How Synopsys could save $$ without offshoring

[Tom Joad]

Actually, this doesn't just apply to Synopsys, all of the big EDA
companies are sending jobs offshore now.

It goes without saying that Silicon Valley is expensive. It's an
expensive place to live and an expensive place to do business.
Because it's an expensive place to live, companies have to pay more to
their employees there so they can afford to live there.

The simplistic answer we're getting from the corporations these days
is "We've got to offshore jobs to save money so we can compete because
everyone is doing it.". Of course the premise of this argument is
debatable in itself: are they saving money on salaries and losing in
productivity or do they simply think they're going to make it up in
volume (of employees). But even if the overseas engineers are not as
experienced as their US counterparts, they soon will be - might take a
few years, but they will be. So we're not only going to see jobs and
money leave the US (salaries not paid here means no taxes for
Fed/State/local governments paid by employees - this is the main
reason most states are coming up short on revenue not because tax
rates are too low, but I digress.) but also knowledge and experience.
US engineers will not be able to keep up their skillsets on their own
and soon they'll lag behind.

Given that the major EDA companies are very much engineering companies
and are based in the US we might hope that they would have some
loyalty to the US. So how about other ideas for saving money? As was
noted above, Silicon Valley is expensive. Apparently Synopsys has a
rather large empty office building on their Oregon campus. Why not
move most of their engineering up to Oregon? The expense for office
space would seem to be much lower there and over a period of a few
years salaries could be allowed to match the lower salaries of that
area. I even hear you can get a very decent house up there for around
$200K. I'm sure that one of the arguments would be that employees may
not want to move, but given the increase in standard of living for the
dollar I suspect many would be very eager to relocate. And of course,
it beats the alternative of having your job sent over to India.
Believe me, being unemployed in the Valley quickly drains all your
savings.

Of course Synopsys isn't the only EDA company that could save money
this way and thus avoid at least some offshoring. Cadence, for
example, could do something similar. I believe Mentor Graphics
already has their headquarters out of the Valley (also in Oregon?) so
they may not be able to save much, but there are also some large
Mentor Graphics sites in the Valley.

Lots of engineers who haven't lost their jobs yet are getting nervous.
Those who have are getting mighty angry about offshoring. There are
more and more stories about offshoring in the mainstream news. The
political mood would seem to turning against the practice. If you big
corporations could avoid it, it might do you some good. We've already
lost manufacturing. Let's not lose engineering, if that happens the
US will cease to be a technology leader. And if that happens, how
long till the US falls to third world status?

Tom Joad

 

[tbx135]

Offshoring is the market saying that labor is over-priced. Supply/demand is
a natural law and while everyone can talk a good game at "protecting" jobs,
the truth is if you can't compete, your business and it's "protected" jobs
go away. Want to keep your job? Cut wages to compete.

 

[Jerry]

cut wages? then cut housing, food, insurance, automobile, taxes and
everything else my wages go to cover.

 

[Russell Shaw]

Offshoring is the market saying that labor is over-priced. Supply/demand is
a natural law and while everyone can talk a good game at "protecting" jobs,
the truth is if you can't compete, your business and it's "protected" jobs
go away. Want to keep your job? Cut wages to compete.

It is natural for people to want something for nothing. It is natural to
steal (it is viewed as sharing in a communal society). It is natural for
politicians to be corrupt (those that aren't, aren't in power anyway). It
is natural for monopolies to form and black economies to flourish. It is
natural for nations to invade only others that have oil. It is natural for
there to be traders and consumers of cocain.
The role of a government is to be non-corrupt and suppress a few of those
natural tendancies, as well as keeping the population employed by promoting
exports of products (not jobs). If your government is exporting jobs, it is
stupid and corrupt.

 

[Andy Peters]

Given that the major EDA companies are very much engineering companies
and are based in the US we might hope that they would have some
loyalty to the US. So how about other ideas for saving money? As was
noted above, Silicon Valley is expensive. Apparently Synopsys has a
rather large empty office building on their Oregon campus. Why not
move most of their engineering up to Oregon? The expense for office
space would seem to be much lower there and over a period of a few
years salaries could be allowed to match the lower salaries of that
area. I even hear you can get a very decent house up there for around
$200K. I'm sure that one of the arguments would be that employees may
not want to move, but given the increase in standard of living for the
dollar I suspect many would be very eager to relocate. And of course,
it beats the alternative of having your job sent over to India.
Believe me, being unemployed in the Valley quickly drains all your
savings.

