Monthly Archives: December 2011

Immigration Blog

Indian-Born Executives Lead New List of Top Immigrant-Founded Companies

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New research reveals that many of America’s top companies that have received venture capital have immigrant founders. An impressive group of Indian-born entrepreneurs head the list.

I authored a recently-released study (find it here) that concluded, “Immigrants are increasingly important in driving growth and innovation in America, as evidenced by the role played by foreign-born founders and key personnel in the nation’s breakthrough companies.” The study found, “Immigrants have started nearly half of America’s 50 top venture-funded companies and are key members of management or product development teams in almost 75 percent of our country’s leading cutting-edge companies.”

To conduct the research I interviewed executives and company personnel and gathered information on the top 50 venture-backed companies in the United States. Those 50 companies had been ranked by the firm VentureSource using criteria such as the track record of the management and investors and recent revenue growth.

I found that the companies with at least one immigrant founder averaged about 150 jobs per company in the U.S. Overall, 23 out of 50, or 46 percent of the top venture-funded companies in America had at least one immigrant founder.

The leading source country for immigrant founders was India, followed by Israel, Canada and Iran. There were also immigrant founders on the list from Italy, South Africa, Greece, Norway, Germany, the United Kingdom, Singapore, Switzerland and France.

Here are the companies on the top 50 venture-funded list that had at least one founder born in India:

Aster Data Systems, whose founders include Tasso Argyros (Greece) and Mayank Bawa (India). The company, based in San Carlos, California, employs approximately 100 people. The focus of the company is providing data management, as well as advanced analytics, for employers.

Chegg Inc., based in Santa Clara, California, has become a well-known company for its textbook rental service. It has about 150 employees. Chegg’s founders are Aayush Phumbhra (India) and Osman Rashid (U.K.).

Glam Media, based in Brisbane, California, had 8 founders. Two of the founders were born in India, Samir Arora and Raj Narayan. Following a recent acquisition the company employs about 500 people. Glam works with about 2,500 website partners in the U.S. and Europe. It helps facilitate web advertising in niche and “mid-tail” websites for name brand advertisers.

Umesh Maheshwari and Varun Mehta, both born in India, started Nimble Storage, based in San Jose, California. The company employs 55 people and focuses on disaster-recovery systems, backups and storage.

Suniva, based in Norcross, Georgia, sells solar cells and modules. It was founded by Ajeet Rohatgi, born in India, and employs 190 people.

Xactly, based in San Jose, California, was founded by Christopher Cabrera and Satish Palvai (India). The company sells Internet-based software that can be used for sales compensation. It employs 140 people

Xsigo Systems, also based in San Jose, California, provides equipment and software for the management of datacenters. Employing 110 people, it was started by three brothers born in India, R.K. Anand, Ashok Krishnamurthi, and S.K. Vinod.

“Today’s breakthrough companies are often founded by immigrants or at least employ a foreign-born scientist, engineer or CEO crucial to business growth and product development,” the report noted. “Executives say access to talent from around the world is even more important to companies in their emerging growth phase.”

A key finding of the research is that our country gains when we are open to talented people, without regard to their place of birth. “Policies that help retain talent in the United States are likely to yield both more startup companies and the personnel needed to create more jobs and innovation in America,” the study concluded.

Immigration Blog

New Research Reveals Benefits of High Skill Immigration

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The main argument made against providing more green cards or temporary visas for high skilled immigrants is that it would mean fewer jobs for U.S. workers. Such concern is based on the mistaken impression that there is only a fixed number of jobs and the entry of any newcomer to the labor market must mean bad news for an incumbent jobholder. Of course, that concern does not reflect how a market economy functions.

Now there is new evidence from a respected economist that high skilled foreign nationals create more jobs for Americans. The report from American Enterprise Institute and the Partnership for a New American Economy – a copy of the study can be found here – was conducted by Madeline Zavodny, a professor of economics at Agnes Scott College and former research economist at the Federal Reserve Bank of Atlanta.

The report carried four main conclusions. First, that immigrants with advanced degrees, particularly in STEM (science, technology, engineering or math) fields create more jobs for U.S.-born workers. According to Zavodny, “The data comparing employment among the fifty states and the District of Columbia show that from 2000 to 2007, an additional 100 foreign-born workers in STEM fields with advanced degrees from U.S. universities is associated with an additional 262 jobs among U.S. natives.”

Second, the study found positive employment benefits from both low skill (H-2B) and high skill (H-1B) temporary visas. “The data show that states with greater numbers of temporary workers in the H-1B program for skilled workers and H-2B program for less-skilled nonagricultural workers had higher employment among U.S. natives. Specifically, adding 100 H-1B workers results in an additional 183 jobs among U.S. natives. Adding 100 H-2B workers results in an additional 464 jobs for U.S. natives,” according to the analysis.

