Vol. 31, No. 3, June 2006, 303–310

BETHANY S. OBERST*† and RUSSEL C. JONES‡

†College of Humanities and Social Sciences, United Arab Emirates University,

PO Box 17771, Al-Ain, UAE

‡World Expertise LLC, 2001 Mayfair McLean Court, Falls Church, VA 22043, USA

This paper summarizes the phenomenon of offshore outsourcing and relates it to the history and current

state of engineering education and the engineering profession in Europe and the USA. In order to assess

the climate affecting employment decisions by and about engineers we have used as sources mostly

the serious press, with an emphasis on material dating from 2004 forward. The authors conclude that

despite anxiety about the out-migration of engineering and technical jobs to places such as India and

China, there is reason to see offshoring as the result of Western investment in capacity building in

developing countries and to believe that the creation of new jobs will outpace the rate of job loss in

Europe and the USA. The paper should serve as a prod to policy-makers and educators to set about

creating an environment in which highly educated engineers and technical employees can continue a

pattern of economic revitalization.

Keywords: Outsourcing; Offshoring; Engineering education; Employment; Capacity building

Engineers have a problem: they are fated to be the persistent cause of their own professional

obsolescence. Consider for example the 19th century threat that mechanization would take

over all the jobs in industry. Who invented and built those machines? Then came worries

about how technology was going to make human work obsolete. But who were the drivers

of technological invention? Now the anxiety is focused on the migration of technical jobs

overseas, piece by piece. But who promoted the raising of standards in engineering education

overseas, to the point that many more international universities are now capable of graduating

capable employees? Yes, the work of engineers today will likely serve to make significant

portions of that same work redundant in the future. Is this a cause for concern? Yes, because

the transition is painful and calls for interventions at the political and professional levels. But

is it cause for despair? No. The fact that it is a recognizable pattern that includes regeneration

should be a sign of current hope. Just as engineers over the past 200 years have frequently

appeared to be on the brink of self-destruction, they have always regrouped, retooled and

returned with new ideas that created new opportunities for employment. That is the dynamic

underlying the waves of outsourcing by offshoring that are causing such a stir today across

Europe and the USA.

This may be a particularly good time to step back and take another look at offshore outsourcing,

despite a growing consensus that there is little hard information about the phenomenon

(The Economist 2005, 30 June). Some of the initial panic has begun to subside and reports

from around the globe indicate a growing awareness that the migration of jobs from country to

country is a permanent characteristic of the contemporary world, driven by both the advanced

capabilities of technology to support a dispersed work force and the pursuit of increased profits.

In fact, outsourcing has become so much a part of today’s world that Dubai, in the United

Arab Emirates, has already created the DOZ, Dubai Outsource Zone (Gulf News 2005) and

cartoonists are making jokes about job migration (Breathed 2004). In addition, a few years

of experience have revealed that offshore outsourcing is a more complex dynamic than a

simple grab for profits. Finally, the US presidential election of November 2004 are past,

and along with it the media-hyped rhetoric that suggested an imminent collapse of Western

economies.

If we put offshore outsourcing into a historical context we see that competition has always

been a characteristic of market economies. Competition between countries occurred long ago,

such as when China lost its monopoly in silk weaving to France and Italy. In this case the

market was large enough that Chinese production did not disappear. More recently, entire

industries have been fought over, with one clear competitor emerging and the defeated party

forced to fold. The US steel industry, faced with challenges from Japan, collapsed. Sometimes

competition has been from within a single industry in the same country. Such was the case

when outsourcing first came into vogue. Companies tried to cut costs by paying specialized

businesses to better provide a service or product faster or cheaper than the company was able

to do itself in-house. When jobs migrated from the outsourcer to a new provider or supplier in

relatively close geographic proximity people might have had opportunities to move with them.