OK, consider the problem of the poor bastard who bought his house in
Silicon Valley at the height of the boom. Sure, you can buy a house
for $200K in Oregon ($200K buys a real nice place in Tucson, too), but
that doesn't help when you can't unload your shack in Si Valley
because you have a $500K note on a property worth much less, 'cause
nobody's buyin' 'cause the jobs are leaving.

Maybe Synopsis should get into the real-estate biz, and buy up, at a
profit for the employee, the homes of the employees who move?

Like that'll happen.

--a

 

[tbx135]

Here's the deal - I can get an overseas resource for 1/2 what I pay here
plus the management agravation. I can sell cheaper as a result. You can
protect your job anyway you want, I'll get around that. In the end I get a
cheaper resource, you lose your job. Ask manufacturing, textile, steel
people about all this. If you want to put your faith in some politician
fixing this, go right ahead.

Wages will go up overseas, after a while and talent will become short. But
thats not happening now. If you want to protect your job, work competitively
with the rest of the world.

 

[tbx135]

that doesn't help when you can't unload your shack in Si Valley

We all take risks...No one was pissing and moaning when those homes
appriciated in value. I also remember the $200+/hr software
contractors...Anyone save any money?

 

[Tom Joad]

Offshoring is the market saying that labor is over-priced. Supply/demand is
a natural law and while everyone can talk a good game at "protecting" jobs,
the truth is if you can't compete, your business and it's "protected" jobs
go away. Want to keep your job? Cut wages to compete.

I've heard of people offering to work for less money to prevent their
jobs from being offshored, but this is never considered a serious
option by management. I suppose they figure that when the economy
improves you'll leave or ask for a raise or something.

Certainly I'd be willing to work for less than I used to. Even up to
30% less, I suppose. However, there are limits. I've still got to
pay rent, insurance, electricity bills, etc. Hey, maybe I should tell
my landlord that he needs to compete and lower his rents by 50%?
Maybe I should mention this to the electric company & the grocery
store as well. Yeah, I'm sure that's going to work and they'll be so
glad I suggested it to them. How about that health insurance? Maybe
I should just go without so I can be more competitive on the global
market. And then there's cars; who needs 'em, since we're aiming for
3rd world here, I should get a donkey.

I too was once a member of the Church of the Invisible Hand. I no
longer count myself a member of that congregation since doubts caused
me to disbelieve.

Tom Joad

 

[Tom Joad]

OK, consider the problem of the poor bastard who bought his house in
Silicon Valley at the height of the boom. Sure, you can buy a house
for $200K in Oregon ($200K buys a real nice place in Tucson, too), but
that doesn't help when you can't unload your shack in Si Valley
because you have a $500K note on a property worth much less, 'cause
nobody's buyin' 'cause the jobs are leaving.

It's a problem, that's for sure, but I wonder how many people are in
that situation. Probably not that many. Of course, considering the
alternative, it could still be a lot better to walk away from a
mortage like that if you've got an opportunity at steady work
elsewhere.

Maybe Synopsis should get into the real-estate biz, and buy up, at a
profit for the employee, the homes of the employees who move?

Some companies will assist in selling the property, but these days
it's probably not likely.

Tom Joad

 

[Tom Joad]

Here's the deal - I can get an overseas resource for 1/2 what I pay here
plus the management agravation. I can sell cheaper as a result.

But why do we need you? Why not just send your management position
over? Why should you make any more than a Wal*Mart Associate if the
rest of us are supposed to be making that much? Come on now, get with
the program and compete!

You can
protect your job anyway you want, I'll get around that. In the end I get a
cheaper resource, you lose your job. Ask manufacturing, textile, steel
people about all this.

Yeah, they're all Wal*Mart Associates now. So basically, you're
proposing that we not make or design anything in this country. We'll
just sell lattes and cheap Wal*Mart junk to each other. It's bad
enough we we don't manufacture anything here anymore, but it's going
to be even worse when we don't design anything here.

