Date: Wed, 25 Feb 2004 23:23:50 -0800 From: Norm Matloff To: Norm Matloff Bcc: Subject: more on the CMU/TCS connection--and now Sutter Health! To: H-1B/L-1/offshoring e-newsletter Last week I reviewed an InformationWeek article about a new study by Florida and Tinagli of Carnegie Mellon University's Software Industry Center (SIC). (http://heather.cs.ucdavis.edu/Archive/CMU.txt) The study bemoaned that, what with all the fuss being made these days about H-1B and L-1, the U.S. economy will suffer as it loses a lot of high-tech talent. I pointed out something that the reporter missed: According to a press release by Tata Consultancy Services (TCS), an Indian software giant which is a major user of H-1Bs and L-1s, one of the major founders of that SIC is TCS! This is a rank conflict of interest, and it's sad that InformationWeek was not aware of it. The industry lobbyists love to get university cover for what they do, which is quite easy, because any university's most fervent activity is the constant search for research money, as I illustrated in my posting last week. Sure enough, the CMU study was immediately cited in a Washington Post editorial lavishly praising the H-1B program a few days later. Unfortunately, this week's InformationWeek article on H-1B again mentions the SIC study without bringing up the TCS connection. The article here notes that the study was funded by the Sloan Foundation. I know and respect the people at Sloan, but the TCS connection is clearly of major importance. To illustrate why, look for example at this quote from the TCS press release (http://www.tcs-america.com/news/062101.html): TCS, as a founding partner of the Software Industry Center, has first access to the research produced, has a seat on the Center's board, helps to set the research agenda, and has access to the Center's researchers and graduate students. That's heavy clout. And study author Richard Florida is a codirector of SIC (with Ashish Arora and Mary Shaw), not just a researcher. Yeah, that's bad, but there's even worse in this article, the citing of Sutter Health as "needing" H-1Bs. A reader of this e-newsletter (who has one of his own), Harry Stein (hstein@mail.airmail.net), immediately noticed a big hole in the following passage in the article: A handful of foreign-born tech workers employed by Sutter Health, a Northern California hospital network, are worried not only about keeping their jobs but about remaining in the United States. Their H-1B work visas will expire soon, and the government won't issue new ones until October. This is incorrect. The government did announce that the H-1B cap had been reached, but H-1B *renewals* ARE EXEMPT FROM THE CAP. Here's another interesting quote from Sutter: Sutter has about 25 H-1B visa holders, people whom CIO John Hummel describes as specialists with hard-to-find skills related to medical IT systems. "I don't need NT engineers. I need some very specific [medical] informatics skills," Hummel says. "I've scoured the country, and I can't find that expertise." Well, I just checked Sutter's employment Web page, and I can't find any positions in medical or bio informatics. Funny, though, I *did* find positions open for NT engineers. :-) I've said many times that I think employers overstate IT job requirements, often deliberately. I don't know if it is deliberate in this case, but I don't believe it is justified. In particular, I do not believe that the jobs Sutter is trying to fill are so esoteric at all. Now, THIS is especially telling: Hummel says he's had some jobs open for two years looking for qualified people, and, if he can't hire someone to do a job, he has to pay consultants three or four times the salary rate. Even if one takes everything here at face value--which, I don't, as explained above--Hummel is admitting that the people do exist. So there is not a "shortage" after all--just a "shortage" of cheap workers. Hummel is admitting that his goal in using the H-1B program is to save on labor costs, totally contrary to the claims made so stridently by the industry lobbyists. What is especially insidious about all this is that the lobbyists have cleverly chosen a medical venue as their example. "Hey, you want to cut down the high costs of health care, don't you?" But remember, even if Sutter is operating sincerely here, the way to cut down costs (and probably *increase* quality) is to hire talented people who don't have an exact match for "medical informatics" but who do have the software skills to do excellent work. Then this: There's certainly no shortage of examples of the U.S. tech industry tapping foreign-born talent, from Intel co-founder Andrew Grove in the '60s to BEA Systems Inc. co-founder Alfred Chuang in the '90s. Saxenian's research shows that Asian immigrants founded about a quarter of Silicon Valley's high-tech businesses in the 1980s and 1990s that survived through 2000. As I've mentioned before, the Intel/Grove example is very misleading: Grove was not a co-founder of Intel (though he was an early employee); his contribution was mainly as a businessperson, not as an engineer; and most importantly, on a technological level, Intel was NOT crucial to the development of the industry (IBM could have chosen many other chips for its PC, and in fact IBM engineers preferred the others). Alfred Chuang of BEA is a graduate of our department. (BEA's major product, WebLogic, was developed by a company founded by another UCD alumnus, Paul Ambrose.) We're very pleased by Alfred's success, and as someone with great fondness for Hong Kong, I've got to say that Alfred is a great example of the outstanding business prowess HKers are famous for. But just as the industry would have been just fine technologically without Intel, the same is true for BEA. The fact is that almost no company in this business has been pivotal technologically (one ought to count IBM anyway). I've critiqued Saxenian's research, the foreign student numbers in grad programs and other topics touched upon in this article many times, and so won't so any more here. Norm http://www.informationweek.com/story/showArticle.jhtml?articleID=17800189 Hitting the year's H-1B visa limit raises questions of whether the United States is open enough By Marianne Kolbasuk McGee and Eric Chabrow InformationWeek, February 23, 2004 A handful of foreign-born tech workers employed by Sutter Health, a Northern California hospital network, are worried not only about keeping their jobs but about remaining in the United States. Their H-1B work visas will expire soon, and the government won't