An American citizen, Paul also is a native of India and chief executive officer of Wipro Technologies, one of that country's largest IT service companies. Many American techies are increasingly bitter about the pickup in the stream of IT jobs from the United States to India, arguing that the trend threatens to erode job prospects in the nation's high-tech sector. At the same time, however, members of the Bush administration and a number of economists argue that the natural flows of capital can't be artificially stopped at the borders and that outsourcing is essential to improving corporate productivity.
Paul, who became a U.S. citizen in 1991, recently spoke with CNET News.com about the growing fear in many quarters that offshore outsourcing will undermine U.S. tech leadership.
Q: What is your response to people who fear the U.S. is losing its technology leadership because of offshore outsourcing?
A: That is really befuddling, because the U.S. is only securing its technological competitive advantage. (Look at) patents that have been written by Indian software engineers in Wipro. The individual engineers get the credit; the ownership is the customer's. So in some sense, U.S. technology companies are racing out ahead of their global peers to tap into the intellectual base that is in India. If the U.S. were to repel it in some way, it would create its future competitor. By embracing and directing it, the U.S. has pre-empted competition.
But if some of the programming jobs that are lower-level jobs go to an Infosys or Wipro--in application development, application and maintenance type work--how are you are going to get the expertise that will later lead to higher-level jobs?
That has a built-in assumption (that) there will not be enough jobs left in the U.S. to fulfill the indigenous graduating engineering base. That is not true. If anything, the number of engineers graduating in the United States is dropping. As (General Electric CEO) Jeff Immelt said, the U.S. graduates more sports therapists than engineers. In some sense, the U.S. is filling that gap with imports of people. In other words, people are flowing to where the work is--immigration.
I think that it is perhaps too jaundiced a view to think that the U.S. economy would not generate as many jobs for engineers as there are engineers. We have got a dropping number of engineers, a growing economy and already the gap is being filled more by immigration than by local demand.
Is the decline in the number of U.S. engineering degrees a problem?
Absolutely. A lot of my friends ask me, "What should I tell my kids? If all the manufacturing jobs are going to go to China, all the engineering jobs are going to India, what should I tell my kids to do?" My answer is--and I may be biased because I am an engineer: "Hey, listen, the cutting edge of technology will always be here, and the shortage of engineers only means there is more demand for them."
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The U.S. graduates more sports therapists than engineers.
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Should the U.S. do more to attract foreign students, such as Indians or Chinese?
The U.S. never wants to lose its ability to be the place where the best talent in the world wants to gravitate. And it should never be fearful of change. To somebody from the outside looking at this debate, it is staggering to think of a U.S. that has anything less than complete self-confidence in its ability to reinvent itself.
What should be done to make the country more attractive to Indian students? Should we be easing up some of the visa checkpoints? That has been slowing things down for students.
Post-September 11, there was an impact. There was a feeling that if you looked Middle Eastern, then somehow you would get stopped more. I had friends who were like, "I do not want to go to the U.S. now." The U.S. response was perhaps verging on the exclusionary.
That concern has gone away. What remains now is the ability to be able to give people who are graduating from Chinese and Indian universities a greater conceptual challenge, a greater intellectual challenge, as well as a greater reward system. Both of them are available in plenty.
So what should those incentives be, exactly?
Making it easier for immigration would certainly help, because what is happening is that the visa pipeline has been a joke. Now that there are no more visas available, people can't come even if they wanted to.
You're talking about H-1B visas?
That is right. The H-1B visa is the classic visa that a graduating foreign student uses between the student visa and the green card. You've just snipped off that link in the chain. You cannot go from student visa to green card. The single biggest thing that can be done is to fix this H-1B situation.
In other words, a student might be less willing to come to the U.S. because they see that the number of H-1B visas is small and they might not be able to stay here?
That's right. (They'll say) "It is going to cost me a fortune to go to a university in the U.S., and my employment after that is not certain. In fact, it is quite uncertain. What if they cut the visas back even further?"
Let me ask your thoughts about recent political changes in India. Are you comfortable with the Congress Party coming back into power and the new leader that has been put forward as the next prime minister?