As information technologies and transportation improved, along with management expertise

in the outsourcing process itself, geographic distance between units mattered less and less,

except to people who lost their jobs in one location and could not reasonably expect to move

around the world in chase of them. In any case, as specialized industries grew to service niche

functions, employees whose jobs were outsourced could not be hired by those companies

without costly retraining that no one was eager to provide.

Offshore outsourcing was a logical sequence to local outsourcing. Continued pressure for

profits drove a search for savings through the exploitation of large wage differentials around the

world. Critical to the expansion of offshoring is the notion that a job is no longer associated

with a person who has integrated knowledge, experience and judgment: a job becomes a

cluster of skills and competencies that are subject to disaggregation and reassignment to one

or more people. Selected components of jobs are shipped through time and space and then

recompiled and expanded into whole new specialized functions at the destination (Engardio

2005). Jobs held by engineers and technically trained people have been disproportionately

subjected to this dismemberment, although there is some bitter comfort in knowing that other

professions are catching up (The Emirates Evening Post 2005).

It is becoming apparent that offshore outsourcing is a much more complex dynamic than

was originally thought. It no longer suffices to assign blame to corporate greed as the sole

driver of the migration of jobs around the world. There is both a ‘push’ and a ‘pull’ associated

with offshore outsourcing. The push is away from the high cost employment markets of the

Western world and the equally important pull is the increased availability of well-educated

people graduating from newly upgraded universities in rapidly advancing economies such as

India and China.

Reports from around the world indicate that the push for outsourcing by offshoring involves

an escalation in the sophistication of the jobs being sent overseas, the use of offshoring as a

threat to extract labour concessions at home and a more nuanced approach to the selection of

offshore destinations.

Jobs that only a few years ago were considered safe from offshoring are now on the block.

‘There is a demand from automobile and aerospace manufacturers to outsource engineering

and design work’ reported The Economist (2005, 5 March). Companies and analysts are

speaking openly of the migration of research and development functions away from the higher

priced labour markets of the developed countries to places such as India. All told, the same

Economist article says that 51% of large firms in North America, Europe and Asia are outsourcing

offshore. At the same time, however, the article goes on to report substantial amounts

of dissatisfaction with the results of offshoring.

The push for profitability comes at a time when the world economy remains fragile,

volatile and increasingly globally integrated. One likely target for reducing labour costs

is the expensive social safety nets which underpin many European economies. Daimler-

Chrysler threatened to offshore some of its production to South Africa unless German unions

granted contract concessions, which they did (Czuczka 2004). Whether actual offshoring or

the threat of it will create a widespread political backlash is unknown, but defensive legislation

is beginning to move through the governments of Western countries. In the USA 40

state legislatures are considering bills which would punish companies that send jobs overseas

(Hopkins 2005).

Many creative variations on offshoring have appeared, sometimes in response to the dissatisfaction

mentioned above. In the USA ‘near-shoring’ can refer to efforts to retain jobs

that might otherwise stray, such as recent efforts by Arizona business leaders and their Mexican

counterparts to collaborate in making their region the ‘project-management capital of the

world’ (Larson 2005). ‘Near-shoring’ is also a term used to describe the movement of jobs

from the Western members of the European Union to countries such as Romania, Estonia,

Bulgaria and Serbia, which have lower labour costs but are near enough to be monitored

easily from a headquarters in Bonn or Toulouse. In this European example near-shoring is

revealing the important cultural and linguistic components at play; countries whose primary

language is not English are less impressed by India’s famous English language skills and are

turning to countries with whom they have closer cultural ties – France sending jobs to Romania,

for example – when they select offshore destinations (Reinhardt 2004). A lesser known

aspect of the out migration of jobs is ‘in-sourcing’, the creation of jobs in the USA and Europe

as a consequence of foreign direct investment. Last year Samsung announced that it would

add about 300 new jobs as a result of expansion of its semiconductor plant near Austin, TX

(Belson 2004). There is even the new hybrid ‘home-shoring’, virtual call centres made up of

people working in their own homes, wherever they may be.

