Don't Blame H-1B Workers for Woes
“More than half of Silicon Valley startups were founded by immigrants over the last decade. These immigrant-founded tech companies employed 450,000 workers and had sales of $52 billion in 2005…The critics of skilled immigration may get their wish. We will scare away the world’s best and brightest who have always flocked to our shores. But the next Silicon Valley won’t be located in the U.S. It will likely be in Hyderabad or Shanghai.”
David Andersen
on 16 Feb 09Protectionism is alive and well in the 21st century US. It’s almost a certainty that if politicians are for something, the opposite is the better course.
Aaron deMello
on 16 Feb 09“But the next Silicon Valley won’t be located in the U.S. It will likely be in Hyderabad or Shanghai.”
Bingo. Its already happening now. A good friend who did well in the boom years with a hedge fund put it very succinctly, although he was talking about the finance biz:
“Funny world today. If you go back 5 or 10 years, capital was amazingly easy to get, and people were very expensive. So you needed to build businesses (in finance) that were capital intensive/people light, and these all look like hedge funds. Fast forward to today, where capital is incredibly hard to get, but people are cheap. So you need to build businesses that are people intensive / capital light.”
That is the challenge today. Obviously 37 Signals did it going the services-funds-product-development route but that doesn’t really work for all tech startups.
If you need a lot of people, then you go where labor is cheap: hence Hyderabad, Shanghai, Hanoi, etc. are potential future Silicon Valleys.
I would add my own homeland of Canada, but in recent years the cost of business here has caught up with the USA, as has Israel.
ratchetcat
on 16 Feb 09That might be our salvation. It’s not a zero sum game.
Happy
on 16 Feb 09Aaron: “If you need a lot of people, then you go where labor is cheap”
Or…If you need a lot of people then you bring cheap labor to you, as H1-B opponents claim is happening. Wether that’s happening or not, I don’t know, but that’s the root of the debate.
pwb
on 16 Feb 09“But the next Silicon Valley won’t be located in the U.S. It will likely be in Hyderabad or Shanghai.”
Not in our lifetimes.
David Andersen
on 16 Feb 09“Not in our lifetimes.”
Famous last words.
Naveen Dittakavi
on 16 Feb 09My comment is regarding Silicon Valley style web app startups in India:
I’m Indian-American – I was born and raised in the US went to a top CS school yada-yada-yada but since graduating have been traveling to the “motherland” for business and pleasure once a year over the last 4 years… What I’ve noticed is that in India you have a pool of talented engineers as you do outside of any big engineering city – but what you lack here is an understanding of the market.
There are only a few Indian web application start ups that are successful with Western consumers. The one that comes to mind is shaadi.com – the leading Indian “e-harmony” that is successful in the domestic Indian market and foreign Indian market. For most other web products, I believe that the problem is the cultural barrier. People born and raised in India do not rely upon the Internet or technology like we do in the US. There are very few e-commerce enabled retailers (except the airlines) here that provide service to the domestic market. It’s just easier and cheaper to get your local guy / servant / help to go to the store on your behalf to get something.
Additionally, the majority of the middle class who lives in an urban environment does not necessarily have a computer at home. Those who do, may not be willing to pay for “broadband” access and stick with dial up. A friend showed me the latest BSNL rates for “broadband”. An unlimited 512k DSL connection costs 1350 rupees a month. Two problems here. One that it’s 512k DSL and two that it’s 1350 rupees a month.
512k DSL… In Atlanta I put my iPhone back in my pocket if 3G is unavailable and the task I want to do can wait. In my opinion, the speed of your connection affects how you use the web. Hence I don’t believe the domestic market in India is ready for the heavy web app experience.
1350 rupees a month. That’s about $28 at today’s exchange rate. To an American that’s not a whole lot – I pay around $60 in Atlanta to Comcast for 8mbps but 1350 rupees ($28) is a LOT of money for the locals. Two days ago I was in Jaipur (the capital of a northwest Indian state) dropping off my friend’s extended family and friends at a train station. I noticed that train station food and drinks were really, really cheap. A cup of coffee or tea was 4 rupees (10 cents US). My friend’s dad told me that if you really have to, you can eat all three meals out in India for less than 50 rupees / $1 a day. It’s not the best food but hey, it can be done and it is done by most of the 1.2 billion people who live here.
So although you have a huge base of people who have e-mail and surf the net once a day at work, using dial up at home, or at an Internet cafe, it’s not yet in their blood or in their face 24/7 like it is for us in the US.
