Indian Tech Workers and the Silicon Valley Economy

A California think tank has verified what many MurthyDotCom readers have known all along: that Indian tech workers make a pivotal contribution to the Silicon Valley economy. According to a recent study by the Bay Area Council Economic Institute, the U.S. began attracting large numbers of Indian engineers in the 1970s and 1980s, to work in the aerospace and defense industries, and in the nascent computer and software industries.  (See Global Reach: Emerging Ties Between the San Francisco Bay Area and India, Nov 2009.) As Silicon Valley grew, American computer and software companies turned increasingly to foreign-born programmers – many from India – because U.S. and Silicon Valley universities were not producing enough qualified computer engineers to meet the demand. The study notes that, between 1990 and 2000, “the number Indians living and working in the U.S. more than doubled – including students; technology researchers; professionals in medicine, law and business; IT engineers and programmers recruited on H1B visas; and their family members.”

The statistical picture painted by the study is indeed impressive; in 1998, when Silicon Valley and the internet were at the crest of a surging wave of growth, “774 of the 11,443 Silicon Valley tech firms started after 1980 had Indian CEOs,” generating annual sales of $3.6 billion and employing more than 16,000 people. According to the study, Indians made up the largest share of Silicon Valley entrepreneurs – 15 percent – who started companies in the decade spanning 1995-2005. Today, the Bay Area is home to over 215,000 Indian immigrants, the second-largest community of Indian-Americans, after the New York-New Jersey area.

According to the study, the combination of India’s talent and entrepreneurial energy, together with the Bay Area’s “innovation infrastructure – research institutions, technology companies, and capital and risk-taking culture” has been “explosive, unleashing powerful business and wealth creation.” However, the study cautioned that this growth should not be taken for granted, because U.S. schools still are not producing science and math graduates in sufficient numbers to sustain the growth of the high-tech sector, at a time when U.S. immigration policy restricts access to foreign talent, and does little to ensure that skilled foreign workers stay here to contribute to the economy. Resolving these issues is critical, say the study’s authors, because Indian IT and engineering professionals see entrepreneurial opportunities in India, and may be tempted to return home if they sense that the welcome mat has been rolled up in the United States.

This is a thought-provoking study, one with implications that range far beyond the IT sector and Silicon Valley. Historically, the United States has always benefited from the creativity and entrepreneurial dynamism of new immigrants, but this has depended on an open-door policy to attract the best and brightest to our shores, and keep them here. One hopes the policymakers in Washington are paying close attention to these developments.