Third, the research addresses concerns that more immigrants entering the labor force hurt U.S. workers. The study concluded, “The analysis yields no evidence that foreign-born workers, taken in the aggregate, hurt U.S. employment.”

Fourth, immigrants with a high education level are major fiscal contributors to the United States. Zavodny writes, “In 2009, the average foreign-born adult with an advanced degree paid over $22,500 in federal, state, and Federal Insurance Contributions Act (FICA, or Social Security and Medicare) taxes, while their families received benefits one-tenth that size through government transfer programs like cash welfare, unemployment benefits, and Medicaid.”

Zavodny believes it’s possible the research underestimated the benefits of high skill immigration. “There are two reasons to think that this study, which uses annual, state-level data over a ten-year period, may actually underestimate the job-creating effects of highly skilled immigrants. First, it does not capture long-run effects if the economy benefits more from immigrants in the long run than in the short run (as suggested by other recent research). Second, it does not capture ‘spillover effects’ if immigrants create jobs in states other than the one where they work (for example, more immigration in California leads businesses to also create new jobs at a subsidiary in Indiana).”

The study was praised by elected officials who favor more liberalized immigration policies. “At a time when job creation should be our highest priority, the study released today casts light on some of the greatest potential areas for growth, at no cost to taxpayers,” said New York City Mayor Michael R. Bloomberg, co-chair of the Partnership for a New American Economy. “It’s time for Washington to restart the conversation on immigration reform – and to center it on our economic needs.”

While the research is not likely to cause critics of immigration to throw up their hands and concede defeat, the study represents important evidence that America and Americans gain from being open to immigrants.

Defence And Strategic Affairs Blog

India must Upgrade its China Strategy from Dissuasion to Deterrence

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It is in India’s interest to focus its diplomatic efforts to expedite the delineation of the Line of Actual Control (LAC) on the Indo-Tibetan border and urge China to resolve the territorial and boundary dispute in an early time frame. In conventional weapons and present force levels, the Indian Army has adequate combat capability to defend the border, but not sufficient to deter war as it lacks a potent offensive operations capability. The gap between India and China in overall military potential, particularly the gap in strategic weapons, is increasing rapidly in China’s favour. China is also actively engaged in upgrading the military infrastructure in Tibet in substantive terms. The all-weather railway line to Lhasa, being extended further to Shigatse and later to Kathmandu, will enable China to build up rapidly for a future conflict. New roads and military airfields have also been built. Military camps are coming up closer to the border. China has inducted a large number of SRBMs into Tibet and can rapidly induct another 500 to 600 SRBMs for a future conflict by moving them from the coastline opposite Taiwan. With improvements in military infrastructure, China’s capability of building up and sustaining forces in Tibet has gone up to 30 to 35 divisions. The PLA’s rapid reaction divisions can also significantly enhance its combat potential over a short period of time. As China’s military power in Tibet grows further, it will be even less inclined to accept Indian perceptions of the LAC and the boundary.

Another factor of concern to India is the emplacement of Chinese nuclear-tipped missiles in Tibet, reportedly first brought to the Tibetan plateau in 1971. While these missiles may have been targeted against the Soviet Union till recently, the present Russia-China rapprochement would make such targeting illogical. The mere presence of Chinese nuclear-tipped missiles in Tibet poses a direct and most serious threat to India as these missiles (DF-2, DF-3, DF-4 and, possibly, DF-5) are capable of reaching all Indian cities. Beijing has been very effective in hiding details of the number of missiles actually deployed and India is only now acquiring the technological means to track and pinpoint the exact locations of these missiles or any others in the Lanzhou-Chengdu region and at the Datong and Kunming missile bases which may have the potential to reach and target Indian cities. This shortcoming needs to be overcome as early as possible through an Indian military intelligence satellite and by humint means.

India, therefore, needs to build up adequate military capabilities to deter the threat from China. In the short-term, the requirement is to ensure that there are no violations of the LAC through effective border management while maintaining a robust dissuasive conventional posture. India must step up its diplomatic efforts to seek early resolution of the territorial dispute, particularly the immediate delineation of the LAC physically on ground and map. Efforts to develop military infrastructure in the border areas for the speedy induction of forces need to be stepped up. India must maintain a strong capability to defend island territories in the Bay of Bengal and to safeguard national interests in the Exclusive Economic Zone. Diplomatic efforts to increase India’s influence in the CARs, Myanmar, Nepal, Bangladesh and with the ASEAN countries should be pursued vigorously.

The long-term requirement is to match China’s strategic challenge in the region and develop a viable military deterrence capability against the use of nuclear and missile weapons systems. Threats posed by nuclear-tipped ballistic missiles cannot be countered by the deployment of land forces and conventional air power alone. Nuclear weapons are best deterred by nuclear weapons and, as a logical corollary, only missiles can deter missiles. Hence, India must develop, test and operationally induct the Agni-III, Agni-IV and Agni-V IRBMs and raise two mountain Strike Corps so as to be able to upgrade its present strategic posture of ‘dissuasion’ to one of credible ‘deterrence’ against China.