From the above, I don’t think that people here are drawn to using the web to solve problems or share information in the same capacity as we do in the US. I don’t think that it makes sense to start a web app startup here targeted towards the domestic market. And although 37s mantras suggest that people can build fee based web products by putting in the right effort and forethought, I think that you need to have an American or Western understanding of how the Internet is used in order to design a product for and sell the product to those customers.
FYI: http://www.calcuttatelephones.com/tariff_broadband.shtml
Perhaps a reader here is an Indian-born web app entrepreneur who can weigh in and provide his/her perspective about designing and selling products to US and Western consumers?
Jeff Putz
on 16 Feb 09I find it stunning that anyone can be arrogant about this.
The labor cost was the thing everyone pointed to back in the day, but as a developer and someone who has had to hire developers, I struggle with the fact that it’s hard to find anyone who doesn’t suck at their job. None of the Indian guys I’ve worked with were cheaper, they just did the job better.
If you can’t hire an American to do quality work, I’m fine with hiring an immigrant who can do quality work for an American company. If our own people can’t prop up our economy, at least someone can.
Steven hates protectionists
on 16 Feb 09The day our great country doesn’t openly welcome the best and the brightest the world has to offer, we have failed to live up to our founding principles.
The myopic view that simpletons have of immigrants has to be silenced by the creative class.
Jay Godse
on 16 Feb 09That’s what folks say every time Silicon Valley goes through a recession. Blah blah blah.
The fact is that California has had a gold-rush culture since the 1850s. People from all over came there to make money.
Silicon valley didn’t get its start just from engineers. They needed money, and that came from military research in the 1930s through the 1960s. See http://www.youtube.com/watch?v=hFSPHfZQpIQ for details.
They also have a strong culture of cut-throat entrepreneurialism and a culture of tolerating failure. (That is why the movie industry also has a huge center of activity in California). They also have a culture of tolerating a wide variety of social behaviours and are often more welcoming of outcasts. That’s one reason why gays were able to coalesce as a distinct group in San Francisco, why a lot of unusual religions are founded in California. That may also explain why socially clumsy tech wizards often find the place welcoming as well.
Engineers are important, to be sure, but so are marketers, sales folks, financiers, and deal-makers. These are actually harder to find than you think in India and China, and this is why many Mandarin-speaking marketers and financiers can make waaay more money in China than in USA.
It’s not just engineers folks. You actually have to have people who also understand the market, understand how to to make deals, how to marshal resources to execute a business plan, and how to sell. Based on that, I’d bet on Silicon Valley any day.
By the way, one reason Bengaluru, India has done well as a tech hub is because a lot of Indian military research work is done there as well.
In that context, the presence or absence of H1B furriners doesn’t make much difference either way.
Naveen Dittakavi
on 16 Feb 09I couldn’t agree more with Jay.
Nikhil Gupte
on 17 Feb 09Hi Guys,
I’m am a web app developer in India. India is no real threat now and I doubt if it will be for a looooong time. Most people here are what you may refer to as “career developers” and that too with very little emphasis on careers (and developers if you really thing about it).
Software Companies here do not have the concept of quality nor do they empathize with their users.
What Naveen says in his previous comments is spot on!
That said, US protectionism could be bad for US business. But India is a loooong way off right now from taking over.
Andy
on 17 Feb 09While the US should have a skilled-worker immigration program, the US is considerably easier for immigrants to enter than China or India.
Also, the culture of big US cities like NYC and San Fransisco is easier for immigrants adopt to. Jay Godse said above of the Bay Area’s culture:
My bet is that Zurich and London will be bigger tech hubs than Hyderabad or Shanghai in the near future. India and China will have big tech hubs in the long term, but they will have to cultivate the industry from their indigenous people unless they open their borders to foreigners.
Inter-EU immigration will help Zurich’s and London’s tech industries grow. Of course, businesses there will need access to capital and may fail frequently.
bvs
on 17 Feb 09Companies aren’t allowed to pay H1-B’s lower wages than their local counterparts (or are they)?
So that means, companies hire H1-B’s for either quality or availability or both and if you throttle the inflow of H1-B’s it would impair the companies which in turn impairs the economy.
‘Protectionism is then just like crack cocaine, gives a high but leads to death.’
