Interesting Andy Grove comments
Grove: Competitive Crisis Looms In U.S.
Lisa DiCarlo, 10.10.03, 9:28 AM ET
WASHINGTON, D.C. - Andrew Grove is depressed.
The chairman of Intel (nasdaq: INTC - news - people ) says that the United States is facing a competitive crisis that puts the country is danger of losing its lead as the world's most innovative technology provider.
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"I'm here to be the skunk at your garden party," Grove told a group of about 150 beltway types gathered here for the Global Tech Forum, hosted by lobbying group Business Software Alliance.
Why is the U.S. waning? Grove says it's because of offshore outsourcing, lack of federal support of sciences education and a "ho-hum" telecommunications infrastructure. "We've lost more than 500,000 tech jobs in the last two years to foreign competitors."
Indeed, many U.S.-based companies are either thinking about or have already sent white-collar jobs outside the country. Companies can often cut costs and boost productivity dramatically by hiring skilled labor in India and other countries. Much of that work lately has involved software development and professional services.
It is this area where Grove fears the U.S. will lose technical leadership and market share. As proof, he said that the U.S. market share for steel and semiconductors has dropped precipitously over the years.
"Is software and services next? It's a very valid question and it would be a miracle if it didn't happen," Grove said.
To pull off the miracle Grove is going to need help, and he knows it. "We must fight protectionism here and abroad, double our productivity and raise the hurdles for intellectual property litigation. We must rally around this goal."
That might be tough, given that companies aren't ignoring the cost benefits of going offshore. In a morning session at the conference, the chief executive of Internet Security Systems (nasdaq: ISSX - news - people ), Thomas Noonan, expressed what could be a widely held belief: "[Offshore outsourcing] is a train we've got to get on and drive or it's going to run over us."
How can the industry rally against offshore outsourcing of jobs when there is such a difference of opinion?
Grove says he's been there before, particularly in the 1980s when American semiconductor companies were getting the tar kicked out of them by the Japanese. "This is a democracy. Debate is good."
Grove is also depressed about the state of sciences education in the U.S., which could eventually put the country in the position of relying on others for innovation.
"More than 50% of graduate students are foreign nationals," says Grove, who says the U.S. needs to attract foreign talent "with appropriate immigration policies." Grove himself emigrated from Hungary in 1957 and went on to co-found Intel in the late 1960s.*
Carol Bartz, chairman and chief executive of Autodesk (nadsaq: ADSK - news - people ), made the point that many foreign students who earn science degrees in the U.S. end up returning to their countries, taking their expertise with them.
Grove says that the U.S. government should invest more to attract and retain talented students. After all, the U.S., he points out, has committed more than $60 billion in subsidies and aid to farmers, oil and steel companies and airlines. "One billion a year [to promote science education] would help us reach this goal."
Phillip Bond, undersecretary for technology at the U.S. Department of Commerce, in a brief interview, disagreed with Grove's gloomy outlook. "Education is one of the administration's top priorities [and] we are committed to bringing talent here."
That may be true, but it's worth noting that one of the tasks of the Commerce Department's technology group is to study foreign competitors. That includes warning against advancing or surpassing U.S. capabilities, which could prompt some federal funding to relevel the playing field. One example: the U.S.-funded development of Cray (nasdaq: CRAY - news - people ) supercomputers several years ago, after Japanese companies built what was then the fastest, most advanced computer in the world.
Grove says it's wrong to assume that low-skilled jobs being outsourced now won't eventually work their way upstream to more critical tasks. When that happens, the U.S. could lose its edge. The People's Republic of China, he said, had stated a goal in 2001 to produce more world-class engineers.
"Do we have the national will to take productive action? When the problem becomes obvious, it will be too late--and the outcome will be too depressing, even for me."
*An earlier verison of this story inaccurately stated that Grove had emigrated in the 1930s.
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