The Global Talent Chase:

China, India, and U.S. Vie for Skilled Workers

By Edward E. Gordon
Too many tech jobs and not enough
tech professionals to fill them
China, India, and the United States
all face this dilemma. Here is what
each economic powerhouse is
and should bedoing to ease its
workforce gap, and a look at a
successful strategy known as
Regional Talent Innovation
Networks, or RETAINS.
Around the world, the talent hunters are on the prowl. China, India,
and the United States, the three largest workforces, are the prime contenders in the battle over jobs and
skills. Technologys increasing impact across all job sectors has continuously raised employers demands
for more intelligent, well-educated,
career-ready workers. Replacement
needs in high-skill occupations are
due to soar. In 2010, a generational
retirement shift began that will remove massive numbers of talented
baby boomers from the labor pool.
Joining the developed economies
of Europe, Asia, and North America,
billions of Chinese and Indian workers and potential consumers have
flooded into the world marketplace.
This has created many new economic opportunities. It also triggered a talent tsunami in labor markets whose warning signs were
largely ignored by most Americans.
Long-term forecasters tell us India
and China may soon become economic superpowers. Their arguments for touting these two rapidly
growing markets are at first glance
overwhelming: China and India start

from a lower economic base. Their

huge populations are waiting to consume. Their colleges and universities
produce an inexhaustible supply of
skilled scientists and technicians.
Ongoing economic liberalization has
given them significant economic
power. Some see the rise of India
and China as a major economic
game changer.
However, the growing talent
shortage in both China and India is a
key issue that is further complicated
by a host of socioeconomic problems. India wants the respect conferred by its rising IT power, but a
rickety infrastructure and widespread corruption challenge its credibility. Chinas state-controlled capitalism is forging into uncharted
territory, run by a fascist-type police
state that fears political liberalization. Something must change.
These and other major limitations
cloud the future of China and India.
A major war for talent is now under
way as Chinese tech manufacturers
and Indian IT firms hunt for skilled
workers. This has serious implications for a U.S. business community
historically overdependent on importing skilled people from abroad.
Assessing the Global
TalentHunters
China and India have evolved culturally, economically, and socially
over the past 30 years. The questions
now are where they are heading and
whether their growth means theyll
continue supplying the United States
and other industrial economies with
talent. China and India may expand
their own talent pool, eclipsing the
U.S. economy and attaining global
economic dominance.
One impact of the growing talent
shortages is the serious threat of inflation. Wages for migrant workers

in China rose 21% in 2011. Indian inflation averaged 9.4% in 2010-2011,

with a 13% increase in wages in 2011.
China: Growing Pains. Chinas
young economy arose in 1978 from
the ashes of the disastrous Great
Leap Forward of the Mao era. It has
benefited from a huge population of
consumers and cheap labor. Now
comes the hard part. As the economy
matures, institutional changes in
s ocial/political structures are required along with massive investments in human capital development.
China now faces a major employment crisis. The 30-year low-cost/
low-wage manufacturing era that
fueled its economic miracle is now
over. Chinas 200-million migrantworker army is growing increasingly
restless over low wages and a lack of
employment benefits.
Other cracks are also appearing in
Chinas boom. Credit Suisse, citing
alarming levels of credit expansion in 2011, warned of slower
growth for the overall economy. Local government and state-owned or
backed enterprise debt totals amount
to well over 150% of Chinas 2010
GDP, according to Victor Shih, a political economist at Northwestern
University. (By comparison, the U.S.
debt-to-GDP ratio is 73%.)
More Chinese economists are now
predicting sharply lower annual
GDP growth. This could undermine
middle-class support of the Communist Party that has been based on the
so-called Beijing consensus, the
contention that people dont think a
lot about freedom of action, free
markets, and democracy, as long as
capable bureaucrats deliver major
economic growth.
It is clear that Chinas greatest
challenge is institutional change. After 90 years of existence, the Chinese
Communist Party finds itself in cri-

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sis. Chinas rising middle class views

it as an entrenched elite.
The fact is that many people today foster hatred for government officials and hatred for the rich, says
Yang Jisheng, a former government
journalist and author.
India: Dysfunctional Structures.
Indias spectacular growth of recent
years is beset by many political and
social issues. Economists and business leaders now believe that Indias
high inflation rate (9.1% as of May
2011) is the byproduct of broad economic structural failure driven by
severe talent shortages, a dysfunctional transportation and power infrastructure, and the unrealistic expectations of many of its citizens.
Unless serious efforts are made to
redress a growing human capital
deficit, Indias economy may stall as
it attempts to move up the value
chain into more sophisticated IT services and manufacturing. Someday,
India may challenge the supremacy
of the United States in pathbreaking
scientific research, but not in the
foreseeable future. It lacks the largescale, high-quality university graduate programs needed for an abundance of such breakthroughs.
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Chinese technology firm Inspur showcases its wares at the Fourth China Cloud Computing
Conference, which took place May 2012 in Beijing. Tech firms growing presence in China
are spurring new efforts by the Chinese government to recruit tech-savvy Chinese expatriates from overseas.

