Entrepreneurship and workforce issues
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Entrepreneurship and Workforce Issues*. Martin Kenney Dept. of Human and Community Development UC Davis & BRIE with Rafiq Dossani Stanford University & Martin Haemmig University of Munich. * Presentation prepared for the President’s Council of Advisors on Science and Technology,

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Entrepreneurship and workforce issues

Entrepreneurship and Workforce Issues*

Martin Kenney

Dept. of Human and Community Development

UC Davis




Rafiq Dossani

Stanford University


Martin Haemmig

University of Munich

* Presentation prepared for the President’s Council of Advisors on Science and Technology,

Subcommittee on Networking and Information Technology

Shenzhen 1985 1995 2004

Shenzhen 1985, 1995, 2004

Kun Chen 2005



  • China

  • India

  • Entrepreneurship

  • Conclusion



Chinese challenge

Chinese Challenge

  • IT equipment manufacturing

  • Western VC flowing in massively

    • Some excellent exits

  • Enormous and growing domestic market for IT products

  • Chinese attempts to create global standards

  • Massive increases in R&D investment by govt. and Chinese industry

  • Large # competent engineers

Chinese tech firms generalizations

Chinese Tech Firms (Generalizations)

  • With the exception of Huawei and Lenovo -- technology is not yet global standard

  • VC funded firms show little global-class tech

    • U.S. business model clones (good returns because MNCs need to purchase access)

    • Firms providing solutions for the underserved domestic market (not IT)

  • Generally not competitive with India for IT offshoring (though govt. is interested)

Entrepreneurship and workforce issues

Top Venture Capital Firms in China

in 2004 and 2005

Source: Zero2IPO various years



2005 india it related employment growth

2005 -- India IT-Related Employment Growth

CAGR 29.8%



Source: NASSCOM 2005

Employee numbers ‘000s

Remember US Work Force is 130 million

The indian it services landscape


Services (80Bn)

IS Outsourcing (110 Bn)

Future growth Focus

The Indian IT Services Landscape

Direction of Evolution

High Value

High Volume

Network Infrastructure


R&D Services

IS consulting

Packaged S/W support &


Application development,

maintenance and outsourcing (60Bn)

Technology & Domain IP

Current Strength

Training& Education ($50Bn)

System Integration

H/w support and

Network Consulting and

Installation (120Bn)


Leveraging current strengths to grow and move up the value chain

Source: Indian IT Firm

Entrepreneurship and workforce issues

Employment in India by Selected Large

Non-Indian Software Firms

Author’s compilation

Entrepreneurship and workforce issues

Infosys, TCS and IBM GS Revenues, 2001-2005

31.6% CAGR

23.4% CAGR

6.3% CAGR

Source: Various Annual Reports

Entrepreneurship and workforce issues

Infosys, TCS, and IBM Net Profits, 2003-2005

27.5% CAGR

15.3% CAGR

6.6% CAGR

Source: Various Annual Reports

R d as percent of revenue for ibm ms accenture and tcs 2005

R&D as Percent of Revenue for IBM, MS, Accenture, and TCS, 2005

Compiled by author from annual reports

Entrepreneurship and workforce issues

The Educational Levels of Web Posted Job Descriptions

for Intel, HP and Oracle, February 2005

Source: Author’s compilation

A job at intel india

A Job at Intel India

  • CAD Engineer: Hardware Engineering is all about finding solutions. As a CAD (Computer Aided Design) Engineer with the Intel Hardware Engineering team, you'll work on teams designing, developing and implementing solutions. As part of Hardware Engineering at Intel, you'll have the opportunity to be involved from start to finish on the development of world-class innovations.ResponsibilitiesAs a CAD Engineer, you will be involved in developing new very large scale integration (VLSI) CAD tools and methodology solutions for design for testability (DFT) and test generation for high volume manufacturing of next generation microprocessor products. You will be responsible for development, deployment and maintenance of in-house fault simulation and test generation tools. This position will be based in Bangalore, India.QualificationsYou must possess a Ph.D. or Master of Science degree in Electrical Engineering or Computer Engineering with five to ten years of related work experience. Additional qualifications include: Extensive knowledge of Digital Design and Design-for-test principles, digital circuit/fault simulation and automatic test pattern generation. Good working knowledge in developing CAD tools using C++ in a UNIX*/Linux* environment. Excellent experience in a related people management role would be an added advantage.

Accessed April 9, 2004






  • Venture capital is now globalized (Kenney et al 2006)

    • Foreign VCs invest in U.S.

    • U.S. VCs invest abroad

  • Offshore presence very early in the life-cycle of U.S. startups

Global vc direct investment flow 2003





Global VC Direct Investment Flow 2003





















Source: Martin Haemmig at www.MartinHaemmig.com

Compiled from data provided by NVCA/Venture Economics, EVCA, AVCJ, IVC)



U s strengths

U.S. Strengths

  • Great research universities

    • Attracting top-notch grad students

    • Cutting-edge research leading to new products

  • Best entrepreneurial regions in world

    • Seasoned VCs, lawyers, executives etc.

  • Many cutting-edge IT and networking users

  • Free flow of ideas and knowledge

  • Strong global connections



  • Globalization here to stay

    • VC/entrepreneurship abroad (Skype, Baidu, etc.)

  • Offshoring to continue (and pressure on white-collar worker wages)

    • IT innovation is globalizing

      • India’s importance in SW will continue to grow

  • Open source/innovation systems are becoming reality

    • Ergo, value will be created wherever the bright, capable, driven people are -- capital will be there for them

Policy responses

Policy Responses

  • Redress the imbalance between life science and engineering/physical sci federal R&D funding

  • Improve education at all levels

    • K-12 creates the feedstock for the future

  • In an open source/innovation knowledge economy secrecy is a heavy burden

  • Ease visa red tape for bona fide students, scholarly exchange, and high value contributors

Thank you

Thank You


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