Brain drain again and again

The Brain Drain phenomenon, where Filipino talent has been relocating outside the country (primarily in the US) in search of higher pay scales, better working environments, and "greener pastures," has been ongoing for a very long time now and continues on to this day. I was at the US Embassy a few weeks ago to renew the passport of one of my sons and noticed a lot of locals (still) trying to get visas and permits to enter that country. With the weakening macroeconomy, I don’t expect any slack in this movement.

The dawn of the New Economy brought with it a real opportunity for our country. With the rapid rise in high-tech and other information technology-related businesses, the Philippines was (and continues to be) touted as the next India, the next global info tech hub, and rightly so. Our huge, trainable, English-speaking workforce, our American-influenced culture, our closer geographic proximity to the US (viz India), are key factors working in our favor. I honestly believe the Philippines has a real opportunity to become a global leader and contributor to the global technology boom. And the government sees this as well.

On a recent trip to the US to promote our portal Philstar.com, I saw our hardworking Trade Secretary Mar Roxas, who is spearheading the country’s drive toward technology leadership. Like Mar, I believe the country’s future will heavily depend on leveraging the Service Economy, not the Manufacturing sector where we have fallen way behind. And technology will be the key weapon. With the government’s thrust on moving in this direction, we now see the rapid mushrooming of IT schools and cyberparks all over the country. In fact, every Tom-Dick-and-Harry is getting into the act. Once the air clears, however, we should have the necessary infrastructure in place (hopefully) not just to be globally competitive but to lead the IT sector. This journey isn’t going to be an easy one, however.

A CNBC telecast last week really caught my eye and ear for its potentially critical implications on the country’s ongoing efforts to transform the Philippines into an information technology hub and power in the future. CNBC discussed the US’s dire shortage of technical manpower and skills. Today, the US grants about 150,000 H-1B visas, called guest worker visas, per year. These visas entitle the holder to work in the US for up to six years. I should know because I had such a visa while working in Chicago for six years with the strategy consulting arm of Andersen Consulting, shortly after my B-school days.

Well the CNBC report described that it took less than six months for the US to grant all of its 150,000 worldwide quota this year (this quota includes both technical and non-technical jobs). I am told that today, the US goes with a country quota system, as oppose to a skills quota system, with Ireland being the largest benefactor (no surprise here, given the significant number of Irish descendants in the US).

For technical jobs alone, one US expert has pointed out that for next year, the US will have a shortage of about 800,000 jobs. Seems that even with the decline in valuations of high tech companies and dot-coms in the US today, this sector is still expected to be quite robust. For while many tech firms have gone bankrupt, or have postponed their IPOs, or have been acquired by another, the successful companies are still thirsting for good talent. And these are good paying jobs to boot. Statistics show that the average median income in the US today is around $38,000. Compare this to the average median income for guest workers in the US which is $50,000. That figure is a most enticing carrot for techies the world over. And what better place to learn the latest in technology than the hotbeds of Silicon Valley and Silicon Alley.

I recently talked to some Internet security experts here in the Philippines. These are the guys who evaluate and design security systems to protect websites from hackers, security breaches and fraud. One of the experts observed that many would-be hackers were being spawned in the Visayas and the southern Philippines, where quite a number of techno-talent is being developed but this talent pool is not finding meaningful work in their geographic locations. With the idle time in their hand, a few have taken to hacking for a hobby. I don’t really know if this is true or not. I did read an article on the significant technology gains being made down south, particularly in the Cebu area. And e-players like iAyala are starting to make investments in the technology field there. But maybe we are spawning techno-talent faster than our economy and underlying infrastructure can support at this stage. Chalk this to evolution pains.
Another event worth describing here: I had breakfast with Emmett Thomas, global partner and president of Monitor Company in Asia. Monitor is the strategy boutique firm co-founded by the guru of strategy, Michael Porter of the Harvard Business School. In my old life as a management consultant, I had the opportunity to work with Monitor on client assignments across Southeast Asia, China and India. I’ve known Emmett for several years now, and over some "healthy" fruit laced breakfast, we got to chat about this need for technology skills in the US. Emmett explained that there are groups in the US, most notably those led by Jesse Helm and perennial presidential candidate Pat Buchanan, which wants to get rid of the H-1B visa quotas, arguing that these "guest workers" are taking away jobs from Americans. But the fact of the matter is that in the technology sector, at least, America is just not minting enough techies to meet the expanding demand. Even with an impending slowdown in the US economy, growth will still be in the 3 to 4 percent range for next year. On the other end of the spectrum, guys like Bill Gates want to open the "floodgates" to allow international talent into the US.

The fact is technology is moving at such a rapid pace. So many good ideas, freer flowing capital to fund these ideas (although there’s been a crunch here over the last few months as the pendulum swings from the sheer euphoria of dotcomsdom last year to the exact opposite direction today), and globalization. While in the US last month, I had lunch with one of my genius cousins, Jeremy. Jeremy spent his childhood in the country before migrating to the US with his family. He’s one of your typical Asian-American overachievers. Previously, he was studying to be a doctor, and recently graduated magna cum laude at the University of California. He was nationally-ranked tennis player in the US and has a 2 handicap in golf. Anyway, I asked him what he was up to. He mentioned he had just started a new biotechnology firm with one of his buddies at the university to address a very specialized area. They hope to raise a venture capital shortly to build their business and, hopefully, launch an IPO some time next year or thereabouts. Well, Jeremy is not a unique case. And guys like him are going to create more and more opportunities for qualified folks globally, including Filipinos. And with an average median of $50K per annum, I see a continued exodus of young, good Filipino talents to the US.

If I recall correctly, one of the leading tech schools locally has been putting out TV ads on specific techie positions and the kinds of salary levels successful practitioners are earning in the US. I don’t think these salaries are for local tech jobs in the US. Seems the carrot behind this ad (at least I interpret it) is, "come to our school, learn the latest in technology thinking and practice, who knows, you may land a nice big job in the US."

I don’t think the brain drain has ever dissipated. I think it has continued all along, is quite strong now and chugging nicely. With a weaker macroeconomy and the foreign investment crash in the country, all the more talented (and even not-so-talented) Filipinos are going to look for greener pastures abroad and find it. The demand is so great in the US that you don’t need to be a "rocket scientist-type" to land something juicy. Some will return, of course, but quite a number may never leave these foreign lands of plenty. Given the paradigm shift from the old to the new economy, this brain drain is going to take a particularly large bite out of our technology crop. I think we should expect this and just plan for it. Hopefully, Mar’s and our local technopreneurs’ efforts will be sustained and we will be truly able to build a world class info tech hub right here.