Why Engineering
Moved Offshore


While the numbers are hard to pin down, there is no doubt that engineering moved abroad from the United States at a rapid rate.

Engineering jobs followed the factories that began moving to countries like China and Mexico in the 1990s. Major corporations built gleaming new engineering and R&D centers in India and Eastern Europe. These facilities aggressively sought the best students and the most accomplished local engineers.

The growth of offshore engineering had been coming together for many years. Looking back, it all seemed inevitable.

The Triggers

Two specific events triggered the surge in offshoring:  The Y2K panic and a perceived shortage of engineering talent in the United States.

Indian IT companies such as Wipro, Infosys, and Tata secured a foothold in the United States by offering to train their employees in any programming language their customers needed so they could debug and fix software. Moreover, because they were paying employees a few hundred dollars per month, they could do it for far less than anyone else.

Indian software firms were going global before the late 1990s, but the Y2K scare introduced them to a much broader range of companies. They quickly built upon their success, enabling companies to shift low-level IT work abroad. The major Indian IT firms used newly developed management skills to advance to project management and systems architecture. Several began ranking among the world’s largest IT services firms.

Now, the second shortage. Following the dot.com bust, many firms grew concerned with the declining number of students in the pipeline, according to Christine Bullen, a senior lecturer at Stevens Institute of Technology, whose work focuses on outsourcing. "Enrollment in computer science and IT programs had been falling for years, with some programs dropping 80 percent," she said.

Other researchers, such as Vivek Wadhwa, an executive in residence at Duke University, argued that the United States has always had plenty of IT professionals. Nearly half the companies he surveyed said that 60 percent or more of job applicants accepted employment and 80 percent of companies filled vacancies within four months.

This indicated a well-balanced market. Yet as Bullen observed, companies believed there was a shortage of U.S. graduates. Moreover, the market was not balanced, and there are shortages in certain skills. "Because they were already experimenting with outsourcing some functions, when they couldn't necessarily hire the skills they wanted, they were comfortable getting them from offshore," she said.

Familiarity with IT offshoring made it easier to send engineering offshore. Also, while most observers believed U.S. engineers were more knowledgeable, more productive, and better team players, companies could hire more workers in India, China, and other developing nations for less money.

Kenneth Kraemer, the former director of the Center for Research on Information Technology and Organizations at the University of California, Irvine, did a study of 400 manufacturing companies. He found that the more a company outsourced manufacturing, the more it outsourced the design and development of its products. In other words, manufacturing pulled engineering to the plant.


Education was also an important factor in the growth of engineering offshoring. Wadhwa and Duke sociologist Gary Gereffi studied the claims of China and India between 2000 and 2005. During that period, both nations more than doubled the number of engineering degrees they granted, China to 517,000 and India to 170,000. Over the same period, the annual number of four-year engineering degrees granted in the U.S. rose about 18 percent to 134,000.

Yet the quality of engineers varied greatly. U.S. engineers and computer professionals had to complete a four-year course to qualify as graduates. China and India lumped in graduates of two-year colleges and technical training courses, which were not quite the same thing.

Still, both India and China had world-class universities and they also had good second-tier schools. Western firms seek to skim the cream of the crop.

Indian firms had become masters of training workers to multinational standards. Meanwhile, Western universities have attempted to fill the breach by setting up satellite schools all over the world, said Phil Altbach, a professor of higher education at Boston College. "

Despite some shortcomings, Western universities were helping by supplementing an improving educational system in the developing world. And in many countries, those improvements are showing up first in the engineering schools.

Thanks to the growth in offshoring, opportunities are there for a growing number of engineers—wherever in the world they may be.

[Adapted from “Why Engineering is Moving Offshore” by Alan Brown, Associate Editor, Mechanical Engineering, March 2009.]

The growth of offshore engineering had been coming together for many years. Looking back, it all seemed inevitable.


March 2011

by Alan S. Brown