Sunday, May 19, 2013

Outsourcing Innovation

With the recent focus on H1B reform; this is a good time to step back and consider the implications of current policy on our nation’s future. Anyone working in IT today cannot help but notice the flood of foreign workers that now populate every IT department and company in the US. Over the past 10 years the internal demographics of the typical IT group has changed radically; and this doesn't necessarily reflect the offshore workforce either. Taken together, it is probably safe to assume that many companies now source half of their IT workforce from talent who aren't US citizens. This demographic shift has been occurring at the same time that career opportunities and income growth have been shrinking across the US economy. Somewhere between 400,000 to 500,000 work visas were handed out during the Great Recession – yet remarkably lawmakers bought into the myth perpetrated by a handful a major IT companies that there was a shortage of skilled technology workers.

Will these graduate have a future in the IT job market?
This situation is not only disingenuous and unfair though, it is dangerous and threatens the future of our economy and standing in the world. The reason for the flood of foreign workers is clear – larger employers are trying to commoditize IT labor to drive costs down as much as possible. The easiest way to do that is to either outsource work internationally or import international workers and pay them far less than American citizens. For the record, there is no shortage of skilled IT workers in the US and never has been. The current policies have driven thousands and perhaps millions of Americans out of work or at least out of the IT industry.

So why does this matter? Is it is any different than Manufacturers shipping their factories to China or other industries sending their customer support overseas?

Yes, it is different. And it matters because Information Technology is where most of this country’s emerging industry is or at least is dependent upon. Our leaders will talk endlessly about innovation and how it drives economic growth – but what happens when we outsource the most critical portions of innovation? Here are some of the more obvious implications:

  1. Our current model places intellectual property at extreme risk and more or less ensures that key innovations will be released globally before the US has a chance to fully exploit new capability developed / invented here.
  2. We will more or less permanently hamstring our internal ability to support all aspects of our own R&D. Unrealistically low labor cost expectations will make us dependent on cheaper and cheaper labor and will drive talented people out of IT and into other emerging fields.
  3. We will kill the emerging STEM focus in secondary and post-secondary education and seriously damage the value proposition for pursuing any advanced education as it becomes clearer and clearer that American Citizens will be discriminated against when it comes to IT hiring.
  4. The talent who truly drive innovation will leave this country and head to Europe and elsewhere where labor commoditization doesn't drive IT hiring. The focus and centers of innovation will move to places where talent rather than cost is valued.

We are setting ourselves up for a crisis that doesn't need to occur. The net result of that crisis will be a continuing slide of the standard of living of most Americans as technology leadership migrates elsewhere. The short term greed of a handful of major employers is reshaping our entire economic landscape for the next 50 years. It’s time we recognized that risk and built a policy that encourages development of the American IT workforce rather than its replacement. This country was built on the promise of opportunity – instead we've developed a new and semi-feudalistic labor class system for the most important segment of our workforce. Any foreign labor that we do allow in should be brought in with Green Cards and paid the prevailing rates rather than artificially low ones, and the numbers of those visas approved should be pegged to unemployment rather than to claims of phantom shortages. American Innovation is built on the foundation of a fair, just and open society; those principles should not be outsourced. If Americans can no longer be trusted to manage our own innovation – what is there for us do in our economy – what future can we truly call our own?


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