Salon has a short essay (available to subscribers; I think you can also see if it you watch an ad or two) on the long-term disadvantages of offshoring high-tech work. The author (himself an engineer) argues that viewing engineering talent simply as a cost that needs to be driven down as low as possible is short-sighted, because
The rush to outsourcing is undermining the economic foundation on which the United States’ technology sector is built…. [T]he process of creating a product [i.e., R&D] is really the process of learning how to make a product. This knowledge may be used to build the next, greatly improved version, or even a whole new market. The accumulation of that kind of intellectual capital is crucial for the future health of a technology company and, by extension, an entire technology sector.
This is an interesting idea: that the apparent value of offshoring skilled work is based on a misunderstanding of the difference between manufacturing things, and making knowledge.
It’s also understandable in terms of a Prisoners’ Dilemma:
All technology companies benefit from a large pool of engineering talent and from a healthy university system educating students and performing basic research. But the benefit is not a direct one. If you outsource (assuming it is as beneficial as its proponents claim) and your competitor does not, you win. But if everyone outsources and the technology base dries up, everyone loses.
Put this way, offshoring sounds like a classic tragedy of the commons problem, and raises the question of whether there are policies that could encourage a longer-term view of the complicated ways skilled knowledge, experience, and economic value all work together.
I’ve been thinking about this in a different context, as a friend of mine is writing a piece for the San Jose Mercury News about Silicon Valley’s response to 9/11. This has stimulated a line of thinking that I’ll put into another post.