This conversation is going a little off but as I said before the companies will try what is at their disposal to remain competitive in the prevailing market situations.
I just mentioned those two technology companies as examples and I am sure there are many which are innovative but my point was that if there is innovation occurring in a particular process that process cannot be outsourced purely for wage differentials and I don't think any company would do that unless grossly mismanaged.
Unfortunately globalization is not a one way street as some belatedly have come to realize.
Andy Grove should take ECON101 and learn the definition of comparative advantage.
If American engineers are not any more productive than engineers in 3rd world countries, why do they deserve a much better living standard?
The problem is not out-sourcing, the problem is the Americans expect they can consume way more than everybody else on Earth.
Feory well done. Do you know, you killed native americans and tried to establish your territory there(by stealing their land). The native americans were also well advanced civilisation , but just because they didnot follow you, you killed and established your kingdom, usa. Now when other culture people ( even if their language and culture is different) try to contribute you, you donot mind taking their work, but you have enough complaints abt their quality of work. If they had got the same facility as you, i am sure they would have been far more better engineers than you. The ppl coming there need visa now, but when you people came, forget abt visa, u just killed native people..same thing happened in australia and so many other places
The American engineers, and American workers in general, deserve to get what they ask for. Even at this time, when Andy Grove, not known to be pro-labor, speaks up to defend the employment of the US engineers, there are still many who insist that everything would be rosy only if the American engineers find some way to become "competitive" again.
As Mr. Grove points out in his examples, these people learn nothing from the past failures, but keep insisting that the failed policies are really successes. That's right, having Americans importing all these 52" LCD TV's from abroad instead of competing in the TV business is a very smart move. Instead of investing in R&D to compete, America wisely exit those industries, and focus instead on the higher margin industry of buying and selling subprime morgages.
@Hermanth - You bring up one of my pet peeves, which I would refer to as the "accounting errors of outsourcing." Just like many business professionals in our industry, you state that it does not make sense to pay someone 10x for "the same job" that others will do for 1x.
But is it really the same job? Is the end result the same to the company's bottom line? You mention the examples of Apple and Google, which have not outsourced their core IP developments. What if they had done so, to take advantage of that 10x reduction in labor costs? Would their products have been the same, or come to market in the same time frame, or with the same top-line financial windfall to those companies? We will never know, but personally, I have my doubts.
I am curious why you say the rate of innovation in the U.S. has been reduced in the past decade, and what evidence would suggest that. You mentioned two U.S.-based companies, but there are plenty of others that have also had tremendous innovations over the last decade.
The American engineer does compete with and also collaborate with colleagues in other countries. Don't write off American innovation just yet!
Your anecdotal evidence is good Rick, but what about the turning away from science and technology as a topic of study and training being demonstrated by most western hemisphere youth?
When it is the right time for the next big idea will the guys and gals at Stanford be ex-patriate students itching to go east to make employment, or will students at an eastern hemisphere university have the cultural and cross-curricula science and technology background to have the idea first?
I would say that the typical American engineer has to become competitive. Business wise it does not make sense to pay someone 10x for the same job others are willing to do for 1x. Much of the problem is also because the rate of innovation in the US reduced in the past decade which made companies look for other areas to remain profitable during lean years and naturally the high cost of US employee came in their cross hairs.
Apple and Google hasn't off shored any of it's core business, care to ask why?
We are definitely witnessing what Mr. Andy is stating in words.
The engineering job is no longer as much appreciated in the US by the US people and well, the bottom line for decision making perhaps is the saving money factor and as such Asian countries are cheaper labor right?
Also, shouldn't we consider that the humanity as a whole is passing now it's technological adolescense?
Perhaps we are closing in where the technological development is reaching it's saturation point and thus... the curve will ressemble a flat line considering the vertical axis the number of innovations. I hate to say the pesimist word but... its getting tougher to bring up ideas this days isn't it?
Seems to me, with all do respect, that Andy Grove is criticizing the very same corporate and business practices that Intel employed during his vice-presidency. It's easy to take aim at the system now that revenue is at an all time high.
Anon123... China is a competitor but is also a large market that is still attractive to investors who view the rewards of the investment as worth the risk. Assets are increasingly being held globally by China, so I would say the tendency may be for countries to start protectionism measures for trade but investments will still be welcome to shore up local jobs. Seize the day or cease the investment? I say the former.