THE OUTSOURCING REALITY
Outsourcing has become a way of life in the engineering community as most OEMs continue to farm out work both domestically and overseas. With years of experience in outsourcing now under their belts, companies seem to have a better sense of where they’re willing to take the risk of handing over design, development, and manufacturing to others.
“Outsourcing is here to stay, but the extent to which companies outsource will ebb and flow as the right balance is found,” remarked one engineer. “Some will find outsourcing is not worth the hassle. Others will make it work, largely to fill holes in engineering staff.”
Companies have also been burned by outsourcing. “Many times, design outsourcing has been a waste of significant time and money,” said one critic of the practice. “Most outsourced designs have not met time schedules and have not provided a final or adequate output at the end of the expenditure. These projects were then brought back in-house, behind schedule and in an almost start-from-scratch state, creating new pressures on an already overloaded engineering team.”
In addition to its spotty track record, most survey respondents believe outsourcing makes fewer engineering jobs available and lowers employee morale. What’s more, better than four in 10 think outsourcing drives down salaries for new engineering hires and limits opportunities for advancement for those already on board.
“Outsourcing lowers engineering wages, devalues engineers, places unfair competition with vastly different economic cultures, and potentially forfeits IP to foreign competitors,” declared one disgusted respondent. “Plus, it costs more to manage and presents more problems than most companies realize—until it’s too late.”
Paradoxically, despite the fact that 56% of respondents said that outsourcing results in fewer engineering jobs, most deny that it has affected them personally. Seven out of 10 say they aren’t concerned with the prospect of losing their job to outsourcing, while 14% maintain their skills are valued more than before. Nearly 20% claim that outsourcing gives them the opportunity to work on more innovative projects, since more routine tasks have been moved out of the organization.
“When done for the right reasons—to get skills unavailable internally or to significantly reduce costs for the same or better quality of work over the entire product life cycle—outsourcing is totally appropriate,” noted one pragmatic observer. “When it’s done simply to save a few dollars so the company can meet quarterly numbers, I think that it’s ultimately damaging to a company in the long term.”
COPING WITH THE RECESSION
Whatever the impact of outsourcing may or may not be, it is clearly dwarfed by the magnitude of the current recession. Just over 40% of those surveyed say their pay has been frozen or cut as a result of the economic downturn, and 37% say their organization has instituted a hiring freeze. It’s no wonder that concern about the general health of the economy is now the #1 issue keeping engineering professionals up at night.
“The focus on short-term, bottom-line results has produced an environment in which cost cutting is considered more important than long-term investment in innovative product creation,” a respondent declared. “This focus has devalued the contribution of engineering to a point that decision-makers are swayed more by some perceived need to drive down initial product development expenses than the long-term revenue generated by products over their entire lifecycle.”
A slight majority says the recession has forced their organization to curb or defer initiatives requiring capital expenditures in 2009. Many cited delays in facility upgrades, new construction, and manufacturing equipment and computer systems purchases as examples of belt-tightening.
“All capital purchases that can’t be justified as absolutely critical to a project’s success have been delayed by one year. Some projects have been cancelled altogether to avoid capital spending,” one respondent said.
In addition, 40% say the downturn put the brakes on operating budgets. “It’s not that expenditures are deferred for some specific time period, but rather that all expenditures are subject to more rigorous tests,” said one engineer. “If they are needed to produce revenue immediately, they’re easy to get approved. If they are for blue-sky dreams, forget it. The watchword is ‘Revenue now.’”
Some firms are in a better position than others. “Here, all projects continue to be funded with the assumption that by the time they are ready for the market, the economy will be ready,” said one engineer.
IS THERE GOLD IN GREEN?
With growing consensus that carbon emissions threaten the environment and the Obama administration’s push for a cap-andtrade system, many OEMs are positioning themselves as leaders in sustainability, even before new regulations materialize. More than one in four of our survey respondents said their company is currently involved in measuring and tracking its carbon footprint.
At those firms, the initiative for better carbon accounting may have come from corporate management (70%), employees (32%), customers (21%), or board members (12%). “We mostly burn coal to make electricity here,” said one reader. “We are pioneers in burning landfill gas and will do more of that, because methane is not as bad as CO2 in terms of global warming.”
Nearly 18% said their employer is in the planning or construction stage of installing alternative energy technologies such as solar, wind, or geothermal at their location, while 8% already have these types of installations in place. “A few key people really believe in it,” said one respondent. “Plus, we have a long history of social responsibility.”
More than one-third said they’ve encouraged their employer to adopt eco-friendly policies in the workplace, mostly by making suggestions to management or other employees on specific ecofriendly changes at work. But 12% have taken on a more active role by joining a group at work to try to influence company environmental practices.
Most (53%) told us their organization is designing or planning to design products that are more eco-friendly. These initiatives are being driven by customer interest (58%), marketing advantages (50%), power savings (44%), government regulations (42%), and competitive pressures (34%). Most respondents also claimed that any potential employer’s environmental practices would be somewhat or very important to them in choosing their next job.
Not all engineering professionals are in step with the green movement. “In general, most so-called ‘eco-friendly’ ventures are wasteful of resources and are based on highly unsound science,” one respondent grumbled. “Global warming is a myth, a hoax, an irrational fear designed by its most ardent advocates to destroy industrial society. I oppose all such practices. However, power conservation is a genuine cost-saver for the company and its customers, so I support that.”
LOOKING TO THE FUTURE
While current conditions may look grim, engineers have little choice but to grin and bear it. Younger professionals probably have too much invested in their educations to bail on the field now, and they have plenty of years ahead to make up for the present lean ones. Older professionals are typically too far into their careers to make a major change, so they too have to play the cards they’ve been dealt as well as they can.
To cope, engineers have to remain diligent about keeping themselves as marketable as possible. They may even have to become more intense about this by further cultivating their expertise and spending a little more time scouting new opportunities. After all, many will admit to having become complacent during the highgrowth years early in the decade.
At the same time, engineering professionals may also have to consider the kinds of lifestyle changes that many others are embracing during a period of diminished expectations. These include reduced dependency on credit and home equity, as well as a more conservative approach to household expenses.
If and when a better employment picture becomes part of the turnaround, those that have exercised such diligence will be better positioned to take advantage of it. On the other hand, if such a turnaround is slow to manifest, engineers can still take solace in the fact that their profession is healthier than many others—and that its intangible rewards remain significant.
Either way, the global economy will continue to depend on a diverse range of engineering disciplines for the foreseeable future. However events unfold over the next decade, some company somewhere will always need someone to come up with a way to make something that works a little better, can be made a little cheaper, and will meet the needs of a few more customers. And that is ultimately the best job security there is.
See Associated Table 1
See Associated Table 2
See Associated Table 3
See Associated Table 4
See Associated Table 5
See Associated Table 6