India-US Relations Blog

Missed Opportunities, Promising Trends

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The year was filled with missed opportunities but also promising developments in U.S.-India relations.  2012 is shaping up to be the same.

 

President Obama’s state visit to India in early November 2010 appeared to impart new dynamism to a bilateral relationship that had been listless since his inauguration. The trip offered an effective tonic for Indian concerns that he had forsaken New Delhi in pursuit of G-2 collaboration with Beijing. The president spoke of India as “an indispensable partner of the 21st century” and dramatically endorsed its long-standing bid for permanent membership on the United Nations Security Council. Reporting on his giddily-received address to a joint session of the Indian Parliament, the Times of India noted that the “audience lapped it up, with no less than 25 rounds of applause in a barely 45-minute speech. The cherry on the cake, of course, was the ‘Jai Hind’ [Hail India] with which he concluded.”

But the promise of re-energized partnership quickly dissolved as leadership capacity in Washington and New Delhi dramatically waned. In retrospect, the trip’s maladroit timing and messaging should have been a tip-off. That the president’s Democratic Party received an electoral “shellacking” just days earlier meant that he arrived in India a much diminished political figure – a condition that became increasingly evident as time progressed. The White House also put out the word that the trip was essentially a jobs-hunting mission rather than one connected to grand strategy, telegraphing how domestic economic anxieties would continue to take attention away from the foreign policy agenda.

Prime Minister Manmohan Singh also was about to undergo his own political declension. A week after the state visit, the multi-billion dollar 2G telecommunications scandal exploded, igniting a crisis of governance and corruption that continues to engulf Mr. Singh’s administration. For the past year, Singh has been forced to deny that he is a lame duck even as his Congress Party colleagues openly pine for his replacement by Rahul Gandhi and his coalition partners – especially Mamata Banerjee’s Trinamool Congress – feel increasingly free to defy him. As 2011 unfolded, it became more and more clear that Singh’s government was adrift and ineffectual.

The leadership void has contributed to the “Delhi disillusionment” that is now a staple of Washington’s foreign policy conversation as well as the transactional approach some advocate vis-à-vis India. Experts now debate just how steadfast this “indispensable partner” really is. Deputy Secretary of State William J. Burns even felt it necessary to make a rhetorical nod to this discussion with this title to a recent address: “Is There a Future for the U.S.-India Partnership?”

Whatever its technical merits, New Delhi’s rejection of Boeing and Lockheed Martin’s bids in its lucrative fighter aircraft competition – an issue on the Obama administration lobbied aggressively – was handled so ineptly that it reportedly hastened Ambassador Timothy Roemer’s departure from New Delhi. Indeed, many discerned a deliberate snub of Washington. Ditto for the stringent nuclear liability law that is so divergent from international norms that it effectively locks out U.S. participation in India’s nuclear power sector – something that the nuclear cooperation agreement was suppose to bring about. Last week’s debacle on retail sector liberalization underscored U.S. concerns that New Delhi has permitted domestic political concerns to impede closer economic interactions, while the WikiLeaks revelations about the Indian debate over the nuclear accord further undermined confidence in New Delhi’s credibility as a serious strategic partner.

All of these episodes only sharpened questions in Washington about whether New Delhi is as compelling a geopolitical collaborator as the Bush administration had envisioned. They also help explain why the Obama administration has yet to bother nominating Roemer’s successor.

To be sure, the Indians have valid reasons to complain about the paucity of American leadership. President Obama’s announcement of an accelerated disengagement from Afghanistan – a decision driven more by the exigencies of domestic politics than by a careful assessment of U.S. security objectives in South and Central Asia – affects India’s security interests in unpalatable ways. Looking towards the exits, Washington does not seem overly concerned about the exact details of a possible political settlement while New Delhi is all too focused on how the strategic terrain in its neighborhood is shifting to its detriment. This lack of solicitude explains why, according to one analysis, “few tears are being shed in the top levels of the Indian establishment over the state of ties with the US.”

Yet beyond the top-level ructions, the past year also witnessed the growing density of bilateral affairs, especially the accelerating pace of economic interactions. Even with the global economy in the doldrums, 2010 was a banner year for the trade relationship, with two-way goods exports surging nearly 30 percent to $48.8 billion. Merchandise exports were also up significantly in the first half of 2011 compared to the same period last year. All told, India is now America’s 12th largest goods trading partner and one of the fastest-growing destinations for U.S. exports. This is a welcome trend, as increased private-sector linkages are key to limiting the risks that today’s political and diplomatic frictions could escalate and disrupt the overall partnership.

