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Internet opportunities create 'brain gain' in some countries

Industry Standard


In this story:

Coming Home

End of the Drain? Not Quite

"The Most Important Thing"

Climbing the Learning Curve

RELATED STORIES, SITES icon



(IDG) -- James Liang was one of China's most promising whiz kids. He won the country's first national computer programming contest at the age of 13, and entered Fudan University's "genius class" just two years later. Liang epitomized a new breed of computer-savvy youth, which the government hoped would help build a modern China.

Then he left for America. At age 19, Liang saw better opportunities abroad: specifically, a full ride at Georgia Tech. Later he found a job in Silicon Valley working for Oracle. For years, people like Liang have left their countries in the developing world to seek a better life in the West, creating a crippling exodus of talent popularly known as the brain drain.

But now Liang has come home. Today, he sees the greatest opportunities in the land of his birth. "China is at the point where the Internet is just going to explode," he says. He has moved back to Shanghai and teamed up with three classmates to run Ctrip.com, an online-travel agency.

Liang is not alone. "The majority of dot-coms in China have been started by returning overseas students," says Luo Hui, deputy director for China's Ministry of Science and Technology. Liang's partner Neil Shen, who earned an MBA from Yale and worked for eight years as an investment banker on Wall Street and in Hong Kong before launching Ctrip in April 1999, thinks he knows why: "In this sector, a brain is the most important factor for a company's success."

Coming Home

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From Beijing to Bangalore to Buenos Aires, the lure of the Internet is pulling longtime expatriates back to their homelands -- and convincing young graduates to stay. In some cases, the reasons behind this "brain gain" are economic -- technology professionals who struck it rich in Silicon Valley are finding their money goes a long way back home. For some, building the Net for their countrymen is almost a duty; for others, it's the chance to be a bigger fish in a smaller pond. Developing countries are accelerating the migration, sweetening the rewards for high-tech workers by pushing development in their technology sectors, cutting taxes and loosening immigration laws.

India is a vivid example. Since the U.S. and the U.K. first opened their doors to Indian professionals in the 1960s, India has lost its best and brightest to the West. Government-subsidized schools churned out thousands of brilliant scientists and engineers, but India offered few opportunities after graduation. Young people had little choice but to become babus (government bureaucrats) or escape abroad.

The old trends are now changing. Since the state's telecom monopoly launched the Net in India in 1996, longtime emigres have begun trickling back to take part in India's Internet revolution.

Prakash Gurbaxani is one of them. He was working in Silicon Valley in the late 1990s and had already spent 13 years in various technology management jobs in the United States. The Internet hysteria unleashed by Netscape's blockbuster IPO in 1996 was creating lots of demand for executives like him, especially in India, where he was CEO material. India was "a gold mine of opportunities," says Gurbaxani. So when Microland, a leading Bangalore-based technology services company, asked him to head their newly formed media division in 1997, he packed his bags.

After running Microland for three years, Gurbaxani ventured out on his own earlier this year and created a Web services firm called 24/7 Customer.com. His experience and connections in Silicon Valley and the economics of India gave the company an edge. Gurbaxani raised $3 million in initial funding from U.S.-based investors including Banyan Venture Partners and entrepreneur Ram Shiram, a former VP at Netscape and Amazon.com. The money goes a long way in India, where relatively modest wages for programmers let companies develop technology at a fraction of what it would cost in the U.S. And the entrepreneurial skills and spirit imported by returnees like Gurbaxani is starting to ripple through the economy as they mentor and invest in other startups trying to get off the ground.

End of the Drain? Not Quite

Returning expatriates are part of an increasing flow of senior talent back to developing countries, but they are not putting an end to the world's brain drain. While 1,500 Indians with valuable overseas experience returned last year to fill senior-level jobs, more than 30 times that number abandoned junior positions in India for the U.S. In fact, some argue that the Internet is actually increasing the brain drain as countries around the world vie for high-tech labor. Europe, for example, will have openings for 1.7 million technology workers within two years; the U.S. will need 1.6 million in the next year alone. To fill the gap, governments in industrialized countries are raising immigration quotas and making it easier for tech workers to obtain visas. The U.S. Congress doubled the number of high-technology visas it issues two years ago, for example, and is expected to increase the number again this year. Increased salaries, stock options, tax breaks and business incentives are lavished on technology professionals as they arrive in the U.S. and Europe.

