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Business for Engineers: Reshoring?

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Jacob
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Differential between onshore and offshore has disappeared
Jacob   5/15/2014 2:54:18 AM
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"Where once companies could move manufacturing offshore with impunity, two factors now weigh against that trend: a new perspective on the hidden cost of offshoring and the decline of wages in the US (and other countries). For many manufacturing jobs, the differential between onshore and offshore has disappeared."

Henry, is it really, doubtful. I think they are not counting many overheads like transportation; logistics, support etc. maybe there won't be much difference in terms of labour payments and government taxes.

Henry Davis
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Re: Differential between onshore and offshore has disappeared
Henry Davis   5/15/2014 7:16:00 PM
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@Jacob companies don't intentionally fail to account for the overhead costs associated with off-shorig very often. Usually, there's an unwritten assumption that an executive's time is to be accounted for in G&A and not assciated with a specific project. The same reasoning goes for individual engineers and their managers. Unless one is working for a company that requires and enforces the daily use of task-oriented time sheets, the company is chronically under-reporting the costs associated with outsourcing.

Workers paid on an hourly basis are much more likely to have their costs correctly associated with the offshored activity. However, most professional organizations, regardless of the country location, do not as a regular matter of course, record the minute-by-minute (or even hour-by-hour) time of every salaried employee. These costs can build up amazingly fast - and they're often hidden in deparmental budgets that do not account for tasks.

    

Jacob
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Re: Differential between onshore and offshore has disappeared
Jacob   5/16/2014 12:26:26 AM
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"Workers paid on an hourly basis are much more likely to have their costs correctly associated with the offshored activity. However, most professional organizations, regardless of the country location, do not as a regular matter of course, record the minute-by-minute (or even hour-by-hour) time of every salaried employee."

Henry, I meant in total about such expenditure and overheads. Yes you are right about account such manpower expenses because accounting is not done in project wise when peoples are working across multiple projects.

Jacob
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Manpower requirement
Jacob   5/15/2014 2:56:14 AM
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Henry, one more think whether US have enough manpower to support these skilled jobs. If No means again they have to hire external peoples for a higher paid salary and perks.

Eldredge
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I remember
Eldredge   5/16/2014 6:00:33 PM
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I certainly remember "rightsizing" and "information worker", as well as, more recently, the touted conversion to a "service economy".

 I think another factor that could contribute to onshoring is the risk of loss of IP. It is difficult to price on it, but it is a real cost.

Henry Davis
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Re: I remember
Henry Davis   5/16/2014 7:17:47 PM
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@Eldredge Loss of control for IP of all kinds is certainly a factor. I worked as VP of Intellectual Propery for a soft processor core company. It isn't just the patents that get put at risk - it's also the know-how to design a thing to begine with.  

How big can an IP cost get? Well prety big. "Rightsized" jobs from a few decades ago led to the quick diffusion of know-how into other companies' workforce.

The opportunity cost can be very high. Comnanies that lose busiuness to patent and copyright infringement can lose hundreds of milions or even billions of dollars in profit in a few short years.  They may prevail in court, but the lost market momentum is hard to recover. I'd say in general, unless the infringer is put out of business, there is no recovery.

 

Eldredge
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Re: I remember
Eldredge   5/16/2014 11:15:50 PM
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@Henry Davis - Once the genie is out of the bottle, it's very difficult to get back - even more so when the IP is divulged to foreign entities, which is often the case.



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