One thing for sure, if it can be outsourced, it will be outsourced, for better or worse.

RE: Is outsourcing services killing careers?

Depending on how you define the word "outsourcing," a very large part of my business comes from other engineers outsourcing particularly technical analyses to me. So I'd say it's building careers. Or at least transferring them.

Even outsourcing tasks overseas builds careers ... for the people overseas.

It's all in how you draw your control volume, I suppose.

Hydrology, Drainage Analysis, Flood Studies, and Complex Stormwater Litigation for Atlanta and the South East - http://www.campbellcivil.com

RE: Is outsourcing services killing careers?

Something to be aware of when looking the UK survey is that the salary survey results encompass both staff engineers and industrial prostitutes contractors, with the latter making up a sizeable fraction of the workforce. Salary is pretty much the only benefit they receive, while staff usually receive other benefits such as employer contribution to pension so a direct £ for £ comparison is difficult. Contractors also pay next to no tax by using accounting rules to minimise it, while the staff engineers get their paycheque decimated by the Inland Revenue without any say in the matter, further complicating any comparison. It would be enlightening to see each industry broken down further into staff and contractor salaries. The link in the IMechE article is dead, but here's the report for those who are interested:

RE: Is outsourcing services killing careers?

Slightly OT but if the IMechE is pushing for higher pay for engineers, which one might foolishly imagine is a matter of great interest to their members, then the first thing to do is to restrict the number of engineering students, instead of continually pressing for more.

Back OT, yes, that would seem sensible. But as Kenat has pointed out, at least up until this date, I don't think anyone has outsourced CAE to a cheap country successfully and cost effectively. By the time the education experience and language abilities in that country are high enough for their CAE to be good, lo and behold, their wages rise to suit (South Korea and China spring to mind). In fact here the push is the other way, at long last we are going back to colocated pods, that is, groups of 4 engineers who work together, 3 on actual cars, one on Playstation cars (that's me).


Greg Locock

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RE: Is outsourcing services killing careers?


That report was published by the Engineering Council, but you're right - none of the professional bodies have the slightest interest in driving for improvement in their members' pay. Neither for that matter does the Engineering Council.

RE: Is outsourcing services killing careers?

My employers would be happy to shift everything to the east, of Europe or to Asia. However another local employer is heavily involved in nuclear submarine reactor work - guess how much of that work goes offshore! It takes 6 months to get security clearance before you can work there.
Re the comments about CAD in India. It can work well but it needs far more effort than either side seems prepared to do. It's about developing their staff and getting them to adapt to our culture and that means getting them to ask questions and challenge decisions. I have found that once they do this things go great but then we have a fairly small team. It is more difficult for other parts of the group with much larger teams.

RE: Is outsourcing services killing careers?

Prior to about 1982, the entire business that my company does, was done "in house" by major corporations, or cobbled together out of the services of an engineering company and a fabricator when undertaken by smaller companies. So 100% of what I've done for the past twenty years is the result of large companies "outsourcing" a specialist skillset to a firm which specializes in that business.

That decision has been a very good one for our clients, and for us. We're more efficient at doing what we do than they are. We have a very long and growing list of satisfied repeat clients.

As to "offshoring", our own business is over 90% export, and we buy goods and services from all over the world.

While I don't agree with free trade with regimes which do not have the rule of law, a functioning civil court system etc. and which artificially manipulate the value of their currency, I have no problem with participating in an international market for goods and services as both a buyer and a seller. Each business has to make decisions about what tasks to do internally, what tasks to do locally and what tasks to do internationally, on the basis of their particular circumstances.

Is the international market in goods and services good or bad for careers? Good for some, bad for others.

RE: Is outsourcing services killing careers?

Yep , just like with nuclear submarines, I dont think I've ever been adversely affected by outsourcing. When it comes to breaking rock and extracting the minerals from that rock, the physical work and therefore direct supervision, has to be done wherever the orebody is located. Do I have competition from other geographical locations?, Yes but so what?? We all produce the same gold bars or copper ingots but those with the lowest cost of production stay in business the longest.

I believe some of the EPCM contractors outsource some of their design work but that doesn't affect me.

RE: Is outsourcing services killing careers?

That's all relative, isn't. Outsourcing helps the career of the person being outsourced to.

In our company, we don't do enough of certain things to have permanent in-house expertise, so we outsource that work to a company that specializes in that, and they make their living doing that type of work. All the people we've ever had that were experienced in that specific discipline left after a few years because they got bored and felt that their skills were rotting away waiting for a new project to come along. Most military labs have greatly reduced their in-house expertise and now depend on contractors and SETA (https://en.wikipedia.org/wiki/Systems_Engineering_...) contractors. Aerospace Corporation has dozens of engineers that government and military agencies outsource to.