If you want to put your faith in some politician
fixing this, go right ahead.

I'm not sure if any politician can help us. Maybe there could be
incentives to have a certain percentage of your workforce employed
here.

Wages will go up overseas, after a while and talent will become short. But
thats not happening now.

and the wages between the third world and the US won't equalize for
another 20, 30 years or so. What are we supposed to do in the
meantime? During this time living standards will equalize and that
means that living standards in America will fall by quite a bit before
we're 'competitive' with the third world. One could hope that that
would rile up a lot of folks here and get them nice and mad so we can
rethink this global capitalism madness, but it will probably happen
slow enough that most folks won't notice till it's too late.

If you want to protect your job, work competitively
with the rest of the world.

I'm work'n on get'n me a big cardboard box so's I can move under a
freeway overpass and thus cut expenses so I can compete in the global
marketplace, yes sir. Way I sees it, I won't need to pay rent anymore
and of course there won't be any electric bill to pay either. And for
food, well I can go dumpster diving at night after working my $7/hour
engineering job for 12 hours. And if I choose an overpass that's
close to work I won't need a car either. Hey, you think they'd just
let me move the family into my cube? The kids could go out
panhandling during the day so they won't be bother'n nobody.

Yes siree, you got me to think'n about how I'm gonna compete with the
rest of the world. I hope you're think'n about it too.

Tom Joad

 

[tbx135]

Here's a fact of life: Everyone likes to get a good deal. No one wants to
pay too much.

The lack of understanding of competition it is going to kill the US. Too
many think they are entitled to this and that.

Your tech job went away for the same reason you first got it: Economics.

P.S. - If I worked at Wal-Mart, I'd be running the store soon, and it would
be profitable.

 

[Tom Joad]

Here's a fact of life: Everyone likes to get a good deal. No one wants to
pay too much.

Sure, but people also like to get paid a decent amount too.

The lack of understanding of competition it is going to kill the US. Too
many think they are entitled to this and that.

As was already pointed out: there's no way you can compete with people
in a totally different economic system where rents, for example, are
equivilent to $50/month. ...where there are no labor or ecological
laws - I'm not advocating that we get rid of those laws, they are part
of what make the US more livable than many other places. ...where
they have government health insurance (have you priced health
insuranced lately?) Or where there aren't so many lawyers. The only
way we can do that is to have massive deflation in the US so that
workers here are competing on a level playing field with worker in,
say, India or China.

Your tech job went away for the same reason you first got it: Economics.

P.S. - If I worked at Wal-Mart, I'd be running the store soon, and it would
be profitable.

Well, those stores are already pretty profitable. So where are you
going to cut to make them more profitable? Likely, you'll decide to
screw the employees even more. Recently saw a skit where a fake
reporter was interviewing a woman who had worked at Wal*Mart for 22
years. The big news was that she would be eligble for health
insurance in another three years. Not too far off the mark.

That's the part of the equation you're missing: the workers. What
good is it having lots of wildly profitable businesses if the workers
are getting screwed or don't have a job at all? Wouldn't it be better
to have businesses that might not be as profitable (but still make a
profit), but treat their employees well? Most of us in this country
work for someone else, so when you screw the workers you screw the
country. Who is going to do all the consuming that is supposed to
keep our economy going if we're all making much less or no money?

What happened to Henry Ford's idea where he figured that the average
worker on his assembly line should be able to afford the cars they
were making? He felt he had an obligation to his workers and by
extension to his country.

Here's a question for you: Most EDA tools are pretty pricey - $50K for
a tool isn't unusual. Do you really think that when the EDA tools are
developed in India that the prices will actually go down to reflect
lower labor costs? Not likely. Where's the extra money going to go?
It'll fatten up the wallets of a few corporate officers, no doubt.
Stock might go up a bit, but what will they do the next year to show
even more profits? That's what Wall Street expects, ever rising
profits. What are they going to cut the next year after they cut
labor costs so low? (send the CEO over to India ;-)

Here's a scenario for you: Now that we're moving all of the
engineering jobs and knowhow (as in, we'll be losing knowhow) over to
places like India, what's to stop them from starting their own EDA (or
other technology) companies? It's going to happen, of course. So
I'll predict right now that the EDA (and other technology) companies
based in the US are sowing the seeds of their own demise amidst their
greed. Why? Well, in five years when Indians have started their own
EDA companies they'll be able to afford to price their software much
lower than their US counterparts. Maybe they'll be able to charge $5K
for tools that American companies are charging $50K for while still
making a healthy profit. And as you say, "No one wants to pay too
much".

