Is America Losing the Battle for Tech Talent?

America has always been a nation of immigrants. Ever since the first colonists came over from Europe, wave after wave of people from foreign lands have moved here in search of a better life. But today, we are turning away the best and the brightest among them, and that is hurting the competitiveness of the United States.

That's the starting point of Vivek Wadhwa's e-book, The Immigrant Exodus: Why America is Losing the Global Race to Capture Entrepreneurial Talent, published by Wharton Digital Press in September.

Wadhwa, an Indian who lived in the United States as a child and returned as a young man to become a citizen, has already had a successful career as an entrepreneur, having founded two software companies. Today, he works as an academic, writer, and gadfly. He has posts at several universities, including Duke, Singularity, Stanford, and Emory. In the book, he argues that a combination of misguided US immigration policies and growing opportunities in other parts of the world has created a brain drain of innovative immigrants.

He has compiled some convincing evidence of the contribution immigrants make to the high-tech industry in the United States. Among the statistics:

• First-generation immigrants or their children had founder roles in more than 40 percent of the Fortune 500, according to a 2011 study by the Partnership for a New American Economy.



• A 2012 report by the same organization found that immigrants were responsible for more than one quarter of all new US businesses founded in 2011, even though they make up only 13 percent of the population.



• In 2011, immigrants started nearly half of America's top 50 venture-funded companies and are key members of management or product development teams at more than 75 percent of those companies, according to a study by the National Foundation for American Policy. The same study also found that 25 percent of the publicly traded companies created between 1990 and 2005 that received VC funding had immigrant founders.

At the same time, Wadhwa is worried that the talent has begun to flow the other direction. He tells the stories of talented immigrants being forced to go back to their home countries because they can't get green cards or visas. Anand Chhatpar, for example, came to the States from India to get a degree in computer engineering and, in the process, launched two companies. He and his wife applied for citizenship but were denied, even though Chhatpar had been featured in BusinessWeek as one of the "Best Entrepreneurs Under 25."

He is now trying to run both companies, which are located in the US, from Bangalore and starting to hire programmers there instead of in the United States.

While some people in this country complain about US companies moving jobs offshore, here is a talented entrepreneur who would rather have his companies in America, providing jobs here. But this country won't let him.

At the same time, globalization has changed the balance of opportunity in the world. More countries are competing for talent. Developing nations like China are making tempting offers to keep, or lure back, their most talented people. And it's working. Wadhwa describes a trend of Chinese expats who come to the States for education, spend a few years working in high tech, and then return to China to found their own companies. The Chinese call them "sea turtles." They see plenty of economic opportunity, and often a better quality of life, back home. These are talented people who are going East, not West, in search of opportunities.

America is starting to feel the effects. Wadhwa's latest research shows that the proportion of immigrant-founded companies in the United States is declining. In Silicon Valley, it has dropped from 52.4 percent in 2007 to 43.9 percent today.

Wadhwa offers a prescription for fixing the problem, including increasing the number of green cards for skilled immigrants, changing the H1B program, and instituting a visa program for immigrants who want to start companies in the United States. But I doubt that Congress or the administration, whoever ends up winning the election, will have the political will to do much about the problem. Our leaders pay lip service to some of these ideas, but nothing ever gets done.

The so-called "startup visa," which would allow foreign entrepreneurs to found companies in the United States if they could attract a certain amount of venture capital and create a certain number of US jobs, has languished in Congress for two years. Most recently, a bill that would have increased the number of green cards available to foreign students who graduate from a US university with advanced degrees in science and engineering fell victim to partisan bickering, despite bipartisan support. (See: Partisan Quibbling Kills Green Card Bill.)

And with the fiscal cliff looming immediately after the election, there's no reason to think that Congress will be focusing on these issues anytime soon. Even if they do, it may already be too late.

Do you think America is in danger of falling behind in innovation because of the loss of skilled immigrants? What should we do about it?