A run came to the United States from India on an H-1B visa to take
advantage of the hot and booming high-tech economy. His American employer
had asked the government to let the engineer work here at a time when there
wasn't enough local talent to meet its labor needs.

Jack Reed is an Oakland resident and software programmer who once pulled
down $120 an hour as an independent contractor. Today he sustains himself
with his woodworking business ( www.woodenfaces.com , handbuilding
mannequins for retailers. With the retail market slowing, he is hoping to
build and repair acoustic guitars.

Following a trend over the last two years, Arun's U.S. employer laid him
off six months ago. Arun, who asked that his real name not be used and
would not divulge his former employer's name, got a tourist visa to buy
some time while he searched for a new job.

Reed, a Database C and Visual Basic programmer, said he used to get "two to
three calls a week offering me new positions, and now I get one or two a
month."

Reed has been out of work for almost a year, despite acquiring new skills.

Both men have been caught in the cross-currents of a huge shift in the
high-tech industry's work force worldwide, and particularly in the Bay
Area, since the onset of the recession.

While the dot-com collapse led to massive layoffs and ended the high-tech
worker shortage that initially produced the influx of foreign workers, many
companies continue to pursue foreign workers -- but with a different objective.

Now, instead of going outside their own work forces to beef up
productivity, local employers are doing so to cut costs. And there appears
to be less reliance on importing workers and more a focus on outsourcing
jobs through foreign intermediaries or by expanding a company's foreign
operations.

Arun worked for a company, one of many that have found cheaper,
underemployed labor pools in India and other lesser developed countries.

High-tech jobs in the Bay Area grew to 570,000 in 2000 from 468,000 in
1997, according to Pradeen Maddan, principal consultant for management
consultants A.T. Kearney. In July 2001, that peak had fallen dramatically
to 510,000. Since then "it's gone down further but not as dramatically,"
Maddan said.

The influx of foreign workers also appears to have slowed. In July, the
Immigration and Naturalization Service announced that 60,500 individuals
were approved for H-1B status in the first three quarters of fiscal year
2002, compared to 130,700 approvals over the same period the previous year.
The reasons for this are complicated, but clearly new entrants are fewer.

Two years ago, the local high-tech industry couldn't find help fast enough.
Segments like research and development, chip-making, programming,
information technology systems, help desks for customer service and Web
development all were scrambling for talent.

Firms facing high demand for labor struggled to meet this gap by
outsourcing work to other firms both domestically and abroad, or by
establishing or expanding foreign facilities. They even put the U.S.
government under pressure to bring in guest workers like Arun to fill that
need by expanding the H-1B visa program.

"They were trying to re-establish their flexibility," said Cynthia Kroll,
senior regional economist at the Fisher Center for Real Estate and Urban
Economics at the University of California, Berkeley's Haas School of Business.

During the period of high demand, some countervailing voices criticized the
giant high-tech companies for not using all the people here, not making use
of older workers or retraining workers, and instead going for the
lower-cost foreign pool.

"That debate was drowned out by the pace at which things were going," Kroll
said.

After two years of downward employment, local firms have started to do an
about face, but in many cases the new jobs are being created in other
countries.

The online newsletter Silicon Valley Internet (
www.siliconvalley.Internet.com reported that American technology companies
have contributed over $10 billion to the Indian economy over recent years
in jobs and foreign investment.

In September, India's minister for information technology, Pramod Mahajan,
announced chip-maker Intel will invest $130 million in that country and
increase staff to 3,000 workers, from the current 900, over the next five
years.

Intel spokeswoman Gail Dundas would not comment on this, but she said,
"Certainly there's investment in other countries but not at cost of local
jobs."

Worldwide, Intel reduced its over 83,000-strong workforce by 4,000 this
year after already having laid off 5,000 in 2001. The chip maker
accomplished this by retraining and redeploying people or by offering them
voluntary separation packages.

Oracle Corp., which has development centers in Bangalore and Hyderabad,
plans to enlarge its Bangalore facilities. It will add 1,800 new jobs over
the next few years, bringing its Indian roster to more than 4,000.

India West reported in August that Oracle will nearly double its staff in
India in the next four years to 4,000, while it is cutting back 200 and
eventually 600 positions locally. Oracle would not comment on this.

