SAN FRANCISCO — While the path to U.S. citizenship sketched out in an immigration-reform bill passed by the Senate is a long one, a key part of one industry isn't waiting to see whether Congress delivers what it wants.
Even while technology-industry lobbyists fight hard in Washington to nearly double the number of annual visas for skilled foreign workers — to 110,000, as the Senate bill calls for — the CEOs of some fast-growing start-ups are already going overseas to find workers with the technical skills they need.
That includes Lew Cirne, CEO of New Relic, a San Francisco-based maker of software that boosts the efficiency of applications that run on corporate computer networks.
Of the 225 engineers working at its headquarters and Portland, Ore., office, just eight are foreign nationals in the U.S. on H-1B visas, Cirne says.
Yet two years ago, when he began to plan another product line — "one that can help take us from a $100 million company (in annual revenue) to a billion-dollar-company in a few years," he says — he turned to a programmer who lives and works in Brisbane, Australia, to help develop New Relic's next-generation software code.
"We have a bias to hiring here. We're not looking to reduce costs by moving jobs overseas," says Cirne, whose previous start-up, Wily Technology, had more than 400 employees when it was acquired by CA Technologies, a larger rival, for $375 million in 2006.
"We're competing for the top talent, no matter where it is," says Cirne, a native of Canada and naturalized U.S. citizen.
He is far from alone.
A growing number of small, private U.S. technology companies — who, like, New Relic are late-stage start-ups with more than $100 million in annual sales — now have engineering offices overseas.
A decade ago, such offices were de rigueur for start-ups backed by marquee venture-capital firms, who pushed their portfolio companies to move some engineering work overseas — mostly to India — to cut costs.
But that labor arbitrage never provided all the savings that companies had hoped for, once the rupee had risen to where the cost of office space in Mumbai equaled or even exceeded that of similar space in Silicon Valley, as it does today.
And the logistical headaches caused by trying to manage workers located many time zones away caused even some large companies to question the value of offshoring engineering work.
While the motivation for large U.S. technology companies to hire foreign workers back then was based primarily on a desire for cost savings — and Microsoft, IBM, Cisco Systems and others all hired thousands of Indian engineers and consultants over the past decade for that reason — the start-ups of today are hiring foreign workers in different places, and for different reasons.
Perhaps the most important reason — along with trying to hire the very best engineers, mathematicians and computer scientists — is that doing so is so much easier than it used to be.
When San Francisco-based Zendesk was looking to open a development office in Europe in 2011, CEO Mikkel Svane and his two co-founders were able to begin their search using contacts they'd made in the software developer community of their hometown of Copenhagen.
The three Danes all moved to San Francisco in 2009, when the help-desk software start-up they'd founded two years earlier outgrew the apartment in which they'd launched it. Yet they'd been able to follow online the work of others who — like them — wrote code in a new programming language called Ruby on Rails.
While two-thirds of its 120 engineers and technical workers are located in San Francisco or Madison, Wis. — home to the Badger State's largest university — three dozen or so work either in London, Dublin, Tokyo, Berlin, Copenhagen or Melbourne, Svane says.
The company now employs almost 400 workers — up from 90 just 24 months ago — and has tripled its number of customers to 30,000 during that time, according to Svane.
TECH'S ANSWER TO 'MONEYBALL'
A start-up's need to produce innovation on a tight budget against entrenched, better-funded rivals forces them to search high and low for workers who can deliver great new products — and who will accept a lower wage than they'd get at a large company.
In exchange, those employees get the chance to work 70- to 80-hour weeks in hopes of building something that could be big.
People willing to take those kinds of risks are similar to the immigrants who — like Cirne and Svane — have come to this country for more than 200 years to pursue their own version of the American dream. About 40% of the current Fortune 500 companies are founded by immigrants or their children.
Other research has shown that, on average, every 100 foreign students who remain in this country after receiving an advanced degree in science, technology, engineering or math (a so-called STEM degree) create 262 additional jobs.
Before the days of online forums for computer-programming languages, small U.S. companies that wanted to compete for the best technical talent had to rely either on their own personal networks — as Cirne did — or try to compete with larger rivals for the graduates of advanced-degree programs at U.S. universities.
The percentage of foreign nationals enrolled in advanced STEM degree programs has remained fairly constant over the last two decades, 33% in 2009 from 31% in 1990, according to a report compiled for Congress in May 2012 by the Congressional Research Service.
During that same time, however, the total number of such students surged 64% to 149,000 from 91,000, as university programs sought to keep pace with a fast-growing industry.
The problem for U.S. tech companies is that, as the need to hire more skilled workers has increased, the number of visas for skilled workers hasn't.
Although Congress temporarily raised the number of annual H-1B visas to 115,000 in 1998, the limit reverted to 65,000 in 2004.
That means a growing number of workers with advanced STEM degrees from U.S. universities have been forced to go back to their home countries to look for work — even while U.S. companies want to hire them.
"I get calls every day from hiring managers and (human resource) execs looking to bring in foreign STEM workers into the U.S. to help them grow their businesses here," says Charles Small, an immigration attorney in San Francisco for more than a decade.
But given a six-month minimum wait time, and the fact that the 65,000 cap on H-1Bs for this year was reached on the very first day that the government began accepting visa applications, any skilled foreign worker that a company found today couldn't start work until Oct. 1, 2014, at the earliest, Small says.
With the Senate moving on a tech-friendly bill, those working on raising the number of H-1B visas now turn their attention to the House, which in past years has voted out of committee several bills that would establish a new type of visa for workers in STEM fields.
There is a new sense of urgency after several other countries — including Canada, Australia and Chile — have loosened their own immigration laws to make it easier for their own companies to hire skilled foreign workers.
"The tech industry will do everything it can to get a bill passed … that makes sure the U.S. remains the center of innovation," says Dean Garfield, CEO of the Information Technology Industry Council, an industry trade group.
As things slowly move forward in Washington, start-ups are going wherever they can to find more skilled workers.
King.com, a maker of some of the most popular social games on Facebook, has 100 engineers in Stockholm.
Its website lists dozens of open tech jobs in London, Hamburg, Barcelona, Bucharest and several other overseas offices.
Optimizely, a start-up here, hired its first H-1B worker this year, says CEO Dan Siroker, a former Google product manager. Under current visa rules, the employee can't start until Oct. 1.
Zendesk now lists all new engineering positions in each of its multiple locations around the globe. That approach has helped the company overcome "the huge challenge of trying to hire technical talent in San Francisco, where the competition is so fierce," says CEO Svane.
So rather than debate whether more skilled foreign workers will take jobs away from Americans, perhaps Congress should pass a bill that prevents more high-skilled jobs from heading overseas.
John Shinal has covered tech and financial markets for 15 years at Bloomberg,BusinessWeek, the San Francisco Chronicle, Dow Jones MarketWatch, Wall Street Journal Digital Network and others.
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