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This podcast is brought to you by India
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Knowledge at Wharton. Please visit
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knowledge.warton.upen.edu/india for more
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information. India Imagine was the theme
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of the 2008 Wharton India Economic Forum
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that was held in Philadelphia recently.
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The dayong event attracted several
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leaders including APJ Abdul Kalam,
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former president of India as well as
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CEOs of Indian companies, nonprofit
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groups, consulting and private equity
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firms. Indian knowledge at Wharton
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brings you one-on-one conversations with
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these leaders. We're going to speak
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today with Vive Guadada who is a fellow
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at the labor and work life program at
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Harvard Law School and also executive in
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residence at the Pratt School of
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Engineering at Duke University. Vive,
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thanks so much for joining us today.
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Thanks for having me here, M. Before we
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talk about your work in academia. Uh, I
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know you have a very interesting
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background as an entrepreneur. Could you
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tell tell us a little bit about your
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entrepreneurial experience? Sure,
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absolutely. I grew up to the ranks of IT
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basically programmer, systems analyst,
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project manager and eventually I
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developed some technology at first
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Boston which led to the creation of my
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first startup company called SEI
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Technologies. We were developing
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revolutionary technology to generate
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systems from high level specifications.
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C was a very successful company 0 to 120
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million in 5 years IPO spectacular
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success and then after IPOs you often
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get on go on the rocks so I exited soon
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afterwards to start my second company
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which was re-engineering legacy systems
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and modernizing them that was also a
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spectacular success until the com bubble
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burst and until my uh health I started
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having health problems and I realized
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that I had to take a break from the rat
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race. Where were where were the were
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these companies based? Uh first the
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first one was a spin-off from first
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Boston in New York City and we moved it
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to uh to the Raleigh area Raleigh Durham
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area and the second one was uh in in the
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same area. Now is the entrepreneurial
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experience in the southern part of the
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country different than it might be say
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in the northeast or in Silicon Valley?
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I'll give you I'll tell you what
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happened. I mean I despite the fact I
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had built $120 million company taken it
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public. It's probably one of the most
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successful software companies of its
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time. I had access to anyone. I I got
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emails returned from Scott McNeely, um,
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Bill Gates, you know, who's who of of
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the tech industry and then I was
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starting my second company. Um, any if I
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was in the Silicon Valley, I would have
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had venture capitalists tripping over
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each other to uh to come to me in the
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Raleigh area. I couldn't get them to
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return my phone calls. Why? Which I
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found out later on after networking
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through the Silicon Valley and through
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Boston because my people didn't make
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good managers. That's this is how the
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Silicon Valley used to be 20 years ago
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for um for Indians and for immigrants.
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That changed. The uh south is still
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running behind in that sense that you
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still have these old images of uh
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Indians being low-level you know
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technicians and not being successful as
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managers and there's a discomfort
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generally in funding uh you know
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immigrant firms. If you look at you know
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if you looked at all the take North
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Carolina other than my company I don't
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know one other company in the last 15
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years that's been funded who which had
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an Indian CEO that's interesting have
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these experiences helped to shape your
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research agenda as you have moved into
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academia and could you tell us a little
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bit about that absolutely I started off
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by studying globalization generally we
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were looking into uh you know what
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really triggered off my research at Duke
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was when I joined that I students came
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to me because I had been a pretty
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well-known tech entrepreneur and they
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were asking me for mentoring and advice
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and there was one question they asked me
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which really stomped me. They asked what
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courses could they do that would give
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them uh they would make the jobs being
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they would make the jobs outsourcing
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proof and I should have known the answer
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to that because I had been involved with
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outsourcing. I'd involve been with
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globalization. The trouble was I didn't
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know why they were worried and what they
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could do about it. So I started
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researching it and the more I researched
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the more I got concerned about US
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competitiveness. So then I had to shift
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gears. I wanted to look at what the US
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could keep do to keep its edge. And this
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is where my past came in that I knew
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that in the tech industry that
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immigrants were playing a increasingly
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larger uh role that in particular I I
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knew there were a lot of Indians who
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were starting tech companies. I also
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wanted
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to to compare the different regions
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compare immigrant entrepreneurship you
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know across the region. So basically I I
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worked I got together with Dean Analy
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Saxian of UC Berkeley and we tried to
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update her 1999 study which found that a
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quarter of the tech startups in Silicon
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Valley were founded by immigrants. In a
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nutshell what we found was that the
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trend which began in Silicon Valley had
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become a nationwide trend that 25% of
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the of the companies nationwide were
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founded by immigrants. 52% of those in
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Silicon Valley were founded by
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immigrants and Indians were by far the
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largest founding group of these
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immigrants. It it confirmed what I knew.
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It also showed me on a region by region
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basis that the entire RTP area is at the
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bottom of of the list in terms of
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immigrant entrepreneurship. It proved in
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numbers what I had known through
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anecdotal evidence. That's interesting.