HS
on 17 Feb 09Naveen,
About broadband, I’d say most people who have internet at all have broadband. Dial-up is dying. And 512k is certainly fast enough for everything except bittorrent. I know because that’s what I’m using.
You’re right about internet-based commerce not being imbibed in India but this is changing (albeit slowly). I think the problem is just that companies are slow to make their presence online. People are more or less comfortable with purchasing online and ready to do so. On any train these days, an increasingly large number of passengers are booking their tickets online.
gvb
on 17 Feb 09H1B is run by US Immigration, but a H1B visa is a temporary (six year maximum) work visa, not a traditional immigration plan where the worker stays in the US indefinitely. I am not an authority on immigration, but I strongly suspect the H1B vs. immigration argument is comparing apples to orangutans.
A question that needs to be answered before H1B and traditional immigration can be debated is how many H1B visa holders convert their H1B status into a “green card” (resident alien) status or full US citizenship.
The traditional immigration benefit comes when the immigrant stays and builds wealth in his new home country. That isn’t to say that H1B workers don’t build wealth for themselves and others, it’s just that it is a temporary benefit that is hard limited by law. From the viewpoint of the US, all the H1B worker’s knowledge and much of the wealth that was created will go <poof> in six years (i.e. it will travel back to the H1B worker’s native country).
Chicken Little
on 17 Feb 09The sky is falling! Oh, it was just another pessimist news article.
Let’s hope that foreign countries will be as welcoming to U.S. citizens when the tables are turned and it’s the U.S. looking for work on foreign soil. I, for one, welcome my future employer in whatever language he speaks.
Anonymous Coward
on 17 Feb 09x
CGlory
on 17 Feb 09You will set off a riot here by posting these kind of articles. Once some online groups see your blog, it will light up with anti-immigrant rants. From my experience, I have seen some talented H1-B engineers. They need some mentoring in terms of code quality, and interpersonal skills. Once we provide them, they will deliver it (rain or sunshine). They have always worked well for me.
I am not really sure why these laws are being passed, as they don’t make sense.
Darren H
on 18 Feb 09Re: GVB’s comment on H1-B;
He’s correct that an H1-B is a temporary work visa, but it is also about the only easy-to-get visa class that is considered “Dual Intent.” Dual intent means that it can be considered as a non-immigrant visa and an immigrant visa at the same time. Basically, it means it’s okay to apply for a Green Card while on that visa.
If you’re not on a dual intent visa and you start the process for a green card, you’re technically “out of status,” since you’re on a non-immigrant visa. “Out of status” is the technical term for “You have 7 days to get out of our country, and we can deport you and/or bar you for life from entering the U.S.”
As far as I know, the only other dual intent visa is an L-1 (Inter Corporate Transfer.)
The overall green card process can be expressed as:
restart:
.. for (i=0; i lessthan 4; i++) { // LC, I-140, I-485, AOS
.. redo:
.... submitPaperwork(i);
.... sleep( ( i + rand( -0.5 … 0.5 ) ) * years );
.... if ( ! paperworkApproved() ) {
........ goto redo;
.... }
.... if ( caughtsignal == SIG_LOSTJOB ) {
........ dateOfLoss = today();
........ if ( ! foundNewJob() && today() > dateOfLoss+7 ) {
............ // must leave US immediately. Can’t return for 1 year.
............ exit();
........ } else if ( foundNewjob() ) {
............. goto restart; // New job; start whole thing over
......... }
.... } // end signal lostjob handler
.... if ( date( H1-B ) > today() – 6 years ) { // Visa expired?
........ if (i < 2) {
............ // If not past AC-21 approved, 7 days to get out!
............ exit();
........ } // end not far enough in process to stay
.... } // end H1-B expired
} // end loop
Greencard = 1; // yay, best 6-10 years of my life to get this!
One additional annoyance is that even though we pay all the same taxes and payroll deductions, if we get into the “no job, get out” state, we aren’t eligible for US unemployment, welfare, or any other social services, because we’re no longer eligible to work. When we get back to our home country, we’re also not eligible for unemployment, welfare, or any other social services there because we haven’t worked in that country recently. Basically, KTHXBYE_AND_GTFO.
Disclaimer: IANAL. I’m a Canadian working in the U.S., still trying to get a Green Card – This is my third entry to the U.S. because of that dang SIG_LOSTJOB (technically, in my case, SIG_LAYOFF due to SIG_COMPANY_BANKRUPT)
This discussion is closed.