Date: Sun, 3 Jul 2005 17:17:41 -0700 From: Norm Matloff To: Norm Matloff Subject: CS enrollment, foreign graduate students, Gates offshoring comment, etc. To: H-1B/L-1/offshoring e-newsletter For many of you, the most interesting of the articles enclosed below is the one in which Bill Gates warns U.S. firms against offshoring their R&D work. I hope you go beyond that, though, as there are much broader issues involved, which have allowed me to bring together several articles from the backlog I have of materials to post and discuss in this e-newsletter. So, while my commentary here will be a bit long, please take a little time to go through the whole thing. As many of you will recall, computer science enrollment at U.S. universities has been plummeting in recent years. The "official" explanation of this has been (a) the letdown after the dot-com bust and (b) the major publicity in the popular press on offshoring of software development work. To that I would add (c) the increasing tendency of U.S. employers to fill on-site jobs with H-1Bs. I would also point out that even (a) is fundamentally an issue of the shift of U.S. firms to using foreign labor, whether in offshoring or in imported H-1Bs. The industry's shrill and false claims in the 1990s of a software labor shortage not only provided the basis for Congress's expansion of the H-1B program, but also produced a huge, unwarranted growth in the labor supply, as CS enrollment soared as a response to the "shortage" claims. Those hordes of additional graduates hit the job market just when the dot-com hysteria stopped, causing huge oversupplies. As I've reported on a number of occasions, this implosion of CS enrollment has been causing the CS academic establishment major angst. To them, this is a horrific threat against their very way of life. If this reduction in enrollment turns out to be permanent (which I believe it will), they will suffer the worst fates known to academia: * Their departments will contract, since faculty size is largely determined by undergraduate enrollment. * The amount of research money--of supreme importance--will shrink, due to having fewer faculty. * Even with smaller faculties, there will be too many professors chasing a fixed number of research dollars. And it has already become very difficult to get research money, again a consequence of CS academia's unholy alliance with the industry lobbyists. * There will be fewer graduate students, due to reductions in both the domestic undergraduate pipeline and the foreign graduate well. That means lower PhD production (another supreme issue), and horror of horrors, a forced shift from teaching graduate courses to teaching at the undergraduate level. For the benefit of new readers, I must again make these disclaimers: * I am not complaining about the drop in CS enrollment. On the contrary, I and most other CS faculty revel in it. We finally have classes of manageable size. It's the administrators who are alarmed at the drop. * I am not anti-research. I consider research to be one of the big attractions of a professor's job. But I believe that we should be scholars, with funding being a means of doing research, rather than an obsessive end in itself, which is what it has become. I've also stressed the point that the CS academic establishment has itself to blame, because they were complicit with actions taken by the industry that have now come back to haunt academia: Support of the industry's false claims in the late 1990s of a tech labor shortage; support of the industry's push for expansion of the H-1B program; and support for offshoring. These actions were in the short run a boost to academia's own expansion, but now have become the very source of CS academia's current woes: * As explained above, those actions caused the poor job market domestic undergraduate enrollment to plummet. * The poor job market has also caused a big reduction in interest among foreign students in U.S. graduate study. * The huge overexpansion in national U.S. CS faculty numbers, a direct result of the industry lobbyists' shrill "shortage" cries, now means that there is much less government research funding available per faculty member, even though overall funding has increased somewhat. For my previous postings on these issues, see any of the files with names beginning with "CS" in my archive of selected postings of this e-newsletter, at http://heather.cs.ucdavis.edu/Archive Now, let's take a look at the enclosed articles in the context I've outline above. First, the article with the comments by Bill Gates, calling upon U.S. firms to keep their R&D work here in the U.S. In this expanded, increasingly competitive economy, India and China are training engineers who are driving their economies forward, yet Japan and the U.S. aren't keeping up, he said. At a national level, both the U.S. and Japan need to train more and better engineers if their economies are to stay at the cutting edge of technological innovation, which would create value that helps support both countries' high standards of living, he said... "The number of students in engineering and IT is going down. ... Staying ahead means setting a very high bar," Gates said. Gates has been eating too much of his own dog food. None of this makes any sense. It's absurd for Gates and the rest of the industry to expect today's young people to go into a field in which those same industry firms are laying off engineers and offshoring the work. Note especially that