While profit is the essential ‘push’ to the use of outsourcing by offshoring, we need to consider

the ‘pull’as well, the increasing capacity of other countries to provide quality engineering

education and to employ their graduates in satisfying jobs.

Enrollments in engineering and technology programmes in India and China are booming.

New universities have been created and old ones substantially modernized and upgraded,

with large infusions of money. Investments have been made in faculty expertise, research,

equipment and infrastructure. Chinese and Indian students have been well known for their high

mathematics and science skills coming out of secondary school: now they have universities

in their own countries that are fighting to attract them. With China’s political leadership

mainly in the hands of engineers, engineering is a prestigious profession (Byrne 2005) and

there are seemingly limitless employment opportunities for graduates (The Economist 2005,

5 March).

At the same time there have been problems in US and European engineering education,

where universities are struggling to diversify their student profiles: funding for engineering

has been sporadic at best and government policies have not provided consistent support for

the expansion of engineering and technical expertise. Since July 2005 the UK has joined the

USA in working through immigration problems and concerns about universities harbouring

foreigners who pose threats to national security. Foreign enrolments, once a mainstay of

engineering graduate programmes, are significantly lower in the USA: between 2003 and

2004 there was a 36% decline in the number of applications from overseas to US graduate

engineering programmes (IEEE Spectrum 2004).

Offshoring could not have happened if there had not been a pull of better overseas engineering

education and foreign graduates moving home, coupled with a certain stagnation in

the attractiveness of Western programmes.

Outsourcing by offshoring is stirring up engineering education and practice considerably, or

at least it should do so. With employment being changed so radically, there are important

new challenges to quality control, technical retraining, the roles of engineering organizations,

the future of entrepreneurship, international competencies for engineers, the links between

industry and higher education and the attractiveness of the profession.

Motivation to take another look at international standards for engineering education and

practice should be increased after reading reports about medical offshoring. As X-rays and

various scans are more frequently being transmitted to centres offshore for interpretation, the

medical profession and even the public are now alerted to potential risks associated with a

misreading of medical charts if education, training and licensure are not up to the standards

that prevail in the country where the patient is receiving the services. Similarly, issues related

to health, safety and maintenance of the public trust placed in engineers should now be raised

by the profession itself. The questions and issues are complex because of the disaggregation of

job functions that occurs in offshoring (Oberst&Jones 2004). However, the need is real for the

imposition of quality control measures, international accreditation of engineering programmes,

upgrading of local, regional and national licensure requirements and integration of codes

and regulations into law, so that the offshoring of pieces of engineering functions does not

create loopholes by which the carefully crafted standards of highly industrialized countries

are eroded. But be aware: ‘One man’s professional credentialing process can be another man’s

trade barrier’ wrote Jessica Vaughan (2004). The path forward is neither straight nor clear, but

it remains urgent.

The thorny problem of how to retrain highly skilled displaced workers is still not being

addressed on a scale anywhere near approaching the potential magnitude of the problem as

offshoring continues to impact on the engineering workplace. Until now retraining has focused

on bringing people into the workforce at the entry level, not on re-educating highly educated

employees for a workplace where the pace of change does not respect natural generational

turnover. There is a vast difference between providing retraining for those without secondary

schooling and fashioning productive ways to reintegrate into the employment market someone

with a master’s degree in engineering (The Brookings Institution 2004). Traditionally it was

the unions which insisted on protection for displaced workers: in the absence of unions what

might be the role of the professional associations in collaboration with the higher education

community in creating the retraining modules which will help the individual engineer in this

period of rapid transition? What seems clear is that a university diploma which includes high

level technical skills and a solid foundation of general education, including experience abroad,

coupled with entrepreneurial skills will stand displaced engineers in good stead if the time

comes for them to reposition themselves in the job market.

