Immigrants and Hitech

[Tuan V Nguyen <t.nguyen@garvan.unsw.edu.au>]

Hello friends,

        I found the following piece of news is interesting. It was posted in
VACETS.

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Published: July 27, 1997
http://www.sjmercury.com/business/imm072797.htm

BY ARIANA E. CHA  
Mercury News  Staff Writer

The stream of immigrant engineers and computer scientists that
nourished Silicon Valley in the early 1990s is drying up -- sending
companies scrambling to construct research and development centers
abroad.

Labor analysts say the changes are due to a number of factors,
including globalization of the computer industry, an Immigration and
Naturalization Service crackdown on companies that abused the U.S. visa
system, and the improved political climate in several countries that
provided large numbers of engineers.

Silicon Valley long ago lost its primacy in high-tech manufacturing,
and now, companies are increasingly choosing to locate their research
and development shops in countries with lower labor costs. While the
valley's boom continues notwithstanding, this migration offshore is
helping to create the region's future competition.

``If you can't bring the brain power to you, you're going to have to go
to them,'' said T.J. Rodgers, CEO of Cypress Semiconductor Corp., which
has opened three overseas semiconductor design centers since 1993.

As many as 40 percent of R&D jobs in the valley are now filled by
immigrants, according to industry estimates. But immigration by
high-tech professionals declined by almost three quarters in Santa
Clara County from 1992 to 1995 -- the latest year for which statistics
are available.  This outpaced a national decline of almost 32 percent.

Nationwide, immigration rebounded some the next year, but still
remained 15 percent lower than during the early part of the decade --
even as the number of high-tech vacancies soared. Local figures are not
yet available.

        Chart: Entering Silicon Valley

                Year     # High-tech immigrants
                ----     ----------------------
                 90             875
                 91             1100 (approx)
                 92             2700
                 93             2300 (approx)
                 94             1500 (approx)
                 95             696
                 96             Not available

          High-tech immigration is down. It declined by 74 percent
          in Santa Clara Country between 1992 and 1995.
          This outpaced a national decline of almost
          40%. It rebounded in 1996, but still remained
          15% lower nationally than during 1993 -
          even as high-tech vacancies soared. 

Early in the decade, high-tech immigration increased even as the
California recession reduced overall industry employment. While
computer electronics companies laid off production workers,
brain-power-dependent software companies grew. Many of those new
programmers were immigrants.

But immigration has failed to keep pace since the recession's end,
while high-tech employment has surged by more than a quarter in
California.

More than 1.1 million new high-tech jobs were created in the United
States last year, according to the Information Technology Association
of America, and there are now more than 190,000 vacancies. Worldwide,
there are tens of thousands more openings.

But the number of college degrees awarded in computer science fell 42
percent from 1986 -- the year it peaked -- to 1995, according to the
U.S. Department of Education. In Asia and Europe, meanwhile, the number
of science and engineering degrees has risen sharply, driving employers
out of the country to fill many high-end vacancies.

With new telecommuting technology, computer scientists and engineers
have their pick of any company in the world.

``The talent pool is now on a global level and the challenge to win
employees can be daunting,'' ITAA Vice President Amy Callahan said.

The U.S. influx of foreign engineers, technicians and computer
programmers was stable during the 1980s at about 20,000 a year. The
number ballooned in 1993, when immigration reforms made it easier for
employers to import workers with special skills, according to a new
National Science Foundation report.

The volume of immigrants also increased after 1992's Chinese Student
Protection Act, which was passed in reaction to the 1989 Tiananmen
Square massacre. During 1993-94, there was a one-time boom of several
thousand Chinese engineering and science students who were issued
permanent visas under the act. Almost half of the Chinese immigrants
moved to the Pacific Coast, the report said.

Then, in 1994, immigration fell sharply as the government began
cracking down on companies that employed highly skilled foreigners on a
special visa while paying them substandard wages.

Many high-tech employers already had concluded that the early decade's
immigration boom would be insufficient to make up for the growing
demand for highly skilled workers. Some are so worried that last year
they and the ITAA asked Congress to funnel money into educating more
computer scientists and engineers.

``We are in a crisis,'' Rodgers said. ``The number and quality of
workers we need is at an all-time low. We can't expand as fast as we
want to and it's only getting worse.  Every company I know has several
dozen -- if not hundreds -- of unfilled desks.''

The sharpest decline has occurred among computer specialists and
mathematicians. The number entering the country in 1996 was almost 21
percent less than in 1993.

Increasingly, expansion-minded companies are farming out high-tech work
to other countries, including Singapore, Brazil and the United Kingdom.
U.S. companies spent $9.8 billion on R&D centers abroad in 1993 -- more
than three times the amount in 1980, according to an NSF survey.

In fact, R&D money spent overseas is growing faster than the amount
invested domestically, now accounting for one-tenth of all American
R&D. With today's faster and more-reliable networking technology, such
foreign sites do not hinder productivity as they might have in the
1980s.

Rodgers' Cypress has unveiled three design centers abroad in the past
three years and has one in Ireland in the works.  Chicago-based
Andersen Consulting, which has four offices in Northern California,
began aggressively opening foreign software development centers in
1995.

And just Tuesday, International Business Machines Corp. announced that
it will spend $25 million over five years to open a global research
unit in India.

IBM will build its Solutions Research Center in India by year's end,
its eighth worldwide including labs in China, Switzerland, Japan,
Israel and the United States. IBM will also give $10 million in
research grants to Indian universities, the No. 1 computer-maker said.

``India is an enormous, important, fast-growing region that's producing
a lot of technical talent,'' said Caroline Kovac, of IBM Research.
``Our view is that you have to be there early to build a presence.''

Immigration has declined equally among professionals sponsored by their
employers and those who get their own visas. This suggests not only
that employers like IBM are not importing as many employees, but also
that more foreign engineers are choosing to remain at home.

Foreign employees may still like the higher wages and benefits that
U.S. companies offer, but given the choice, many prefer to stay in
their homelands.

``I joined Cypress because it was one of the premier semiconductor
companies . . .'' said Shiva Gowni, 36, manager of the company's
Bangalore, India, design center. ``But I enjoy being able to live
closer to my family.''

Bloomberg News contributed to this report.