the July 1 edition of the San Francisco Chronicle had news of a deal between Microsoft and the Indian offshoring/H-1B giant Tata Consultancy Services to develop offshoring facilities in China. Gates' claim that everything will work out as long as R&D is retained in the U.S. is unrealistic. First of all, that won't draw in the young people, because (a) it's too much of a gamble, to go through a CS major, first for a Bachelor's and then a Master's degree, on the slim chance of getting an R&D position, and (b) many if not most of those "domestic" R&D jobs will go to H-1Bs, not U.S. citizens and permanent residents. Now, as I said, the CS academic world is in a real panic over the prospect of having to live in a world of greatly reduced expectations. So, they're engaging in a campaign to reverse the enrollment declines, and in so doing are not being very careful with the facts. One false claim that is being made repeatedly is exemplified in the letter to the editor enclosed below, written by an engineering dean at Purdue. It cites a highly out-of-date BLS projection made on the basis of 2002 data. You see the same BLS study cited in another article enclosed below, in which a representative from Microsoft bemoans the decline in female CS students, again citing the BLS study as indicating great opportunities ahead. I've seen such claims made numerous times in academia, including at my own university. These academics may not be deliberately and outrightly lying, but they certainly aren't questioning what they are passing on the trusting young people as firm fact even though the academics have enough sense to know that the projection is badly out of date. To put that BLS projection in proper perspective, it forecasts a 45.5% increase in software engineers between 2002 and 2012. Compare that with the 13,000-worker DROP in software engineers during the first quarter of this year (during a period of putative recovery in the tech sector), according to statistics by...the BLS! See the IEEE-USA press release enclosed below. This misrepresentation by CS academia for their own personal gain is really unconscionable. Recently I talked to a retired UCD life sciences professor who mentioned that her grandson would be starting as a first-year student in computer science at UCSD next fall. When I told her that future job prospects for technical work in this field were poor, she said that her grandson had been worried about this but the folks in the Computer Science and Engineering Dept. at UCSD had really given the kid a high-pressure sales pitch. Note that the IEEE-USA press release cites BLS as reporting an increase in jobs for "computer scientists and systems analysts." The term "computer scientists" is vague, but generally refers to a certain subset of R&D positions, an area that even Gates concedes is shrinking in the U.S. Thus the reported increase is likely in system analysts. What is going on there? First of all, as I've mentioned so often, most underpayment of H-1Bs IS done in full compliance of the law. There are so many loopholes in the law that there is no reason for employers to use illegal methods. The system analyst job category has been a favorite refuge for such employers, as shown dramatically in the Programmers Guild Web page, "How to Underpay an H-1B," at http://www.programmersguild.org/archives/howtounderpay.htm The term "system analyst" is both broad enough to include programmers, thus fulfilling the needs of these employers and of a nature that lends itself to low salaries (again fulfilling the needs of these employers). That nature is that the term "system analyst" is an old-fashioned term mainly used for people working on IBM mainframes. Due to the non-modern nature of their jobs, their pay tends to be lower. In other words, the employers of the H-1Bs can hire people with modern skills but pay them at the same levels as those without modern skills, a typical--and quite legal--loophole. (The Programmers Guild case study also involves what I call Type II salary savings due to hiring H-1Bs. See my university law journal article cited below.) Secondly, it is likely that many of those system analysts are people in consulting firms who are charge of putting together turnkey hardware/software systems for clients. These are often displaced programmers, and in fact the industry advocates of offshoring have pointed to this and other similar types of work as the "new" career path for CS graduates. Indeed, the statement I quoted earlier from CRA's Foley was along those lines. However, even this is working for some displaced programmers in the short run, in the long run it is NOT a viable option, because the young graduates cannot get the necessary programming experience to move into such jobs. In other words, either way, the BLS optimism for jobs for U.S. citizens and permanent residents is unwarranted. As I said, the CS academic establishment has itself to blame, as it actively supported the industry lobbyists' globalist moves. My worst criticism in this regard has often been of the Computing Research Association, a consortium of most major CS departments in the U.S. and Canada. See for example my CNet op-ed at http://heather.cs.ucdavis.edu/Archive/ACMProgContestMain.txt Originally the CRA acted with honor, countering the ITAA's claims in 1998 that CS enrollment was on the decline and "thus" we needed more H-1Bs. (I use the quotation marks here, because even declining CS enrollments would not imply a need for more