Talent is the new tech, data is the new oil
Part 1 of 2
Of the most valuable public companies in the world, 7 out of 10 are now from software tech, beating out oil, banking, retail and consumer goods (see table insert/except by some criteria, the top Chinese banks).
Wealth in ancient times depended on who controlled natural resources of metal, salt, fertile land, etc., and was obtained by conquest. Later, wealth came from slaves and having colonies to feed one’s populations and plantations. After World War 2, nations rose to wealth by producing services and goods, trade and distribution, not necessarily thru control of resources, which could be purchased as inputs. Today, the clear top of the pyramid is occupied by those who control technologies, and this is produced by human talent.
This growing importance of human talent in the economic chain was clearly illustrated when Apple’s Tim Cook told the US government that it was sourcing phones from China not just because of pricing and supply ecosystems, but very much also ecause of deep pools of available engineering talent and management. In 2018, China produced 4.7 million science, tech, engineering and math (STEM) graduates, India 2.6 million and about 560,000 in the United States. Majority of China’s STEM graduates are in engineering, making it easy for them to enter into production functions, while the US STEM graduates are more into basic sciences.
Reflecting this globalization of the need for and the movement of talent is Silicon Valley itself, center of the world’s digital revolution, and the great competitive edge of the United States. Seventy percent of employed talent in Silicon Valley are foreign citizens — more than 50 percent of that are Asian, the majority being Chinese, followed by Indian citizens. There are also significant numbers of Iranians and Filipinos. In Silicon Valley and university research centers, the Asians are not only valued for their quality of work, but even preferred for their willingness to work long hours with extra functions without complaint. More Indians have reached higher management of tech and finance corporations, possibly because of their articulateness and affinities in management style.
US politicians and analysts, while acknowledging the importance of a technically advanced work force, are also concerned about outward flow of ideas, and “will consider restrictions on foreign STEM students from designated countries.” Cases of alleged spying have been raised where research institutions are concerned, some with understandable basis, whereas other charges are ambiguous, such as in cases where there is the normal course of discussions by the academic community, where information flows both ways or where information is available in the public sphere. Pirating of talent, licensing, purchase and mergers of companies for their technologies are common around the world even across borders and are commonly practiced by US companies and research institutions. What was initially defined as a US-China trade war came to include technology. Now acceptance for education, collaborative research and communications policies are being redefined and are an extension of this war.
These moves by the US are understandable in the context of a rivalry. What are some possible effects? Changes in immigration and employment may involve more than $12 billion a year, from China alone, there are more than 300,000 students who would be looking for jobs. This will affect access to talent pools for both research and management, just when the US is projected to have a shortfall of some 2 million engineering/STEM workers in the next five years. It will also affect US access to both investment capital and opportunities. Note for example, 2 of the most valuable companies in China — Tencent, of WeChat fame, was majority funded by a South African media company and Alibaba was majority funded at start-up stage by Softbank of Japan and by Yahoo of the US. Chinese investments in US companies, in both tech and non-tech fields, have also grown in the billions until recently limited by both the Chinese and American governments.
Research workers in China number 5.5 million and there are over 50,000 with doctoral degrees in science and engineering, surpassing the number of their American counterparts. The same is true with the number of research publications a year. The number of citations of US papers is still much higher, an indication that the overall quality of US papers is still more valued by peers.
Between 2000 and 2015, China has quadrupled the number of its STEM graduates by some 40 percent (as against about 20 percent in the US). It, however, has recognized the importance of
quality over quantity and has discouraged the chase for doctoral degrees. From a strategy and operations perspective, the quality of the directors leading a large population or organization is more important than the total number.
The value of talent and human resources has moved out of the academic world and has not only attained the highest monetized valuations in the world’s stock markets, but has been the subject of intense study, planning, legislation and incentivization from the highest levels of government and industry in the world’s top powers.
What are we in the Philippines doing, what should we be doing? What are our neighboring Asians doing regarding this growing value of talent? What will happen in the rest of the world and the less educated populations around us in the next 10, 20 years as power and economic value are rearranged all around us?
George Siy is a Wharton-educated industrialist, international trade practitioner and negotiator, serving as director of IDSI. He has been invited as a resource person on economic and development issues by various business organizations, media and the academe. He has advised the Philippines and various organizations in trade negotiations with Asean, Japan and the United States.
New Worlds by IDSI (Integrated Development Studies Institute) aims to present frameworks based on a balance of economic theory, historical realities, ground success in real business and communities and attempt for common good, culture and spirituality. We welcome logical feedback and possibly working together with compatible frameworks (email@example.com).