Europe and the USA share concerns about the need to build and maintain a highly educated

technical workforce (National Academy of Engineering 2005; information on proposals to

establish a European Institute of Technology is available at europa.eu.int). There has, however,

been a notable absence of dialogue across the Atlantic about possible coherent responses.

The time is right for policy-makers to create trans-Atlantic strategies to give engineers the

opportunity to move up the career ladder to outpace the off-shoring dynamic: this would

involve the selection of strategic priorities and funding, university level retraining and more

education in invention, creativity and entrepreneurship. In the absence of that the separate

national level discussions will continue to reduce the employment of engineers to a simple

competitive market issue, never raising it to a shared social concern.

Will the people in India, China and elsewhere who are now employed in business process

outsource centres be the entrepreneurs of tomorrow who will strengthen their country’s

economic base? As time goes by we are learning more about the environments to which outsourced

jobs are being sent (The Economist 2005, 5 March). The infrastructure necessary for

entrepreneurial activity is by and large not robust in India and China. Lacking the protection

of intellectual property rights and easy access to capital, to say nothing of reliable utilities

and transportation systems, will ambitious, creative people emerge from the newly created

offshore business process outscourcing centres to build grass roots prosperity in their homelands?

The answer is not clear. To counter those who scoff at the idea that a person would risk

using their intellectual capital in societies that do not respect it we need to remember that the

potential rewards in this new frontier in India and China are often perceived as sufficiently

great as to overcome the threat of failure.

Engineering educators are in a privileged position to speak out on issues related to the impact

of offshoring on the profession. They are the most credible source of information about the

aspirations and talents of young people who are preparing themselves for a profession, not

just a job. However, engineering educators also have a role in explaining how the migration

of research offshore threatens the unique bond between higher education and industry. Dating

from the early years of the US land grant colleges, where the ‘mechanic arts’ participated

through experimentation and application in raising the standard of living of the greater population,

the university–industry link has always ensured its continuation by involving students

in the research process (Jones et al. 1990). Those students, then, were the multipliers, the ones

who continued the practice of research and inquiry through their careers. Despite the capabilities

and benefits of distance learning, it is hard to imagine a substitute for the mentoring and

nurturing process of education which takes place in the laboratories, classrooms and offices

of a university as undergraduates, graduates and post-graduates take on increasingly important

roles in research carried out under the sponsorship of industry. The possibility that more

industry sponsored research and development will be removed from university laboratories

and conducted elsewhere might ultimately be a greater danger to Western economies than the

loss of jobs, cutting off opportunities for new generations of young people to acquire research

skills and ambitions under the guidance of their professors.

Today, most employees are seen as units to be stockpiled and shed as business warrants. Technology not only

allows fewer people to do the jobs of many; it also allows their skills to be taught to almost anyone, quickly,

anywhere around the world. (Reich 2003)

Robert Reich’s statement describes an unattractive work environment and issues a challenge

to educators to examine the balance in the curriculum between skills training and education.

Perhaps the biggest threat of outsourcing is that it has made the engineering and technical

professions less appealing, just as effective recruiting programmes were better communicating

the benefits of the profession to young people selecting future careers. Of particular concern is

that traditional first jobs for young engineering graduates are now being sent offshore. And a

closer look also shows warning signals for India and China and other offshoring destinations.

In India young employees, their appetites whetted by relatively high paying jobs, now shed

those entry level positions willingly at the offer of a higher paying job, driving up the wage

scales, of course, and also creating instability in the companies that employed them (Scheiber

2004).