I can do absolutely anything. I'm an expert!
FAQ731-376: Eng-Tips.com Forum Policies forum1529: Translation Assistance for Engineers

RE: Is outsourcing services killing careers?

I'm based in the US and had a project in China. Chinese engineering, Chinese construction, for a plant in China...etc...

My manager asked if we could save money by outsourcing the Engineering to India.... sigh...

Just finished a plant in Saudi Arabia. They went to 5 EPC firms for detail design, each in a different country. Ended up in Spain because that's where the Saudis wanted to visit during the project. They used a Chinese company for construction (Flew Chinese workers in to KSA).

So ya, Outsourcing is everywhere and you want to stay ahead of it...

This is normally the space where people post something insightful.

RE: Is outsourcing services killing careers?

So, if we're going to stray off topic a bit...

Outsourcing to get expertise/talent/capabilities.... completely makes sense to me and I'm all for it. The 'hassle' of coordination is typically well worth the benefit if you've picked the right 'expert'. Outsourcing CAD if you're getting quality service might make sense. However, when the work you're getting is like mediocre to poor interns would achieve (we used to have a lot of interns, some excellent, a lot good, quite a few mediocre and the odd 'swing & a miss') and not improving with time then I struggle to see the logic.

If it's some big international 'quid pro quo' related to offsets or something maybe - but for us it appears to just be short term goosing of numbers & hitting some buzz words etc. for wall street.

Posting guidelines FAQ731-376: Eng-Tips.com Forum Policies http://eng-tips.com/market.cfm? (probably not aimed specifically at you)
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RE: Is outsourcing services killing careers?

There is also the issue of time.

A former employer had a fairly capable machine shop in one of our buildings, fully staffed, usually busy, but capable of delivering new parts overnight in emergencies. ... and everything was an emergency, all the time.

Some goddamn MBA got a really big bonus for suggesting that we close the machine shop, sell the tools as surplus, and farm out the work to local vendors. ... who promptly hired our machinists and bought the tools for a song.

Said goddamn MBA was _not_ held accountable when the next emergency caused a month's delay in someone's schedule because there was no emergency capability in house, and now we had to wait in someone else's job queue to get our stuff.

Top Management could not understand why schedules were now slipping more than usual.

Outsourcing similarly makes sense, only in particular circumstances.

Mike Halloran
Pembroke Pines, FL, USA

RE: Is outsourcing services killing careers?

That is the trade-off. Note that even the internal shop would have to have had some slack to handle "emergencies." Otherwise, they would have to slip someone else's schedule to handle the emergency. All of that does cost money, and so long as your management recognizes that and takes that into account, then everyone should be happy. Alternately, your company could pay a premium to the local shop to get higher into the queue, or have the work done off-shift. Paying a few guys double time for a short duration ought to still be cheaper than running an internal shop at less than full capacity year-round.

I can do absolutely anything. I'm an expert!
FAQ731-376: Eng-Tips.com Forum Policies forum1529: Translation Assistance for Engineers

RE: Is outsourcing services killing careers?

And therein lies the fundamental problem . Mike H's MBA colleague as well as IRstuff are focussing on direct costs. Where is the guy who will come out and ask " What is our ability to service our customers with a really fast turnaround time worth to us?" " How much business will we start to lose when it becomes apparent that our customer service has deteriorated over the last 5 years?" " " Do we really benefit by having our CAD work done offshore, perhaps getting good service and only losing 10 days when we have to send the drawings back only three or four times?"

RE: Is outsourcing services killing careers?

Actually, I have an answer for that cost question.

According to the founder and owner of that company, being late to market cost at least a million dollars a month; and that was ~20 years ago.

Every once in a while I would turn over a new page on the legal pads I kept on my desk, and find that said founder/owner had been in my office, and boldly scribbled "FASTER!" on the hidden page.

Mike Halloran
Pembroke Pines, FL, USA

RE: Is outsourcing services killing careers?

Well look on the bright side, that's only $33,000 per day ( in 1995 $$). your favourite MBA probably was able to put around $150,000 back onto the books when he sold the machine shop contents at auction for about 15 cents on the $. I'm sure he looked like hero to his bean counting boss

RE: Is outsourcing services killing careers?