H-1Bs, as we've always used far fewer CS grads than we've produced, and also used many people with degrees in non-CS fields. Again, see my university law journal article.) The CRA pointed out that CS enrollments had been increasing sharply since 1995. However, that didn't last. The CRA soon became one of the biggest boosters of the industry lobbyists' claim of a shortage. Former CRA chair Ed Lazowska of the University of Washington was especially active in supporting the industry lobbyists' push to get Congress to approve H-1B increases during the 1990s. And last December's H-1B increase for foreign nationals with graduate degrees from U.S. universities is of course related to the CRA's aims. In that light, an article in the current issue of the CRA's newsletter is of interest. (http://www.cra.org/CRN/articles/may05/freeman.landweber.html) One of the authors, former Georgia Tech Dean of Computer Sciences Peter Freman, has been one of the most active supporters of the industry's shortage claims. He was, for example, one of the nominal authors of the CRA's "shortage" study. Freeman and his coathor wrote in its executive summary that the "preponderance of evidence" showed a shortage--phrasing that appeared nowhere in the actual study, which the authors later told me was written by research assistants, not the authors. (See more on the CRA report in my university law journal article, Sec. IV.A.5, http://heather.cs.ucdavis.edu/MichJLawReform.pdf) Freeman later turned nasty. In 2001, when the first signs of decline in the tech job market started to appear, the magazine Graduating Engineer interviewed Freeman in a story about the reduced opportunities for new graduates. The reporter pointed out my research showing that even during the height of the high tech boom in the late 1990s, virtually every firm, large or small, was hiring only about 2 or 3% of its job applicants, hardly indicative of a shortage. Freeman replied: "That is such a non-sensical experiment, I don't even think it's worth paying attention to," says Dr. Peter Freeman, Georgia Tech's dean of computer sciences. "That's like saying I spit in the wind and it blew in my face, so I guess we're having a hurricane." "Anybody can apply for a job. I mean, the obvious rejoinder would be that when there are high paying jobs there are, of course, going to be lots of people applying for them," Freeman says. "If Matloff would care to carry out a scientific study of things, I might be willing to (extensively) comment." Of course, my study had indeed been "scientific" (and the reporter quoted my response, explaining my background as a statistician, etc.), but Freeman's unprofessional statements just how shrill the industry lobbyists' academic allies had become. And in the same article, Lazowska called my statements "loony." (The article is at http://www.graduatingengineer.com/articles/20010904/Hey-Buddy,-Can-You-Spare-a-Job-Offer). Given all that, Freeman's current article is surprisingly honest. Again, keep in mind that one of the major issues now throwing CS academia into such a tizzy is that overexpansion of the field has made it extremely difficult to get research funding. The response of most of the movers and shakers in CRA has been to tell the press that the U.S. is falling behind other nations in the tech area, and that Congress should take measures to increase CS enrollment and expand the National Science Foundation's funding of university research. But in the current article, Freeman, fresh from a stint as an NSF director, actually calls on CS academics to greatly reduce the number of applications they make to the NSF for research grants. Let me remind the reader that this is directly related to H-1B. Since pursuit of a Master's or PhD is a money-losing proposition for domestic students (that same issue of CRA News shows that most graduate student research stipends are under $20,000 per year, far less than what would be made in industry), CS departments have had to rely quite a bit on foreign students to do the research on which those NSF funds are spent. Many of these foreign students become H-1Bs after graduation (hence last December's H-1B expansion legislation), so for Freeman to actually call upon CS academics to reduce their quests for research funding is of huge significance. Thus, though I'm not enclosing the entire article, I will at least include an excerpt: Given the above analysis, it appears that constraints on multiple submissions by individual researchers will go a long way in addressing both the overload issue and the perceived drop in funding rates. For example, we might limit researchers to, at most, one research proposal per year per solicitation. Another option might be to disallow submissions to a solicitation by those who have been successful in the prior years competition. Still another might be to limit the number of research proposals submitted to CISE in a given year. These, together with the change to annual solicitations, have the potential to cut the number of submissions and increase success rates. An associated benefit will be the extra time that researchers have to work on research instead of proposal-writing. I couldn't resist including that last sentence in my excerpt here. Think of what Freeman is saying: The obsession with research money has reached the point (and has been there for quite some time) at which major researchers spend all their time writing research grants, rather than doing actual research. This is