Offshoring and US competitiveness

When I was in kindergarten, my family lived in New Delhi. It was a magical year in which I made permanent memories of the sights, sounds and smells of India. A decade ago I returned to India for a tour of its software industrial parks. That visit changed me in another way.

When I was in kindergarten, my family lived in New Delhi. It was a magical year in which I made permanent memories of the sights, sounds and smells of India. A decade ago I returned to India for a tour of its software industrial parks. That visit changed me in another way.

I met programmers and tech journalists who were my equal or better in every way, but whom you’ll likely never hear of unless they’re profiled in an article. Their faces and their voices became permanent memories, too. For me, the offshoring debate isn’t abstract. I know that it turns on a mere accident of geography.

I’ve never been to China. But Dick Cook — who is the CEO of ERP software vendor MAPICS and also the immediate past chairman of the American Electronics Association — has been there twice on AEA trade missions, and he’s headed back next month. One of his indelible memories is of a cafeteria lunch in Hewlett-Packard’s Shanghai programming centre:

“I mentioned to my host that we have some jobs done in India, where we consider the advantage to be the English language. And he said, ‘Dick, you don’t understand what’s happening here in this country.’

“He sent us to his cafeteria for lunch, on our own. We randomly picked a table, and I sat across from a young lady who was 27. She worked with J2EE on a team of 13, with a project leader, an architect, a couple of designers and some QA people. I asked where she learned English, and she told me all masters-level and higher classes are taught in English because they want to work with the latest state-of-the-art software.

“As she explained all this I was thinking to myself that I’d have no problem employing her. Her conversational skills were so good that I asked where she picked them up. Australia? The UK? The US? No, her company had sent her to India for three months to learn project management. Her comment: ‘A Chinese girl has to learn English to live in India.’ ”

Dick’s a pragmatic guy who outsources to India, and is likely to outsource to China too, because he thinks doing otherwise would be not competitive. He’s not deaf to the siren song of protectionism, but would rather focus on ways to stimulate American innovation and competitiveness, and he’s compiled a list of strategies:

Do more to foster maths, science and technical education. “Other countries are catching up in terms of education and skill, and we all want to ignore that,” Cook says.

Make it easier for foreign nationals who earn advanced technical degrees in the US to live and work here.

“There should be a fast track to a green card, so we keep more of those highly educated people in the country,” he explains.

We should also find better ways to reward risk-takers.

“We’re going to be forced to expense stock options, meanwhile China has announced it will implement a stock-option-like programme,” Cook says.

He suggests a rethink of the Sarbanes-Oxley pendulum swing.

“The prescriptive rules are doubling my accounting fees,” he says.

And most of all, Cook wants to fix health care.

“When you move the work to India and China you get an immediate $US6000 savings right there,” he says. “It’s huge.”

Great points. I’ll give Dick the last word as well: “If you force American businesses to be non-competitive, they’ll go out of business. I think we need to focus on seriously going into business.”

Udell is lead analyst for the InfoWorld Test Center.

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