But for some Net entrepreneurs, the thrill of leading the Internet revolution at home is a bigger draw than cash and creature comforts. In Rosario, Argentina, as Adolfo Rouillon was growing up, waves of students were fleeing his country's military dictatorship. Later, economic hardship drove people away. In 1995, Rouillon and four neighborhood friends were plotting a similar exit, preparing for English exams and dreaming of the plum jobs they would land with American MBAs. But a vacation in Spain changed the agenda. "There, we heard three words: Internet, Netscape and Yahoo," says the 27-year-old Rouillon. "On the flight back I spent the night reading a book called The Internet Bible. That's how it all started."

Rouillon and his friends returned home, quit their jobs, scraped together $10,000 in personal savings and created Amtec.net, which offers simple services like setting up Web pages for local companies. When they moved the startup to Buenos Aires, the country's capital, their office consisted of nothing more than a public phone booth, a laptop and a corner table at a shabby downtown bar. "You had to come up with creative excuses for people who wanted to come out to your office," laughs Rouillon.

Five years later, Amtec is a successful I-Builder with $10 million in revenue and some 250 employees scattered throughout Argentina, Brazil, Chile and Mexico. All the technical operations are located in Rosario in an effort to help the founders' hometown, located in a once-thriving industrial region that has fallen on hard times recently as companies have moved to Brazil, where wages are lower. Rosario has many universities cranking out graduates, but they often end up behind the wheel of a cab or in other unskilled jobs.

"The Most Important Thing"

Rouillon and his partners founded a small school to help give graduates and others some of the basic technology skills they need to get a toehold in the new economy. "There are just some things that the school system here still doesn't teach," he explains. New hires spend 30 to 45 days learning programming languages such as Java and HTML. "Being able to create all these jobs is clearly the most important thing that has happened in my life," says the deeply religious Rouillon, fighting back tears.

Training people in Rosario, of course, also serves the company's interests by providing a supply of potential workers. And as Rouillon admits, "it is so much easier to find good people ready to work for you in places where opportunities are less plentiful."

Nonetheless, Rouillon is expanding the training program to a remote area of Brazil, thereby giving a boost to people who may one day start their own Internet company. "What you are seeing is just the tip of the iceberg," he says, "There will be thousands of us in no time."

That prediction may be a tad optimistic given the difficult financial environment for Internet startups everywhere. But even if the dot-com frenzy is over, the impact that Rouillon and other returnees have made in their home countries in Latin America and Asia will be felt for years.

Climbing the Learning Curve

AsiaInfo CEO James Ding, for example, was among China's first generation of returned scholars. He left for the U.S. in 1988 to escape a stifling economic system that dictated where he would work and how he would live. "Everything was fixed and arranged," he says. "There was not much freedom to find your own way." He came back five years later on a mission: to wire China. It was a decision made in part out of duty. "You see how big the difference is between the U.S. and your home country, and you want to be able to do something to help. It's not a comfortable thing to say, 'OK, now I'm living my life in the United States. I'm just going to forget about China.'"

Throughout the '90s, AsiaInfo designed and constructed China's first commercial Internet backbone. The surge of Internet startups that followed gave the country a crash course in Business 101. China's Internet revolution "has changed people's mentality," says Duncan Clark, a consultant at BDA China. Before, only those with money or connections could go into business. These days teenagers think about starting their own companies. "Today you hear people talking about management, capital markets and business plans," adds Clark. "It's been a great education. These effects aren't going to go away."

Case in point: The five founders of FanSo.com, an education Web site, have been on a vertical learning curve since they launched last year. In typical Net fashion, the quintet started in their dormitory with just $650 and a couple of personal computers. Last semester two of them dropped out of school to devote all their time to the site. Now housed in an incubator near their old university, FanSo has already expanded to sixty employees and is working on its second round of venture capital. Deputy CEO Tong Zhilei, 25, who graduated with an MBA from Qinghua University this year, says it wasn't easy. "Every 15 minutes there was a new problem," he remembers. Yet he never considered going abroad.

Unlike James Ding's graduating class, which lost more than half of its graduates to countries overseas, Tong estimates that only about 15 percent of his classmates have left. Forty percent, on the other hand, work at Internet companies. "The Internet is the future here," he says. "Everybody makes his own choices, and some still believe they'll do better by going abroad. But today there is tremendous opportunity in China."




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