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Weekly Column

Making Waves: How to Turn Around the U.S. Tech Economy in One Week With No New Laws, Regulations, or Tax Breaks Required and Without Moving to India

Status: [CLOSED]
By Robert X. Cringely

Last week I heard from a reader who had a novel idea. If IT outsourcing and offshoring are becoming such a problem that hundreds of thousands of American programmers and engineers might lose their jobs because of it, why not just move to India and join the winning side? The idea seemed ludicrous, but the more I thought about it the more sense it made �- not sense like my mother might have had (real sense), but sense like I might have (Cringely sense). Why not move to India?

Well, there's always the malaria, I suppose.

But ignoring the odd health problem, wages are dramatically lower in India, but then so is the cost of living. As long as your quality of life is the same or better, one could argue that it doesn't matter how much you are being paid.

You'd probably be a lot more important in India than back home, too. That's because an American programmer in India would probably be of most value working on projects where the final customer was an American or non-Indian company. Your marketable skills might turn out not to be architecture, design or coding, but culture and communication. Wouldn't that be ironic? After all, from my earlier outsourcing columns it was clear that there are major problems with the practice, and those problems stem mainly from cultural differences.

I have a friend from India who came to the U.S. and worked nine years for Sun Microsystems in several important capacities. He told me that he was well into his second year on the job when he figured out that he was supposed to tell the truth in meetings. And it was very freeing when he realized that getting the bad news out as quickly as possible and dealing with it not only didn't hurt his career in the U.S., but actually helped it.

This type of lesson remains unlearned in most Indian development organizations, so the American who can interpret the needs of the customer, explain them to the Indian technical staff, then drive the work to completion, would be very valuable.

India isn't for everyone, but some people really love it. It isn't America, and can't be made into America, so forget that. India has to be enjoyed for what it is, which is a place that smells and runs and sounds completely different from what most Americans are used to.

But if you are working for HP in Houston and moving to HP in Bangalore, well Houston is actually hotter in the summer.

So I went on the web to see how easy it would be to emigrate to India. I found NOTHING. I called the Indian Embassy in Washington, DC and asked how I could emigrate to India. They didn't know what I was talking about.

What the Indian Embassy was prepared to discuss was how my U.S. employer might transfer me to India for some period of time. I told them PBS had no such expansion plans to my knowledge, though they might make an exception just for me. They were also willing to discuss how I might go to India as an entrepreneur, bringing capital into the country and starting a new business there employing Indians. I told them I had no money to invest. And the idea that I'd just arrive at the Mumbai equivalent of Ellis Island looking for a job, well they found that rather amusing.

You can't just move to India it turns out. Someone there has to want you -� no, they have to NEED you -� OR you have to be bringing with you a big suitcase of cash to start a business. Journeyman techies need not apply.

It's interesting that Indian immigration policies are more restrictive than U.S. immigration policies. There is no true Indian equivalent, for example, of our H1-B work visas. There is no quid pro quo. But then there is also no wave of U.S. engineers clamoring to move to India.

Paul Sen, who directed both my "Triumph of the Nerds" and "Plane Crazy" shows (he was the guy behind the camera I tried to kill in the second hour of Plane Crazy) grew up in Calcutta, and has a keen appreciation for the cultural differences between the two nations. I remember how amused we all were when Paul took his English girlfriend to visit India and what she was most looking forward to was lying on the beach. I had never heard of anyone going to India to lie on the beach. Neither had Paul.

But this doesn't mean that there aren't Americans or beaches in India. If you look inside the major Indian IT outsourcing firms you'll find lots of Americans. Most of these Americans were born in India, emigrated to the U.S., became American citizens, but have subsequently gone back to their homeland not with the idea of living there forever, but of capitalizing on this very offshoring phenomenon. They are living the American dream, but doing so in Bangalore, not Palo Alto. And why not? If it is a more efficient way to get things done then it is proper. I just feel that offshoring is presently being done too often for the wrong reasons and with the wrong ultimate result.

Then it came to me. I've been missing the whole point. We've all been missing the point of what's really wrong with the current economic recovery. Forget about India. What is it that we are doing wrong right here right now that has us grasping at IT outsourcing as having anything important to do with U.S. prosperity?