exactly what has happened, and I know of many major researchers who have rather little knowledge of the details of the methods and results of their own research projects, a bizarre situation. True, Freeman is speaking only "within the family" here, but it's nice to see someone in the family finally speaking the truth in public. And he makes another comment of that nature: Another issue beyond our control is the increasing competition for international students. With the upsurge in the economies of countries such as India and China and the attendant professional opportunities for students who remain at home, increasing numbers have opted for local universities. In addition, the difficulties facing foreign students trying to enter the United States since September 11, 2001, have sometimes made universities elsewhere (e.g., Australia) more attractive. I've mentioned many times that the reduction in foreign applicants for U.S. CS graduate programs is NOT due to the reason cited by the industry lobbyists, i.e. NOT due to our draconian post-9/11 visa policies. It's main due to the fact that the job markets in the U.S. have dried up while things are booming back in China and India. I know this from the foreign student grapevine, and it has been noted in print by the Chronicle for Higher Education and the academic journal International Higher Education. See citations in the files beginning with "ForeignGrad" and "Action" in http://heather.cs.ucdavis.edu/Archive Well, as seen above, even though Freeman claims the 9/11 cause too, he only lists it secondarily, and he does indeed say that the primary issue is job markets. This is seen also in another article enclosed below, in which the Sacramento Business Journal interviews an Indian-American recruiter of Indian H-1Bs, who says: But what is going on now is that many of the people who came here for temporary jobs decided to stay, and recent graduates from schools in India are not eager to leave there because they can get good jobs with good salaries there, and they can be with their families, and they are comfortable. And they don't pay too much taxes. Four or five years ago everybody wanted to come here, but in recent years, that is no longer true. Norm http://www.computerworld.com/managementtopics/outsourcing/story/0,10801,102848,00.html Computerword, June 29, 2005 Gates warns against reliance on outsourcing Urges investing in R&D to keep competitive edge News Story by Paul Kallender JUNE 29, 2005 (IDG NEWS SERVICE) - TOKYO -- Companies should not outsource their core business functions and staff, Microsoft Corp. Chairman and Chief Software Architect Bill Gates told a group of Japan's top businessmen today. Gates, who was speaking at the Nippon Keidanren (Japan Business Federation), Japan's biggest and most influential business group, urged IT companies to beware of outsourcing too much to save costs and to keep their key engineering resources and intellectual property at home. "If you rely too much on people in other companies and countries ... you are outsourcing your brains, where you are making all the innovation," he said. The need to maintain a competitive edge by investing rather than cost-cutting was a theme that Gates returned to several times in an address to a group of leading Japanese IT and consumer industrialists that included Hajime Sasaki, chairman of NEC Corp., and Tadashi Okamura, chairman of Toshiba Corp., both of whom had front-row seats. Too many U.S. companies were cutting their research and development budgets at a time when investment in these areas is needed to cope with an increasingly competitive global market economy, he said. At a national level, both the U.S. and Japan need to train more and better engineers if their economies are to stay at the cutting edge of technological innovation, which would create value that helps support both countries' high standards of living, he said. Gates cast the U.S. and Japan as competing in a global market economy that had grown from about 1 billion people 20 years ago to 4 billion people. In this expanded, increasingly competitive economy, India and China are training engineers who are driving their economies forward, yet Japan and the U.S. aren't keeping up, he said. "The number of students in engineering and IT is going down. ... Staying ahead means setting a very high bar," Gates said. http://www.science.purdue.edu/enewsletter/June2005/JSVExponentletter.htm Demand grows for computer scientists In response to the article "Purdue's dot-com fallout," published in the March 22, 2005 Purdue Exponent: The writer pointed out the decline in undergraduate enrollments in computer science over the last couple of years. The recent trend is unfortunately true across the nation, largely because of the dot-com bust, Sept. 11 and the perceived threat of outsourcing. However, the reality of the economic picture is that computer and information science are projected to be major growth sectors in the United States in terms of jobs. The increased demand for computer specialists in the 10-year period from 2002 through 2012 is expected to top 1.4 million new jobs, which dwarfs the roughly 50,000 students graduating in computing at our universities each year. These hiring projections are based on sophisticated econometric models developed by the Bureau of Labor Statistics. The projections take into account the dot-com phenomenon, Sept. 11 and outsourcing. The detailed forecasts are available in an article by BLS economist