Offshore Outsourcing Prevention Starts at Home

Critics of H-1B visas and offshore outsourcing focus on the cheapening of the American IT worker, but they're missing the bigger issue--education.

December 17, 2004

12 Min Read
Network Computing logo

Our nation's universities simply aren't graduating enough citizens with math, science and engineering degrees to sustain the long-term needs of U.S. tech employers. Enrollment by U.S. citizens or permanent residents in graduate science and engineering programs declined 10 percent from 1994 to 2001, according to the National Science Board, while enrollment of foreign students increased 35 percent. As of the 2000 census, immigrants held 17 percent of the bachelor's degrees, 29 percent of the master's degrees, and 38 percent of the doctorates in science and engineering. Ten years earlier, they held just 11 percent, 19 percent and 24 percent of those degrees.

For one reason or another, the children of American computer scientists, mathematicians and engineers are choosing other careers. Despite this trend, Silicon Valley and other tech enclaves have managed to carry on as the engines of U.S. economic growth, sustained in large part by the intellects of immigrants and visa-carrying foreign nationals. But as other countries increase their investment in technical education and build up their own technology industries, U.S.-trained foreign nationals will have far more reason to return home. Either we make it easier for the best and brightest technical minds to work in the United States, or we send them packing to create jobs and arm competing companies abroad.

Job Creators

Every time a foreign-born entrepreneur starts a technology company in the United States, or every time a foreign-born CTO helps drive a U.S. company to new heights, countless other technical jobs--as well as sales, marketing, finance, HR, administrative and other jobs--are created. To deny this multiplier effect is to deny reality.

No doubt, foreigners granted visas or permanent U.S. residency will continue to displace some American tech pros. There will always be losers in a competitive labor market. But in aggregate, the more smart, hungry people we employ, the more opportunities we open up for other smart, hungry people.So rather than get irate about the "influx" of foreign tech pros, consider the big picture. As it stands, an approved extension of the H-1B program would let U.S. employers hire only 20,000 additional foreigners with master's and doctoral degrees. Employers must still pay these workers the prevailing wage for their fields and show that qualified U.S. workers aren't being passed over.

But issuing more H-1B visas is only a stopgap measure. Sooner or later, the United States will have to grant permanent-resident status to more foreign-born technologists, or it will have to educate and train many more of its native people. The latter issue deserves its own separate discussion. Stay tuned.

Rob Preston is editor in chief of Network Computing. Write to him at [email protected].

Editor's Note (01/10/05) We've received a number of letters from readers voicing their opinions on Rob Preston's column. Below are several that we wanted to share. Look for others in an upcoming issue of our print magazine.In his column, Rob Preston raises red herrings when discussing offshore outsourcing and H-1B visas (cheap labor).

Preston opines, "For one reason or another, the children of American computer scientists, mathematicians and engineers are choosing other careers." Can anyone really blame them? What bright prospect do students see in an industry that's being devastated by cheap labor from Third World nations with which they cannot compete? The economic ramifications are staggering and will eventually erode our nation's status as a world superpower.

The IT positions being lost are the higher-paying knowledge jobs that many former manufacturing workers had trained for after getting laid off as a result of NAFTA. Perhaps we could complete if our standard of living were on a par with that of Third World countries. My fear is that eventually it will be.The issue of whether the United States is graduating sufficient math, science and engineering students from universities might be a valid concern for the future (15 to 20 years out), but it definitely doesn't apply to the current scenario. In fact, the cheap-labor policies are actually creating a self-fulfilling prophecy by discouraging enrollment in the technology field.

The unemployment rate among U.S. IT workers is nearly 9 percent. Many are degreed with decades of experience, yet can't find work in the United States. Education or experience is not an issue at present. Rather than fill jobs with qualified Americans, corporations are using the thousands of "purple squirrel" postings that flood the job boards to justify their claim that more cheap foreign labor is needed.

Last year, student enrollment in engineering programs was down 25 percent at Carnegie Mellon and as much as 40 percent at other U.S. universities. This is the direct effect of declining wages and opportunity. Who would even think of incurring $100,000 in student-loan debt for a low-wage job in technology? If students are smart, they'll go into fields like law or political science to grab more lucrative jobs.Preston writes that U.S. tech employers "want access to a wider, deeper pool of highly motivated talent-and they're prepared to head offshore if their choices are limited in the States." This is fine. Let the offshoring corporations look for labor (and customers!) overseas in Third World nations, which often don't open their own markets to American products. U.S. consumers can show their displeasure by shunning the products and services of businesses that outsource American jobs offshore. After all, we live in a world of "free trade." The void left behind in the United States will be filled by some entrepreneurial small business that will hire American workers.Businesses that desire to profit from a community have an ethical obligation to that same community. The jobs that businesses create provide more dollars for consumers to buy more of those businesses' goods and services, thereby fueling a growing middle class.

The free market should resolve the problem on its own. When offshoring corporations' profits suffer because of consumer boycotts, they'll have to rethink their cheap-labor policies. Dell did this recently, moving its commercial support back to the United States after customers complained.Corporations are shooting themselves in the foot. They're taking away the world's best shoppers (Americans) and replacing them with low wage earners who either can't afford to buy the companies' products or aren't allowed to purchase them because of government regulations. The situation is really no different from the corporate-governance scandals of the'90s. Companies are driven by short-term greed and ignore the long-term effects of their misguided policies on the U.S. economy.

My hope is that the next generation of Americans can have the same opportunities we all had to live the American dream with good, plentiful jobs.

Mary Shubert
Technology Innovations
[email protected]

I agree that there aren't enough American students pursuing careers in science and engineering. But even there were, would the skills taught at a typical U.S. university today be sufficient to make American graduates competitive? I have my sincere doubts.