Recently the job board Monster.com conducted a survey asking respondents --
presumably all of whom are looking for jobs -- whether the U.S. should
increase or decrease the number of work visas for foreign workers.
Eighty-one percent said "decrease."

But the survey's very question framed the problem as an "us versus them"
argument rather than the complex mosaic it is. What is frequently lost in
comprehending this situation is that we're looking at global trends. The
Bay Area's problems are a reflection of what is happening throughout the
planet.

Kailash Joshi is chairman of the Silicon Valley branch of The IndUS
Entrepreneurs, a nonprofit group that supports entrepreneurship especially,
but not exclusively, among those who hail from the Indus Valley. He gets
testy at the intimation that India is gaining at the expense of local jobs.
It's all part of a trend of manufacturing shifting from developed to lesser
developed countries, he said.

"India has created a big advantage in software and hardware. The same thing
happened 30 years ago when TVs and computer manufacturing migrated to
Taiwan, Korea and mainland China," Joshi said.

Ireland, Israel, South Africa, Russia and Siberia also are drawing
high-tech jobs away from the U.S. as effectively as a sieve drains water
from freshly cooked pasta. All have educated work forces with proven
English-language skills and labor costs that are lower than in the United
States.

Meanwhile, the number of companies that were expanding in the East Bay and
South Bay have retracted or shelved those plans. Cisco Systems, for one,
was planning a major expansion in San Jose that has been delayed.

One local company that is benefiting is neoIT. Based in San Ramon, neoIT's
business is helping local companies outsource their work offshore. They've
recently hit 5,000 clients for whom they find suppliers in India, Ireland,
Israel, the Philippines, Vietnam, China, Poland, South Africa and Russia --
with more than 500,000 skilled workers.

"Our business is still strong. The reasons for outsourcing and using
sourcing technology have definitely changed. Faster time to market used to
be a major consideration. Now companies are looking first at how to reduce
costs and capital expenditures," said Atul Vashistha, neoIT's cofounder and
chief executive officer.

While the need to cut costs is overwhelming, there's another attraction to
look beyond our borders, according to economist Kroll. A company locating
an installation or using a work force in a less developed country is
looking long-range to the day that country becomes a marketplace as well.

"It's an advantage to have a labor force located near markets," she said.

But the local situation is not all bleak. A.T. Kearney's Maddan said
Silicon Valley will not be completely bereft of its brainiest.

"The really high-end knowledge jobs in product design, research and
development -- what Silicon Valley is known for, the development of new
technology -- the kind of people you need with Master's degrees, Ph.D.s,
post docs, those jobs will be here," he said. The scientists devoted to
nanotechnology, biotechnology, proteonomics and life sciences will continue
to innovate here.

Meanwhile the lesser developed economies are basically getting ready for
next wave of tech jobs where they can continue "IT-enabled services" --
that is, support and administrative work, Web site development, call
centers, lower-end programming and maintenance of software programs that
are already written.

Maddan said these jobs are already migrating abroad, jobs that need basic
computer and English language skills. Already, customer support staffs in
Asia are answering customers' questions about their e-commerce orders.

Robert Half Technology recently predicted that there will be an increase in
IT hiring in the Pacific states during the last quarter of this year.
"Technology executives are hiring conservatively, keeping many projects on
hold, pending more definitive signs of economic recovery," according to
Katherine Spencer Lee, the consultancy's executive director. Robert Half
predicted health care and biotechnology will be looking for those skilled
in Enterprise Java and .NET development.

But this is a tiny segment of the palette we call high-technology and not
all agree with Robert Half's assessment.

In the meantime, high-tech companies will keep the global focus in
long-term plans and "continue to look at parts of world where they want to
be, such as China, as both having low-cost labor forces and potential for
growth and demand," Kroll said.

And in the U.S., displaced workers like Arun and Reed will have had to roll
with the punches.

Arun didn't want to leave the U.S. and return to India, which also has seen
a dip in the job market for skilled workers in the electronics industry. So
he "got a B2 tourist visa to buy me some time and I just found a job with
non-profit. So I will go through the process of (applying for an) H-1B visa
all over again," he said. It's not what he wanted, but he feels lucky.

Reed has had recent offers for jobs, but they do not conform to his skills
or his need to remain in the Bay Area. With the job market the way it is,
Reed thinks he'll be tinkering in his woodworking shop with fret boards for
sometime to come.