Notwithstanding the disappointments over the fighter competition, the United States has also become a critical player in the ambitious military buildup India is undertaking. New Delhi was the third largest buyer of U.S. weapons this year, with purchases amounting to $4.5 billion – a level ahead of such long-time American allies as Australia, Saudi Arabia, Israel and Japan. Indeed, over the past year or so the Indian government has either purchased or taken possession of a number of key weapons systems: the AH-64D Apache attack helicopter, the C-130J Super Hercules transport aircraft, and the C-17 Globemaster III strategic transport aircraft.

Finally, as the constant parade of Cabinet officers and senior officials between the two capitals attests, bilateral relations have acquired a scope and depth that were unimaginable less than a decade ago. Among other things, Washington and New Delhi now hold regular consultations on policy vis-à-vis China, Deputy Secretary Burns has just concluded talks in New Delhi about strategic and economic cooperation, and a trilateral U.S.-India-Japan security dialogue will meet for the first time next week. Indian foreign policy elites are growing more comfortable with the notion of strategic intimacy with the United States. And the expansion of Chinese strength will undoubtedly push New Delhi to tighten its security relations with Washington in the years ahead, though the process will neither be as smooth nor as speedy as many Americans would like.

All of these factors are contributing to the steady accumulation of bilateral bonds. The key question for the approaching year is whether Washington and New Delhi will exhibit the constancy of leadership needed to capitalize on these favorable developments. Alas, the prospects do not appear promising. With 2012 shaping up to be one filled with turbulent politics in both countries, the focus of President Obama and Prime Minister Singh will continue to remain inward.

Immigration Blog

Per Country Limit Bill Continues to Attract Attention

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H.R. 3012, “The Fairness to High-Skilled Immigrants Act,” is a small bill, anywhere from 1,000 to 2,000 pages shorter than the bills that normally attract a good deal of media attention. Yet H.R. 3012 continues to attract major editorial and news attention.

The bill, which passed the U.S. House of Representatives 389 to 15, would eliminate the per country limit for employment-based immigrants. That would especially help highly skilled individuals from India and China waiting a long time for green cards. The bill would also raise the per country limit from family-sponsored immigrants from 7 to 15 percent.

The Wall Street Journal editorial page used its powerful voice to call for Senate passage of the bill. “For businesses looking to hire advanced-degree candidates or skilled workers, the end of the cap is a good thing,” argued the editorial. “The 7% solution sought to make the American dream accessible to people from every nation. But today’s reality is that American universities are graduating a high number of foreign-born engineers, computer geeks, scientists, mathematicians and nurses that come from a narrow list of countries. The U.S. will be more prosperous by letting graduates who land jobs stay permanently.” (Find the editorial here, registration may be required.)

But the Wall Street Journal noted the legislation is not the ultimate solution to the employment-based green card problem: “The trouble is that the House bill does nothing to address the real problem: 140,000 green cards a year for advanced-degree and skilled workers is far too few. By refusing to increase the number, or to make a special category of green cards automatically available for American university graduates in science, technology, engineering and math, Congress is again delaying reform that could help the lackluster U.S. economy.”

In an editorial titled “Tinkering at Immigration’s Margins,” the Washington Post also weighed in on the bill, but not as favorably as the Wall Street Journal. “A bill passed by the House of Representatives last month would grant a few thousand more green cards annually to Indian and Chinese engineers, software designers and scientists, mostly at the expense of Korean, Filipino and Mexican engineers, software designers and scientists,” wrote the Washington Post. “Since the legislation makes no overall change in the paltry number of green cards available, hundreds of thousands of highly skilled employees already working in the United States on short-term visas will remain backlogged in the system, in many cases waiting for more than a decade to become legal, permanent residents. That’s what passes for immigration reform in Congress these days.”

Not surprisingly, the legislation has also made news in India. The Economic Times of India took a different tact from its American counterparts, focusing on the impact of current U.S. immigration law on the lives of individuals. (Find article here.) It cited the example of an Indian IT (information technology) specialist who came to the United States in 2003 on an H-1B visa. His employer filed for his green card in 2004 in the third preference and he is still waiting. “He is living in the U.S. under annual extensions of H1B, and every time he leaves the US, he has to apply for advance parole with the U.S. Citizenship and Immigration Services, so that he is not stopped from re-entering,” reports the newspaper. “Kumar doesn’t know when his application for green card will become current.”

The article notes it could take another 10 years or more. “Living in such uncertainty is tough. He had started toying with the idea of giving up the green card dream and returning to India. But that was till last week when the U.S. House of Representatives passed ‘The Fairness to High-Skilled Immigrants Act.’”

As of this writing, H.R. 3012 remains held up in the Senate by Senator Charles Grassley (R-IA). No one can be certain whether he intends simply to slow down the bill, force it through the committee process, or see that it never comes up for a vote.