The End of Our tech dominance?

Date: Thursday, December 19, 2002 2:25 PM

H-1B and JOB DESTRUCTION NEWSLETTER

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The CEOs quoted in this article are some of the largest employers of H-1Bs.
They have also been hell-bent to outsource every job they can to cheap labor
countries like China and India. Cadence Systems, noted in the article below,
has 150 engineers in a design center in Bangalore, where it has invested
$120 million, according to Business Week. The BW article shows 6500
engineers in Bangalore employed by seven large U.S. high tech firms. Oracle
and H-P are the largest U.S. employers there.

Now they are whining that the outflow of technology may cause an end to our
dominance.

*** Am I missing something here? ***

TECHNOLOGY
The Reverse Brain Drain
Foreign-born techies head home as they lose their jobs--and work visas.
FORTUNE
Tuesday, October 29, 2002
By Eryn Brown, David Kirkpatrick

Tech executives have plenty to worry about. Stocks in the dumps. PC sales at
a crawl. Layoffs from San Jose to Austin. And then there's the people
problem: the reverse brain drain. With tech entering the third year of its
slump, a significant number of foreign-born engineers who flocked to America
in the '90s are heading home, either by choice or, increasingly, because
they've been laid off and have lost their work visas.

Take Rama Velpuri. The Indian-born engineer is a U.S. citizen with a degree
from Louisiana State, and he spent the '90s working at Oracle. But when he
started his own software firm, Oramasters, he decamped for Hyderabad, India.
There he runs his company for only $30,000 a month (including payroll for
his 25 employees) and pays $1,000 a month for a five-bedroom house in
Hyderabad's tony Jubilee Hills (complete with three maids, a chauffeur, and
a gardener).

There's plenty of evidence that thousands of less lucky foreigners have been
forced to leave the U.S. too. Thom Stohler, a lobbyist for the American
Electronics Association, points out that the number of temporary work visas,
known as H-1Bs, has dropped from more than 163,000 in 2001 to a projected
90,000 in 2002. Girish Gaitonde, CEO of Xoriant, an IT services firm in San
Jose, says he employed 400 H-1B workers in 2000 but has only 125 today. And
stories are circulating in the Valley of immigrants abandoning their cars
and homes to move back in with their parents abroad.

But beyond the outflow of techies, Intel, Microsoft, and others have begun
worrying publicly about a much broader problem: overall U.S. tech dominance.
Speaking at the Agenda technology conference in Scottsdale recently, Intel
CTO Pat Gelsinger fretted that "perhaps the current downsizing of the U.S.
IT industry is not a temporary thing. Maybe we are headed for becoming a
second-class citizen in the world of IT." Microsoft strategist Craig Mundie,
sipping cocktails at a reception later, seemed to agree. "If the U.S. cedes
its leadership in IT" to countries like India and China, he ominously
opined, "there will not be a second chance."

Equally worried was Ray Bingham, CEO of Cadence Design Systems in San Jose,
whose software helps automate sophisticated semiconductor design. "China
produces 600,000 engineers a year, and 200,000 of them are electrical
engineers," he said in his presentation at the conference. By contrast, the
U.S. last year granted 70,000 undergraduate and 37,000 graduate degrees in
electrical engineering. Compounding the problem, 54% of engineering
doctorates went to foreign students, many of whom returned home after
graduation. Tech executives are also disheartened by what they see as a
disastrous diminution in national commitment to IT research and development,
and by the low penetration of broadband in the U.S. compared with other
countries. Given those shortfalls and the obvious advantages entrepreneurs
like Velpuri enjoy in other countries, it's hardly surprising that more than
a few tech executives are wondering where that leaves the U.S. "When I look
20 years down the road, I have trouble believing there'll be much software
development in the U.S.," says Kanwal Rekhi, a prominent Silicon Valley
angel investor. Sure puts tech's current list of troubles in perspective.

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