Embedded Systems CEOs Defend Outsourcing

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March 31, 2004 (4:25 PM EST)

SAN FRANCISCO - As offshoring increasingly infects the political debate in the US, especially in electronics, a handful of chief executives defended the practice on Wednesday during a forum at electronicaUSA with the Embedded Systems Conference.

Estimates range to 3.3 million jobs that will be lost to offshoring by 2015, with about half a million of them in the technology field. The backlash against sending jobs overseas has intensified as Americans higher up the food chain, who once thought they were safe, realize that they aren't.

Their furor has spilled into election year politicking, with both presidential candidates promising to curtail the practice and painting CEOs as betrayers of the American employee.

CEOs defend their actions as necessary to remain competitive and to increase productivity. "CEOs have a moral obligation to their shareholders to improve the productivity of their companies. It's that simple," said T.J. Rodgers, CEO of Cypress Semiconductor.

Rodgers argued that the 2,000 jobs Cypress has in the US are protected by the fact the company is able to have offshore facilities, such as assembly and test in the Philippines, that help it remain globally competitive. "So I guess I take pride in being one of those Benedict Arnold CEOs because we are going to make this country more productive and therefore create more jobs, not lose jobs," he said.

Echoing a recent report on outsourcing issued by the pro-business American Electronics Association, there was also advocacy of creating a friendlier environment for foreign nationals in the U.S. Citing Intel Corp.'s Andy Grove as an immigrant responsible for possibly creating millions of jobs, National Semiconductor CEO Brian Halla noted, "Today, because we are out of H1-B visas, he wouldn't be allowed in the country."

"We have the best university system on the face of the earth [but] we don't let them (foreign nationals) stay here. We should be stapling their green card on the degree," Halla said. Instead, "we are sending them home to compete against us."

For some engineers, that notion is highly controversial, cold comfort. Many rank-and-file engineers who have lost their jobs in the downturn are bitterly against allowing more foreign engineers to remain in the country. They also rail against the practice of offshoring higher level engineering jobs, believing that it will erode America's technology leadership.

Despite the increase in outsourcing - whether real of perceived - the panel agreed that the U.S. is still the place to be for advanced technology development. Those jobs are not at risk and won't be any time in the near future.

"As a company, we really would be a fool to say let me relocate everything out of the Valley because I can get cheaper wages somewhere else," said John Daane, CEO of Altera Corp. "The company would become a follower. If you want to be a leader, you have to have an engineering site here so we are continuing to invest in our site in San Jose and I don't see that changing."