The refrain has become familiar: the West lost its manufacturing edge. Over the past four decades, the United States and Western Europe outsourced factory floors to East Asia, trading tangible industrial capacity for cheaper consumer goods. The consequences are now plain—fragile supply chains, fossil fuel dependency, and a hollowed-out middle class. But as the world debates reshoring and reindustrialization, a quieter crisis is unfolding in plain sight: the West is now forgetting how to write code.
“If we lose the ability to manufacture, we lose control over our own destiny,” wrote historian Vaclav Smil in his 2019 work Growth. The same warning applies to software.
The first great forgetting was manufacturing. In 1970, the United States accounted for 28% of global manufacturing output. By 2023, that figure had fallen to 16%, according to data from the United Nations Industrial Development Organization. China, meanwhile, rose from less than 3% to over 30%. The shift was not accidental—it reflected deliberate corporate strategy. Shareholder value maximization encouraged offshoring to cut costs. The result was a generation of engineers who could design products but not build them. Apple’s iPhones are designed in Cupertino, but the precision machining that makes them possible relies on supply chains in Shenzhen and Zhengzhou.
Now a similar pattern is emerging in software. For the past two decades, global corporations have aggressively offshored coding and maintenance work to India, Eastern Europe, and Southeast Asia. The logic was identical: cheaper labor, faster scaling, higher margins. In 2022, software and IT services offshoring from the U.S. reached an estimated $185 billion, according to the Information Technology and Innovation Foundation. While this generated short-term profits, it gradually eroded the domestic talent pool for system-level programming and infrastructure engineering.
The symptoms are mounting. In 2020, a critical software bug in a widely used U.S. Treasury Department system remained unresolved for months—not because the fix was technically complex, but because the team maintaining it had been downsized and outsourced. In 2023, a major cloud outage at a Western healthcare provider traced back to a configuration error that no in-house engineer could diagnose for twelve hours. These incidents are not anomalies; they represent the accumulated risk of forgetting.
The parallel between hardware and software is instructive. Just as offshoring manufacturing led to a loss of tacit knowledge—the kind of know-how that cannot be captured in blueprints or standard operating procedures—offshoring software development weakens the experiential layer of coding. Writing maintainable, secure code requires more than syntax knowledge. It demands deep familiarity with historical context, legacy systems, and organizational nuance. These elements are difficult to transfer across time zones and cultures.
Code is not a commodity. It is a craft that decays when its practitioners are disconnected from the ecosystems it serves.
The problem is compounded by the changing nature of software education. In the 1990s and early 2000s, computer science curricula emphasized systems thinking: operating systems, compilers, database internals, network protocols. Today, many top-tier programs in the U.S. and U.K. prioritize frameworks and libraries—React for frontend, TensorFlow for machine learning, Spring Boot for backend. Students graduate knowing how to assemble components but not how to build them from scratch. This mirrors the earlier shift in manufacturing, where design engineers increasingly lacked knowledge of fabrication processes.
Meanwhile, countries like China, India, and Vietnam are accelerating their own software competence. In 2023, China produced over 1.2 million STEM graduates, with a growing proportion specializing in systems software and embedded programming, according to the Chinese Ministry of Education. Vietnam’s tech workforce grew by 17% annually from 2018 to 2023, with an emphasis on semiconductor design and firmware development. The West is not just forgetting—it is ceding ground to those who remember.
“The knowledge required to build a modern jet engine or a secure operating system is not easily reacquired once lost,” wrote engineering professor Susan S. Silbey in a 2021 paper on institutional memory. “The cost of relearning often exceeds the cost of maintaining.”
The stakes extend beyond economics. Software now underpins critical infrastructure—power grids, air traffic control, banking systems, defense networks. Relying on offshore maintenance for these systems introduces geopolitical risks that few Western policymakers fully appreciate. A 2022 report by the U.S. Cyberspace Solarium Commission warned that “the concentration of software supply chains in a small number of foreign jurisdictions creates single points of failure for national security.” Yet the offshoring trend continues.
When you offshore the maintenance of infrastructure, you offshore a part of sovereignty.
There is hope, though. Some Western firms are reversing course. In 2023, Siemens announced a plan to bring 80% of its critical software development back in-house over five years. The German engineering giant cited security concerns and the difficulty of integrating outsourced code with proprietary systems. Similarly, the British fintech company Revolut began reshoring its core banking platform development in 2022, after finding that remote teams introduced up to 30% more security vulnerabilities in production code.
But these cases remain exceptions. For every Siemens or Revolut, there are a hundred companies quietly expanding their offshore presence. The structural incentives remain misaligned: short-term cost savings trump long-term resilience, and shareholder pressure discourages investment in domestic talent.
What the West needs is not protectionism but a deliberate revaluation of technical labor. It needs educational systems that reward deep competence over surface-level familiarity. It needs corporate governance that counts technical debt and security risk as real liabilities. It needs political leadership that recognizes code as infrastructure, not just a cost center.
The lesson of manufacturing was simple: what you stop making, you stop knowing. The lesson for software is still being written. Whether the West learns from its own history—or repeats it—remains an open question. The answer will determine not just its economic competitiveness, but its ability to shape the technological future on its own terms.