- The Washington Times - Wednesday, October 15, 2003

If you want to see a real weapon of mass destruction, try a $1,000 computer in Bombay. High-tech jobs in the computer industry are bailing out of the United States. Fast. They’re bailing into India, China and other countries with more talent than capital.

The following tidbit is from the Register, the excellent British Web site that follows the industry: “One in 10 jobs in U.S. tech vendors and information-technology service providers will move offshore by the end of 2004.”

This cheery note comes from the tech-analyst firm Gartner, which is not remotely alone in its views.

Andy Grove, co-founder of Intel, recently said the fate of the U.S. steel industry looms for software. He doesn’t mince words: “It would be a miracle if it didn’t happen in the software and services industry.”

Craig Barrett, CEO of Intel, says that while Intel has recently kept numbers steady in the United States, it has hired 1,000 more software engineers in China and India.

Over the next few months I see a steady stream of such stories. IBM’s tech people are considering unionizing to fight the shift of thousands of jobs to Asia. Company after company is quietly beefing up its overseas efforts in software engineering and R&D.;

This is moving toward an economic sea change that is going to have large consequences. We are seeing the separation of intellectual from physical capital.

In the past the United States has tended to shift low-tech jobs to other countries, such as assembling shoes in Indonesia or autos in Mexico. Now serious brainwork is heading for other shores.

While losing jobs in shoe assembly is bad for the people assembling the shoes, it doesn’t strike at the heart of American commercial supremacy. Brains have been what have kept the country where it is. Engineering, R&D;, software, chip design: These are what make us competitive.

And, as we are rapidly discovering, they are exportable. Just like shoe assembly.

The problem is that the Chinese and Indians are every bit as smart as we are. Both countries have three or four times our population. This means they have between them many times our numbers of first-class engineering minds.

And with the Internet and cheap computers, they can work just fine from New Delhi. For them, working for a U.S. firm is extremely attractive, because they make what for them are princely amounts of money. For the American firm, the arrangement is equally attractive, because they are paying a fraction of an American programmer’s salary. And the foreign governments are happy to have the United States pay them to learn to compete.

I talk to U.S. engineers and programmers and find that they are furious over the creeping, or galloping, unemployment. They say they are just as good as the foreigners, who just work cheaper. I don’t doubt it. But if your choice is between two equally good products, one of which costs a third of the other, which are you going to buy?

Intel’s Mr. Grove blames the problem not only on labor costs in the United States, but also on the decline in the number of people with advanced qualifications.

We rely more and more on foreign talent in the country — and outside of the country. And of course if Americans cannot make acceptable salaries in software here, they will study something else, increasing the need for programmers in Bombay.

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