Silicon Valley, as the old joke goes, was built on ICs — Indians and Chinese that is, not integrated circuits. As of the last decennial census, in 2000, more than half of all the engineers in the valley were foreign-born, and about half of those were either Indian or Chinese — and since 2000 the ratio of Indians and Chinese is reckoned to have gone up steeply. Understandably, therefore Silicon Valley has strong views on America’s visa regime.
The latest reminder of the power of the “quota raj”, as Indians like to call it, came on April 2nd, the day the Citizenship and Immigration Services began receiving applications from employers for this year’s batch of H-1B visas, a special class of visa that allows highly qualified foreigners such as software programmers to work in America for up to six years. The number of these is currently capped at 65,000 a year, well down from 195,000 a year in 2003.
Within hours, 150,000 applications flooded in and the government picked the winners by computerised lottery. An additional tranche of 20,000 H-1Bs for graduates from American universities will run out very soon. As the Harvard Crimson, the university’s daily paper, puts it, many of the foreigners in its class of 2007 have received their “deportation orders”.
A lot of this has to do with a political backlash against Indian and other foreign scientists caused by offshoring, the practice of farming out technology operations to firms in places such as India — “exporting jobs” in populist jargon. But the quota actually mostly hurts American firms. “There is a skills shortage in Silicon Valley,” says M.R. Rangaswami, who migrated from Chennai (then Madras) in 1976 and now runs the Sand Hill Group, a firm in the valley that advises software companies. Bill Gates told a Senate panel in March that the H-1B quota was endangering America’s future and should be abolished.
Senator Edward Kennedy asked Mr Gates whether this might cause a brain drain in poor countries. AnnaLee Saxenian, a professor at the University of California at Berkeley and author of “The New Argonauts”, a book on the subject, argues that the exact opposite is the case. It might be called brain circulation.
Immigrants, she maintains, tend not to leave a place altogether. They form networks that, in effect, make Silicon Valley the head office and their home countries the branch offices. That’s what the Taiwanese and Israelis who came to Silicon Valley in the 1970s and 1980s did, and the Indians and Chinese followed the same pattern.
Thus the Taiwanese built Hsinchu, near Taipei, into a “silicon sibling” for manufacturing gadgets dreamed up in California; the Israelis, with ties to their army, built a transnational security-software industry; and the Chinese and Indians are now turning Shanghai and Bangalore into new silicon siblings in, respectively, microchips and software.
As a result, the typical start-up firm in Silicon Valley today is a global multinational from its day of incorporation, with entrepreneurs travelling back and forth, hiring talent inside and outside the United States and transferring technology, capital and chutzpah in both directions. Take Prem Uppaluru, who graduated from the Bombay branch of the elite Indian Institute of Technology in 1975. Some 30 percent of his class came to Silicon Valley and all have founded technology companies; Mr Uppaluru is currently on his fourth, and has just hired 35 people in Silicon Valley and 25 in Bangalore.
More of these immigrant entrepreneurs are now returning home, but without giving up on Silicon Valley, says Sridar Iyengar, a former president of the Indus Entrepreneurs, a predominantly Indian network. He himself moved back to India in 1997 but keeps his home in Silicon Valley and his green card.
All this could change for the next generation of talented Indians and Chinese, says Mr Iyengar, who is 60. His generation typically came with an H-1B visa, then got a green card and eventually citizenship. Now, getting just the first is much harder. At the same time, the quality of life and opportunity at home in India or China has improved spectacularly. Increasingly, Mr Iyengar, who is an adviser to and investor in several Indian start-ups, is advising young Indians to stay at home.