Information Builders CEO blasts Gates on H-1B

Von Don Tennant

Gerald Cohen, the outspoken founder and CEO of New York-based business intelligence software vendor Information Builders Inc., spoke with Computerworld on Friday about the controversy surrounding offshore outsourcing and the H-1B visa cap. Excerpts from that interview follow:

Bill Gates told an audience in Washington a few days ago that the U.S. needs to get rid of the cap on H-1B visas. What"s your position on that? He"s full of it. He says, "I"d hire a lot more American engineers if I could find them -- they"re not available, and that"s why we"re going to China and India." He"s full of it. He"s going there because it"s just cheaper. He can find all the engineers he wants in this country.

A lot of CEOs of companies like yours are saying they just can"t find the people, so they"re lobbying Congress to get rid of the H-1B visa cap. That"s bulls---. A couple years ago that was true, and that"s when the cap was raised. You know who wants [to get rid of the cap]? The Indian companies. The way the Indian companies work is they have to have a certain number of people here, and a lot more people back there -- so they"re the ones who want to get all these people in. And they don"t even pay them American wages -- they just pay them as cheaply as they can.

I"m the chairman of the New York Software Industry Association. One of the programs we have is a federal government program that gives the city of New York money to run technical training courses for people in the city to upgrade their skills, so city companies don"t have to go overseas [for workers]. The program is essentially an H-1B replacement program.

The funny thing is, we"ve had our people apply for this -- it"s a free course -- and they found a lot of these guys who took the classes were here on H-1B visas. If you had more H-1B visas, the only thing you would see is the overseas people coming here and replacing more American jobs.

But surely you use overseas labor to lower your own costs. I"m going to put two hats on. With one hat -- my [Software Industry Association] hat -- I say we want to keep jobs in New York City. The other hat says we want the company to be prosperous, and if I can lower my costs by doing work overseas, the company"s more prosperous. But I"m not so sure that"s better for the country.

I think a certain amount of tariff protection protects native industries. If it was product, we have a mechanism -- we put a tariff on it, and we"ve used that for years. It"s a well-accepted idea. In fact, most of the guys [overseas] we"re buying from have restrictive tariffs -- we can"t get into their markets so easily. For services, you don"t have a tariff, so it"s a phenomenon that now services are going outside the U.S. And I personally think that"s not a healthy thing for the country.

How much of your development work is done outside of the U.S.? We do a little quality-assurance work outside of the U.S. We find it"s economical to do the routine kind of QA work [overseas].

What"s your response to the unemployed U.S. IT worker who says you should be keeping those jobs in the U.S.? We have to [do business] economically. It"s a real problem. The government is providing us with no help, so we"re doing [what we have to do] ourselves. If you look further down the road, there"s going to be a huge drain of IT jobs. A lot of these jobs that go overseas are the spawning grounds for future jobs. So the whole industry"s going to move offshore.

What do you want the government to do to help? The Indians will bring people into the U.S. cheaply [to work here]. No! When you [bring people into] the U.S., you have to pay American wages. That would be a minimum standard, for example. There are a lot of small things that could be done, but I have no solution for how we"re going to throttle this in some way.

In any case, you have no problem finding the skills you need for your company in the U.S.? No, I don"t. I go offshore strictly for price. I can get things done cheaper in Moscow than I can in New York City.

A lot of people say the education system in the U.S. is failing to provide qualified IT workers. You disagree? That"s bunk. Why do you have declining computer science majors? Because every parent is saying, "Why major in computer science when all the jobs are going offshore?" It feeds itself. And I guarantee you, if it doesn"t stop, in a couple years you"re not going to have much of an IT industry here.

So you feel the universities are doing a good job? Yeah, but they"re getting a declining enrollment. I"m on the board of the CUNY Institute for Software Development and Design, and I think [universities are] doing a terrific job of graduating competent master"s and Ph.D. program students in computer technology.

You rely on markets outside of North America for 25 percent of your business, and you"ve said that number could rise to 50 percent by the time you pass the torch to a successor. So, clearly you expect to do a lot more work overseas. If you have a laboratory in France or England, that"s not replacing American jobs, necessarily. You"re selling in England, you should do some work in England, for example. That makes sense. What are you selling in India? Zilch.

So you don"t buy the argument about outsourcing offshore as a means of getting a foothold in a market? No, I don"t buy that. What are you going to sell to the Indians? We"re not going to sell them a whole lot of software. And not much hardware either, if you ask me. The hardware we do sell them is manufactured in China or Taiwan.

But it"s a big world out there, and as it computerizes, it"s going to buy software. So I think there"s a huge market outside the U.S. All of us are building out our infrastructures to sell worldwide. And we"re going to hire employees in those countries. That"s good for their economy and good for our economy.