Daniel Hecker. See: http://www.bls.gov/opub/mlr/2004/02/art5full.pdf What is becoming more apparent as we move further into the information age is the strong relationship between computing and society. Information technology has accounted for the majority of the economic growth in the United States since the 1990s. Realizing the new challenges is what a high-quality Purdue computer science education enables, and it is enhanced when combined with disciplinary training in other fields. It is sometimes hard to see the beauty and promise of computer science from a first-year programming course or from the limited exposure that using a PC can provide, and that's something we as educators have to work on. But the demand for computer scientists in the United States is there. It's real and growing. The innovations from the computing field go to the very heart of our economic vitality, both nationwide and in Indiana. Whether we provide the needed brainpower in computing will have a profound impact on our future lives. Jeffrey S. Vitter Frederick L. Hovde Dean College of Science Five U.S. Technical Job Classifications Show Employment Drop, One Shows Steep Increase http://ieeeusa.com/communications/releases/2005/061505pr.asp WASHINGTON (15 June 2005) - Five major engineering and computer job classifications showed a drop in employment in the first quarter of 2005 vs. the 2004 average, while one showed a large increase, according to data compiled by the U.S. Department of Labor's Bureau of Labor Statistics (BLS). The biggest drop was among computer hardware engineers (18,000), followed by computer software engineers (13,000), computer programmers (8,000), electrical and electronics engineers (8,000) and computer and information systems managers (5,000). Contrasted with this loss of 52,000 jobs, the BLS reported a gain of 54,000 jobs among computer scientists and systems analysts. "While we are encouraged by the employment growth among computer scientists and systems analysts, the continuing shrinkage of other technical specialties signals that all is not well in electrotechnology professions," IEEE-USA President Gerard A. Alphonse said. Sacramento Business Journal - June 6, 2005 http://sacramento.bizjournals.com/sacramento/stories/2005/06/06/focus5.html Tami Tangasmay Recruiting foreign workers no longer such a hot job India-born Tami Tangasmay was working as a project manager for Compaq in Houston and was asked frequently to find other skilled Indians to work on Compaq projects. He was asked so frequently that in 1997 he decided to make the recruiting of foreign workers for American high-tech firms his business. Until fairly recently, it was a very lucrative business. Two things happened, he says. First, many of the people he brought over for temporary jobs decided to stay and found permanent jobs, which diminished the demand for foreign workers. Second, India's economy is booming, and workers sought by American firms are staying home where they can get paid comparable salaries, remain with their families, "and they don't pay too much taxes," Tangasmay said. "So my business, and most businesses like mine, is in trouble. I can still find people willing to come to the United States, but not so many as before. Most of those who come now intend to stay here, to make their homes here. It is still a dream for many people in India. But not as many as before." What brought you to the U.S.? I came to the United States in 1990 to get a master's degree in computer science. At that time, the U.S. had the best schools if you wanted to get an advanced degree. But now, 15 years later, it is reversed. It is schools in India that provide the best opportunities for advanced learning, at least in computer science. What happened, I believe, is that India's economy improved and as a consequence the schools improved. And the schools focused on computer science because they saw that there was a growing interest, worldwide, and many of the students who had come to the United States to learn went home to teach, so now it is schools in India which are producing people with qualifications American companies want. But what is going on now is that many of the people who came here for temporary jobs decided to stay, and recent graduates from schools in India are not eager to leave there because they can get good jobs with good salaries there, and they can be with their families, and they are comfortable. And they don't pay too much taxes. Four or five years ago everybody wanted to come here, but in recent years, that is no longer true. What brought you to Sacramento? In 1999, because the Silicon Valley was the place to be, I opened an office in Fremont. It was going fine, but the cost of living in Fremont was very high so we moved to Roseville, bought a home there, moved the office here, and are very happy. I think that, so far, Teksoft has brought 400 people here from India and Singapore, and we have contracts for 100 more. Teksoft advertises in newspapers and on the Web over there, seeking qualified workers who want to come to the United States. When the people come here, they are working for Teksoft, which then supplies them as consultants to the companies needing workers for their projects. We pay the workers, say, $4,000 for the project, and we bill the company for, say, $6,000, and that is how we get paid. And the future? It is impossible to predict if this will continue. Things are changing too fast. Last year, for example, the cost