Microsoft Moves IT Research Jobs Offshore, Following Manufacturers

If you move the manufacturing away, research and development will eventually follow. This was the message of several speakers at the Building The New Economy conference, and the last week's news about Microsoft's Taiwanese cloud computing research center really stood out to me after being told that Taiwanese microchip manufacturers often have to come up with .

Note particularly the specific reason given:

"We need to keep our ability to really work with our ODM (original design manufacturing) and OEM (original equipment manufacturing) partners on what the devices will look like," [Microsoft Chief Executive Steve] Ballmer said.

Microsoft has never made hardware, so I'm not faulting them for the Taiwanese location of their equipment manufacturers. However, this has to be recognized as the inevitable result of moving production far away, one that white collar workers were generally unconcerned about before they realized that their jobs could leave, too.

As Carolyn Bartholomew, Vice Chairman of U.S.-China Economic and Security Review Commission, explained, if the manufacturing leaves they inevitably come to need on-site engineering support. It isn't too many steps from there to Taiwanese chip manufacturers coming up with everything from the design to the finished product, and apparently, the software to run on it.

You're never too educated or experienced or valuable an employee for the global economy to leave you behind.

Nonetheless, Americans are told that we're supposed to get a good education and better training so we can keep our opportunities open. How's that working out, again?

I wrote last time about how financial incentives have destroyed that dream for blue collar workers, yet as Prof. Suzanne Berger of MIT noted at the conference, the great industrial research centers of the past have been either shutting down or directing research solely towards narrow goals with a defined profit motive. Companies have been relying more on an open innovation'model, or crowdsourcing, the forces that gave us Wikipedia and Linux. Yet Berger said that nothing has adequately replaced the sustained blue sky research that fueled the tech boom of the 1990s before falling to the cost-cutting axes.

Berger also said that a good model of how research funding can act as a driver for jobs could be found surrounding MIT, where a briskly growing ecosystem of biotech startups can be found in the shadow of an institution that gets 85 percent of research funding from the government. The startups aren't there, she said, for the low wages or low taxes; they need to be near the center of innovation.

Point is, it works from both ends.

A government can support good jobs with a robust industrial strategy that will drive innovation from the production floor via demand creation, or they can support them through increasing the store of basic and applied knowledge that drives industry from the research center. But government can't support jobs by electing not to care about them and hoping it will all work itself out, which is basically what the United States is doing now.

How's that working out for us, again? Oh. Right.

Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future