BY A.MATTHEWS

CERRITOS, CA –  In a thought provoking, intellectually stimulating address, Vivek Wadhwa Adjunct Prof. at Duke University and Senior Research Associate at Harvard Law School, jolted the audience out of their seats at the TiE (The Indus Entrepreneurs) meet on Feb 17 at the Sheraton here. Sharing the stage with him was the other keynote speaker Michael Barker , Managing Director at Revolution Partners.

Wadhwa’s passion for his pet topic “Facts and Myths in the Globalization Debate: How Our National Policies are often Misguided and How the U.S. Can Continue to Keep Its Global Edge,”  came out strong. From his opening statement “ the US is in serious trouble,” he made the audience sit upright in their chairs, eager to hear him out.

Some of the commonly held myths he began debunking are that the US is falling behind in graduating engineering students; companies are going where the skills are; we need more H1 B visas; and young college dropouts are Silicon Valley entrepreneurs.

The research he conducted at Duke showed ground reality to be different. In India engineering graduation rates were not clear, even prestigious Universities like Jawaharlal Nehru University (JNU) did not have hard data available on hand. The definition of engineering was not clear . Thus, comparisons between India and the US was an apples to oranges one. Whereas,  an apples to apples comparison would have different results.

Wadhwa found that there is no shortage of engineers in the US. Skills of Indian and Chinese engineers are not much different whereas Americans have the best and most suited skills for this market. So why are companies going overseas? Not as commonly thought because of lack of skills but because of cost saving,   overhead savings, access to new markets. Ninety-five percent US companies said outsourcing will continue and gain momentum whereas most others said they would send grater variety of jobs abroad.

Another issue he tackled was R & D. The question raised is will R& D jobs going overseas require advanced degrees? Wadhwa’s research revealed that India was in big trouble with its education system. China graduates more PhDs in engineering than does the US. India’s performance is miserable. China is taking over the world, the US is stable whereas India is only a flash in the pan.

However, the redeeming factor for India is that in the next wave of globalization India will be the biggest player as it is rapidly developing into the global center of R&D and innovation. Major segments of R& D in India are Pharma, Aerospace, Consumer Appliances, Semiconductors.

The Kindle was designed in India as was the Razor phone circuitry.

There was no doubt India was racing ahead in R& D despite its weak education system.

On the other hand, China was using its manufacturing might to build R & D capability but was not making progress, as China excels in ‘imitation’ and not ‘innovation.’ It merely steals technology and replicates it. Though it is pouring billions of dollars into R& D this is a waste.

Workforce development is the secret of India’s success. Though only 50 percent of India’s graduates are employable and the IIT graduate only 5000 engineers annually, the magic lies in the fact that India has adopted the practices if its ‘Guru’ the US and  perfected these.

There is a big time emphasis on workforce training, informal training, ongoing skill development, managerial development, upgrading education which has made India’s workforce more productive.

Touching on the hot topic of immigration Wadhwa made another startling statement – the US is headed for a massive reverse brain drain and returnees will accelerate off shoring and R& D. With over a million immigrants still waiting for the coveted green cards this comes as no surprise. We do not need more H1B visas but what we need is more green cards.  Returnees came to the US as they thought education and development would be better, but are now returning to their native countries because of better opportunities there. Only 6 percent of foreign students now want to stay in the US permanently, whereas 80 percent thought the future was brighter in India.

The US is in greater trouble than it thinks. What it needs to do to maintain is global edge is to develop its workforce, bring in immigrants on immediate green cards, work harder, think smarter and innovate.      

Barker spoke on “Steps to make your business more valuable for yourself and to an acquirer”. He focused on Mergers and Acquisitions, his expertise being in virtually all areas of IT. The IT sector has outperformed the broader markets and was out of recession. Venture industry was going through challenging time. Giving some stats he said 464 VC investments were completed in Q4 2009 down 48 percent from 891 deals in the previous year. Thirty-six percent VC funds were invested in tech companies in 2009 versus 37 percent in 2008.There has been a material increase in M&A markets in 2009 in  segments like storage, IT Services,  application software. Clean tech will be a big market in the future.

Some of the important factors that acquirers look for are large indentifiable target market, business trends enabling growing market opportunities, dominant market position, multifaceted business offering, strong financials and an experienced management team.

Earlier, TiE Executive Director Neena Dolwani welcomed the guests. President Navneet Chugh introduced Danny Barron and Monique Caulfield who are in the midst of making a movie based in India ‘Basmati Blues,’  at a $8 million budget .They made a 30 second pitch for the movie. Director Krishna Shah, of a 70s movie‘Shalimar’, starring Zeenat Aman, was also introduced. Emcee for the evening was Executive Committee member Rajnit Walia.