of applying for a temporary work visa was $183. This year, it is $2,185. That cost is borne by the companies like mine wishing to hire foreign workers. Apart from that, there are often attorney's fees and other costs which raise the cost of bringing in a foreign worker to as much as $3,000. That means that I must consider investing $3,000 for a person in India or Singapore that might or might not be the person a company here wants. The company can't know, until the person gets here and starts working. I don't think the increase in the visa application fee was intended to discourage the hiring of foreign workers by American firms. I think it had to do with security and to make sure that the temporary worker visa process was not being misused. I can't predict whether there will continue to be the hiring of as many foreign technical workers as there has been, so I have started to diversify. I have a franchise with Liberty Tax Services, and opened two offices in Sacramento and will have six more in the next two years. I also became a real estate agent, and at the end of this year I will become a broker. I am interested in business, and I plan to look at other opportunities as well. -- Interview by Bob Schmidt © 2005 American City Business Journals Inc. http://www.infozine.com/news/stories/op/storiesView/sid/8728/ Kansas City infoZine Thursday, June 30, 2005 Female Interest in Technology Fields Crucial, Say Universities and Corporations By Janet Nester - Fewer women are choosing science and technology-based careers, and corporations and universities alike are working to increase interest in these booming fields. Science & Technology Washington, D.C. - Scripps Howard Foundation Wire There has been an overall decline in American students' interest in information technology and engineering, and the competitiveness and marketability of young people in the U.S. is at stake, said S. Revi Sterling, program manager for Microsoft Research. She and other corporate representatives spoke Tuesday before a House subcommittee meeting that was the third in a series examining U.S. high school education. While the decrease in interest is evident among both men and women, the situation is worse with women. The number of women choosing computer science as an undergraduate major has declined every year since 1984, Sterling said. The Department of Labor projects that computer systems analysts, database administrators and computer scientists will be among the fastest-growing occupations through 2012. These technology jobs will grow faster than the average for all occupations because of increasingly sophisticated technology, according to the department's Web site. The dot-com era helped give the information technology field more visibility and show more women that computer science is an option as a career, said Kathleen M. Joyce, undergraduate recruitment director for the College of Engineering and Computer Science at Syracuse University. Now that the era is over, those fields just aren't as visible any more. A lack of role models and a misconception about what workers in the field do is holding women back, Sterling said. "There are no role models," Sterling said. A desire to make a difference is a driving force among women, she added, and many don't realize the options available in the information technology field. "They don't know enough about the information technology field and don't realize they can improve airport security by creating a more efficient iris-scanning program," she said. Girls need to be encouraged to go into math and science and not to be discouraged by societal stereotypes, Joyce said. "Women won't say or think a field is attractive not because they think they can't do it but because they are not encouraged to go into higher level math or science," Joyce said. Sterling also works with the National Center for Women and Information Technology, a coalition of more than 40 corporations, academic institutions, government agencies and non-profit organizations. The center's programs include a partnership with the Girl Scouts of America to stimulate interest in information technology and computer science among young girls. The coalition also funds a program in Illinois that sends female computer science majors to help teach high school computer classes to girls, Sterling said. "These programs are especially beneficial because high school girls can see women a few years older than them working with computers," Sterling said. Every year, Syracuse invites prospective female engineering students to spend a weekend with women students there to spark interest in the field, Joyce said. Popular culture has also helped the medical and law fields, with the prominence of shows such as "Ally McBeal" and "Scrubs," Sterling said. Women accounted for 56 percent of all college students in 2003, continuing the majority they have represented since 1979, according to the U.S. Census Bureau's Web site. Representatives from several other corporations listed broader programs their companies were helping to create and fund. The North Carolina New Schools Project, funded in part by an $11 million grant from the Bill and Melinda Gates foundation, aims to create 40 to 50 new and redesigned schools that will improve education standards. GlaxoSmithKline, the pharmaceutical company, is on the advisory board for the project and has advised superintendents and business leaders there, said Bill Shore, the company's director of community partnerships.