Globalization Takes A Bite Out Of EEs' Salaries

Globalization has delivered tremendous opportunities to the electronics industry over the past two decades, but for many engineers in Europe, North America and other developed regions, it has also brought a world of pain in terms of fewer job opportunities and lower wages, according to the EE Times Annual Salary & Opinion Survey. As new technologies for mobile devices, the Internet and embedded systems, to name a few, have taken hold during this period, a corresponding growth in outsourcing of design and manufacturing functions to low-wage countries in the Asia-Pacific region, Latin America and Eastern Europe have undermined wages, cut job opportunities and left U.S.-based engineers disgruntled about their job prospects, according to the EE Times survey, conducted by Beacon Technology Partners, a marketing and research firm based in Maynard, Mass. A key finding revealed by 1,158 respondents in North America is that American-born engineers, particularly those over 50 years old, are having a harder time adjusting to the effects of globalization. Many of them have been displaced by foreign-born Indian, Chinese and British counterparts, who have landed jobs at large corporations like Cisco, Dell, HP and IBM. Income disparity is a key concern. The study revealed that North American-born engineers working in North America have median earnings of $107,000, while foreign-born engineers working in North America enjoy higher wages. Indian-born engineers reported an average salary of $114,000; engineers from China/Taiwan posted an average salary of $113,700, and those born in the United Kingdom earned $131,900. The study also found that one in every five engineers in North America was born outside the United States. That's one of the largest proportions of non-U.S.-born respondents in the 10 years EE Times has conducted the survey, said Jim McLeod-Warrick, partner at Beacon Technology. While the United States has gobbled up engineering talent from overseas, U.S. corporations have also expanded their presence abroad; hiring outsourced engineering skills or expanding manufacturing plants where they hire foreign workers for far less than a U.S. counterpart. Recent reports indicate that expansion into foreign markets is trending upward at a robust rate. In October, Hewlett-Packard Co. said it plans to open a PC plant in China's Chongqing region, expanding its presence in Western China to better serve the local market. Other leading companies are following suit. In June, Dell Inc. said it plans to boost its software-services business in emerging markets such as Brazil, Russia, India and China. Sun Microsystems Inc. announced earlier this year that it hopes to maintain the pace of doubling its revenue in India every three years, as technology spending by telecoms and financial service firms remain robust. "What is buried underneath globalization is the fact that you can hire eight Chinese engineers for [the salary of] one American engineer. In Taiwan, you can get four of them for one of us," said a North American source, who requested anonymity because his company is operated by Chinese management. In addition to salary considerations, the source said U.S. corporations are finding that foreign engineers come with highly recommended skills. "At one point in time I would have said 'I'm an American and they are not as good as our engineers, but what they don't know they'll learn.' I can tell you firsthand many foreign engineers are every bit as good as any of us are," the source said. As companies continue to employ engineers overseas, as well as hire through the H-1B visa program, many U.S. engineers face difficult times. The experience of Gene Nelson, who holds a Ph.D. in radiation biophysics, demonstrates what a rough and tumble world engineers must navigate today. After losing his job in the early 1990s, Nelson spent seven years at a company that contracted with Microsoft Corp. to outsource its telephone technical support. Today, Nelson works at the not-for-profit organization, NumbersUSA, which advocates for lower immigration levels in the United States. "Until about 1990, employers paid for technical training. Now, most of the cost and risk have been shifted to the technology worker. A U.S.-citizen technology worker usually pays $50,000 to $200,000 in college costs to obtain their bachelor's degree. Then, the employer captures a significant part of this investment when employers prematurely declare the technology worker to be 'obsolete' before the worker reaches age 40," Nelson said. After age 40, the American citizen--independent of their age or origin--usually finds himself (or herself) to be either unemployed or underemployed in a non-technical field, he added. "Employer abuse of work visa programs facilitates the substitution of fresh, inexpensive, imported, and indentured young blood for American citizens." The survey also indicated that a majority of older North America-based engineers don't believe globalization has been beneficial to their careers. When asked if they agreed that globalization of the electronics industry over the past 20 years has improved opportunities for U.S. engineers, only 30 percent of engineers who are 50 years and older agreed while 60 percent of respondents under 35 years old concurred. However, the study found that the number one concern of U.S. engineers was outsourcing and its impact on their job prospects. When asked to rank their concerns about career issues, 36.4 percent of respondents said offshore outsourcing was the number one concern, followed by worries about the job market, job security and unemployment at 34.3 percent. A third concern was balancing work and life issues. The numbers reflect eroding confidence among older engineers who have studied and worked in the field for the past 30 years and now believe the profession does not offer the promise it once did. This is reflected in the number of engineers who said they would recommend engineering as a career to their children--38 percent of engineers 35 years old and younger said they would, but that dropped to 26 percent for engineers between the ages of 35 to 49, and 33 percent for those over the age of 50. "I have encouraged my daughters to stay as far away from an engineering career as possible," Nelson said. Prith Banerjee, senior vice president, research, and director for HP Labs, said he saw firsthand the difficulties of enrolling U.S.-born students into engineering courses when he served as dean of the College of Engineering at the University of Illinois at Chicago. "I used to struggle with trying to attract U.S.-born students into the engineering undergraduate programs at the University of Illinois," Banerjee said. "U.S. children have the perception that math and science are difficult whereas in India and China the support structure greatly values math and science education." Still Banerjee cautioned against believing the hype about the employment environment. Job prospects for U.S. engineers are good, he said. "We are recruiting," Banerjee said. "I looked at how many requisitions are open at HP Labs in Palo Alto and it's in the range of 15 requisitions for engineers with Ph.D.s." HP Labs has seven locations around the world, and according to Banerjee, globalization has helped. "For example, we have a project going on that involves researchers from Palo Alto, Bristol and China," he said. "This kind of collaboration, trying to pick the brains of people from different continents, would not have happened 40 years ago." According to Banerjee, HP Labs is investing in five key areas: information explosion, cloud computing, intelligent IT infrastructure, content transformation and alternative energy. These areas hold the greatest promise for HP engineers, he said. "All these areas are futuristic problems, challenges and opportunities. I think the future of engineering is really bright," Banerjee said. Topping the list of future job opportunities, 63 percent of respondents predicted that alternative energy technologies hold the most promising future, followed by solar thermal at 54 percent, nanotechnologies at 50 percent, system-on-chip (SoC) at 46.9 percent and photovoltaics at 46.6 percent (see charts, page 28). The study also revealed that 44 percent of respondents have already incorporated green principles into their designs, reflecting a shift in focus to reducing power consumption at many of the big electronics firms. While OEMs are developing products that advance green technology, design teams in the reseller community are focused on technologies that provide much greater energy efficiency. Projects like virtualization and data center consolidation, for example, are rife with opportunities for engineers, according to Keith Baskin, storage practice manager at Norcross, Ga.-based Optimus Solutions, a value-added reseller of products from HP, IBM, Cisco, EMC, Microsoft and Oracle. "My advice to engineers would be to go into the reseller channel," Baskin said. "Just in the last six months our company hired eight installation engineers. We have one in storage, one in networking, three in the Intel space and three in the software area." Baskin also noted that the reseller space offers engineers a chance to work in the United States if that is their preference. "When we implement projects for U.S. companies, we need en-gineers that are hands-on and they've got to be local," he said.