Date: Tue, 1 May 2007 20:58:29 -0700 From: Norm Matloff To: Norm Matloff Subject: Vivek Wadhwa vs. Bill Gates To: H-1B/L-1/offshoring e-newsletter Vivek Wadha, the iconoclastic former tech CEO who now is critical of offshoring and H-1B, was interviewed on NPR yesterday. The interviewer interspersed recorded clips of Gates with his live interview of Wadhwa. The contrast was stark. (I'll make it even starker later on.) Gates was saying that the reason Microsoft offshores software development is not because wages are cheaper abroad, but rather because we have a shortage of people here. Wadhwa replies, discussing his survey of employers: [We found that] India and China have no real advantage in either the quality or the quantity of their graduates. USA is far ahead by any milestone. We also asked them why they're going overseas, and the number one reason was cost, cost, cost. It's not about a deficiency in the U.S. worker or a shortage over here. It's about the economic benefits they get by going to India or China. Of course, Wadhwa was talking about firms in general. Gates had said that Microsoft is different, that for them it's about access to talent rather than access to cheap labor. But Gates' claim is belied by a Microsoft internal slide presentation. That presentation, obtained by WashTech News, featured a slide which made Microsoft's intentions quite clear: "Pick something to move offshore today." The full presentation, available at http://washtech.org/news/documents/valentine/ makes it even clearer that the issue is NOT lack of qualified Americans but is instead good old Scottish thrift, i.e. access to India's cheap labor. Phrases like "quality work at 50-60% of the cost, 2 heads for the price of one," "cost advantage of adding offshore talent," "leverage the Indian economy's lower cost structure," "good fiscal decisions are mandatory," etc. are sprinkled throughout the presentation. And though it is stated that some work needs to be done in Redmond, "outsourcing is not just for noncritical work." So Gates was completely wrong. A charitable interpretation is that he doesn't know what's going on in Microsoft, and was basically duped by those "Scottish" executives. But that sounds quite like a stretch, so less charitable interpretations are more likely accurate. Wadha has an extended summary of his study at http://www.issues.org/23.3/wadhwa.html The study itself is at http://www.memp.pratt.duke.edu/downloads/Duke_Industry_Trends_in_Engineering_Offshoring_10_24_06.pdf You can read my comments on the study at http://heather.cs.ucdavis.edu/Archive/DukeOffshoringStudies.txt You can hear the NPR piece at http://www.npr.org/templates/story/story.php?storyId=9910492 Or, if you're an mplayer fan like me, go to mms://wm.npr.org/wm.npr.na-central/npr/me/2007/04/20070430_me_07.wma\?v1st=77EDC57229040A58\&mt=1\&primaryTopic=1006\&assignedTopics=1006 Norm