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Gates: Outsourcing due, in part, to slow immigration process
Posted by: McQ on Thursday, March 13, 2008

And I have to agree. Our legal immigration system is terrible:
US high-tech companies are being forced to outsource more jobs overseas because of outdated restrictions on immigration, Microsoft chairman Bill Gates told Congress Wednesday.

Gates, echoing a longstanding complaint from the technology sector, told a congressional panel that the US immigration system "makes attracting and retaining high-skilled immigrants exceptionally challenging for US firms."

"Congress's failure to pass high-skilled immigration reform has exacerbated an already grave situation," Gates said in remarks prepared for delivery to a hearing of the House of Representatives Science and Technology Committee.

"As a result, many US firms, including Microsoft, have been forced to locate staff in countries that welcome skilled foreign workers to do work that could otherwise have been done in the United States, if it were not for our counterproductive immigration policies."
We're supporting 21st Century high-tech industries with 18th Century immigration laws and bureaucracy. The time it takes to successfully immigrate to the US is absurdly long. In reality it takes less time to ship the jobs where the workers are than to wait on the workers to be admitted through our immigration process.

And this really a separate issue from the illegal immigration problem, although I'm sure that it too would be considerably less of a problem if we streamlined the guest worker program as well.

The irony is we have the high-tech ability to do both and have taken none of the legislative steps necessary to enable such as system. And what do we hear candidates talking about? Punishing those businesses who outsource jobs instead of talking about the fact that it is the legislators who've put those businesses in the position they're in by not taking the action necessary (and this isn't a recent problem by any stretch) to provide the workers necessary to keep the companies and their other jobs here.

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Previous Comments to this Post 

Well, call me prejudiced, but when they’re hiring foreign coders with less experience, to replace US citizens who aren’t willing to live 5 guys in a single apartment so they can work for $25.00 an hour to write code AND then the companies are busy claiming there aren’t enough workers and that’s the reason they have to import the labor from (pick your spot - India, Eastern Europe and recently South America) I have a problem.

The US citizen coders are there, they just want to eat a bit more into MicroSofts bottom line so they can have their own piece of the American pie.
This is a high-tech version of "jobs Americans won’t do", trust me, I see it every day.
Written By: looker
URL: http://
...when they’re hiring foreign coders ...
And therein lies the issue, because coding has become a commodity. The fact that you use that term tells me a lot about your objections, and why I don’t agree with them.

We’ve just left a unique era that will not come back. During that time period, anyone who could write even marginal quality computer code got a high wage. It’s not unlike the deal the automotive factory workers got in the 1960s to 1980s, but it was driven by extreme demand for services and immaturity of the industry instead of by unions.

But technology marches on, and the value in the software development industry is no longer in simply writing code. It’s in design, understanding requirements, appropriate process, testing methodologies and a host of other skills.

In fact, the value is in people who write less code. Think about it. If two developers took exactly the same amount of time to write a system with exactly the same functionality, and one produced a thousand lines and the other produced three thousand lines, which developer would you prefer?

People who have that wider variety of skills, and particularly those that can create elegant solutions with less code, still experience very high demand and high pay. In fact the last few years have seen quite a bubble in compensation for high-end software developers, with yearly increases of 15-20% being typical. It appears that the sheer mental capabilities required for the range of skills keep supply below demand no matter how many foreign developers are brought in.

But the idea that people could just be "coders" who slammed out code and made lots of money forever was always flawed. Code generators and better tools were guaranteed to wipe out those jobs, for simple economic reasons. Globalization and outsourcing just accelerated the process.

Now, it is true that a lot of American companies run primarily by bean counters use outsourcing as a bludgeon. Some of them go too far, and outsource things the foreign coders are not qualified to do. The result is typically disaster. That kind of foolishness will eventually work its way out of the system, says econ 101.

However, that’s a different issue from allowing talented developers into the system. That’s effectively a brain-drain from overseas into our economy. In aggregate, we benefit from it, though in localized cases the competition may drive down compensation (I have not seen that in my own clients, however).
The US citizen coders are there, they just want to eat a bit more into MicroSofts bottom line...
No, they’re not. As someone who just spent nine months helping a client find three top-end developers, and interviewing dozens of people in the process, and having my clients lose money because they couldn’t get software developed fast enough, I can guarantee you that they’re not. Oh, there are plenty of coders. But we have a severe shortage of developers.

Gates is right. The industry needs all the talent it can get, and while there’s no shortage of commodity coders, there’s a definite shortage of genuine developers.

I can’t agree with your "jobs Americans won’t do" line, either, and for the same reason. The comparison to the immigration mess is way off the mark. They don’t come here illegally by the millions as low wage workers that overtax the social system, increase crime, etc. They come here in small numbers motivated to work hard at a difficult task.

Nobody in the tech industry has any right to think they can just keep drawing high salaries when someone else can deliver more value. The world does not work that way long term, even if it has worked that way for a while in the US.
Written By: Billy Hollis
URL: http://
I love the term "American Jobs" like we have some sort of ownership of someone hiring practices.

However thats not really the issue. I went with my wife the the DHS office the other day for her to be fingerprinted. My wife recieved four letters in the mail of the exact same form letter for the appointment. This is the third time in 2 years we have made the trip for this expressed reason. I still to believe that fingerprints dont change and therefore are good for identification, why the DHS does not believe this is beyond me. The first thing we had to do was stand in line to present her resident card to a man who then gave her a paper form to fill out with a pencil. Never mind that the information being asked for in the paper form was magneticlly encoded on the strip on the back of the card she had to present to get the paper form. After filling out the form, we had to go stand in the same line again to present the form and have it examined by a guy who compared the information to the card that was used as identifcation the first time to get the form.

