To bring you this year’s analysis of who’s hiring and who’s firing in the technology industry, IEEE Spectrum teamed up with The New York Times to survey 752 IEEE members about the past, present, and future technological trends they are seeing.
Rather than looking at industry statistics such as sales or market values, we focused on tracking research and development efforts across 19 technological areas as well as academia (for a full list, see the accompanying chartsand the sidebar " How We Divided Up The Tech Universe"). We chose this focus because, apart from the fact that R&D is specifically the work many engineers do to earn their living, R&D staffing and spending act as a general bellwether: declining investment in R&D typically indicates an area that isn’t set for high growth or is experiencing commoditization of its products and the attendant squeezing of profit margins.
Overall, the news is encouraging for the tech industry, albeit not spectacular. Looking back on the last two years, 31.1 percent of 482 respondents reported they had seen increases in R&D staff at their organizations, 32.0 percent reported steady staffing levels, and 25.9 percent reported drops. Looking forward to the next 12 months, members found the picture more optimistic: of 492 respondents, 33.3 percent predicted increases in R&D staffing at their organizations, 37.2 percent reported no change, and 15.2 percent predicted declines, with 14.2 percent responding ”don’t know.” Those working in Prepackaged Software (software that is sold ”as is,” such as Microsoft Office) and Original Equipment Manufacturing (OEM) were the most bullish, with 13 out of 29 and 26 out of 58 respondents, respectively, predicting R&D staffing increases.
Surprisingly, then, when we asked our survey participants which area they would recommend to an engineering student interested in an R&D career, Prepackaged Software and OEM ended up near the bottom of the list (Storage and Consumer Computers tied for last place, with just one vote each out of 646 respondents). Instead, practically tying for first place were Biomedical and Wireless/Mobile technologies, with 103 and 102 votes apiece; Energy came in third with 95 votes. A further 85 survey takers recommended pursuing an R&D career in academia, without specifying an area.
We also took a detailed look at outsourcing to see where those R&D jobs might be going, geographically speaking. Despite the perception that Asia is sucking up all the available R&D jobs, the real picture is more balanced, with 48.9 percent of U.S.-based and 46.6 percent of European respondents saying their organizations did no R&D work offshore. This doesn’t look set to change dramatically: when asked if they expected that their organization would outsource R&D in the next two years, either within their country or outside it, 46 percent of 366 respondents said no, 38 percent didn’t know, and just 16 percent said yes.
Not surprisingly, though, when we asked those who said yes where they planned to outsource, Asia was the big winner, with 39.1 percent plumping for India, followed by China at 32.6 percent. Interestingly, the United States came in third, with 28.3 percent, representing 13 respondents—nine of whom are based in the Asia/Pacific region, suggesting that the flow of outsourcing is not just from West to East.
Across the board, the No. 1 reason for offshoring R&D is lower labor costs. Those working in the Prepackaged Software and Consumer Internet (such as Web applications and VoIP telephony) areas were most adamant about its importance, and just over 90 percent of respondents declared it their highest priority when offshoring.
But lower labor costs are not the only reason for offshoring—also rated high was ”Access to additional knowledge and skills.” Tech areas in which R&D offshoring was least common were Security, Energy, Biomedical, and Aerospace, while those most prone to offshoring half or more of their R&D efforts were Consumer Computing and Displays.
Regional and national development agencies may want to take note of another survey finding: host country incentives, such as tax breaks, while important to some, weren’t a huge draw for offshoring firms in general, with 62.5 percent of respondents ranking them as ”Not very important” or ”Not at all important” and just 11.5 percent of respondents ranking them as ”Very important.” The presence of special facilities, such as themed research parks that focus on specific areas such as Nanotechnology or Biomedical, was even less significant, with 67.5 percent ranking it as ”Not very important” or ”Not at all important” and only 5.7 percent as ”Very important.”
Companies are also finding that offshoring is not without its drawbacks: just 9 percent of 133 respondents whose organizations currently offshore R&D reported ”No problems.” The biggest headache was ”Language, communication, or culture” barriers, as reported by 54.1 percent of respondents, followed by ”Insufficient oversight of projects” and ”Results are not high quality.”
Of course, not all outsourcing means work is sent overseas. We also looked at domestic outsourcing. Nearly 80 percent of firms did some domestic outsourcing, and the Energy, Consumer Computing, and Transportation areas were most likely to outsource half or more of their R&D in this way.
In the accompanying charts, you will find a breakdown of these results, along with some more information about who our survey members are and where they work; bear this additional information in mind when examining the breakdowns. For example, only 10 out of the 752 IEEE members we surveyed indicated that their organizations were involved in Entertainment (such as video games or consoles), as opposed to 125 who indicated an involvement in Wireless and Mobile technologies. So a breakdown in the Entertainment category will naturally have more uncertainty than one in the Wireless/Mobile category. However, we thought it best to present you with as much information as we could and allow you to use the data to meet your own needs.