By Jack Ganssle

Offshoring

Published 3/18/04

"Stop whining and concentrate on technical issues."

"You're the voice of doom; it's not really that bad."

"Jack Ganssle is a moron."

Readers respond passionately to this column. When I touch on the subject of offshoring, H1-B visas, or the future of software development the email is divided into two camps. Many share my concern that first world engineering is in for a rough time, with major structural changes likely to surface.

The USA is divided as well. While Lou Dobbs nightly exposes companies sending jobs abroad, last week Secretary of State Colin Powell reassured workers that the US anti-offshoring clamor won't in fact have any negative impact on employment (http://nytimes.com/2004/03/17/international/asia/17POWE.html). Of course, he was reassuring workers in India, not in the US where job creation in all non-government sectors remains stagnant.

This election season escalates the usual partisan politics to wearisome levels. The Democrats will harp on the President's vulnerability on job creation till even the unemployed are sick of the chatter. The Republicans continue to promise that Keynesian economics will triumph. Real Soon Now.

As near as I can tell the neither of the candidates offer a credible "solution" to the offshoring issue. Both advocate, among other measures, enhancing adult education to make displaced persons competitive again. Yet in an embedded.com poll (http://embedded.com/pollArchive/?surveyno=5900041) 41% of respondents felt college was irrelevant to their jobs. Another 30% essentially compared their higher education to that of a trade school: "they taught me to crank code." A great educational system is surely a critical component of a successful economic policy. But even polymaths need a job when they graduate.

Kerry proposes using only local workers on all government contracts. At first blush that's an admirable idea - hey, I don't want my tax dollars going overseas when so many engineers here are unemployed! On the other hand, doesn't this imply we're demanding that the Feds behave even less efficiently than today? Won't that require higher taxes? And, since government spending represents only (only!) 20% of the GDP the impact of such a program won't be huge.

Yet, as Tevye would say, on the other hand, for the last 40 years the people of the US have underwritten welfare and other programs that are inherently inefficient, in a belief that doing good for people is important.

It's a complicated issue.

Others call for new tariffs and other trading restrictions. I've yet to see a protectionist argument that looks practical. Today's transnational corporations can easily skirt legal strictures using offshore subsidiaries. Without such regulation we rely on the kindness of corporate officers, hoping they'll "do the right thing" and hire locally.

CEOs have a fiduciary responsibility to maximize shareholder value. Like it or not, that's their job. I kick myself for saying this, but can't deny the truth: minimizing costs, even when that means exporting jobs, is simply part of the deal for the boss. The stockholders demand it. And a lot of us are the stockholders.

Jobs and goods flow around the world at light speed, the better to maximize profits. People are replaceable cogs, tossed to the wind when there's a chance to increase returns by a microscopic amount. Capitalism is a wonderful thing but perhaps it's now too perfect.

A century ago Lenin observed that a capitalist will sell you the rope with which to hang himself. We embedded people built the communications infrastructure - the rope - that's now strangling our careers.

The offshoring issue will go away when a new balance levels salaries around the world. When a Cupertino developer's salary matches those in Bangalore engineering jobs will be plentiful here.

Readers frequently ask me to speak up about the offshoring trends. I wish I had a solution to propose. What are your ideas?