MikeHalloran, your little story of penny-wise and pound-foolish management is delicious. It underscores the point of view that it's definitely possible for a company to be too big. When management making decisions like this are unaware of the role that the machine shop plays in meeting customer expectations, they have already demonstrated that the company is too big to avoid making mistakes like this. I sincerely doubt that this was the biggest, or dumbest, decision made by that management.

RE: Is outsourcing services killing careers?

Molten, your doubt is correct.
I may relate the story about the biggest dumbass decision some day, but most folks wouldn't believe it.
... and I want to protect the few friends who are still employed at the remains.

Mike Halloran
Pembroke Pines, FL, USA

RE: Is outsourcing services killing careers?

In regards to Outsourcing CADD, Specs, and Analysis I have had success with well defined tasks, but not finished deliverables. Once I realized that I could get production things done quickly and consistently, I altered my expectations and received acceptable results. The caveat was that I needed to finish the product and live with the bulk of the grunt work being completed. After adjusting my expectations, this worked well, and helped schedule; additionally helped quiet down upper management that could not sleep unless hours overseas had been charged to the project.

RE: Is outsourcing services killing careers?

John Hart-Smiths paper "Outsourced profits the cornerstone of successful subcontracting" really covers the issues of outsourcing quite nicely (although the title gets one a lot of the way there). Ultimately the answer is accountants can't count!!!


There is also his footnote from the paper
"The views expressed here are those of the author and not necessarily those of the Boeing management. Conversely, the visible policies of the management are not necessarily those that the author would have recommended, had he been asked."

RE: Is outsourcing services killing careers?

Where I worked many years ago, we went through a phase where management thought it would be a good idea to outsource (locally, but outsourced nevertheless) some mechanical design/drafting work at a time when my office (mechanical design) was slammed, with the other excuse that the hourly rate for the outsourced work was less than our internal hourly rate. I told them it was not a good idea, just schedule it properly and wait the few weeks until we could get someone on it. That wasn't good enough for the scheduling department, so out went the contract to do that design ...

I gave the sub my deadlines when I had to have stuff done. Heard nothing.

A couple weeks later, when one of the deadlines was approaching, I gave them a reminder. Nothing.

"I need to know where your footings need to be by next week so that I can finalize the concrete design". Nothing ...

"OK, it is now the deadline for finalizing concrete design, so here are where your footings are going to go." Oh boy, did I start hearing something then. "Sorry, why didn't you give me the design you had back when I had time to accommodate it? Now I can't, so here's where the feet are going to be. Deal with it."

A while later, we actually did get some drawings (late, of course). I don't remember too much of the details (about 20 years have passed) but I do remember the design that they gave us was a pile of dung. It probably cost our own design office more hours fixing problems than to have done the job the way we should have in the first place.

RE: Is outsourcing services killing careers?

Mike Halloran, I believe every time that you use the phrase " goddamn MBA " the world becomes a slightly better place ...

Keep up the good work !!!!

Sr. Process Engineer

RE: Is outsourcing services killing careers?

It takes an MBA to run ruin a company!

There is only a small difference between run and ruin.

I once worked for a 30 year old successful company in the aerospace electronics market. A 900lb gorilla that was in a niche market big enough to support a 1000lb gorilla. No competitor could ever get in the same niche. Every year it returned 12% or more. Then it was bought by a Fortune 100 aerospace company who consolidated it into other operations (to save money) outsourced some designs (to save money). The new corporation demanded a minimum 18% return-per-year or else and it was put into control by newly-minted MBAs. Within 7 years the former company name existed in only a name attached to some legacy products. During this 7 year period, the MBAs, to cover bad decisions, would fire or lay-off some of the experienced engineers every time they missed a sales target (a target not set by the experienced engineers). Today, the former engineers work for a competitor who always tried to get into the market but couldn't. They have re-captured about 60% of this market. This new company only uses MBAs for the basic accounting - the product direction of the company is once again controlled by those who have a technical background in this highly technical market.

RE: Is outsourcing services killing careers?

Comcokid, your story sounds familiar: many of our key niche equipment suppliers were small, successful private companies. Many have been bought, then ruined, by "conglomerates". Fortunately, being private and employee owned, I am guardedly optimistic that it won't happen to us. If it did, I'd be out like a shot...

RE: Is outsourcing services killing careers?

Have you thought that your mark in life maybe to ruin a successful business?
Miss-management does earn some people a living, and they live among us.

The issue I see is the out-sourcing, and in-sourcing is a cycle that if nothing else removes dead wood, and some productive workers also.
Maybe the issue is too much change is not good.

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