Business Bangalored

From X-rays read in Australia to computer troubleshooting calls answered in India and back-office operations handled around the world—all for U.S. firms—thousands of jobs once filled stateside are now offshore, and the term Bangalored, in reference to India's high-tech city, has entered the lexicon to refer to American layoffs due to outsourcing.

For companies, outsourcing can mean lower payroll costs, helping them better compete in a global marketplace. For offshore workers, it often means employment opportunities they wouldn't otherwise have. For many U.S. workers, it prompts fear that they may be unemployed.

Is offshore outsourcing a competitive threat or a competitive strength?

Barry Epstein

BSEE '61, MSEE '63
President, EcoStatic Systems LLC

Answer: Offshore outsourcing without balance is a competitive threat to the U.S.

Without positioning myself as an isolationist, I do have concerns about the high level of offshore outsourcing by U.S. companies. I feel that left unchecked, it could greatly harm our country, not only in the immediate loss of jobs here, but also, and even more alarming, in loss of expertise and production capabilities in this country.

I believe we should tread carefully in this realm, striking a balance that preserves expertise and, with that, many jobs.

I do understand that companies often enjoy a competitive edge price-wise because offshore outsourcing costs can be less than U.S. employees. But we must be concerned with the long-term effects this can have on our country's strength.

We've seen negative impacts because of the decline and even loss of various U.S. industries. Some may say that outsourcing software development is different. But it isn't. Might we lose our expertise to do software development in this country because of offshore outsourcing?

I'm concerned that our universities, too, may be contributing to the threat. Our universities are helping build universities in other countries. While this certainly has merit, could it be a factor in declining strength here at home? Could this assistance eventually lead to transfer of cutting-edge research to facilities now being developed elsewhere?

The people who lose jobs here also concern me. We have a moral responsibility to help people throughout the world, but we also have to find a point of balance. Not outsourcing offshore isn't realistic in today's world. But I think companies may look too much at what they can save rather than believing in the future of the country. That may be especially true in some intellectual areas. And I hope hindsight never shows it was true in military areas.

We can't close our eyes to the need for long-term balance. Otherwise, we'll lose our expertise—and perhaps more—here in the U.S.

Ravi Venkatesan

MSIE '86
Chairman, Microsoft India

Answer: Offshore outsourcing is a competitive strength.

Hiring the best talent, wherever that may be—in the United States, India, China, Isreal, or Europe—is about much more than cost arbitrage. It's about companies accessing IQ and innovation, which makes offshore hiring a critical component of competitiveness for the U.S., the biggest beneficiary of globalization.

This is becoming even more critical because of the expected talent shortage in the U.S. as the population ages and our education system struggles to generate enough high-end talent to meet demand. We see this, for example, in the need for more computer scientists. This skill gap can be addressed partly be taking advantage of talent wherever it exists in the world.

The ability of companies such as Microsoft, Intel, IBM, Boeing, Caterpillar, and others to utilize worldwide talent allows them to create world-class products. And that actually creates jobs in the U.S., rather than the implication that offshore outsourcing cuts jobs.

Clearly, there are winners and losers in globalization at the individual, firm, and national level. Singapore, for example, owes its prosperity to globalization and its ability to continuously adapt. Individuals, companies, and countries who can adapt can take advantage of change rather than be hurt by it. Those are the ones who tend to be winners. Those who do not adapt end up losing.

For workers, the key is to make sure that you continuously learn, grow, and acquire new skills and that you are willing to take risks and go where opportunities are, perhaps even to another country. If you're not able to, someone else will.

For globalization to continue successfully, it's vital to ensure that more people in every country gain from it rather than lose. Otherwise, social and political backlash could curb it. This, then, creates a responsibility for business and government to focus on both competitiveness and job creation.

Adam Fruehling

Doctoral student
School of Electrical and Computer Engineering

Answer: Offshore outsourcing presents challenges we must address.

I see outsourcing as more a challenge than a threat, but it is an issue that must be handled more tactfully. Global economic development cannot and should not be avoided. However, outsourcing must be executed with respect to the individual.

If it's done solely for cost purposes, it's detrimental. Hiring engineers just because they're cheaper doesn't say much in terms of the people you hire and disregards individual creative potential. The criteria should be in hiring the best-skilled employees possible, regardless of their origin. Also, outsourcing does threaten jobs here and has hurt many people, particularly in the automotive industry.

Outsourcing makes sense, though, when you locate your engineering workforce where the products they develop will be used. Someone in the same location may better understand the needs there. That's true, too, for customers in the U.S. I think you need to match your workforce with your customer base. If the majority of your customers are in the U.S., the majority of your workforce should be, too.

I believe everyone deserves educational and job opportunities. Being born in the U.S. doesn't give you a divine right to those privileges. At the same time, I see the U.S. as a place that provides a good environment for those opportunities, and I would like to see continued economic development at home. Currently, the majority of graduate students in the ECE at Purdue are international. Assuming this trend nationwide, it's easy to see why companies have a hard time finding U.S. students with graduate degrees. Perhaps that could be eased by making the path to citizenship easier for people with proven records of contributing to the U.S. economy and working within the legal immigration framework. For example, graduating with a U.S. degree or employment at a university for several years would result in citizenship.

—Interviews by Kathy Mayer