Tom Joad

 

[tbx135]

You live in your world, I'll live in mine - Happy Holidays

 

[Kai Harrekilde-Petersen]

Y'know guys, sitting here as I am, on a different continent than
America, reading about 'Valley people crying out about "outsourcing to
aboard", is kind of odd.

Netnews is a global media, and there are quite a few non-US people
contributing to the vlsi related groups. So please, consider that your
audience is not just the Valley, nor just California, and not just US
of A. It's the whole d**n world.

As for outsourcing, everyone is under pressure from the global job
market - but to a different degree, depending on the specialization of
your labor, and what the cost of your labor is.

Globalization is a double-edged sword; we have a larger market to
compete in, but we also have a larger body of competitors. Sorry to
stir the bitter cup for you, but you cannot have the one without the
other.


Regards, and seasons greetings to everyone.


Kai Harrekilde-Petersen

 

[EdwardH]

The US Government is the major advocate of Globalisation. Every government
wants to remove protection and further the cause of free trade. Exportation
of
jobs is another side of this coin. It started with manufacturing and has now
moved
up the food chain.

We had a situation a few years back where there wasn't enough design talent
around and companies looked to other countries for people. With the
collapse of the dot comms and the downturn in the telecomms and computer
industries suddenly there was an excess of people.

Engineers in other countries also need to live. I live in Australia and
worked for a multinational that closed down (and incidently is now
outsourcing
much of its work to India). I have been out of work for a year but will
soon start work for another multinational.

The issue for me is not that jobs go to other countries or that we should
drop our living standards but rather how we innovate and create new
technologies
so that there is work for everyone. Responsible financial management and
accountability at the top level in major corporations is another issue.

Edward

 

[Tom Joad]

Y'know guys, sitting here as I am, on a different continent than
America, reading about 'Valley people crying out about "outsourcing to
aboard", is kind of odd.

dk, is that Denmark? You are also in a high-cost labor country (at
least as reckoned by the globa free traders) which means your jobs
could be exported as well.

Netnews is a global media, and there are quite a few non-US people
contributing to the vlsi related groups. So please, consider that your
audience is not just the Valley, nor just California, and not just US
of A. It's the whole d**n world.

It's a global conversation. I'm sure this sort of thing is happening
in Europe as well as the US.


Tom Joad

 

[Tom Joad]

The US Government is the major advocate of Globalisation. Every government
wants to remove protection and further the cause of free trade. Exportation
of
jobs is another side of this coin. It started with manufacturing and has now
moved
up the food chain.

We had a situation a few years back where there wasn't enough design talent
around and companies looked to other countries for people. With the
collapse of the dot comms and the downturn in the telecomms and computer
industries suddenly there was an excess of people.

Engineers in other countries also need to live. I live in Australia and
worked for a multinational that closed down (and incidently is now
outsourcing
much of its work to India). I have been out of work for a year but will
soon start work for another multinational.

The issue for me is not that jobs go to other countries or that we should
drop our living standards but rather how we innovate and create new
technologies
so that there is work for everyone.

I've often heard people in the free trade camp say that the US is more
innovative than other places on the globe and that we will come up
with some new idea or product that will save us. Sure, it's happened
in the past so I suppose there is some precedent. But lately when I
hear this it sounds more and more like a matter of religious faith.
Why assume that only US engineers can come up with "The Next Big
Thing"(TNBT)? The fact is that if vast numbers of US engineers no
longer have the opportunity to develop their talents and skills they
won't be able to come up with TNBT.

It appears that the offshoring is just accelerating. Here are a
couple of quotes from an article in EETimes last week:

"Morgan Stanley estimates the number of U.S. jobs outsourced to India
will double to about 150,000 in the next three years. Analysts predict
as many as two million U.S. white-collar jobs such as programmers,
software engineers and applications designers will shift to low cost
centers by 2014."