The system is broken worse than most other parts of the government.

Written By: John
URL: http://
live 5 guys in a single apartment so they can work for $25.00 an hour to write code
$25/hr is $52k a year, where are they trying to live that 5 need to split a single apartment?
Written By: meh
URL: http://
Billy, you’re putting an awful lot of judgement of me based on the choice of a single term I used.

Meh - most of these guys I’ve met are smart, hard working guys who you wouldn’t mind having as neighbors and co-workers (just like any random collection of current citizens you’d work with). A lot of them will become citizens. Most of the ones I know are saving the cash they net from this sort of arrangement (smart, actually) or sending it home. A fair number I’ve met have a wife and kids back...wherever.
Written By: looker
URL: http://
Then again Billy, you know, I don’t do the hiring.

Perhaps my perspective would change if I was looking for people to fill positions.
Written By: looker
URL: http://
Meh - most of these guys I’ve met are smart, hard working guys who you wouldn’t mind having as neighbors and co-workers (just like any random collection of current citizens you’d work with). A lot of them will become citizens. Most of the ones I know are saving the cash they net from this sort of arrangement (smart, actually) or sending it home. A fair number I’ve met have a wife and kids back...wherever.
My apologies, I wasn’t trying to imply anything about the coders. The comment I previously quoted gave me the impression that $25/hr was such a low wage that a citizen couldn’t support a family and 5 workers had to share an apartment. This sounded like an area with a very high mortgage/rent cost.
Written By: meh
URL: http://
Meh - no, no, your question makes sense. $25.00/hour is certainly nothing to sneer at and unless you’re working in this industry you might have cause to wonder how someone would ever think to bitch about it and claim THAT lousy pay. It’s instructive to at least one of Billy’s points that I obviously HAVE that attitude and didn’t realize it.

I know if my sons were making that I’d feel a lot more secure they weren’t going to try and move back in!
Written By: looker
URL: http://
I don’t see the value of immigrating people to the point you have an unemployment problem which is another way of looking at Gates comment.

The employment impact aside, there is the issue of assimilation. Too much immigration too fast and you won’t assimilate the new populous.

I grew up in Canada and Balkanized countries are no fun.

For one, Balkanization will essentially paralyze the US. Canada used to have an international presense. It was mostly neutral but they had one. Now they are an inconsequential presence internationally. That is the byproduct of the paralysis Balkanization gives you.

And Canada’s Balkanization is directly responsible for the fiascos like the Human Rights Councils that we witness with Ezra Lavant. Because pandering to sub-groups in a Balkanized community will always trump individual rights. Lavant might be off the hook and the HRC’s days may be numbered because of all the attention it got, but the HRC will be implimented in another form and people like Lavant will be hauled in front of them.
Written By: jpm100
URL: http://
Actually, the problem is not 18th century or even 19th century immigration laws. Those were the laws under which the great immigration waves of 1800-1920 (approximation for purpose of dating ease) arrived in the US. The system we now have was put into place in the 1920, as a result of the economic downturn that followed WWI (didn’t want those jobs go to non Americans), the Red Scare (after all they might be Bolshies), and plain old racism (this was the heyday of the KKK, which was aimed as much against Catholics as it was against blacks; not to mention dislike of Jews, Chinese, etc.). Details have been changed over the years, but it still remains the same—designed to keep people out of the US, especially if they might take jobs otherwise available to Americans.

If we disposed of that system, and put something rational in place, we would not only solve Mr. Gates’s problem, but solve most of the illegal immigration problem too.
Written By: kishnevi
URL: http://
I am sorry, but I don’t buy Gates’ argument, unless he can prove he pays the exact same wage to his employees in foreign countries, perhaps correcting for government differences. Then I guess he could claim he wants a global supply of workers to employ in the USA.

The bad news for Mr. Gates is that as countries grow richer, as they are doing so very fast now, these "model" employees who work very hard for low wages start to ask for higher wages and want to work less.

Also, in my experience, poor countries are "poor" because they have low productivity. Sure, you can cream off some of the higher productivity people, but in general low wages means low productivity. And that affects things more than people imagine. I will guess that any outsourcing requires employees to monitor it, and quality check it, and then fix the problems that occurred.

I’m in China now, and the factories now moan that they can’t get enough basic cheap labor - office staff is plentiful, but its hard to find manual workers. Sound familiar? Labor wages just went from RMB 800 to 1,000 in the span of two months. (That doesn’t include their dorm or food, etc.)

Written By: Harun
URL: http://
Does that also apply to all those highly skilled (and highly accented) customer service reps, phone sales people, and help desk folks?
Written By: timactual
URL: http://
Does Gates say where Vista was developed?
Written By: timactual
URL: http://
I am sorry, but I don’t buy Gates’ argument, unless he can prove he pays the exact same wage to his employees in foreign countries, perhaps correcting for government differences.
Not buying that logic. You expect someone to pay above market rates in one local becacause they can’t pay market rates in a different local because of a lack of capacity? And if they don’t you say they didn’t want to do business in the higher priced local?

I think Billy hits the nail on the head with the "coders" vs. "developers" comments. People tend to treat all jobs that primarily involve the dark art of using computers as somehow all interchangable and labeled "high-tech" or "IT". If we treated the medical profession as one large block of interchangeale workers we’d have people quitting as surgeons because of a glut of orderlies. Yet in "IT"...

And I’ve got a feeling Microsoft doesn’t pay many (if any) developers $25/hour in the US.
Written By: Ryan
URL: http://

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