India has many advantages that

China lacks. India has a democratic
political system and an Anglo-Saxon
legal code. Also, Indias younger age
cohort is slated to continue growing,
with the nations total population
passing Chinas by 2030. There is
much talk about Indias demographic dividend (i.e., its relative
youth), but this will only be an illusion unless the quality of Indias entire national talent development system is significantly upgraded.
U.S.: Myths and Realities for
Talent Hunters. There is a growing
mismatch in India and China between the available talent pool and
economic demands for more skilled
human capital. Other serious socioeconomic issues complicate their efforts to increase the number of highskill workers. U.S. business leaders
still believe that America remains the
best location for the worlds top scientists and engineers.
A World Economic Forum study

November-December 2012

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reported that the majority of U.S.

patent filings by many American
companies are now being made by
foreign nationals living in the United
States (General Electric, 64%; Merck,
65%; Cisco, 60%). This motivates
many in the U.S. business community to lobby Congress to raise the
annual H-1B foreign visa quota from
65,000 to over 100,000.
But the talent tide is turning, as
talent hunters from many nations
woo their nationals to return home
to become participants in their burgeoning economies. Also, the United
States has tightened immigration
policies and raised visa application
fees to screen out potential terrorists.
It can now take up to a decade to obtain permanent U.S. residency. Finally, many other nations are tapping the same STEM talent pool by
offering attractive employment opportunities and permanent citizenship to foreign nationals.
In 2011, the World Economic Fo-

rum found that more Indian immigrants were moving back to India
than were moving to the United
States. A separate Kauffman Foundation study, Losing the Worlds Best and
Brightest (2009), surveyed more than
1,200 foreign nationals attending
U.S. colleges and universities and
found that 60% of Indian students
and 90% of Chinese students believed that stronger economic opportunities awaited them in their home
countries rather than in the United
States.
You have the cream of the crop
coming over here getting educated,
getting experience over here, and
suddenly they become much more
marketable and can do (just) as well
anywhere else, concludes Vivek
Wadhwa, the studys lead author.
Over the last 20 years, an estimated 150,000 highly skilled immigrants have returned to India and
China, says Wadhwa. About 135,000
Chinese students left the United
States in 2010 and returned home,
according to the Chinese Ministry of

Educationa 25% increase from

2009.
Structural Changes Alter
NeededSkills
All of the worlds talent hunters
face the same challenge: the ready
availability of skilled people, which
is often the primary driver for companies site selection. But rather than
hunting for foreign talent, businesses
over the next decade will need to
create their own skilled talent pools.
And their success will largely determine the future success or failure of
their national economiesand, by
extension, the worlds.
Until recently, U.S. businesses
have bridged this skills deficit by either importing educated workers or

exporting high-pay/high-skills jobs

to skilled talent pools overseas,
wherever they could be found. Both
of these talent strategies are beginning to fail.
The demand for talent and the supply of workers with the desired skills
are out of balance all over the world.
The populations of Japan, South
Korea, and many European nations
are in decline. India and China are
moving into more-sophisticated hightech manufacturing or IT services,
but both are now encountering severe
shortages of engineers, scientists, and
technicians. In both countries, domestic labor pools lack the requisite educational preparation due to deficient
public-education systems and the inadequate standards of institutions of
higher learning.

Girls in a West Bengal, India, village demonstrate their computer-savviness. India has a
surging population of youth who are, or will soon be looking for, new jobs in technology,
according to Ed Gordon, who cautions that the country must urgently improve its education
system and technology infrastructures if it is to find employment for them and continue to
grow economically.
SAMRAT35 / DREAMSTIME.COM

