An Update
Rita Glover, EDA Today, L.C.
June 2003
Globalization, the distribution of a corporation's business
and workforce around the world, has been a growing reality among large
high-tech companies. To check the pulse in EDA, we did an informal
survey and found somewhat different attitudes between chip companies and
design automation tool vendors.
For chip companies, the prime motivator is lowering the cost
of labor during a time when profit margins are slimmer than ever. Chip
companies may not be willing to move their most complex design efforts yet,
but they find that many in-house support tasks can be provided perfectly
well from foreign locations. The skillsets for information technology
(IT) jobs such as technical assistance centers, web design,
business-to-business e-commerce, accounting, and travel systems are now
readily available overseas.
The main motivator among high-tech companies is a strategic
desire to employ people in regions where business growth is occurring,
especially when business is stagnant in the U.S. Americans are
increasingly interested in putting part of their workforce into emerging
marketplaces like China, India, and Latin America so that their corporations
do not appear to be based primarily in the U.S.
In the past, a company or department was centered in the
U.S. and had "partners" in other locations. Among some chip companies,
those "partners" now are being converted to the company's own head count.
This is expected to have a big impact on the success of projects, because
there will be accountability into the main corporation.
The main disadvantage about moving into a foreign country is
how well the local employees can speak the parent company's language — in
this case, mainly English. It's sad but true that it doesn't matter
how competent you are with a computer if you cannot communicate. The
employer's in-house training typically does not include English as a second
language; it teaches the business processes and the applications that
employees will be working with.
EDA companies report that it's not that they are choosing to
migrate jobs overseas — it's that their foreign nationals are choosing to go
back to those locations. A lot of Asia-Pacific workers who have come
to the U.S. on H1-B visas for technology workers are returning home.
There is more opportunity in India and China than in the past, and with the
experience they've acquired in the U.S., they can go back home, work in R&D
centers, and help train the local workforce.
Among for EDA vendors, labor savings is not a motivating
factor. If you're a global company, you need a global employee base
and a global presence. You need to relate to the markets you serve,
and be present there in order to be credible, as well as sensitive to the
issues within those particular markets.
One of the major EDA vendors said, "The perception is that
we just consider it cheap labor, but that's untrue. That's not the
reason that we would go over there. In this kind of industry, how
could we go over just to get cheap labor? We have to have quality, and
there's a highly educated workforce in many Asian countries. They have
a very strong educational background; perhaps even better in the
fundamentals of engineering than we get in the U.S. The only problem
is that they are younger, and don't have as much experience using the most
current tools and the same practical, day-to-day training in a professional
business culture. But they'll get there."
Mentor Graphics CEO Wally Rhines said a few months ago while
opening a new office in India that Mentor expects to invest $50 million
dollars in India over the next ten years. This was misinterpreted as a
sign that the company was migrating jobs out of the U.S. But what he
was trying to do was characterize the level of investment that existed,
which didn't imply a change. Mentor's head count in the U.S. is
growing, and is expected to continue to grow.
The main reason an EDA company would build a workforce
anywhere is because it's close to the customer. China alone has about
243 design centers, so it behooves EDA companies to do business there.
The major EDA companies have been multinational for years and have
businesses in as many as 60 countries.
EDA companies are now fairly even in terms of their revenue
distribution between domestic and international sales. When half the
revenues of U.S.-based companies are international, the companies owe it to
themselves to stay well in tune with those markets or risk losing them to
someone else.
In terms of its effects on locals, globalization has been a
wonderful thing for foreign workers. Many people from Asia have had to
choose between going to the U.S. and being 10,000 miles away from their
families and friends to find work in their field. Now they get to do
the work they were trained for, and they get to stay in the local community
to do it.
We are moving toward a more level playing field, where a few
powerful countries no longer dominate markets and finances. The coming
era is coalescing into a scenario where technical knowledge and labor
markets will work together around the world rather than compete along
national lines.
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