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IEET > Life > Innovation > Vision > Futurism > Staff > Hank Pellissier

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“Headhunter” explains why USA high-tech industry is declining


Hank Pellissier
By Hank Pellissier
Ethical Technology

Posted: Feb 20, 2012

The United States has lost 28% of its jobs in high tech since its peak in 2000, claims a study released recently by the National Science Board. This means 687,000 positions have been lost. Why has this happened?

I’ve lived near Silicon Valley for three decades. I’ve always regarded the high-tech hub as a permanent dynamo in the USA economy, an employment source for it’s citizens, and ground zero for the future’s scientific breakthroughs. Imagine my surprise when I queried a “headhunter” recently who informed me that times-are-a’-changing; high-tech is migrating to Asia, and why be surprised? A huge percent of SV jobs are already filled by immigrants from that continent…

The “Anonymous Headhunter” patiently answered my questions about today and tomorrow’s global realities in the high-tech sector:

Hank Pellissier: Please describe for me and IEET readers your occupation as an SV headhunter.

Anonymous Headhunter: I’ve been headhunting for 19 years, my partner for 15 years. Most of our clients are startups - we also work with venture capital firms. We are engineering focused, but also place in Marketing, Sales, technical writing, etc. Most of our placements are high level - Director or VP  level, and architect or Principal engineers. The bulk of our work is for Silicon Valley.

Hank Pellissier:  You locate employees for high tech companies. Okay, here’s my next question. Demographics in SV have changed enormously since the 1980’s - Cupertino is now 63% Asian, Fremont 50%, Sunnyvale 40%, Santa Clara 38%. Many, I guess, are high-tech workers who immigrated here?  Did you get them hired?

Anonymous Headhunter: Yes, a huge portion of the potential candidates for positions that we submit to our clients are foreigners, mostly Indians, then Chinese, then other nationalities (Israeli, Europeans, etc.)

Hank Pellissier: So… there just aren’t enough qualified USA workers for many of the jobs offered?

Anonymous Headhunter: The technical jobs in Silicon Valley are hard to fill with Americans. We have 18,000 people in our database, collected over 10 years, and easily 65% or more are foreign. The ones that are not are executives and marketing and sales guys. The number of American engineers is small, by comparison. Not to say the universities are not still cranking out software and hardware engineers, but I am sure that foreigners outnumber American kids in all those classes. When we asked computer science professors for help, asking which students they would recommend, they sent us all foreign names.

Hank Pellissier: Why do you think America isn’t producing enough workers for these high-quality jobs?  Are we lazy?  Do our schools suck? Are we obese and stupid? Do the Chinese and Indians just work harder? 

Anonymous Headhunter: “Why” is the big question. Since I’ve been a recruiter for almost 20 years, I’ve seen the number of foreign candidates rise each year. American students are simply not choosing engineering as much as the foreign students. American schools have great computer science programs, that is not the issue. It’s just seems that more foreigners are picking those majors than the American students. Lots of Americans must be choosing business or Humanities and not enough technical majors. But that is just my opinion, based on the number of young American technical candidates i see coming out of schools. I get email every day from new grads, asking for help finding jobs, but honestly, most are Indian or Chinese, not many Americans.

In my opinion, American schools, starting about 30 years ago, slacked on the technical requirements. USA grade schools and high schools didn’t emphasize technology, so when those students got to college, they were already behind - they couldn’t compete in the technical courses, so they chose a different profession, instead of engineering. Today the USA has a ton of MBA’s. This is good, if partnered with a technical degree. But just a bunch of MBA’s with no technical backgrounds? It takes business know-how to run a successful global company now, but you have to start with technical expertise, or you have nothing to build and sell eventually. And no engineers to create your product.

What are American students doing now?  Flipping hamburgers?  Dropping out of school?  Taking Psychology courses? This generation is not helping the US economy.

Hank Pellissier: Do the Indian and Chinese technical workers you hire, specialize or dominate in specific fields? Are Americans the leaders in… anything?

Anonymous Headhunter: Indians and Chinese are not good at just one thing, they are pretty well versed in all hardware and software engineering. I would say the Indians are better at all the web and mobile application development more than the Chinese, but that may just be my personal experience with them. If I have a web or mobile application opening, I seem to get more Indian candidates responding than Chinese. The Chinese are very good at other hardware, software and firmware (embedded) development and are quickly getting up to speed on the mobile app world. They are all Huge Apple fans and Apple is now all about mobile apps, so I suspect in the next few years, the Chinese will be cranking out more and more SW engineers for mobile application development.

