To say that we are living through a revolutionary period on multiple fronts is no exaggeration. Recognizing that the technology universe is closely inter-twined with geopolitics, economics and capital markets forces takes no stretch of the imagination either. However, the assertion that how America responds to the dislocation of engineering jobs may well determine whether we face a middle-class revolution is likely to fuel vociferous debate.

The outsourcing debate has been ongoing for several years. Prior to the financial meltdown in 2008, however, anyone who questioned the “wisdom” of outsourcing engineering jobs to more lower-cost regions of the world would have been placed on the waiting-list for Guantanamo Bay. Earlier this year, Ron Hira, professor of public policy at Rochester Institute of Technology, touched off a firestorm by penning an opinion piece in EETimes that was titled: The Obama administration promotes outsourcing. Coming from an academic, who would be stereotyped as an O-bot, the piece has especially generated a plethora of comments and critique (O-bot: one who is programmed to robotically carry out the policies of the messiah; credit for “O-bot” goes to Michael Graham, controversial radio talk-show personality in the greater Boston area). And, IBM with their stealth layoffs and concomitant hiring boost overseas has become the poster-child of the sins of outsourcing, with labor unions clamoring for proverbial blood.

As an electrical engineering graduate, I arrived in Silicon Valley in the mid-1980s when semiconductor companies actually had fabs in the valley running three shifts. Being young and idealistic I witnessed with some bemusement the efforts of various traditional labor unions to band together the fab line workers. The senior and seasoned design engineers, my mentors, were adamant in advising us “young guns” not to fall prey to the promises of alleged mobsters and thugs. Rhetoric aside, the more well-reasoned argument was: these are lower-skilled manufacturing jobs that can be more efficiently (read: more cheaply) done overseas. Okay!

When I went to business school, for my technical lobotomy, I distinctly recall the debate over labor unions in our human resources class. Our professor was a typical labor-loving liberal, and most of the section on labor unions was spent demonizing Ronald Regan (for dissing the air-traffic controller strike) and Robert Crandall (long-standing CEO of American Airlines for similar union-busting sins). One undergraduate business major, who annoyingly registered for most MBA courses, piped up this observation: perhaps unions have out-lived their usefulness in a knowledge-based economy? Pretty big picture thinking for an undergrad runt; though I’m not sure what that comment did for his grade! Undoubtedly, the legacy unions (airlines, auto manufacturers, etc.) have largely contributed to the demise of industrial America over the past 20-30 years.

Fast-forward to the late 1990s: the technology economy was on fire, putting an “e“ in front of your company name or product basically gave one “legitimacy”, and dot-coms with flimsy business models were going IPO. Outsourcing engineering jobs overseas had already begun, but largely in the information technology software and business process arenas. These were allegedly the lower-skilled call center and grunt work jobs that could more efficiently (read: more cheaply) done overseas. Hmmm!

Design engineering for the semiconductor and systems industries was largely immune from the outsourcing trend through the technology bubble. The focus then was on revenue growth while profitability was this “old-fashioned, prude” concept. Then came the nuclear winter of technology: circa 2001-2003. The technology IPO market that had labored through 2001 went through a drought through most of 2004. Venture capitalists fortunately found “religion”, and began focusing on profitability. And, like any herd mentality trend (someone actually wrote a book about The Tipping Point!?!), “do you have an India outsourcing strategy” became a necessary check-mark for entrepreneurs looking for funding along Sand Hill Road. The argument was now articulated along pure economic lines: if we can hire four engineers in India (or Russia, or Armenia, or China) for one engineer in the US (or Silicon Valley), we have to do the fiduciary responsible thing for our shareholders, right? Hmmm again!

I have spent the bulk of the last 12 years as a sell-side analyst for design software and semiconductors on Wall Street. Additionally, my friends know that my political leanings usually tend towards the conservative side (or right of center). So, what’s the point of this diatribe; or, in other words, what’s my beef against open borders, globalization, and financial shenanigans in general? Allow me to elucidate:

At heart, I am an engineer (a polished geek, if you will). Having stayed in touch with my industry peers through the years, I have great empathy for what is going on with experienced engineers as a direct consequence of the outsourcing trend.

The financial analyst and journalism vocations have also been impacted by outsourcing; although less visibly so, since there are sea-changes in the underling financial services and media industries.

As a 40+ year old job seeker during multiple stages over the past four years, I have encountered blatant age discrimination (the politically correct HR-speak is “over experienced”; as opposed to over-qualified). And, while I have no desire for the US to adopt French employment laws (read: socialism), I have also fallen victim to the overt abuse of “at will” employment contracts.

Okay (sob, sob), we feel for you dude, but what the heck does this have to do with the outsourcing trend? Market forces are in play, and one can either adapt, or get out of the way!

Here’s the rub! There will always be some new, emerging geography with a growing population of educated engineers willing to work for relative peanuts. Taken to the limit, we will have outsourced all of the engineering jobs (mundane, creative, and innovative), all of the marketing jobs, all of the financial analysis jobs, all of the journalism jobs, etc. The only professions one cannot outsource (yet) will be key service providers (doctors, teachers, firemen, policemen, etc.), sales people (at least for direct sales), and the entertainment, hospitality, and recreation industries. Oh, and the all important, Wall Street suits, money managers and lawyers. Everything we consume (outside of food) will be designed and manufactured at some low-cost location. Just hunky dory!

I don’t study demographic trends as a hobby, but the population in the US does continue to grow. Almost everyone’s retirement funds were slashed in half in 2008. So, for mere mortals, retirement is a more elusive goal. Unless the outsourcing trend is stemmed, we are going to have a middle class revolution on our hands. The “tea party” protests about a month ago will likely prove to be a mild prelude to louder and more frequent protests against capitalism run amuck.

Free-market capitalism has been running amuck since the repeal of the Glass-Stegall Act under Clinton. And, good ole’ George might have slept through some of his classes on corporate finance and leverage at HBS. Amazingly, I actually like the gist of Obama’s corporate tax re-haul proposal: change economically undesirable behavior by modifying the tax code (so companies that outsource more jobs will not be able to expense those jobs for tax purposes). We’ll have to see if Congress goes along with it, and whether this was more public posturing by candidate Obama (stop campaigning, dude; you won!).

The grass roots answer may lie in an “enlightened” form of unionization by rank-and-file engineers in the US. We know that the legacy unions grew too big and powerful, got corrupted, and abused their missions. We can do better. Engineers are eternally pragmatic, and my guess is that most would be willing to “get real” about compensation expectations and rejuvenate their work ethic if there was an opportunity to continue gainful employment.

What’s your answer to this dilemma?

Yes, an “enlightened” form of unionization makes sense

Change is here and Obama’s corporate tax re-haul plan will work

No one’s listening: let’s just take to the streets

What dilemma! The US cannot fight the forces of globalization and economics; go bag groceries, dude!