Is outsourcing services killing careers? 12

[jd90]

Hello, I came across this article which is discussing the average salary of chartered engineers in the UK (£63,000), there seems to be a debate about the accuracy of this figure but the statement chartered engineer spans a rather wide spectrum. What I found interesting however, is that one of the comments states:

"one of the secrets to earning a decent income is working on stuff that cannot be easily outsourced"

I understand this is once again a broad statement, but I would like to see if people think this is accurate? I am talking in relation to services specifically, I know manufacturing and labor etc. can be outsourced relatively cheaply, but can services such as analysis, design, even project management? I hear the CAE industry is growing rapidly in India for example.

https://www.imeche.org/news/news-ar...earn-an-average-of-63-000-a-year-survey-finds

 

[moltenmetal]

MikeHalloran, your little story of penny-wise and pound-foolish management is delicious. It underscores the point of view that it's definitely possible for a company to be too big. When management making decisions like this are unaware of the role that the machine shop plays in meeting customer expectations, they have already demonstrated that the company is too big to avoid making mistakes like this. I sincerely doubt that this was the biggest, or dumbest, decision made by that management.

 

[MikeHalloran]

Molten, your doubt is correct.
I may relate the story about the biggest dumbass decision some day, but most folks wouldn't believe it.
... and I want to protect the few friends who are still employed at the remains.



Mike Halloran
Pembroke Pines, FL, USA

 

[GregLocock]

Incidentally if you google "outsourcing CAD success" without the quotes you get remarkably few success stories!

Cheers

Greg Locock


New here? Try reading these, they might help FAQ731-376

http://eng-tips.com/market.cfm?

 

[nickelkid]

In regards to Outsourcing CADD, Specs, and Analysis I have had success with well defined tasks, but not finished deliverables. Once I realized that I could get production things done quickly and consistently, I altered my expectations and received acceptable results. The caveat was that I needed to finish the product and live with the bulk of the grunt work being completed. After adjusting my expectations, this worked well, and helped schedule; additionally helped quiet down upper management that could not sleep unless hours overseas had been charged to the project.

 

[verymadmac]

John Hart-Smiths paper "Outsourced profits the cornerstone of successful subcontracting" really covers the issues of outsourcing quite nicely (although the title gets one a lot of the way there). Ultimately the answer is accountants can't count!!!

https://assets.documentcloud.org/documents/69746/hart-smith-on-outsourcing.pdf

There is also his footnote from the paper
"The views expressed here are those of the author and not necessarily those of the Boeing management. Conversely, the visible policies of the management are not necessarily those that the author would have recommended, had he been asked."

 

[IRstuff]

Haven't gotten very far, but looks pretty plausible.

TTFN
I can do absolutely anything. I'm an expert!
faq731-376 forum1529

 

[BrianPetersen]

Where I worked many years ago, we went through a phase where management thought it would be a good idea to outsource (locally, but outsourced nevertheless) some mechanical design/drafting work at a time when my office (mechanical design) was slammed, with the other excuse that the hourly rate for the outsourced work was less than our internal hourly rate. I told them it was not a good idea, just schedule it properly and wait the few weeks until we could get someone on it. That wasn't good enough for the scheduling department, so out went the contract to do that design ...

I gave the sub my deadlines when I had to have stuff done. Heard nothing.

A couple weeks later, when one of the deadlines was approaching, I gave them a reminder. Nothing.

"I need to know where your footings need to be by next week so that I can finalize the concrete design". Nothing ...

"OK, it is now the deadline for finalizing concrete design, so here are where your footings are going to go." Oh boy, did I start hearing something then. "Sorry, why didn't you give me the design you had back when I had time to accommodate it? Now I can't, so here's where the feet are going to be. Deal with it."

A while later, we actually did get some drawings (late, of course). I don't remember too much of the details (about 20 years have passed) but I do remember the design that they gave us was a pile of dung. It probably cost our own design office more hours fixing problems than to have done the job the way we should have in the first place.

 

[MJCronin]

Mike Halloran, I believe every time that you use the phrase " goddamn MBA " the world becomes a slightly better place ...

Keep up the good work !!!!

MJCronin
Sr. Process Engineer

 

[Comcokid]

It takes an MBA to run ruin a company!

There is only a small difference between run and ruin.

I once worked for a 30 year old successful company in the aerospace electronics market. A 900lb gorilla that was in a niche market big enough to support a 1000lb gorilla. No competitor could ever get in the same niche. Every year it returned 12% or more. Then it was bought by a Fortune 100 aerospace company who consolidated it into other operations (to save money) outsourced some designs (to save money). The new corporation demanded a minimum 18% return-per-year or else and it was put into control by newly-minted MBAs. Within 7 years the former company name existed in only a name attached to some legacy products. During this 7 year period, the MBAs, to cover bad decisions, would fire or lay-off some of the experienced engineers every time they missed a sales target (a target not set by the experienced engineers). Today, the former engineers work for a competitor who always tried to get into the market but couldn't. They have re-captured about 60% of this market. This new company only uses MBAs for the basic accounting - the product direction of the company is once again controlled by those who have a technical background in this highly technical market.

 

[moltenmetal]

Comcokid, your story sounds familiar: many of our key niche equipment suppliers were small, successful private companies. Many have been bought, then ruined, by "conglomerates". Fortunately, being private and employee owned, I am guardedly optimistic that it won't happen to us. If it did, I'd be out like a shot...

 

[cranky108]

Have you thought that your mark in life maybe to ruin a successful business?
Miss-management does earn some people a living, and they live among us.

The issue I see is the out-sourcing, and in-sourcing is a cycle that if nothing else removes dead wood, and some productive workers also.
Maybe the issue is too much change is not good.