I think the USA is still ahead of the game - except for maybe Japan - in video gaming. We have good gaming companies here and they do tend to hire more American engineers. Also, Mechanical Engineers. For some reason, Mechanical engineering is not really a profession of high choice for either Indians or Chinese, so many of the Mechanical Engineers are also Americans. That may change in the future, but it is what I am finding now.

Hank Pellissier: What job areas are the hardest for you to fill?

Anonymous Headhunter: Anything in high level web application and mobile application development, user interface experience - is tough to fill right now. There simply are not enough expert guys in this field. We can find them - they are just all engaged and if they cut free, they all have multiple offers on the table and can demand top dollar. Most of these guys seem to be American, but many Indians as well.

Hank Pellissier: Can you give me an example, of a job you tried to fill, that you couldn’t find an American for?

Anonymous Headhunter: Yes. Recently we had an order from a small security start-up. The requirement was for a security hacker type developer who could test their embedded product and try to break into it, to find the security holes. The requirement called for someone who was a US citizen, due to complicated visa reasons.  It did not need to be a senior person, just a new college grad. We went to Stanford, UC Berkeley. San Jose State, talked to dozens of new grads…almost ALL were foreigners and would need visa sponsorship. We could not find a US citizen new grad computer science major for the longest time. We finally did, but it was ridiculously difficult. Almost everyone was a foreigner.

Hank Pellissier: What do you see in the future? The USA falling behind in crucial industries, like AI and robotics? 

Anonymous Headhunter: America is already behind in critical areas. Although much of the think-tank part still thrives here, due primarily to the VC companies, all the manufacturing is already done offshore. Middle-level manufacturing and technical jobs are pretty much gone from America. The New York Times had an interesting article that explained what Apple faced when making the iPhone; it addresses lots of what I am talking about. The sheer mass of technical humanity in China for example - we simply cannot compete.

Hank Pellissier: In high-tech R & D - have you noticed it expanding into certain nations?

Anonymous Headhunter: Yes, here’s an example: Nokia is closing a huge location - 1000 engineers - in Denmark. They are moving much of that work to China where labor, even highly technical labor, is cheaper. Another client we have has a huge R&D facility in Japan. But Japan is not cheap—so they have plans to phase out that location and move a lot of that work to China, Taiwan or elsewhere where labor is cheaper. We are witnessing, first hand, a huge movement of technical jobs out of the US and Europe to less expensive labor locations. And after Asia gets too expensive, then where? Africa?

Right now, most of my current efforts are recruiting in China. Here’s another example: An American audio company has sales and marketing in the USA, but all their R&D and manufacturing is in China. Our task is to find audio, acoustic gurus from all over the world, and convince them to move to China. My search is very international, I recruit the whole wide world for these guys—

If you told me 3 years ago I would be recruiting engineers from all over the world to relocate to China and Taiwan to work in R&D factories, I would not have believed you. But that is what I am doing.


Hank Pellissier was IEET’s Managing Director on January-October in 2012, and an IEET Affiliate Scholar. He’s the author of two e-books, Invent Utopia Now and Why is the IQ of Ashkenazi Jews so High? He is currently at BrighterBrains.org
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COMMENTS


Here I am. On the other side of world, in China.  Forget about all our explanations that we are interested in Eastern cultures or whatnot, fundamentally, the reason why I am living in China is because cost of living is so low! In the US, I pay a third of my salary just for the rent. You get burnt out after a while.

But I have to admit the real reason why I’m living in China despite my fondness of Bay Area culture depends on the technological condition. Internet provides me with abundance of knowledge and information. I would never sacrifice that if it had been in early 1990s, the Bay Area with its fusion of high tech and hippie culture is the equivalence of heaven on earth. But now, the entire library of human knowledge is in the palm of my hands whenever I go, even on the otherside of the planet. China’s low cost of living, ironically, provides me material abundance given my financial circumstance.
After all, what can you possibly ask from life other than abundance? Material Abundance + knowledge Abundance, only then will we move up the hierarchy of needs toward self actualization and transcendence.
I think Both the headhunter(as employer) and I (as freelancer ) are all sorta living the Friedman’s Flat world story (despite multiple possible objections). This is the story of fiber optics wiring up the massive human tech abundance in the developing world. It’s exciting!