Despite all these associated problems, there is reason for optimism. Looked at one way, offshore

outsourcing is in large part a tribute to the success of the engineering profession in

Western countries in upgrading the quality of engineering education around the world to their

standards, thus creating a pull from emerging economies. European and US engineering faculty

who are about to retire are now looking back with satisfaction at a career lifetime of visits

to developing countries to design better curricula, to help build well equipped laboratories, to

conduct joint research projects and to advise colleagues about how to work towardsWesternstyle

accreditation. While such work did not always garner for the faculty the same career

advancement that well-funded research and prestigious publications did, the satisfaction and

(admit it) the adventure of global travel were sufficient to keep many involved. Foreign governments

have regularly invited teams of Western engineering educators to give advice on how to

establish productive links between universities and local industry, how to prepare students at

the secondary level for university level engineering study and how to attract more women and

other under-represented groups into the profession. And so engineering educators willingly

served abroad, even knowing that they were wrestling with these same issues back home as

well. Over the past several decades US and European funding agencies have, with varying

levels of enthusiasm and constancy, given priority to projects which built and maintained

international collaboration, although funding of these projects waxed and waned, often as a

function of political winds. Professional associations all made at least gestures to indicate their

commitment to sharing their collective expertise abroad, and some even developed energetic

and productive agendas which have borne demonstrable results.

Is it possible that all this effort and all this brain power were deployed without an understanding

of the risks inherent in success? Today we are seeing the results of these endeavours.

Substantial numbers of engineers who emigrated to be educated overseas in Europe and the

USA are combining the best of two worlds: their excellent education and the opportunity to

work back in their home culture. Engineering programmes in India and China are now showing

the effects of upgrading in the form of strong graduates who never had to leave their home

country to obtain a good education. And these newly strengthened universities are competing

with Western universities for students and faculty. Industries in emerging economies are

benefiting from larger numbers of nationals who have expert skills and are eager to invest them

in the growth of their home nations. This is another ‘pull’ in the offshore outsourcing environment:

the readiness of countries to attract back the people and the work which were previously

associated exclusively with the Western world, and even to offer to their own young people

educational programmes of high enough quality to make students question the necessity of

leaving home for university training.

Even the pessimists have to admit that offshore outsourcing is not the end of a process of

change that engineers and engineering have played a role in launching. Jobs and functions

that migrated overseas will continue to be affected by new technologies: just consider what

natural language speech recognition, if perfected above present levels, will do to the call centre

jobs that recently migrated to India, as The Economist (2004) has pointed out. There is reason

for optimism. As engineering has provided the backbone both for peaks of material progress

and troughs of decline, it has proven itself again and again to be capable of regeneration, both

of itself and of the societies it serves. There is no reason now to believe that this will not

happen again. Engineering educators and professional society leaders need to be addressing

these issues now.

Belson, K., Jobs: a 2-way street. International Herald Tribune, 2004, 12 April, pp. 1 and 4.

Breathed, B., Opus. The Washington Post, 2004, 4 April, Section 1, p. 1.

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(accessed 18 August 2005).

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Hopkins, J., To start up here, companies hire over there. USA Today.com. Available online at: www.usatoday.com

(accessed 19 March 2005).

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2004).

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Bethany S. Oberst is Professor and Dean of the College of Humanities and Social Sciences

at the United Arab Emirates University in Al-Ain, UAE. She also holds the title of James

Madison Distinguished Professor at James Madison University in Virginia, USA. She has

served as Vice President for Academic Affairs and as Executive Director for International

Programs at James Madison, Dean at Southwest Missouri State University, Assistant to the

President of the University of Delaware and Chair at Cleveland State University. Dr Oberst is

co-editor of the International Engineering Education Digest, a monthly summary of published

articles of importance to those interested in engineering education.

Russel C. Jones is a private consultant, working through World Expertise LLC to offer services

in engineering education in the international arena. Prior to that he had a long career in

education. He has been a faculty member at MIT, Department Chair in Civil Engineering at

Ohio State University, Dean of Engineering at the University of Massachusetts, Academic Vice

President at Boston University and President at University of Delaware. He currently chairs

the Committee on Capacity Building of the World Federation of Engineering Organizations.

Dr Jones is founding editor of the International Engineering Education Digest, a monthly

summary of published articles of importance to those interested in engineering education.