"Guyer believes as many as 40,000 of IBM's 160,000 U.S. jobs will be
transferred overseas by 2005, a figure she says was gathered from
phone calls by IBM employees."
http://eetimes.com/sys/news/OEG20031223S0008

What good is it if US corporations are wildly profitable but keep
employing fewer and fewer people in the US? Maybe it will look like
GDP is growing at a rapid clip (kind of like it has looked for the
last couple of quarters) while very few in the US have decent jobs
anymore.

Empires rise and fall and I suspect that even while it seems as though
the US is at the top of it's game right now, it's really in the
twilight of empire. When you decide as a culture that it is no longer
important to actually make things or even _design_ things anymore,
what's left? You sell raw materials to other countries and they sell
back the goods made from them. Isn't that a lot like being a colony?

Tom Joad

 

[Ron Jeffries]

Empires rise and fall and I suspect that even while it seems as though
the US is at the top of it's game right now, it's really in the
twilight of empire. When you decide as a culture that it is no longer
important to actually make things or even _design_ things anymore,
what's left? You sell raw materials to other countries and they sell
back the goods made from them. Isn't that a lot like being a colony?

As much as I'd like not to believe this, it's hard not to see the possibility of
truth in it.

As a software developer, all I know to do is to work to make my skills, and my
teams skills, as good as they can be, so that using us is as cost-effective as
possible.

As a political being -- something I'm really not good at -- I don't know what to
recommend. Protectionism is a short-term strategy and may actually work against
us finding The Next Big Thing, by letting us go back to sleep.

An interesting difference about this situation compared to past situations is
that the "business" thinks it has found a good way to be more effective -- use
people from countries with lower pay scales. It may fall to the "profession" to
come up with The Next Big Thing, to save itself.

Or is there something short-sighted at a /business/ level about offshoring, and
can a company that doesn't offshore find a way to eat the lunch of those that
do? Responsiveness to its market, perhaps?

Regards,

 

[Kai Harrekilde-Petersen]

dk, is that Denmark? You are also in a high-cost labor country (at
least as reckoned by the globa free traders) which means your jobs
could be exported as well.

dk is Denmark, correct. We've definitely seen the export of of
low-tech labour from Denmark for the last 30 years or so, and the
export of high-tech is starting to happen.

It's a global conversation. I'm sure this sort of thing is happening
in Europe as well as the US.

Indeed - that was part my point. Jobs will go where it is deemed most
economically viable to have them.


Happy new year to everyone,


Kai

 

[David Lightstone]

"EdwardH" <[email protected]> wrote in message

I've often heard people in the free trade camp say that the US is more
innovative than other places on the globe and that we will come up
with some new idea or product that will save us. Sure, it's happened
in the past so I suppose there is some precedent. But lately when I
hear this it sounds more and more like a matter of religious faith.
Why assume that only US engineers can come up with "The Next Big
Thing"(TNBT)? The fact is that if vast numbers of US engineers no
longer have the opportunity to develop their talents and skills they
won't be able to come up with TNBT.

It appears that the offshoring is just accelerating. Here are a
couple of quotes from an article in EETimes last week:

"Morgan Stanley estimates the number of U.S. jobs outsourced to India
will double to about 150,000 in the next three years. Analysts predict
as many as two million U.S. white-collar jobs such as programmers,
software engineers and applications designers will shift to low cost
centers by 2014."

"Guyer believes as many as 40,000 of IBM's 160,000 U.S. jobs will be
transferred overseas by 2005, a figure she says was gathered from
phone calls by IBM employees."
http://eetimes.com/sys/news/OEG20031223S0008

What good is it if US corporations are wildly profitable but keep
employing fewer and fewer people in the US? Maybe it will look like
GDP is growing at a rapid clip (kind of like it has looked for the
last couple of quarters) while very few in the US have decent jobs
anymore.

It make a bit more sense if you view it not as exporting jobs, but as
exporting managerial process and culture.
It simply is easier to move the process overseas than improve it. The
profits are just a pleasant side effect.

Anyhow they are not employing fewer people, they are employing more. Its
just not more people in the highly industrialized countries