ITs Not All Going Away

As offshore drift accelerates, seek new strengths.

When I want to see a technical professional turn pale, I quote Neal Stephensons vision of a world in which "weve brain-drained all our technology into other countries," as described in his 1992 novel "Snow Crash." In a near future when knowledge, capital and even natural resources have become increasingly mobile across national boundaries, Stephensons narrator observes that "the Invisible Hand has taken historical inequities and smeared them out into a broad global layer of what a Pakistani brickmaker would call prosperity."

For those who hope for something more, either personally or on behalf of the companies they manage, its crucial to develop a home-court advantage thats not vulnerable to a lower offshore bid. Critical IT tasks still

facing U.S. companies include application integration, supply chain streamlining and tuning of the IT infrastructure. These tasks demand strong communication skills, face-to-face relationship building and the ability to respond in the field 24-by-7.

That means theres still room to be a U.S. IT professional—but not where U.S. IT providers are themselves leading the race to the bottom, as they respond to intense market pressure to cut costs on the supply side and to slash margins on the demand side. Theyre finding that it doesnt take much infrastructure to make a country competitive in software development or hardware design. Intel, for example, has its largest design center outside the United States in Bangalore, India, where an engineer costs $8,000 a year instead of $50,000 in Silicon Valley. Texas Instruments plans to triple the size of its Bangalore unit in the next five years to 2,700, having started with only 10 engineers in 1999.

Intel ranks India behind China and Israel for manufacturing capability, but designs are just bits, and it doesnt cost much to move them to the factory—for example, to Intels half-billion-dollar Pentium 4 fabrication site in Shanghai. Of course, the Chinese can also draw a trend line on a graph and follow it to its logical conclusion: Last year, the Chinese Academy of Science rolled out its own server chip running a localized version of Linux—whose growth in China is transforming system software, and even productivity applications, into public goods. Sun has given its StarOffice suite to educational ministries in China, Hong Kong and Taiwan. An Evans Data survey of Chinese developers, conducted last summer, found two-thirds of them planning to focus on Linux development during the coming year.

Stephensons "brickmaker" scenario might therefore turn out to be optimistic, in that his narrator lists software as one of the four industries in which the United States will retain an edge on its overseas competitors for at least the next several decades. The other three are music, movies and high-speed pizza delivery. I wonder if software is going to be on the real worlds list of U.S. leadership areas by the time weve caught up to the "Snow Crash" time frame. Between getting it written cheaply in India and being forced to practically give it away in China, I have to wonder where the business expects to find its revenue growth over the next several decades.

If you cant make money on the bulk goods, its essential to retain an edge in the high-value specialties. For example, Japan moved into stainless steels and luxury cars when South Korea challenged its position in commodity markets. U.S. software companies arent doing that, however. Im surprised to see Microsoft and IBM, both of which are aggressive producers and stewards of intellectual property, being so quick to let it take up residence overseas. Microsofts Beijing laboratory has become a world leader in computer graphics research, while much of IBMs user interface research has moved to its China lab.

I ask these companies, and I ask you, what business do you want to be in 10 years from now? And do you care where you do it?

Its vital to identify the areas in which you plan to hire brickmakers, while you design the building—or youll be making bricks yourself. Communication skills and in-the-field experience in IT integration will make American IT pros worth more at home.

Peter Coffee can be reached at