<p>There is also the social aspect. Many people who grow up in America and get into these top colleges who have a business mind often know how to play the game. Of course you can play the game no matter where you’re from, but I think everyone can agree that different societies handle things differently (as in the psychological notion that, for example, Japanese people avoid confrontation, things like that).</p>
<p>Besides, it seems as though there would be an easier opportunity for fraud when you stretch your executive and financial branches across so far as well. If it were my corporation, I’d want to know where everyone was and if they were trying to jip me. I would definitely not feel safe having foreigners handle that sort of thing, simply because I’d be unfamiliar with the whole thing. I would confidently say that this could possibly be the case in the real world.</p>
<p>While I obviously can’t speak for the beliefs of all company managers, if what you’re saying is true, I don’t understand why that would be. After all, companies seem to have no problem shifting much of their core information technology and consulting services to service firms such as IBM Global Services or EDS - who in turn have transferred much of that work to offshore service centers. Similarly, many large Indian IT software houses such as Wipro and Tata have won significant IT outsourcing & consulting business from US firms. </p>
<p>I would argue that a company’s IT systems are just as crucial to the operation of the business as any other system. Email system, the internal company phone system, the router/switch network, manufacturing/production scheduling software, the underlying databases and middleware - if any of that goes down, the whole company is brought to a standstill. Yet oddly, companies seem to have no problem outsourcing those operations to India, either directly via an Indian firm such as Wipro or indirectly through IBM Global Services. Such IT outsourcing extends even to a company’s financial IT systems, such as its accounting/ledger software systems. Why exactly is it perfectly fine to offshore your company’s financial IT systems, but not the financial services themselves?</p>
<p>Another irony. Many of the Wall Street firms have themselves offshored much of their own IT and computing services - and indeed, the financial services industry was in the vanguard of industries to do so. So apparently it’s perfectly fine for companies to pay high fees for “American” investment banks, despite the fact that most of those banks themselves would cease to operate if their offshored IT systems were to malfunction. </p>
<p>*More than 75 percent of major financial institutions send IT work offshore, according to Deloitte, and the consulting firm estimates that offshore technology spending by banks will increase by 2010 from the present 6 percent of the industry’s $44 billion total annual IT budget to 30 percent. * </p>
<p>Is that so? Then why is it that so many of the most successful hedge funds and private equity firms in the world - who have garnered a tidal wave of funding from corporate pension funds and other large institutional investors - are not actually (technically) headquartered in the United States, but rather in the Cayman Islands, Bermuda, Virgin Islands, and other exotic paradises? Granted, they have offices in the United States, but for the purposes of regulatory and tax jurisdiction, they aren’t technically “American” investments (and, no, they don’t fall under UK jurisdiction either). </p>
<p>Furthermore, many of the major Wall Street banks have outsourced financial research work to India. A company who ‘entrusts’ its financial management to a Wall Street investment management team may find them relying on inhouse research analysis reports that were produced in India. </p>
<p>“India will see increased outsourcing of research in equities, economics, derivatives and debt research because of cheaper talent as well as language skills,” said Andrew Holland, executive vice president for DSP Merrill Lynch in Bombay, a firm 40 percent owned by Merrill Lynch.</p>
<p>Hence, I see no reason for why companies would demand financial services from US banks rather than via offshoring when, #1, they’re not shy about outsourcing plenty of other crucial internal operations offshore, and #2, when those US banks have themselves offshored much of their own internal operations. </p>
<p>Yet, be that as it may, for whatever reason, as long as finance careers - for whatever bizarre reasons - continue to pay better than engineering careers within the US, then many of the best US engineering students will prefer to work in finance than in engineering.</p>
<p>^Like you mentioned, the companies choose offshore HQs for financial reasons. The majority of the employees remain local. Also, the US is still the world leader when it comes to financial management and project management (I know, laughable).</p>
<p>Engineering has generally been an underappreciated profession. Throughout most of history, engineering (and science) has depended on the favor of patrons. Think of Galileo, Aristotle, Leonardo daVinci, et al.</p>
<p>Then perhaps it’s time to allow some other country to become the world ‘leader’ in financial management. When their financial system inevitably collapses from the activities of their ‘leading’ financial firms, driving their greater economies off a cliff, then their taxpayers can pay for the bailout.</p>