If I go back 14 years ago, I was actually part of the wave of General Electric (employees) first entering India. In some sense, I was leading GE?s efforts to invest in India and build India as a market. I was facing a resistant government on the other side. They wanted to be closed. I remember personally seeing what Dr. Manmohan Singh, who is now prime minister and who was then the finance minister, did to open up the economy. In some sense, he blasted away many of the sort of constraints that were holding us back. I look at that and say, "Boy, there is nothing wrong with having him be the guy who is running the show." The things that you worry about are: What are the compromises that need to be made with small political parties to keep the coalition alive?
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It is staggering to think of a U.S. that has anything less than complete self-confidence in its ability to reinvent itself.
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The Communist Party, for example?
That is right. But my own sense is that once the new government achieves liftoff speed on its own, then the side parties know that if they go, somebody else can come. The balance of power tilts back to the party that has the dominant share.
Wipro's chairman has been active in setting up a foundation. Besides offering good jobs, has Wipro done other things to try to alleviate some of the poverty issues in India?
We have focused our noncommercial efforts on education...on two fronts. One is for the "haves," which means people who can afford to go to school. We have been launching a new kind of education program that is more discovery-based, rather than rote-based, a criticism that we hear a lot about in India.
At what grade level?
We basically do it from grade four to eight. It is in private schools. It's in public schools as well.
When you say you are focused on "haves," who are you targeting?
People who already go to school. And then we take into account the fact that something like a whopping 60 percent of India?s kids don't go to school.
Primarily in the rural areas?
Right. That part of the work typically is oriented around how to get kids to schools. It is a completely different set of challenges. If you are within an hour?s drive from a metro area, you are classified as a "have." If you live more than an hour's drive from a metro area, you are a "have not."
How do you give them the infrastructure they need? You want to give every school a computer, but you certainly cannot afford to give every school a computer. So we worked with a local entrepreneur who would set up a computer center in the school, and from 8 to 5, that computer is available to students. From 5 to midnight, it is a for-fee service for locals who want to do e-mail or whatever. The entrepreneur makes money, while we get the infrastructure in the school. The kids benefit and the locals benefit because they have now access to e-mail.
So far from my experience with the offshoring I have seen it has taken 3-4 times the number of people to do the same job. Does it really save money then? I have been a hiring manager and I have been a primary interviewer trying to hire new employees at several companies and the fact is I have seen more padded resumes from offshore just so they can get in the door and offer services for less money and it ends up they don't have a clue when it comes to actually performing the job.
Let's cut the talk about a global economy and talk about skill sets. These new labor markets just do not have the established skillsets to actually benefit yet. This gap is spaned with sheer numbers. Where I work currently I have heard more dissatisfaction from the engineers that offshored IT support efforts are much poorer than US based support teams. They get bounced around from one technician to another. The cutural gap is causing similar issues and the US teams are expected if not required to bend to the offshore personel. This is reality for those of us in the trenches, the place that many CEOs in the Ivory towers don't go and look.
If companies really want to save money, take the workers they have and move them to lower cost areas like the Midwest or Rocky Mountain region and establish facilities away from the high cost areas like Silicon Valley or New York. You will save more money by lowering the real estate costs and many of these locations offer incentives to get high tech industries moved in.
Lew Newby
A telecommuter from Ohio to a company in San Jose, CA
While your comments are understandable, to bundle all the offshoring up together and treat them as junk is as good as saying that all the US based engineers are better than the rest of the lot. Offshoring works and it has proved it works on the balance sheets of many US based companies. Moreover, why this hue and cry about outsourcing when every major american FMCG company wants to sell their product and dominate local markets in all parts of the world? Should other countries also stop US companies to sell anything in their mkts? This is just business. No need to be emotional about it.
Note that a decision to offshore is voluntary. There is no compulsion to offshore- companies do it becuse it makes business sense- reduces costs, improves quality. While you will always find anecdotes and studies saying otherwise, most companies have spoken loudly with their wallets. If offshoring does not work, the wallets will speak again.
As Lord Liege, points this is a business oppurtunity, a management opportunity. And in a commercial world, people in commerce will call the shots.
There is no need to get emotional about we live in a global marketplace where everything is a commodity. (of course, whether we should want to live in such a world is a big question in my mind)
Note that a decision to offshore is voluntary. There is no compulsion to offshore- companies do it becuse it makes business sense- reduces costs, improves quality. While you will always find anecdotes and studies saying otherwise, most companies have spoken loudly with their wallets. If offshoring does not work, the wallets will speak again.
As Lord Liege, points this is a business oppurtunity, a management opportunity. And in a commercial world, people in commerce will call the shots.