In my 2004 predictions column from last month, I forecast that IT outsourcing would become an issue in the U.S. Presidential election. That prediction has already come to pass, but frankly I don't see any candidates embracing it as they should. This is not strictly a matter of inevitably maturing industries in transition. Nor is it a phenomenon that can simply be stopped by a new law or regulation. These are electrons we're schlepping halfway around the world, and it is just about impossible to keep electrons inside or outside political boundaries. So we can't stop it, but it would also be better not to lean into it as much as we have been, nor with such enthusiasm.

What's to be done? Well throwing $500 million into community college retraining programs as the Bush Administration proposes is doing less than nothing because it not only won't fix or even put a dent in the problem, it also proves that those who proposed this solution don't even understand what's broken. The people losing technical jobs aren't welders who can take a few weeks of retraining to move from steel to titanium. We keep being told by the experts that this is a major structural change taking place and those lost jobs won't ever come back.

I don't believe that one, either.

I took a long shower and figured out that what we're all worried about is that next technology wave that is supposed to come along, but hasn't. And somewhere in there we started assuming that the next wave, whatever it is -� biotech, nanotech, somethingtech �- will require such dramatically different skill sets that the people who are working now will just have to be shipped off to Lowes and Home Depot. But that hasn't been the case with past waves. Of course, there are always new technical skill sets required, but most of the people in a technical organization don't work precisely where the rubber meets the road. The difference in industrial DNA between a leading-edge chip company and a leading-edge biotech company is probably less than 10 percent.

We are in as good a shape as ever to support that next wave, we're just nervous because it hasn't come yet. The wave is late. If it was here, new companies would be being started in large numbers, sucking-up good and bad engineers alike along with the added spice of some new specialists brought in from universities and other countries to change the mix just enough to support the hot new technology.

Why is the wave late, then? It doesn't have to do with technology or education or marketing, it has to do with venture capital. The venture capital business has changed and that change isn't entirely good.

Venture capitalists aren't my favorite people. I see them as generally greedy and self-important, and not nearly as smart as they think they are. And right now they are very nervous about making new investments. What if the next wave they pick isn't the right one? Another part of the problem is that venture funds have grown too large, pushing up the average deal size required for funds to think of themselves as being efficient. Yes, that makes no sense, but I told you these people aren't very smart. Several big venture funds have actually been giving money back to their investors lately in an effort to allow smaller investments. But billions of dollars �- tens of billions of dollars -- are still in those funds, waiting to be invested. And eventually the pressure of all that money is going to start a new investment cycle. Some people think it has already begun but I don't.

And when that investment cycle finally gets going in earnest, most of the unemployed people in Silicon Valley will suddenly be employed again just at the moment they were about to sign up for that welding course down at the JC.

But there is still that part about choosing the right wave. How will the venture capitalists know when the time and the opportunities are finally right? That's the really silly part. They don't have to know. Heck, they've never known before.

These people aren't very smart, remember? They make enormous profits in an industry where 90 plus percent of their investments have always failed. What they have always done is invest in lots of different ideas, fund lots of startups, then see what clicks and throw the really big money into what's clicking. That's what has worked in the past and what will work this time, too, except the venture capitalists have been reading their own press releases and their nervous institutional investors have, too, so nothing is happening.

They are waiting for a revelation that will never come.

Here is my solution to adding jobs to the jobless recovery, to bringing Silicon Valley back to life, and to taking outsourcing and offshoring off the front page. Next week, Every venture capital firm in America should take five percent of its available funds and invest that money with best deals they've all had sitting on their desks for months. It doesn't matter what the startups are. Give them the darned money, which I calculate to be about $5 billion spread across a thousand new companies. It isn't tax money, government money, money taken away from education or Medicare. Its just money that was already intended for high-tech investment �- money that probably would have been lost anyway. INVEST IT! Stop trying to pretend you are so smart or that your input and board membership really makes a difference (it doesn't -� you heard it here first) and write the checks.

And cancel my visa application, because I'm staying here.

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