issue new ones until October. Sutter has about 25 H-1B visa holders, people whom CIO John Hummel describes as specialists with hard-to-find skills related to medical IT systems. "I don't need NT engineers. I need some very specific [medical] informatics skills," Hummel says. "I've scoured the country, and I can't find that expertise." The United States last week stopped accepting H-1B applications, saying that, five months into the fiscal year, it has enough to fill the 65,000 annual limit on the visas, which let foreign workers hold jobs here. Hummel says he's had some jobs open for two years looking for qualified people, and, if he can't hire someone to do a job, he has to pay consultants three or four times the salary rate. So Sutter has retained immigration lawyers to fight "great battles to keep these valuable people." There are sure to be a lot of skirmishes this election year about H-1B visas. The program always has been personal and emotional, and now it has become a lightning rod as the IT industry watches jobs go by the thousands to lower-cost foreign workers here and abroad. Designed for workers with specialized skills that are in short supply in the United States, H-1Bs also have been seen as a means of importing cheap labor. But the visas are only part of the debate. In the midst of what some call a jobless recovery, with the tech economy still on uncertain footing, the United States faces the larger question of whether it's protecting its workforce adequately-or cutting off its lifeblood of innovation. There's a great risk of sending a message abroad that the United States isn't foreigner-friendly, contends a study released last week by Carnegie Mellon University's Software Industry Center. If the country becomes a less-attractive destination for foreign-born technological and scientific experts seeking work, it could weaken the U.S. economy as these experts go to other countries to develop new technologies, write economics professor Richard Florida and doctoral candidate Irene Tinagli. The study, funded by the Alfred P. Sloan Foundation, notes that northern European countries, Canada, Australia, and New Zealand have liberalized immigration and increased efforts to attract foreign talent while the United States has made entering the country more difficult. Florida, author of The Rise Of The Creative Class (Basic Books, 2002), contends that a key element of the global market is competition for people. India and China will be centers for cost-effective manufacturing and delivering of basic business processes, but the economic leaders will be nations that best mobilize the creative capacities of their people and attract creative talent from around the world, he says. "The U.S. is facing one of the biggest competitive crises in its entire modern history. For the first time in my lifetime, talented and creative [foreign-born] people feel the U.S. is not the kind of place where they want to be," Florida says. Annalee Saxenian, who became dean of the University of California at Berkeley's School of Information Management and Systems this month, agrees the United States might be sending unwelcome signals to foreign-born experts, but she doesn't see that displacing the country as the place most foreign-born scientists and technologists want to work. U.S. capital markets are much more open than anywhere else, and the United States provides a more-favorable entrepreneurial climate than any other nation, she says. "Unless you believe in a very radical and rapid turnaround, the notion that we're undermining competitiveness is premature," Saxenian says. There's certainly no shortage of examples of the U.S. tech industry tapping foreign-born talent, from Intel co-founder Andrew Grove in the '60s to BEA Systems Inc. co-founder Alfred Chuang in the '90s. Saxenian's research shows that Asian immigrants founded about a quarter of Silicon Valley's high-tech businesses in the 1980s and 1990s that survived through 2000. Beyond the long-range economic implications, the immediate concern for some American businesses is deciding how they'll fill technology jobs, here or abroad. Intel uses H-1B visas to hire specialized talent in work related to chip design, and fewer than 5% of its 78,000 employees hold H-1B visas, a spokeswoman says. "The cap inhibits our ability to manage our business," she says. Roughly half of the Intel employees with advanced degrees in electrical engineering and computer science are foreign born, she adds. Technology leaders worry about attracting the best young minds in the United States to the technology sector, not just people from abroad. Microsoft chairman Bill Gates this week hits the college-campus circuit-including the University of Illinois, Carnegie Mellon, MIT, and Harvard-to give what amounts to a series of pep talks to computer-science and -engineering students. There's reason to worry. In 2003, U.S. universities awarded 2,027 doctorates in electrical engineering and computer science, with 63% earned by foreign nationals, according to the Engineering Workforce Commission, part of the American Association of Engineering Societies. Of the 15,906 master's degrees awarded in those fields, 56% were earned by non-U.S. students. Yet some U.S. business-technology managers believe the surest way to bring people into the field is to protect the opportunities and salaries available to workers, including measures such as limiting H-1B visas. Adrian Williams, an IT manager at a health-care company, says that U.S. companies have turned to cheap, experienced foreign workers at the expense of developing recent college grads, so the pool of affordable U.S. workers shrinks. Jim Wilson, who spent a number of years working in a school district before taking a job as a systems engineer for San Mateo County, Calif., blames education, from grade schools not focusing enough on math and science skills to community colleges focusing on the latest programming skills that, once they're outsourced or automated, leave people ill-prepared to compete for IT jobs. Unemployment in 2003 for all IT workers averaged 5.6%, and 6.4% for computer programmers, according to data from the Bureau of Labor Statistics, compared with 6.0% for all workers. Wilson doesn't buy the argument that the United States will shut itself off from innovation if it limits the hiring of foreign-born workers. "There are huge untapped resources with people who were cut loose in the U.S.," Wilson says. "There is also a moral obligation for U.S. companies to hire from the U.S. first." ----- End forwarded message -----