Bad news: Steadily declining IC development productivity means more job losses for engineers employed in first-world economies—e.g. U.S. and Europe. Those lost jobs are going to second-world economies because labor costs are much lower. Moreover, the trend is accelerating as chip design complexity outpaces gains in productivity. Don’t shoot the messenger for the message.
IC development productivity isn’t keeping pace with rising design complexity. The solution has been to increase team size—throw more resources at projects. Once that decision is made, the question quickly turns to choosing the geographical location to hire the new resources? Second-world economies that have a good base of technical professionals seem to be the logical choice, at least from the perspective of executive management.
It’s not that engineers in those countries are more productive than their counterparts in North America or Europe. Rather, it’s that they are significantly less expensive—four to eight times less expensive.
I expect the pace of job migration will quicken during the next few years because IC design complexity is non-linearly outpacing increases in productivity. There’s a triple effect happening here—team sizes are growing, off-shore development sites are maturing, and the financial cost of off-shore labor remains low. That’s all bad news for engineers in first-world economies.
If productivity kept pace with rising complexity, team size would be remaining constant. Off-shoring would nonetheless occur, because of the cost advantage. But it would happen at a slower rate—that was the situation 10 to 20 years ago. However, as off-shore development sites matured, and the cost and effectiveness of inter-site communications technology steadily improved, off-shoring became increasingly viable—and effective
Off-shoring of development was a competitive advantage for first movers. But today, it is rapidly losing that edge, because nearly all companies do it. So in most cases, it’s now a necessity in order to compete. If you’re paying four to eight times more for your resources, your cost structure is uncompetitive—even if your productivity is, say, twice as high.
What I would tell engineers in their 30's: gain experience by working in several different countries who's engineering labor costs are likely to remain low.
Engineers in their 30's or 40's: go back to school for either additional training or in a field of science/engineering requiring skills not likely to be easily off-shored.
Engineers in their 50's: Stay in the field as long as possible, save as much money as possible, and develop your post-engineering career plan.
Thanks for your comment.
So what do you tell engineers that are in their 30's, 40's, and 50's with only a B.S.?
"Sorry about getting laid off? Don't worry about the mortgage, rent, and finding a new job because even though you may have 10+ years of experience you don't have a M.S or M.B.A"
How are we supposed to live, support our families, and accomplish this?
I have an exercise to anyone reading this.
1. Log on to linkedin.com and check out the profiles of engineers. I will guarantee you that you will find that less than half of them have had a job that's lasted longer than 5 years at anyone given company within the last 10-15 years.
My point: Engineers are now commodities and like commodities we are used up and discarded when no longer needed. On top of the fact that foreign prices on these commodities are cheaper.
2. Log on the career website for any mid to large size company (Xilinx, Intel, Qualcomm, Broadcom, etc) count the number of engineering positions open in the continental U.S. Now run the same search but instead of the U.S. punch in their sites in China, India, etc. Finally, compare the numbers.
My point: I don't have to dissuade people from becoming engineers, this will.
In the end Engineer is a tough and challenging career and one that I love, sadly it is no longer rewarding. Unless your niche is RF or Biomedical there is not going to be much work out there.
I have been lucky and haven't had any long periods of unemployment in my short career, but I know this won't last. There is nothing fueling engineering in the U.S. Defense money is going away, consumer has been on its way for the last 10 years. Biomedical won't sustain on its own and neither will energy.
I wish I had the resources to go back to school get an M.S or an M.B.A. Maybe others will get lucky and survive, but as for me, you can chuck me up as one of the casualties of this brave new world.
And please if you see me at your local intersection with my cardboard sign, please drop me a dollar.
I believe dissuading someone who has the aptitude to earn an engineering or science degree from pursuing that path does that person a disservice. Not that many people have the intellectual capacity and stamina needed for it, and therefore, those that do have the ability will have an edge in the job market. Granted, they may need to pursue a graduate degree of some kind, as an undergraduate degree may not be enough, but those are the stakes that will be needed to compete in the world that's emerging.
I certainly respect and understand your points, such as the high cost of getting a college education, which is a big problem that needs to be solved. However, your point about a $40K/year job doesn't resonate with me. I don't see too many people that can sleep well at night when they can't make financial ends meet.
Lastly, not sure who is suggesting that the U.S. will or should be a nation of MBA's. My point was that giving engineers a little bit of business training would be very helpful on numerous fronts.
My plan and what I would advice to any 20-30 year old engineer and/or students looking into getting an engineer degree don't and if you are in the industry then do your best to get out.
Just like the name of this blog ROI, the return on investment is just not worth. I urge them to be like the businesses that are sending the work overseas, try to get a much out of your money as you can. Killing yourself getting an engineering degree, taking on those loans, just to know that you have to do the same for grad school on another field just doesn't seem right. Your 50-100K in the hole by the time you are done and the prospects and not everything they are cracked up to be.