There is no need to get emotional about we live in a global marketplace where everything is a commodity. (of course, whether we should want to live in such a world is a big question in my mind)
Mr. Paul says that there is a shortage of engineers in this country. OK then, demonstrate: post a typical job ad on Monster.com or CareerBuilder.com and see how many "qualified" resumes you get.
In 1998 Norman Matloff, a professor at UC Davis, testified before Congress on the alleged endless shortage of IT workers. See
http://www.house.gov/judiciary/6096.htm.
For example, he said that Microsoft hires about 2% of applicants. What's the CEO's rule of thumb - does it become a labor shortage when you only get about 50 applications for a job opening?
I don't know about acceptance statistics for engineering programs at American universities, but I suspect it's the same story.
Mr. Paul also states that there are not enough H-1B visas available. I guess he is not happy that the yearly quota is now back to 65,000, down from 195,000. Go and bribe a politician, Mr. Paul.
Here is an excerpt from a FAIR report called "Deleting American Workers: Abuse of the Temporary Foreign Worker System in the High Tech Industry"
The INS [now ICE] conducted a study of 3,247 H-1B applicants who applied at an American consulate in India (Indians account for about half of all H-1B visas issued) and were unable to verify the authenticity of almost 45 percent of the claims made on the petitions. Twenty-one percent of the work experience claims made to the INS were confirmed to be fraudulent.
The report is available at www.fairus.org.
Mr. Paul says we should embrace outsourcing and H-1B's, and we should "reinvent" ourselves. I live in southwest Riverside County, one of the fastest growing areas in the country. The North County Times quotes a local economist who is excited that Lake Elsinore is about to be reinvented, to use Mr. Paul's term. We are now attracting big business here. So who is coming to town? Is it IBM, HP, Microsoft, or Intel? Guess again. It's Home Depot, Lowes, Staples, and other retailers. The local car dealer is expanding too.
This isn't reinvention. It's more like repetition of history. A century ago big business had the same idea of using foreign workers for cheap labor. High-tech companies are now going overseas to do the same thing.
If I get outsourced again when I reach the age of 50, my retirement will look bleak. With people like Mr. Paul running the private sector, I am ready to love big brother.
There is no use in arguing with Mr. Paul about this subject, because he lives in a completely different world from the rest of us, and his values are not the same.
Really, all these suggestions from outsourcers that we all should get on with the program and "reinvent ourselves" are getting old. What else do expect to hear from someone either benefiting directly from outsourcing or working for someone whose official corporate policy is that "outsourcing is good for you b/c it is good for our bottom line" ?
Maybe News.com should interview someone from the other "side" as well ? Someone who "successfully" reinvented himself by going from IT field to .... [fill in the blanks here].
The Alfred P. Sloan Foundation, a philanthropic nonprofit institution, was established in 1934 by Alfred Pritchard Sloan, Jr., then President and Chief Executive Officer of the General Motors Corporation.
http://www.sloan.org/programs/documents/PublicInterestTeitelbaum2003.pdf
"Do we need more scientists?
by MICHAEL S. TEITELBAUM
FOR much of the past two decades, predictions of an impending shortage of scientists and engineers in America have gained increasingly wide currency. The country is failing to produce scientists and engineers in numbers sufficient to fulfill its economic potential, the argument runs. The supposed causes are weaknesses in elementary, secondary, or higher education, inadequate financing of the fields, declining interest in science and engineering among American students, or some combination of these. Thus it is said that the United States must import students, scientists, and engineers from abroad to fill universities and work in the private sector?though even this talent pool may dry up eventually as more foreign nationals find attractive opportunities elsewhere. Yet alongside such arguments?sometimes in the very same publications in which they appear?one learns of
layoffs of tens of thousands of scientists and engineers in the computer, telecommunications, and aerospace industries, of the deep frustration and even anger felt by newly minted Ph.D.s unable to find stable employment in traditional
science and engineering career paths, and of senior scientists and engineers who are advising undergraduates against pursuing careers in their own fields. Why the contradictory reports on professions routinely deemed critical to the success of the American economy? Is it possible
that there really is no shortage in these fields? ..."
- Excellent article - America imports everything, so why not technology?
- by September 7, 2004 6:16 AM PDT
- I agree completly with Mr.Paul, i would love to see him debate this with Lou Dobbs and put the record straight!
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