In the meantime, China and India will grow in importance as markets and suppliers of engineers and design skills, they added.
Lower overseas labor costsas low as 90 percent lower in some locations, according to Brown and Linden's researchare providing U.S. chip makers with competitive advantages. The "ideal result" of the offshoring trend would be that U.S. companies "will grow and hire more workers at home and abroad." But the researchers warned that some U.S. engineers will lose jobs due to the offshoring of design projects and "only the remaining [overseas] workers and consumers [will] benefit from the firm's move offshore."
Their research also found that competitive advantages are offset by other costs associated with design offshoring. These include: the need to describe design tasks more precisely to overseas design teams; extra controls on intellectual property, especially in China; increased management costs; and reduced productivity and slower product cycles. Together, these factors raise the risks for offshoring chip design and R&D projects, they concluded.
In order to counteract the disadvantages of offshoring and maintain U.S. technology innovation and job creation, the U.S. needs to maintain its strong university system, observers agree. Policy makers also need to restore U.S. economic stability to promote continued investment in innovation and a "transparent and globally-integrated financial system [that] is necessary for private investment."
The debate over offshoring is getting louder, with all sides in the engineering community weighing in on the future implications for employment and innovation. Much of the debate has shifted to assembling reliable data such as labor statistics to determine the overall economic impact of outsourcing projects like chip design. Critics worry that a new wave of offshoring to India and China will stifle U.S. innovation as the U.S. confronts stiffening global competition.
Other observers note that recent political shifts in the U.S. may strengthen the hand of organized labor, which provided much of the financial backing for Democrats to recapture control of Congress. In return for campaign contributions, labor groups will press lawmakers to put the breaks on offshoring as a way to preserve U.S. manufacturing jobs, observers said. What impact that might have on the future of U.S. innovation remains unclear.
Nearly everyone agrees that investments that support and nurture the world-class U.S. university system along with rigorous graduate training are the keys to maintaining U.S. innovation, and perhaps serve as an antidote to globalization.
But a growing number of U.S. engineering school graduate are foreign students. How to keep them here is the subject of a heated debate in the engineering profession over the number of high-tech H-1B visas the U.S. should issue each year. Professional groups say the H-1B program is mismanaged. Industry groups counter that the program is vital for U.S. competitiveness.
"We need to retain as many graduates as possible, especially with advanced degrees, to win the global innovation competition," Robert Doering of Texas Instruments told the workshop.