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Tech Industry

Perspective: Explaining the tech brain drain

Michael Kanellos says there's a reason U.S. high-tech companies are hiring an increasing number of engineers and other employees from overseas: In many cases, they are smarter than us.

There's a reason U.S. high-tech companies are hiring an increasing number of engineers and other employees from overseas: In many cases, they are smarter than us.

Often lost in the debate over H-1B visas and the announcements marking another ground breaking ceremony by a western company in Asia is the slow, and arguably inevitable, globalization of the tech industry. In the '80s and '90s, other nations saw how the United States benefited from the computer revolution and began to change their tax structures and invest in university capabilities.

France and Spain have invested heavily to transform a few selected university departments into centers for analog and microprocessor chip design. China, while attractive for its low labor rates, has also become a research and development center. Microsoft's second largest lab sits in Beijing.

Russia, meanwhile, is using its long history of mathematics to enter the industry. Many of the algorithms behind Intel's communications products and the software emerging from the company's labs come from its research center in Nizhny Novograd. Cellular companies are also increasingly working with Russian scientists, both there and at U.S. schools such as the University of California, San Diego.

"There is an awakening of the issue of manufacturing versus R&D" among countries increasing tech capabilities, said Alex Pepe, Motorola vice president and director of strategy for technology and manufacturing in semiconductor products. "Countries that have focused exclusively on manufacturing are discovering that as soon as it's cheaper to do it somewhere else, they (corporations) will move."

Concurrently, the United States is not minting graduates in the hard sciences like it used to. The National Science Foundation announced last week that the number of Ph.D.s in engineering and science to 25,509 in 2001, an eight-year low.

Further, the percentage of these doctorates going to foreign residents rose: In engineering, 41.1 percent of the doctorates went to U.S. citizens in 2001, compared with 43.3 percent in 1998, according to the study.

Lower labor costs aren't the sole reason for the shift.
Cost cutting, of course, remains a driving force behind many elements of the global push. Call centers are being erected in India and in the more remote regions of Canada because labor is cheaper than in the United States or Europe. Similarly, many software projects, such as bug testing, are being ferried to developing nations because these functions can be learned rapidly.

In a sense, the software industry is going through what the hardware manufacturing industry experienced 15 years ago when PC and chip manufacturing migrated to Taiwan. First, Taiwan specialized in manufacturing basic products like circuit boards. Now it makes around half the world's notebooks and designs many of them as well. Classic tech employees aren't the only ones affected: Some media companies now use cheaper copy editors in India to produce the news.

Still, lower labor costs aren't the sole reason for the shift. It may account for the bulk of the jobs, but not the highest paying ones. With its anti-layoff laws, getting employees in France isn't like hiring day laborers in a parking lot. Some U.S. companies are also expected to increase operations soon in Cambridge, England.

So what's the United States to do? First, the educational system needs to be strengthened so that more high-school graduates will eventually be directed toward the most challenging fields. Better explaining the field to high school students will also help. One engineer consultant I spoke to said he couldn't interest his girlfriend's son in the profession until he told him about his salary and five weeks of vacation a year.

Give anyone who gets a Ph.D. in a select field a green card.
Second, politicians and high-tech companies should reinvigorate the concept of the melting pot: Rather than discourage foreign students or workers coming here, the United States should court them. Give anyone who gets a Ph.D. in a select field a green card. Bilingual employees that can straddle both companies are some of the most heavily recruited today. Issuing green cards to new graduates, moreover, would reduce the ability of companies to hire H-1B visa holders cheaply.

Third, the United States should take stock of its inherent skills. Although universities overseas have been catching up with the United States in terms of minting graduates, the United States still has an edge when it comes to project management and marketing. Engineers in China don't get this sort of training, according to several executives. In other words, backslapping, the kind of thing learned at keg parties at college, is a valued ability.

Smart people are going to be born overseas. The best thing the United States can do is woo them.