Urban Onshoring: The Movement to Bring Tech Jobs Back to America

http://www.wired.com/2014/11/urban-onshoring/

by e15ctr0n • 12 years ago

81 35 12 years ago

SixSigma• 12 years ago

"Reshoring" is on the rise.

The labour costs are rising and those that have survived by expanding market share on the back of the offshoring wave are finding that the other transaction costs are beginning to dominate.

In manufacturing, the economic conditions are such that retailers are holding even less inventory meaning that the order size required to make purchasing in China viable is no longer optimal, especially with such a long lead time.

Having local control is proving to be more valuable than cheap labour.

http://www.sciencedirect.com/science/article/pii/S1478409214...

king_magic• 12 years ago

Good. Offshoring was and is a terrible idea.

wyclif• 12 years ago

It may have been a terrible idea, but it's hard for tech firms to argue with "dirt cheap" Filipino labour.

pjmlp3• 12 years ago

You mean for the management board, because those of us cleaning the code during the integrations think otherwise about the real meaning of "cheap".

jsudhams• 12 years ago

Care to explain why? This is may be true for manufacturing where in US more and more non science student are coming out[dont have data but based what i read on US news web sites].What i see happenning in India is that there is not reverse outsourcing or insourcing but more of captive i.e. large companies setting up thier own office in India than outsource to Infosys/Wipro/TCS. I think the wages are not the primary focus now even though it is still a key component but the flexibility it provides with follow the sun and other models. On personal note out of my 16 years experience i have been working outsourced environment for 3 years and rest 10 in captives. I get paid roughly $60k which includes my salary, benefits and network other facility charges including computer and building charges. The same job in US just the salary alone is US$125K+ and you need to add other charges. Outputwise we provide the same level to the company.

amalag• 12 years ago

There is also a move to reshore to lower cost areas in the US, not necessarily urban.

Iftheshoefits• 12 years ago

This is especially egregious in the tech industry. Profitable tech companies can afford to pay more than even Bay Area wages to their tech employees. The most profitable ones (e.g. Google) could bump their engineers' already relatively greater salaries by 10-20% and still be very profitable (six-figures, net profit, per employee).

People writing software in "lower cost" areas for "lower cost of living salaries" are being taken advantage of even more than Bay Area workers. Paying a good software engineer less than a Bay Area wage ought to be viewed as insulting at best, regardless of where they live.

Pxtl2• 12 years ago

Absolutely. There are many parts of the USA/Canada that have enough population density and local universities to have a decent talent pool but aren't SF or NYC.

I'm a big urbanist so my immediate thought is smaller post-industrial cities with lots of cheap building stock and old universities around like Buffalo and Pittsburgh, but you could do the same thing in well-gridded suburban sprawl areas, as long as they haven't hit full-bore gridlock yet (Boston or Toronto suburbs are right out).

santaclaus• 12 years ago

Toronto suburbs are right out

Waterloo seems to have done alright for itself. Well, until RIM imploded.

hemantv• 12 years ago

This would be awesome for India too, as most of the value created in India right now is getting outsourced.

This will force companies to create value and capture value inside India. Initially that would be tough but over long term this can be game changing.

_random_• 12 years ago

Moving IT jobs to Europe should be easy. Salaries are stagnant which is surely a sign of oversupply of workforce.

_delirium• 12 years ago

I think it's partly a result of there being more EU countries with good technical education, than with a strong technical employment sector. Something like ~15, maybe more, EU countries are doing a fairly good job training engineers, computer scientists, etc., but only about 7-8 are doing a good job employing them. Hence a tech company in Copenhagen has as a "feeder" not only Danish schools but also to a significant extent Spanish schools, Greek schools, Romanian schools, etc.

(If not rectified in some way that will produce other problems, since countries like Greece and Romania are spending a bunch of money to train engineers, many of whom emigrate immediately, going to contribute to the economies of places like Denmark, Germany, or the UK rather than finding a role in the local economy. Some remittances do get sent home, but overall, training another country's workforce probably ends up as a net loss for the training-side countries.)

yummyfajitas3• 12 years ago

I'll stick to India. Indians have a better work ethic ("36 hours/week? sacreu blue!"), cost less, and the regulatory environment is vastly better. Someone isn't working out or demand has gone done? Pay them a month or two of transition, they move on, and everything is finished. No real risk of lawsuits or regulators coming to bother you.

(The same is not true in the UK, for example, which I'm told is one of the most relaxed Euro nations. I know someone who managed the RBS shrinkage process, I couldn't deal with that sort of stress.)

Additionally, your competition for work is reduced since a lot of Indian shops are simply terrible places to work. If you pay people well and treat your employees well, they will love you forever.

IndianAstronaut• 12 years ago

One thing people seem to forget is that every worker is a consumer. Every programmer is also going to be a consumer of goods as well. Programmers in India or H1s will buy cars, buy mcdonalds burgers, buy computers, use software, etc.

mkaziz• 12 years ago

Is this something tech people tell ourselves to make us feel better?

WhitneyLand• 12 years ago

I think that viewpoint is too cynical. Personally I'm rooting for them.

danielweber• 12 years ago

You know that the auto industry went through something similar a generation ago? They thought moving off-shore would work, but it didn't for various reasons, so they returned, albeit to different locations in the US.

maxerickson• 12 years ago

Ford seems to build where they sell:

http://corporate.ford.com/our-company/operations-worldwide/g...

I guess some vehicles sold in the U.S. are made in Mexico/Canada, but the combined manufacturing workforce in those two countries is ~20% of the US workforce. I guess that list also doesn't do much to capture where subsystems are being made.

shitehawk• 12 years ago

For the sake of your users, your sanity and eventually your bottom line, good riddens.

smaps• 12 years ago

So you know for the future, it's 'good riddance'.

Animats• 12 years ago

They have people working as game testers. That's a job that's usually outsourced to low-paid people, but not offshored. As a job, it sucks. Read "The Trenches" - http://trenchescomic.com The number of game testers isn't that large.

Manufacturing jobs are coming back to the US, though. It turns out that there has to be about a 4:1 labor cost advantage to justify outsourcing to Asia. US vs. Shentzen is now about 5:1. The headaches of controlling the work, quality control, and shipping delays add up. General Electric brought washing machine manufacturing back to the US.

It only added 200 jobs, though; the new plant is highly automated. The peak year for US manufacturing employment was 1979. Production is way up since then. Employment is not.

It's hard to think of anything that really needs a large number of low-wage employees in a single location any more. Even Foxconn is planning to automate phone production and cut their workforce way down.

HeyLaughingBoy• 12 years ago

It only added 200 jobs, though; the new plant is highly automated. The peak year for US manufacturing employment was 1979. Production is way up since then. Employment is not.

This. This is the point that people frustratingly ignore when they say "the US doesn't have manufacturing." We are cranking out stuff like no tomorrow. We're just doing it with far fewer people.

Urban Onshoring: The Movement to Bring Tech Jobs Back to America

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