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The impact of failing to treat education as a strategic national priority

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Reuters' planned tripling of its number of Indian employees strikes me less as another marker of job transfer under outsourcing than it is a signal that we here in the US and Europe need to redouble our efforts at producing trained candidates for the industrial positions on offer.

I have long been of the opinion that we have neglected our educational system, allowing it to lie fallow, while we have failed to properly price the potential output of that system, thereby depriving the nation of the necessary strategic core to underwrite generations to come.

I found the comment of Reuters' CEO, Tom Glocer, to be revealing:

The amazing thing - and this is the dirty little secret about outsourcing that people need to talk about publicly a bit more - not only is the cost conflation amazing at four, five or even six to one, but the quality and productivity is better too. We are flooded. We have 100 qualified applications for every data input person and these people have qualified accounting degrees.

I fear that we have utterly failed to make a weapon of education, to treat it as a strategic national priority as another form of national defense. Yes, Reuters has made a "sacrosanct" pledge to "cut costs by £440 million ($782 million) by the end of 2006, and is fully aware that "costs in Bangalore were about 40 percent lower than in New York or London," but the key is the overwhelming number of qualified applicants for each position.

What I don't know when Glocer says that Reuters has "100 qualified applications [have qualified accounting degrees] for every data input person", is what is the total number of qualified candidates, how many of those are under or unemployed and thereby gravitate to outsourcing firms, how many positions are available to accountants (here being hired as data entry staff), and how much is Reuters paying to attract those candidates versus other employers.

It is one thing to have a smaller net population than, say, India or China, but it is another when your percentage of qualified candidates is lower so that your net pool of candidates is smaller, thus placing us at a net disadvantage. A nation such as China can select out the top ten percent of it population, and still field an industrial nation equal to the total US population.  The outcome is further lopsided in that the percentage of engineering and science graduates is greater in China and India than it is in the US.

IN 2002, Intel's Chairman, Craig Barrett said:

Currently, U.S. universities and colleges conduct about 48 percent of all basic research in the country, and the federal government funds nearly half of that. In the past 10 years, the majority of increases in federal and state support for basic research have been in medicine and the life sciences. For the physical sciences and for computer science and engineering -- drivers of the primary technologies for the past 20 years -- basic research funding has gone down, in some fields by more than 20 percent over the decade.

Increasingly, some of the best technical talent comes from outside the U.S. In our graduate schools, foreign nationals earn about half of engineering Ph.D.s, and almost as many math and computer science doctorates.

Even as we graduate fewer, we have lowered the level of standards in too many of our institutions in order, I think, to offer more candidates the opportunity to secure a baccalaureate. I like to say, "Eyes two, torso one, BA one" in today's expectations of an American job candidate having a degree. Universities are complicit, given that their costs continue to escalate, in attempting to offer more candidates a paid chair in a classroom. (They have certainly decreased the number of 'needs-blind' scholarships available to those of talent but lacking funds.)

I have nothing against elites per se, and certainly not those based on merit, and my gut feel is that our educational elite, and certainly our engineering and scientific elite, is far too small.

It may not be glamorous in the eyes of voters and legislators, and its deficiencies may not be immediately evident, but we will pay a great price for failing to attend to our strategic needs in education. I maintain that one of the greatest threats from terrorists like al Qaeda is its distraction of our attention from long term needs such as education and infrastructure.

Reuters Plans to Triple Jobs at Site in India
By HEATHER TIMMONS
New York Times
October 8, 2004

Bangalore may be gaining on Silicon Valley
Andy McCue, Ed Frauenhei, Cnet News.com
July 29, 2004
San Francisco Chronicle

America needs research funding now
by Craig R. Barrett
The Chief Executive, March, 2002

Gordon Housworth



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