In Germany, I attended a university of applied sciences (comparable to a high-quality community college) and received a BS in electrical engineering. Its curriculum was far more rigorous than that of the U.S. master's degree program in which I'm currently enrolled.

The German program comprised 33 courses. I took one class in management, one in technical English, one in mass communication and one in occupational safety. The remaining courses were about plain core electrical engineering.

When I take a look at a U.S. university, the BS programs offer mostly general-studies courses and only a small portion in the major itself. After 12 years of school, is it really necessary for students to take yet another course in English or history? Or is it that the high schools are so bad as to require the college freshmen to improve their reading and writing skills? I'm not surprised that a U.S company would rather hire an engineer from India who didn't waste his or her undergraduate years studying the geography of the former Soviet Union or playing basketball.

Another more favorable aspect of European higher education is financial accessibility to technology programs. My studies in Germany didn't cost me a dime. On the contrary, I was given money for living and other expenses-half grant, half noninterest loan. The loan was due five years after graduation. I paid it back in a lump sum for a 28 percent reduction.Contrast this with the United States. For one graduate course at a state university, I pay way over $1,000 tuition and at least $150 extra for books and materials. The campus looks like a park, and the student-faculty ratio is lopsided in the wrong direction. Granted, there's a nice baseball and football stadium, but the courses are anything but state of the art. In no way would I be able to afford such an artificially overpriced education were it not for the tuition reimbursement program my company offers.The German educational approach is to produce graduates who are highly trained in one core area, whereas American universities tend to offer courses covering a broad spectrum. Both approaches have their advantages. I think that U.S. engineering programs should combine the two strategies, and at a much-reduced cost to students.

If U.S. colleges shift their focus away from the football teams and toward the science centers, many good things can happen. But as long as the schools and their students put a premium on running fast and knocking heads, classic degrees will remain on the back burner.

With the proper training, American engineering and science graduates could have a competitive advantage over H-1B visa holders, particularly when applying for jobs involving U.S. government contracts-I sent rsums to many local companies that wouldn't even interview me because I'm not a U.S. citizen. These contracts aren't likely to go outside the country, and many don't involve any military application.

David KringsEngineer
Company name and e-mail address withheld by request

I read Rob Preston's column "A Foreign Concept" with great interest. I think I can answer somewhat why the children of high-tech professionals aren't going into the same careers as their parents.

I work for a large telecommunications company. I have more than 20 years of IT/engineering experience, with graduate degrees in electrical engineering and business administration. I bought into the fallacy that education is the key to a good job and a good future. What I have found instead is that advancement has more to do with nepotism, paternalism and cronyism.

My situation is hardly unique. I've seen individuals with electrical engineering doctorates and numerous other distinctions passed over for promotions in favor of Billy-Bob's cousin with a BA in art appreciation. I know of one electrical engineering Ph.D. who quit his job after six months because he was fed up with the technical ignorance prevalent at the company.

My employer pays me a significant amount of money to perform tasks that any high school student could accomplish. For the same pay, I would gladly do interesting technology work if it existed within this company. I should point out that the company is a large outsourcer of IT jobs.

As far as I can see, the intellectual infrastructure of this country is being quickly destroyed. And large corporations are the major culprits. The problem isn't that there aren't enough Americans with technology skills-it's that most of us give up and move on to other areas. The vast majority of advanced-degreed individuals I know are biding their time to either start their own enterprises or work for smaller-and, hopefully, more benevolent-companies.Bottom line, I encourage my children to pursue careers in health care or the legal profession. Given the current state of technology careers in this country, I cannot in good conscience advise them to work in my field.

Name withheld by request

The main reason fewer U.S. students are pursuing degrees in math, science and engineering is that Americans don't see a great demand for jobs in these areas. During the tech boom, U.S. enrollment in CS (computer science) grew. Afterward, this enrollment went down again. Why is this? Because friends and relatives warned the students they wouldn't be able to find tech jobs once they graduated.I earned a CS degree in 2002, but couldn't find a job until 2004. So I told all my friends to avoid the field if possible.

Once I did get my job, I realized how little my required CS degree actually gets used. I run automated tests all day. In reality, anyone with a high school diploma and a technical inclination could do this job. However, since I work at Microsoft and it hires only "the smartest and best"-just like any other company-I'm stuck in a position for which I'm overqualified. Judging from what family and friends tell me, hiring overqualified people is a common practice.Another reason for American students' waning interest in math, science and engineering is the intense worldwide competition to enter U.S. degree programs in those areas. Foreign students looking to immigrate know that if they can get into such programs, they stand a good chance of staying in our country. So to enroll, U.S. students must compete not only with their fellow citizens, but also with students from around the world. That means only the best U.S. students can enter U.S. grad schools, while otherwise qualified candidates are shut out. Certainly, U.S. colleges are the best in the world and should go after the best students. But U.S. taxpayers pay for these schools and should award positions primarily to citizens of the country footing the bill.

To fix the problem, let's stop the influx of foreign workers. The purpose of the H-1B visa program was to provide temporary assistance for companies requiring specialized skills. These enterprises shouldn't be relying on H-1B visas for their normal business operations.There are plenty of U.S. techies looking for work-nearly 10 percent of them are unemployed. We should take care of our own first. Only after demand picks up will we see more U.S. students taking math, science and engineering courses.

Name withheld by request

Tell Us How You Really FeelSend e-mail to [email protected], fax to (516) 562-7293 or mail letters to Network Computing, 600 Community Drive, Manhasset, NY 11030. Include your name, title, company name, e-mail address and phone number. All correspondence becomes the property of Network Computing.

Stay informed! Sign up to get expert advice and insight delivered direct to your inbox

You May Also Like

More Insights