My brother - who is CEO of a tech company in Silicon Valley - asked me to post his comments. Here they are:

“Good article. Sad but true. I agree with Anonymous Headhunter. When we needed to hire some key design engineers about a year ago, we tried hiring Americans. We interviewed about a half dozen people, but they all wanted way too much $$ and their skill levels did not seem to be where we needed them to be. So, instead, we ended up hiring 2 Russian engineers as temps, and also joined up with an Indian design company, where we have 4 or 5 more engineers working in India on our project. This is working well for us, despite the language and distances. 

I am strongly for buying and hiring American. But, if you really can’t find what you need, it is not possible to stick with that philosophy. We have to get things done. The temp engineers I was considering for the project, who did not seem really all that capable to us, wanted anywhere from $110 to $150/hour. The Russians are on site and charging us $65 and $75/hour. They are very dedicated and workaholics. The Indians charge us $35/hour, and are excellent engineers.”





It’s not surprising to me that it’s difficult to convince experts to emigrate to China.  Cybernoetic Man asked what anyone could possibly ask for beyond material abundance and information?  I assume he has some way around the Great Firewall, but what about the constant state suppression of information?  Chinese authorities recently bulldozered over a train wreck to hide the evidence.  What about freedom?  Is he really comfortable living in a police state?  What about rudimentary consumer and environmental protections?

It might be unfortunate that the US is falling behind in technology, but it seems to me that many Asian countries lack the foundational frameworks necessary for building really dynamic economies.  Where is the rule of law or transparency?  Also, I wonder why so many Asians need to come here to succeed.  Is a free and open society necessary to allow creativity to bloom and people to realize their potential?  Culture matters.  To me, the lamentable things happening in the US are the erosion of the rule of law, transparency, and personal freedoms.  These are our what really make us great.  Who cares if American kids don’t care about engineering.  Let the people who do care come here and do it.





What appears to be an ethnic disparity may be confounding the underlying issues, and it would be good to understand why IT careers are being rejected by some and favoured by others?

1. Is it because Asia as a whole sees opportunity for technological progress and future economic success?

2. Is it because individuals seek opportunity and success, and work just that little bit harder, seize the day, to pursue a better quality of life?

3. Is the disparity encouraged by big Corps like Apple and IBM?

4. Is there social stigma that is attached to geeks and nerds as opposed to jocks?

5. Are business executive and managerial careers favoured more highly than IT and technical posts by some groups?

6. Are some individuals/groups more willing to put in extra hours to solve difficult technical problems outside of the office?

7. Does it help if your culture rejects intoxication, socialising, in favour of more sober enterprise?

It may be none of these, or may comprise all to varying degrees?





Is the US really falling behind in technology? Is Europe?

Does America really have a shortage of IT and technical nerds?

When was the last time you upgraded to an Indian or Chinese computer operating system?

How is the best way to find out who chooses which career path at college/Uni and why?

How can we reverse disparity? Should we attempt to reverse disparity?

Questions.. Questions?





@futurist
Yes. I do have ways around GWF. Obviously my standards of living is higher than the average Chinese urbanites. But living in the Bay Area is very expensive, It’s just personal financial situation. If I had the money, of course I would live in the States. I don’t like the police state, but so far it has no personally intruded on my privacy. Besides, it’s not as awful as the media reports.
I was just raising a point about hyper-connected world made available by internet. The Friedman flatworld story, you know. I don’t have to be in the Bay Area to access the most cutting-edge knowledge in culture, philosophy, and tech now. Heaven on earth used to be there, but now I carry it with me wherever I go.





but the overall big picture is just the demographics. You can’t get every US college graduates to be mid-level engineers when China and India graduate more tech students than there are students in US. There’s no natural law that says SV has to be the ground zero of tech breakthroughs.
Overall, it’s a good thing to get distributed tech innovation. The only question is if you can attract the talents worldwide? Can you always be an accelerating brain-gaining country?
Different countries have different purchasing power the same dollar brings. the US still leads in the most cutting-edge, but sometimes the numbers, both financial and demographic, are tipping to the other side of pacific.





yes this is sad but very true. But I believe that the headhunters should also possess some qualities which are reflected by their decisions in the selection of the candidates and for indirectly in the industry’s growth. they should be the people above par excellence in this area. Nowadays, with the growing demand of headhunters Multins cuddihy & associates provides <a href= “http://mullinscuddihy.com/executive-search/”> online headhunters</a> for this purpose to many of the organization.





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