A major structural change is also

occurring in the U.S. labor market.
Though the GDP has risen, unemployment has not fallen in a way
consistent with the number of job
openings. Why? U.S. productivity is
increasing. In manufacturing and
most other business sectors, its not
just advanced machines. Its increasingly evident that many new advanced technologies are digitizing
the whole economy. These surges in
productivity will create tomorrows
jobs and raise living standards. New
jobs will come from rising efficiencies in production and innovative
technologies spawning new products and services throughout the entire economy.
The flip side to these breakthroughs is that todays and tomorrows jobs require advanced technical skills. A workplace may need
fewer people, but they must be better educated and able to work with
advanced computer systems. This
has become the new normal for employment, whether it is in an office,
production facility, hospital, law
firm, or service business.
These digitized jobs present a new
problem. The consensus among employers is that people need to be
reskilled for the new workplace. The
urgent need to create more skilled
workers is now a central political
and economic concern in communities across America.
The availability of better-educated
talent with up-to-date career skills
now largely determines where businesses will locate. Communities that
break down the structural barriers
among businesses, education, and
community groups and collaborate
to renew their talent creation and
economic systems will attract new
businesses and retain current ones.
Those that dont will wither and die.
The Great Recession has accelerated an ongoing labor-market shift
that was masked by the many lowor semi-skilled jobs created during
the housing/financial bubble. In todays labor market, employment for
low-skilled or semi-skilled workers
h a s f a l l e n d r a m a t i c a l l y. E v e n
m iddle-skilled professionals have
seen a steady decline in jobs because
of automation. In general, the job opportunities are brighter for high46

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skilled people who have kept their

knowledge and applicable certifications up-to-date and who can relocate where jobs exist.
Some critics blame popular culture, and not just deficient education
systems, for the lack of desired skills
among workers. In testimony before
the U.S. Senate, Charles Butt, chief
executive of a Texas-based H-E-B supermarket chain, said that finding
qualified young workers is an increasing problem: Many schools inherit an over-entertained, distracted
student body.
The spread of new media zombies, who lack basic academic competencies, interpersonal skills, and
critical thinking abilities, is reaching
alarming proportions. It should not be
surprising that the number of young
people entering science, technology,
engineering, and math-related (STEM)
occupations is shrinking.
The major business issue today is
not talent management. It has become talent creation. One-third of
U.S. business executives report that
they face a crippling loss of essential
skills as the baby boomers retire
enmasse.
Current U.S. education-to-employment systems are broken at the local/state/regional levels. They have
outlived the labor economy for
which they were created 100 years
ago. Over the past 30 years, the incremental adjustmentsthe education reformshave done little to
patch the broken talent pipeline connecting people to jobs.
What steps can U.S. businesses
take to remedy these massive deficits in the skilled talent needed today and over the next decade?
Technology is easy to develop,
states Dean Kamen, best known as
the inventor of the Segway scooter.
Developing a new attitude, moving
the culture is the difficult part.
The RETAIN Strategy
Over the past decade, my research,
consulting, and travels have given
me the opportunity to learn about
regional publicprivate partnership
networks emerging across the Americas, Europe, and Asia that are investing in new talent-creation systems. The goal of these networks is

November-December 2012

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to create more talented people at

higher skill levels who will be able to
better support a developed nations
competitive businesses and be highwage earners.
I call these organizations Regional
Talent Innovation Networks (RETAINs). They are local, broad-based
community initiatives that include
large and small businesses, community organizations (such as chambers
of commerce or Rotary chapters), regional economic development or
workforce development boards,
county/city/state agencies, unions,
public and private elementary and
secondary schools, postsecondary
educational institutions, foundations, parent groups, and nonprofit
organizations in health care, literacy
development, and other groups that
serve challenged workers who need
employment.
RETAINs are regional in composition. They focus on talent development through a wide array of innovative programs. They are financed
by private and public funds, including business investments, foundation grants, and local, state, and federal funding initiatives.
Already, more than 1,000 RETAINs
have been organized across the
United States. RETAINs are now
building functional collaborative
networks of partners from all segments of the community to create
new, more open education-to-
employment systems. These nonprofit organizations are leveraging
businesseducation partnerships
into new linkages to meet long-term
local talent needs. RETAINs help
their communities keep local businesses, stop population decline, and
attract new industries and service
businesses by expanding the local
pool of talented people.
RETAINs are built upon the value
of civic activism. Businesses collaborating with a broad array of community organizations, government
agencies, and nonprofit groups are
working together to form these new
pipelines that connect people with
jobs through both short-term and
long-term initiatives. In the short
term, they are moving to fill current
vacant jobs. Through RETAIN networks, businesses offer entry-level
job-training programs for those cur-