You think all these other fields have it better? You think companies are not out there thinking how to ship these jobs overseas as well? Why have a manager here when the workers are over there? Why base the company here when 90% of the employees are in Asia? You think we will end up a country of CEOs, CTOs, corporate lawyers, etc.
The best advise I would give is to minimize your exposure to debt, in the end you will probably be happier with a 40K/yr job that will allow you to get some sleep at night. Do your engineering as hobby. The idea of a nation of MBAs is a joke.
In addition, I think that the EE curriculum at the undergraduate level should include a mandatory overview course on "Business Practices" -- it would provide a brief introduction to key topics, including finance, market strategy (e.g. segmentation), corporate structures (C, S, etc.), venture capital financiing, etc. I have no doubt that it would pay significant dividends to the individual, the industry, and the U.S. economy.
Thanks for your comments.
As frustrating as the performance of US companies and management has been over the last 10 or 15 years, electrical engineering is as engaging and fascinating field as ever. I understand the motivation to dissuade others from the field, but I can't embrace it. Technology is too important and too rewarding to work with to give up on it.
The US still has huge advantages in education and skills in many areas, and there are many startups and smaller companies each year demonstrating this.
Things have changed, though, in terms of what matters most:
- IC design skills, digital or analog at least, are widely available. If you're going to be only a circuit designer you'll have a tough time competing. The competition is global, so you have to be on top of your game and do high quality work.
- RF design skills are still in relatively short supply.
- Robotics, connected systems (e.g. sensor networks), and biomedical devices are all seeing more investment and growth now than just "IC design."
- The end product and system are more important than IC design, which is just one means to the ends. - Having a combination of skills that cover system or product design and IC / circuit design seems to be a better bet.
I for one would like to see the tone change away from "IC design design in the US is going away" to one more entrepreneurial, focused on the opportunities we have for exciting product development in mixed systems of RF, communications, embedded controllers, sensors, software, etc. Anyone capable of doing detailed IC design is probably capable of excelling in these related areas, as well, and positioned to make good design choices and trade-offs.
Things don't remain the same forever, and the larger, older companies keep trying to do the same old thing with management that doesn't care about the technology anymore (just numbers).
So, let's get on with it and focus on where the opportunities are so we can keep doing exciting and innovative work.
I think you're probably right -- older engineers will face a struggle if they cannot adequately differentiate themselves, and less experienced engineers will be impacted at a higher rate. But what happens when the older ones retire? Surely there will be opportunities to fill their shoes, especially if they have advanced engineeering degrees and several years experience in area of specialization. Companies will retain these people, especially if they work well within a team.
Thanks for the comment.
IMO, an EE (Masters) with fluency in Vietnamese or Mandarin (and English of course) would be quite valuable - throw in an MBA degree and I think you've got a very marketable combination.
In other words, for the U.S. to remain competitive, it must increase the skills and knowledge of the its workforce. The U.S. has the best and and largest number of graduate programs in the world. We must leverage this. We need to be graduating students from these programs that upon graduation will reside and remain in the U.S. A government policy that encourages this would be quite worthwhile. Thanks for your comment.
I strongly agree that one must pursue their passion. But there is also the need to pick a career that ensures longterm employment and a decent salary. Naturaly, there has to be a balance. However, IMO, attention to "ensuring" longterm employment and good salary has never been more important than it is today. That's because of the inexorable trend toward globalization. IMO a technical undergraduate degree followed by whatever graduate degree one chooses is the best possible combination, and one that increases the likelihood of long term employment and good compensation. No guarantees of course, just higher probability.
You mention that law/medical degrees would be better than engineering, but those are graduate degrees. Why not an undergraduate in engineering followed by either law or medicine? (BTW, that's what I did -- undergraduate EE and then law.)
As for business management, PR or marketing, which are all fine professions, I likewise believe an undergraduate technical degree followed by an MBA in one of these disciplines is the right way to go.
In sum, my hypothesis is this: (1) For new engineers entering the U.S. workforce, they should enter with a master degree. Why would I hire a EE new grad (undergraduate) when I could get one overseas for a fraction of the cost? (2)In order for the U.S. workforce to climb up the value chain, we need a lot more college graduates that have technical degrees, who then pursue Masters Degrees in whatever disclipline their passion leads them.
I certainly wouldn't argue that things are broken in the U.S., but I think that the problem is that the U.S. needs to adapt to the new global playing field -- e.g. that there is a tremendous amount of low-cost, competent engineering talent available at low-cost throughout the world. In order for the U.S. to compete and keep its population employed, the U.S. workforce must climb higher up the value-add chain. That entails a number of actions, one of which is far more technical training of our workforce, both in numbers of people and skill level.
Thanks for your comment.
David Patterson, known for his pioneering research that led to RAID, clusters and more, is part of a team at UC Berkeley that recently made its RISC-V processor architecture an open source hardware offering. We talk with Patterson and one of his colleagues behind the effort about the opportunities they see, what new kinds of designs they hope to enable and what it means for today’s commercial processor giants such as Intel, ARM and Imagination Technologies.