Research & Development Being Offshore Outsourced

Research and Development is moving out of the United States and offshore. In a new Economic Policy Institute study titled The Offshoring of Innovation, Dr. Ron Hira made the acceleration clear.

The economic and national security outcomes of increased resource input into the innovation process are going to be different than they have been in the past. We need fresh thinking about policies that will re-shape the new national innovation system to achieve desired outcomes

Going into the details, basically we have certain forces in the United States who believe innovation, R&D is all about increased people and education. Hira shows those assumptions are not true and outlining national R&D strategy with these assumptions could leave the United States falling behind. More importantly, working professionals...are already being left behind and not because of their skills or education.

In R&D Goes Global:

Back in the 1980s, politicians and pundits mourned the migration of blue-collar jobs from advanced industrial countries to emerging economies. More recently, they fretted over the flow of low-level white-collar jobs. In both cases, their one piece of advice for the advanced countries was to do what they did best: innovation.

Think again. Now even innovation appears to be fleeing to low-cost countries, as they seemingly leapfrog the traditional stages of development. Clearly, we are at the beginning of a fundamental shift in where R&D is performed.

Yet even discovering where the money is going, what specific investments, projects, facilities are being offshore outsourced is difficult due to the lack of disclosure by these multinational corporations.

Certainly, there is no regulation that forces firms to break out the locations of R&D spending in their reporting. Just as certainly, there are competitive and even political motives to keep the locations hush-hush. Nobody wants to hear rabble-rousing engineers in the richer countries grousing about the “giant sucking sound” made by Asia as it slurps up some of the profession’s highest-paid jobs.

As an example, contained within Hira data, GM increased offshore outsourcing of R&D 22.7%! Yes this is the same GM that needed a bail out.

Even further Hira notes the employment conditions eroding to less than fast food worker for highly skilled and educated Professionals:

During the past two decades there has been a significant shift in the employment relations between U.S. employers and their American scientists and engineers. Corporate decisions are increasingly being made with little regard to how they affect workers. IBM, a leading employer, shows how radically these practices have changed over the past 20 years. As recently as 1992 IBM never laid off an employee, but since 2002 it has policies in place that force its U.S. workers to train foreign replacements as a condition of severance and unemployment insurance (Bulkeley 2004). These practices have become quite widespread in the American technology sector. An American software engineer (Engineer 2007) working at a major semiconductor company put it this way, "The basic plan where I worked was to hire H-1Bs [foreign workers in the United States on temporary work permits], train them, and use them as a way to outsource and transfer technology to China. I trained my replacement who was here on an H-1B visa from India." When asked if he would tell his story publicly, he demurred saying, "The company I worked for required I sign a several page agreement stating I would not discuss company information. My human resources representative and manager both made it clear that the company has never lost any challenge and has gone out of its way to destroy the lives of the people who have caused issues. They tell everybody this, not just me. They would brag about cases." At the same time that this American engineer was training his foreign replacement, the CEO of his company was publicly complaining to Washington policy makers about a shortage of U.S. engineers.

The problem with Engineers, Scientists and researchers is they are meek as the mice of their experiments. Rabble-rousing might amount to posting a comment anonymously on a blog about how they just have their entire life's work shafted. Truly U.S. Scientists and Engineers need to scream from the rooftops about their careers, livelihoods and working conditions.

Hira also notes that United States Universities are now building campuses in Dubai, India, China and awarding U.S. degrees. But it's worse than that.

Many have seen the statistics on offshore outsourcing costing the United States over 5 million jobs, but few realize our own universities are helping offshore outsourcing firms figure out how to offshore outsource the very best and cutting edge R&D jobs!

From 2006, the University of Pittsburgh literally help a forum to assist offshore outsourcing companies look for ways to offshore outsource high paying U.S. jobs.

Another issue with offshore outsourcing critical research and technology is security

Recently India outsourcer Satyam was exposed as a bigger fraud than Enron yet customers find they still cannot easily cancel their contracts. Literally Satyam tried to install spyware at the World Bank.

Industrial espionage is also rampant, including within the Academic system.

Something has to give and so far it appears to only be our nation, our economy and our future. The United States, including it's federal and state funded universities, is literally giving away assets for our future innovation, destroying the careers of their current engineers, denying investment and opportunity for our nation's future scientists.

Scientists & Engineers are not just the canary in the coal mine, they are the gold mine. Expecting to import and outsource that resource, while throwing away the citizens of the nation, enabling arbitrage defies the facts and possibly the laws of gravity. We know it defies the history of national growth and dominance. Continuing down this path of the race to the bottom is selling the United States down the river.

A pdf of Hira's paper is attached.

PDF icon HiraBriefingPaper_226_r3.pdf350.56 KB



And thus the lies of the ITAA

Where they told me 8 years ago that we were only exporting the "easy" jobs and nobody would ever export the R&D jobs for fear of intellectual property poaching, is exposed as the lie it was.

Maximum jobs, not maximum profits.

yes it is

and the absurdity that only the "low skilled" jobs would be offshore outsourced is really almost racist. What makes anyone believe that in other nations, magically the people cannot handle top level jobs?