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Did you also find any uh evidence on on
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about revenues and jobs created by
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companies launched by immigrant
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entrepreneurs? Yeah, we found that in
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2005 these immigrant founded companies
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in the engineering and tech sector, they
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generated $52 billion in revenue and
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employed 450,000 people. Now, you know,
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to the people who are opposed to skilled
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immigration, if you added up all the
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engineers and technologists that entered
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the US in that 10-year period in which
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we did the survey, uh they would they
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generated the number of jobs that these
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immigrant founded companies were
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generating was more than the number of
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immigrants we allowed in that entire
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10-year period. Plus, they were fueling
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the economy. The fact that you have 25%
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more startups than you would may have
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otherwise have had is is hugely
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important for the US economic uh growth
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and for global competitive advantage.
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you know like uh the the issue you
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mentioned about uh the the the entry of
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skilled immigrants into the US uh
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another issue that has been somewhat
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controversial uh is is the out
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outsourcing of jobs overseas especially
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skilled jobs going o overseas uh have
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you looked at that in your research and
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what have what what's been some of uh
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your your what what does your research
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show in that area we looked at R&D going
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offshore because it's one thing for you
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know when when manufacturing goes let's
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take dress Dress making, dress making
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goes, you still have dress design,
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right? Now, if dress design goes, what
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do you have left? So, what's happened
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right now is that whether we like it or
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not, a lot of low-level technology jobs
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have gone overseas, that's fine. As long
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as we're still doing the design and the
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analysis in the USA, what we're seeing
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is that increasingly R&D is shifting
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overseas to India, China, and all over
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the world. Now, you can't stop it. No
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matter what the US does, it cannot stop
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the fact that that India is rising
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rapidly. China is trying very hard to
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rise and catch up with India. But but
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our research has shown that they're
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having lots and lots of problems because
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you can't mandate innovation. It's what
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the Chinese are learning the hard way.
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So India's rising. China is struggling
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but nevertheless they're spending
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massively on R&D. So what can the US do?
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I mean we can't stop it. We not going to
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shut our borders and we're not going to
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shut down R&D happening overseas. What
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we have to do is we have to now figure
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out how to how to adapt to it and
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benefit from it and to uplift our entire
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workforce. And how how how does the US
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do that? Well, this is another thing
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that the conclusions I've come to from
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my research because one of the things we
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discovered was that um that India was it
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education system is really weak that the
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number of engineers that graduate is
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much much less than is commonly believed
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and the fact is that they're graduating
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only 800 900 PhDs a year in engineering
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30,000 35,000 real masters a year in
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engineering. So this contradicts
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everything I've just said about India
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rising in R&D. The question is how can a
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country in which the education system is
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is so weak in which it's politicized and
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in the even though they're now talking
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about making investment the fact is that
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that it'll take 5 years before that
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investment has any benefit how is it
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that India is rising so rapidly the
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answer that I've discovered in after
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meeting with dozens of uh of companies
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over there is in the workforce training
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that Indian companies have taken the
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best practices from the USA and from
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Europe and moved those up a couple of
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that they can train managers in you know
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in the USA to go from the equivalent of
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a fresher in India which means a recent
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graduate joining a technology company to
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manager takes about 10 years or so in
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India they can do that in three years or
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maximum four years because they
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perfected the art of training people
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they invest heavily year by year in
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upgrading the workforce we've forgotten
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how to do that our best companies used
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to do this I mean some of them if few
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still do but the vast majority of
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American companies don't invest in the
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workforce anymore India has learned how
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to do that from the USA and they
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perfected the art. So the if you ask me
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what's the number one thing the US could
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do to keep competitive you know yes we
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keep talking about improving K to2
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education and it's very important math
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and science are important but the fact
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is that the 120 million people in our
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workforce invest in them start with uh
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with upgrading your workforce and you'll
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become competitive so could you offer
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some examples of the kind of things that
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you have seen companies in India or
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China do to invest in their workforce
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that could be replicated by companies in
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the US I I can tell you from India
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because in China we haven't seen the
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same level of innovation in China. The
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innovation is largely been being driven
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by multinational corporations and
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they're simply replicating the US
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practices in in China. Nothing more. I
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haven't seen anything advanced beyond
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that in China. Now in India, it was just
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amazing. You know, you start off with
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recruiting. The fact is that um you know
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Microsoft for example gets two or
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300,000 rums a year from programmers.
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They have software that goes through it
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and it's just wrote based on rums.
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They'll weed through it and and do it
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and then they select the people they
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want to interview. Well, in India, the
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education system is pretty weak. And if
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you went simply by degrees and resumes,
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you won't hire anyone. Yet, the industry
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has to do it. So, you know, companies
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like Converg, companies like Genpacked.
