Tech bosses defend overseas hiring / Intel, HP chiefs warn that U.S. needs to improve education system

BARRETT154_rad.jpg Craig Barrett, Intel CEO, gives his keynote address at OracleWorld in San Francisco. KATY RADDATZ / The Chronicle BARRETT154_rad.jpg Craig Barrett, Intel CEO, gives his keynote address at OracleWorld in San Francisco. KATY RADDATZ / The Chronicle Photo: KATY RADDATZ Photo: KATY RADDATZ Image 1 of / 3 Caption Close Tech bosses defend overseas hiring / Intel, HP chiefs warn that U.S. needs to improve education system 1 / 3 Back to Gallery

2004-01-08 04:00:00 PDT Washington -- Two leading Silicon Valley chief executives, reacting Wednesday to criticism they've shipped too many high-tech jobs overseas, defended hiring workers in India and China and warned that the United States and particularly California were in danger of losing their competitive edge to the Far East.

"There is no job that is America's God-given right anymore," said Carly Fiorina, chairman of Palo Alto information technology giant Hewlett Packard.

The comments came as part of the tech industry's counteroffensive against intensifying criticism about the export of high-tech jobs.

Fiorina warned against the growing protectionist backlash, saying the only alternative to losing jobs overseas was to make a national decision to stay ahead of foreign competitors by improving grade-school education, doubling federal spending on basic research and forming a national broadband policy, as Japan and Korea have done.

Craig Barrett, head of Santa Clara chipmaker Intel Corp., declared that the world had arrived at a rare "strategic inflection point" where nearly half its population -- living in China, India and Russia -- had been integrated into the global market economy, many of them highly educated workers "who can do just about any job in the world."

"We're talking about 3 billion people," Barrett said, more than 10 times the U.S. population. "The U.S. has a very simple choice to make. We have to decide if we're going to be competitive with these markets."

The two executives were representing the Computer Systems Policy Project, a group of eight chief executives from the nation's biggest information technology companies. The group issued a report Wednesday that raised an alarm in Washington about U.S. high-tech competitiveness but offered an alternative to protectionism. All these companies earn a large share of their revenues abroad and fear trade restrictions.

At the same time, high-tech executives find themselves increasingly on the defensive as they shift operations abroad. IBM Corp., a member of the group, recently announced it would move nearly 5,000 highly paid programming jobs overseas.

The exodus of high-tech jobs to India, China and elsewhere has generated rising dismay in both parties in Congress and spawned a welter of calls for retaliation, including from several Democratic presidential candidates, though no legislation has yet gained ground.

Front-runner Howard Dean declared in a debate recently that the country needed a leader who "doesn't think that big corporations who get tax cuts ought to be able to move their headquarters to Bermuda and their jobs offshore. "

High-tech executives insist that they must use overseas workers to remain competitive.

Fiorina and Barrett said their companies had been operating in India and China since the 1970s. Companies that sell two-thirds of their products overseas cannot be expected to hire all U.S. workers, they insisted, adding that their success overseas allows them to add more highly skilled "systems- level" jobs in the United States.

But these require highly educated workers, they stressed.

"It has been assumed that we basically have a padlock on high-tech jobs," Barrett said. "That's no longer the case with the enlargement of the world's workforce and the inclusion of many, many highly educated people around the world."

The Intel chief staunchly defended overseas hiring. "We'll put people next to our customers," he said. "We'll make best use of the resources around the world."

Barrett insisted that Intel was "still making massive investments in the U.S.," but he noted that jobs at these new facilities require two years of college "just to walk in the door. The infrastructure and education requirements of those jobs is forever increasing."

Fiorina warned the United States risked losing its lead in high-end products as well.

"It's interesting to me that so many people talk about China or India or Russia as being a source of low-cost labor," Fiorina said. "Truthfully, over the long term, the greater threat is the source of well-educated labor. And if you look at the number of college-educated students that China graduates every year, it's close to 40 million. The law of large numbers is fairly compelling."

Fiorina and Barrett said the United States must make a strategic choice to increase its competitiveness before it wakes up one day and finds it's too late.

They outlined a list of objectives, including a doubling of federal spending on basic research in U.S. universities. Barrett derided Washington's decision to spend as much as $40 billion a year on farm subsidies and just $5 billion on basic research in the physical sciences.

"I have a real degree of difficulty with the fact that we are spending some five to eight times as much on the industry of the 19th century than we are on the industry of the 21st century," Barrett said.

The executives also urged a national broadband policy to allow more homes and businesses to quickly take advantage of high-speed data networks, much as Japan and Korea have done.

They also called for dramatic improvements in K-12 education in the United States, saying schools act more to block budding math and science students than to foster them.

They insisted that protectionism would fail, comparing the current situation to the competitive threat from Japan in the 1980s, when U.S. corporations underwent a painful restructuring that ultimately propelled them forward, while Germany and France resorted to protection and fell behind.

"Short-term, protectionism always looks better and feels better," Fiorina said, but it ultimately fails.

Barrett also blasted California as the "least competitive business environment in the U.S. today."

The state is losing businesses to other states that are more welcoming, in much the same way the United States is losing out overseas, he said.

Cheaper labor Companies can find low-cost technology professionals overseas:. Country Average programmer salary United States $60,000 - $80,000 Canada $28,174 China $8,952 India $5,880 - $11,000