Friday, May 7, 2010

IT != IT - the Case for a Differentiated Immigration Policy

The Swiss government recently reduced the quota for work-permits for applicants from so called 3rd-states - which typically means countries outside the EU and not covered by the free-trade treaties between the EU and Switzerland. After a highly publicized protest led by high-tech companies like Google, Microsoft and IBM, the Swiss government has rather quickly reverted its decision.

In the midst of a recession with higher than usual unemployment and increased levels of immigration from the EU following the free-trade agreements, the general mood in the population is not very supportive of any increase in immigration quotas. This is seen as yet another attempt by greedy corporation to undercut the Swiss standard of living by importing cheap labor from overseas - typically from south-east Asia in what is generally by called the IT or information technology sector. How can there be a shortage of IT labor, if almost everybody knows someone who is unemployed and supposedly somehow "in IT"?

As with most controversies, there may be some truth to the matter of companies trying to use immigration to depress labor costs, but the crucial core of the problem here is the ability for for companies who operate global R&D facilities in Switzerland (like the companies named above) to be able to attract the best possible talent in a particular field - regardless of skin-color or country of origin.

Since information technology has permeated about any aspect of not just business, but also increasingly personal live, the so called IT sector has become large and diverse that saying somebody is "in IT" is about as meaningful and descriptive as saying that somebody is working in an office.

The vast majority of IT jobs are about supporting and customizing systems and applications based on the specific needs of their users. The most visible IT workers are PC technicians or system administrators, which almost everybody knows first hand from their daily work. Or armies application developers which work on big in-house IT projects for large corporations like banks or insurance companies - either as employees or as contractors from large IT services companies like Accenture, IBM or Infosys on behalf of local clients. Most of what is going on here, is indeed not rocket science from a technical point of view. The key stake-holders are not technology companies, nor are they interested in technology per-se. They rather consider it a necessary evil, a cost center which they would like minimize. No matter how high-tech certain IT service providers are giving themselves for the public image, in reality they are trying to be as technically unspectacular and conventional as they can be in order to minimize the risks of implementing something which has basically been done before many times over in slightly different forms. As no two organizations are exactly the same, the IT systems used to support them are also slightly different which causes all this effort and duplication. For many of these jobs, the ability of communicating with the users of the system and understanding their application domain is a lot more important than raw technical skills and knowledge. It is rightfully debatable to what degree immigration vs. increased education and training should help resolve the general shortage in this still fast growing sector.

But there is also a very small segment of the IT industry, which is the true high-tech sector. This is where the technological innovation happens. These are the companies and people, why build the core pieces like operating systems, database engines, computer chips, programming frameworks or communication equipment. This is typically also where the value-add is most concentrated and companies like HP, Apple, Cisco, Intel, Microsoft, Oracle or Google have famously propelled their founders and investors into the top league of the worlds most wealthy people. This is where the coolest and sexist jobs are for the technically inclined, ambitious, talented and well educated in the IT workforce and the companies who are being seen as the avantguarde of technological innovation can typically get a pick of whom they want to hire globally.

This kind of jobs are also typically concentrated in a few select places around the world, most prominently in Silicon Valley, because this is where the necessary key talent can be found. However this is not because the people born in Santa Clara County are somehow smarter than the rest of the world, but because of migration. Silicon Valley has a share of foreign-born population way above the US average at about 40% (10% US average) an a rate of over 60% among engineers and scientists in the Valley. And this hides an equally significant domestic migration within the 300 million US population, where many with advanced degrees in engineering and science have moved to Silicon Valley from all over the country, if they want to play in the top league of their field.

Even though they pale in scale and importance next to Silicon Valley, there are a number of secondary clusters of high tech excellence around the world. Switzerland is reasonably well positioned with a strong tradition of industrial innovation going back to the industrial revolution in the 19th century, two technical universities who often appear among the highest non-anglosaxon institutions on many league-tables and a number of high-profile R&D labs. Some of them by domestic champions (pharma & machine industry) and some number of US high-tech companies (e.g. IBM, Google, Microsoft, Cisco) who have decided that Switzerland is a good place to hire some of the top talent, who for some reason doesn't want to move to Silicon Valley... It would be hubris for a country of barely 7 million to assume that a significant part of the worlds leading experts in any particular field could be produced domestically, no matter how strong a culture of excellence or how strong the confidence in the local education system.

Any organization which is at the same time highly specialized and world class must necessarily be able to recruit globally from the best talent possible in that particular field, whether it is a top-ranked symphony orchestra, a premier-league football club, an elite-university or a world-class industrial R&D lab.

The reasons why global companies have chosen Switzerland as a place for global R&D is only partly because of a strong technical tradition, good universities and some number of key talent already there, but also primarily because of the highly rated quality of life, including reliable public services, picturesque landscape, low personal income taxes, safety, stability and a generally pragmatic government. Basically a place where it is relatively easy to convince people to relocate to, who otherwise have plenty of choices, options and other offers.

In the grand scheme of things, these few world-class labs will only employ a few 100 to few 1000 highly educated specialists and as such have very little impact on the overall employment or immigration situation. But they generally contribute a disproportionate amount to the economic development through prestige or intensified interactions and networking with other local firms and universities. For the one key ingredient - the ability to attract top talent, they need to to be able to recruit internationally with minimal restrictions and interference. At this point it is up to the Swiss government to either leverage its current reasonably strong position in the competitive global knowledge economy or to snatch defeat from the jaws of victory. E.g. through misguided pandering to the populist right-wing on immigration and to the left in the form of misguided attempts at labor market protectionism.

Organizations who can credibly make the point that they are in that global league, recruiting for the top talent in their field, should be except from any restrictions and quotas. In addition there should generally be a priority visa category based on education, skills and experience compared to the best in their filed - similar to the "alient with extraordinary ability" visa in the US. To go a step further - anybody who graduates with distinction from any university in whatever to-N global league-table, should have the automatic pre-approved right to a work and residence permit should they choose to come. (To calm the shrieking voices of panic on the right: very few would actually come, since they typically have plenty of opportunities and lots of other good offers. )