While US politicians argue about immigration and offshoring, London entrepreneurs have a big opportunity to take advantage of skills shortages in the American tech sector
As he grapples with war in Iraq, nuclear showdown with Iran and North Korea, and the inexorable growth of China, President George W Bush could be forgiven for seeking a little light relief at home. But he isn't getting it. With his popularity ratings low, petrol prices rising and his Republican comrades looking for inspiration ahead of mid-term elections, Bush has become embroiled in a debate that no-one can ever win - immigration.
For a country shaped by pioneering pilgrims who arrived uninvited on a boat, it's ironic that Americans are so strung up about immigration. Every country has similar contradictions, of course - the British make a point of hating the French, yet if we could unravel our lineage many of us would end up sooner or later at William the Conqueror and his Norman mates. But in the US, where an estimated 11 million illegal immigrants have made their home, it's a red hot and highly controversial topic. The House of Representatives recently passed draconian legislation up to the Senate that criminalises illegal entry to the country and demands that much of the US border with Mexico be fenced off. The Senate has since been debating a complex set of alternative proposals, including a compromise bill that increases border security while expanding a guest worker scheme and offering more immigrants a chance to acquire legal status and ultimately, citizenship.
Bush, whose conservative instincts would usually align him with the 'Kick 'em Out' brigade, finds himself in a quandary. For one thing, the Hispanic vote is an increasingly powerful force in US politics. For another, big business is pushing for flexible policy, since so many sectors rely on immigrant labour, including construction and agriculture. All this explains why, during a speech in California on Monday, Bush was pushing for a compromise.
The problem with the current immigration debate, however, is that too much of it is focused on the US-Mexico border and unskilled labour. As we've reported before, there are significant issues relating to a shortage of skilled labour in the tech industry and elsewhere, which tend to get overshadowed by the broader political arguments. While US politicians wring their hands in anguish at the growth in offshoring, the reality is that the policies they create are restricting tech businesses from hiring the talent they need, because of a shortage of visas and delays in issuing green cards see 'Work in Progress'. That leaves many companies with no choice but to hire labour abroad.
All of this matters for the London tech scene. Offshoring has historically been associated with low-skilled jobs, but Western companies are increasingly comfortable hiring programmers and IT specialists from India. While the rates they pay for these skills are low compared to Europe and the US, cost is not the only reason they do it. Many US companies would be prepared to pay more for the right people - the fundamental problem is that the people they want aren't available. It's a shortage of human capital - the kind of capital that resides, of course, in the UK.
No-one's suggesting that London should turn itself into the Bangalore of the West, but there are clearly enormous opportunities here for companies to fill the gaps in the US market. UK entrepreneurs have long partnered with major US suppliers, resellers have always developed add-ons to other suppliers' products, and organisations such as Yahoo foster a network of independent developers to create innovative products for their portfolio. That process can logically be extended even further. There's little to stop UK companies from providing a whole range of specialist services to plug US skills gaps, in anything from product design to marketing expertise. If aircraft manufacturers can design and build prototype craft using virtual teams around the world, then tech companies are perfectly capable of collaborating across 5500 miles of water as well, particularly for intangible products such as software.
This kind of collaboration has long been punted in the business community but rarely achieved. Business necessity, however, is a great driver. With compromise being sought on the whole immigration issue, the chances of a radical restructuring of US policy are slim. That leaves the door open for UK entrepreneurs to try something different.
By Keith Rodgers, Webster Buchanan Research