rently unemployed who have some

of the required job skills and a willingness to learn the rest. Unlike previous public job-training programs,
RETAINs do not offer generic job
training in the hope that this will assist an unemployed person in finding future employment.
Many of these publicprivate networks are now linking individuals
who have some of the required job
skills to specific vacant jobs. For up
to six months, an intensive training
and education effort puts these trainees both in the classroom and on the
job to get the required knowledge.
They receive a training wage from
the business and their unemployment compensation. In other words,
they earn while they learn. The majority of these trainees graduate
from their education programs and
are hired to fill vacant positions.
Two excellent examples of this approach are HIRED in St. Paul, Minnesota, and Chicago Career Tech in
Illinois. Established in 1968, HIRED
specifically matches an unemployed
worker who has some, but not all of
the required skills for a vacant job in
a local business. HIRED then provides the worker with classroom education that addresses skill or educational deficiencies, while the
business provides a trainee position
with on-site job-specific training.
HIRED has established a growing
network of companies using this
proactive approach to fill their vacant positions.
Chicago Career Tech was initiated
in 2010 to retrain unemployed midlevel tech workers for new jobs. A
rigorous educational program that
was developed in collaboration with
Chicago-area technology firms provides these workers with the specific
educational updates required to fill
vacant positions. Of the 165 people
in Chicago Career Techs first class,
149 received final program certification and were placed in jobs. A second class of 300 began in 2011.
For the long term, RETAINs are also
developing career information and education programs from elementary
school through college. High-school
career academies, as well as higher education career and technical programs,
are increasing the number of local
well-educated students and connect-

ing them to a regional career pipeline that future prosperity depends on

for employment. Such regional over- the U.S.its government, business,
hauls of education-to-employment people, universitiescoalescing besystems are beginning to help sustain hind a strategy for growth and creatand grow local economies. If the RE- ing incentives so talent and capital
TAIN talent model is brought
flow to promisup to scale across the United A workplace may
ing sectors
States, more Americans will
where the U.S.
need fewer people,
find good jobs and increasstill has an
ing numbers of U.S. businesses but they must be better
edge in an inwill become more competitive
creasingly comeducated.
in the world marketplace.
petitive global
New York Times columnist
economy.
David Brooks wrote, The U.S. has
But in the midst of a major un
always been good at disruptive employment crisis, executives at all
change. Its always excelled at de- levels are reporting increasing difficentralized community-building. culties in recruiting skilled talent
America needs to build on these past and filling scientific and technology
strengths now. The McKinsey Global positions. Among the worlds three
Institute agrees: To create the jobs largest workforcesthe United
t h a t America needs to continue States, China, and Indiatechnology
growing and to remain competitive, is outpacing current job training and
leaders in government, business, and preparation programs. China and
education will have to be creative India are moving from low-skill/
and willing to consider solutions low-wage manufacturing into highthey have not tried before.
skill/high-wage industries, but the
If the United States fails to address needed talent is sorely lacking.
the current talent red alert, the price
U.S. businesses can no longer rely
will be high. The survival of many on engineers and scientists from
U.S. businesses is at stake. Large cor- India and China to fill their skills
porations continue to poach many gaps, as these sought-after workers
workers from small and medium- are increasingly being attracted by
sized companies. In fact, Manpower opportunities in their native counhas predicted that, between 2010 and tries. But Regional Talent Innovation
2020, 10% to 20% of U.S. businesses Networks (RETAINs) are gaining
will close their doors due to the in- momentum across the United States.
ability to fill key vacant jobs.
More than 1,000 of these publicpriCivic activism has long been a hall- vate partnerships are helping current
mark of American culture. Business workers upgrade their skills and are
persons, educators, union leaders, sponsoring regional career informagovernment officials, and community tion and education programs.
groups and organizations can work
As this centurys economic powertogether to form these Regional Tal- h o u s e s b u i l d u p o n t h e i r o w n
ent Innovation Networks. The United strengths, prospects for the global
States can move beyond the current economy as a whole will improve.
job crisis into a decade of increased No single businessor country
opportunity for those who are willing can win this jobs battle alone.

to form partnerships focused on developing the skills and education reAbout the Author
quired for employment in a twentyEdward E. Gordon is president of Imperial Consulting
first-century global economy. We
in Chicago. His most recent
must act now before it is too late.
Improving Prospects for
GlobalProsperity
The success of the United States,
China, and India, as economic
powerhouses, matters to the world.
As Wall Street Journal economics editor David Wessel put it, Its clear
www.wfs.org

book is Winning the Global

Talent Showdown (BerrettKoehler, 2009). He may be
reached at Imperial Consulting Corporation, www.imperialcorp.com.
This article draws from his recent white
paper, The Talent Hunters: The United
States, China and India in the Battle over
Skills and Jobs (Imperial Consulting Corporation, 2012).

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November-December 2012

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