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What they've done is they've set up
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storefronts that you go to, it's like
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going to a shopping mall, and they have
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video presentations where you can take
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your family, learn all about the
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company, and you can do an interview on
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the spot. If they think you have
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potential, then they'll they'll put you
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through a process, hire you, and then
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they'll train you in in the local area
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as well. Now, that's innovative. The
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fact is that they're not relying on rums
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the way we rely on résumés. And then you
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start work. Well, uh you go to emphasis
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and they put you through a 4-month
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training pro program which is like a
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boot camp. By the time you're done with
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that, you're you've got the equivalent
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of a master's degree. It doesn't stop
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there. In the USA, once you, you know,
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graduate and join a company, you're
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expected to now be productive. And
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that's typically the last training you
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go through. you know uh companies like
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IBM offer you uh online training and
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they and they they facilitate you know
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your learning if you want to learn but
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the fact is there's no incentive built
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in the system well in India you go to
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companies like Satyium Infosys and so on
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they mandate that you must receive 100
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to 200 hours of training every year um
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of your
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career so basically we the Indians
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receive more training Indians at the top
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receive more training than Americans
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receive in vacation and then they get
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rewarded for doing market and then there
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systems set up to manage the progression
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of the career. We have HR directors well
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they have talent directors which
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important to CEOs of the companies as
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well. They give talent development the
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same level of importance that we give HR
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development over here. So they manage
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your career. They help you through it.
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They guide you through through the
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entire process. The CEOs and executives
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spend an inord inordinate amount of time
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training their employees and building
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the workforce and so on. So I can go on
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and on for half an hour about the
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amazing things that that are doing
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there. The US needs to learn from them.
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You know, this is getting back to how
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can the US keep its edge. It's time for
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us to learn from from our disciples. You
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know, we're the we've been the guru so
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far in management and workforce
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training. India has been the disciple.
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It's now time for the guru to learn from
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the disciple. That that that's really
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interesting. Uh just to change ts for a
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little while. I I know along with your
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uh uh work in entrepreneurship as well
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as uh in IT uh and in academia you had a
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brief foray into Bollywood. Uh tell us
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about that experience. You want me to
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confess my sins now, right? Please. When
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I first uh disengaged from the tech
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world, I know I had been working so hard
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that I didn't get time to spend with my
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children. My son had decided he wanted
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to be he wanted to be an Indian. He
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wanted to be a movie star and he was
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fascinated by Bollywood. Um I was really
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worried about him leaving his technical
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career, his you know promising u
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technology career and moving into
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Bollywood. So I decided to take him into
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it. I basically got involved with some
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producers and and helped produce a film
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in Bollywood and I gave him a a role in
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the film and uh you basically went
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through the entire experience of
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Bollywood. By the time we were done, he
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says, "Dad, thanks for taking me there,
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but no thanks. I'm out of here. I want
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to go back to the tech world." And I
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also learned how crooked Bollywood is
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because we were dealing with American
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producers and Hollywood people. I tell
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you, Bollywood for all of its uh bad
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fame doesn't hold a candle to the
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crookedness of Hollywood. They're both
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very corrupt industries. How so? Uh just
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entire system, ML. Everything from uh
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from the way financing is done to the
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way it's managed to the way uh the
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system is rigged in in in favor of uh
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the large studios. I mean the entire
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system is uh is very weak and both
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industries are equally corrupt. Well, we
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we must come back at some future date to
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a more detailed conversation about that.
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But for now, can you tell us a little
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bit about what kind of future research
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projects you you're working on? Right.
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Um, you know, one of the the things we
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learned is that industries have changed
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now. Before you used I mean, I'm sure
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most people even now when they think of
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the automotive industry, they think of
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the American automotive industry versus
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the Japanese automotive industry. Now
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you hear about an Indian automotive
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industry. Well, the fact is there's no
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such thing as an American automotive
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industry. that uh the uh the technology
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for American cars is built globally. The
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technology for Chinese cars is built
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globally. The parts for the Indian Tata
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car are are assembled globally. What's
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happened is that entire industries have
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globalized. Take the farmer industry,
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the same thing. The fact is that the
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entire pharma industry has now dispersed
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diffused that you're now increasingly
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seeing drug discovery happening in India
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and China. You're seeing clinical trials
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happening in India and China. You're
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seeing almost every segment every value
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segment of of that industry happening in
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India and China. The same thing with the
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aerospace industry. The same thing with
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the semiconductor industry. Industry by
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industry. I'm actually analyzing six
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industries to show that they become like
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sand now. It's Lego blocks. It's no
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longer monolithic blocks anymore. It's
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sand which is dispersing. So we're
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demonstrating how globalization has
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changed the entire face of industries.
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I'm doing an extensive new project on
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workforce training and education. I'm
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also doing a follow-up on the on the
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immigration research to understand you
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know what has happened to returnees
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because what we're finding is that
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increasingly returnees have been driving
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innovation in China and they did in
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India but India has become self self-
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sustaining in terms of innovation it's
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really built the domestic capability to
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do what it needs to do it's not
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dependent on returnees anymore but we're
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doing extensive new research on
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returnees and then my favorite topic is
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entrepreneurship also looking into the
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backgrounds of Americanborn
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entrepreneurs and so so on so on So
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you'll be hearing a lot from me and uh
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we'll be publishing quite a few
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interesting papers over the next 12
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months or so. I look forward to seeing
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them and Vive, thanks so much for
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joining us today. I enjoyed being with
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you, Michael.
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For more information, please visit
00:15:24
knowledge.warton.upen.edu/india.
00:15:28
[Music]
