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Global Outsourcing

Dear Dave
Fact or fiction, are engineering firms today routinely sending work to foreign firms in places like India and China as a way to lower their labor cost and increase profitability? If so, how prevalent is this and how does it work? We keep hearing outsourcing is the wave of the future, but we have not seen it ourselves.

Dear KJ
Fact. Unfortunately, I do not have any statistics available to quote to you on the current depth and breadth of the practice, but I do know first-hand of engineering and architectural companies who are either already actively engaged in subcontracting portions of their work to partner firms in foreign countries or are in the process of investigating the feasibility.

Professionals are in the knowledge business, and with today’s enabling technologies combined with the rapidly accelerating increase in educational achievement, infrastructure and standards of living around the globe, the flow of knowledge is no longer restricted (or protected) by distance or borders.

I wish it were otherwise, but it is my belief that to see the likely trajectory of professional services in this country, we merely need study the history of manufacturing over the past two decades. To be sure, there are still plenty of manufacturing jobs in the U.S., but the manufacturing segment of the economy as we have known it has been forever redefined. Services are next. And it is not just engineering and architecture that are in the cross-hairs of this economic displacement, just about all types of professional services from law firms to even medicine are beginning to experience it.

In the cases I am personally familiar with, firms continue to do the bulk of the programming, planning and design work in-house, as they would on any project, but they are subcontracting some or all of the construction documents overseas. As you might imagine, it can be extremely difficult at first to work in this manner and requires much effort and patience between firms to iron out the initial kinks.

While I’m not advocating that firms rush to embrace outsourcing, I urge them not to ignore it. There is a fundamental realignment slowly beginning to take place and any prudent firm will want to watch developments closely and plan its response accordingly. To do otherwise would be foolish.

Wahby and Associates