My name is Ken Alvares. I am Vice President, Human Resources Corporate Executive Officer for Sun Microsystems. Thank you for extending this opportunity for me to be here today to discuss a matter of critical, and growing, importance to my company and to the high tech industry in general - the shortage of qualified workers to fill crucial positions in the information technology sector. This deficit of skilled workers, if not remedied quickly, will result in lost business opportunities, slower innovation, and diminished productivity overall. Those developments would seriously hinder our ability to compete, and the high tech industry's ability to continue the sort of rapid creation of jobs this country has benefitted from. Ultimately, a prolonged worker shortage could cause U.S. high tech companies to lose their dominant position in the world market.
I suppose before I continue, I should give you an idea of what Sun is all about. Sun was founded in 1982 by four idealistic young pioneers, two of whom, incidentally, Vinod Khosla and Andreas Bechtolsheim, were foreign-nationals pursuing graduate studies at Stanford University at the time. They were joined by Scott McNealy, Sun's current CEO, and Bill Joy. Together those pioneers shared a new vision of computing embodied in the motto, "The Network Is The Computer." Since that time, Sun has emerged as a global leader in enterprise network computing, with over $9 billion in revenues and operations in 150 countries. The company now employs over 23,000 workers, and was recently ranked 203 on the Fortune 500. Today, Sun is helping to lead the industry into the next generation of network-centric computing through its Java technology, a new computer language that will make the Internet an interactive environment for users. George Gilder, reporting for the Wall Street Journal, recently professed that "the Java programming language and platform is a tsunami that will sweep through the economy."
Sun's entire business is about unleashing the power of network- centric computing to help open up new markets and expand new opportunities. By expanding access to the wonders of the Internet, and freeing people from the constraints of a monolithic operating system, Sun innovations like Java and the network computer are helping to revolutionize the high tech industry. We are working to establish a new computing paradigm where consumers can be ensured the right to choose the products and services that are best for them. This new paradigm, based on open systems and the power of the network, will help to reduce the cost of computing dramatically; making the vision of a $300 computer device - as affordable, easy to use, and widely available as your telephone - a reality.
This, in turn, will generate the potential for increased prosperity; not only by nurturing and facilitating the new wave of electronic commerce to help boost the nation's economy, but also by creating a cascade of new jobs to help businesses harness this new network potential. Sun is about creating the tools that our society will need to usher in the promise of the future. There is, however, one catch. Sun can do none of this without the talents of highly skilled workers.
The most valuable asset that Sun has is its highly skilled and innovative workforce. From the computer programmer who develops a revolutionary new type of programming language, to the computer scientist who designs a faster, more efficient method of storing and processing data across digital networks, these information technology workers are the bedrock of the high tech industry. In fact, when one considers how dependent all of American business in general has become on its technology infrastructure to grow and to profit, it would not be an overstatement to say that skilled high tech workers are creating the tools that our nation relies upon to drive the economy. Unfortunately, this breed of worker is in woefully short supply in America today.
Right now, Sun has 2,300 unfilled positions, 1,200 of which are in core information technology positions. According to a recent survey conducted by the Information Technology Association of America there are approximately 346,000 positions in the core skilled areas of computer programmers, systems analysts, and computer scientists or engineers currently vacant in U.S. companies today. Sun hired 4,788 people last year, and we anticipate the need to bring on approximately 6,000 more people during this coming year. Unfortunately, with our growing need for skilled information technology workers outstripping the available supply, the numbers simply do not add up.
One source Sun has had to rely upon to make up for the relative shortage of skilled workers at home, is the H-1B program. This program allows us to bring in professionals with particular sets of needed skills on a temporary basis. Sun gives employment priority to U.S. workers, but the small part of our total U.S. workforce comprised of foreign-born employees, such as those with temporary H-1B visas, are a critical element of our success. These workers contribute specialized, unique skills to the company in a variety of key positions, such as Software System Engineers; Research and Development Engineers; System Design Engineers; and Technical Support Engineers.
Let me tell you about some of the specific areas where Sun is facing a hiring problem. The position for a Kernel Technical Support Engineer, for example, has remained open for over 90 days. This is a crucial support position where the person works with Sun's external customers over the phone to help them resolve UNIX kernel issues. Unfortunately, it is difficult to find people to fill this position because most of those who are skilled enough to handle the work are developers, and do not want to do support. If Sun cannot get back to its customers in a timely manner to help them fix their problems, the end result could be the loss of a client.
Again, we have an opening for an internationalization and localization tools engineer. This position has been open since March of 1997. We had offered the position to a U.S. citizen, but he declined due to relocation considerations. It has been extremely difficult to find other qualified candidates. With this position unfilled, Sun has been unable to implement certain efficiencies in our automation. This has resulted in a resource and cost overrun of our projects by at least 10%. We are currently spending about $7-$8 million on the impacted international projects, so these continuing inefficiencies are costing us at least $700,000 - $800,000.
The absence of skilled workers to fill these vacancies and others like them is a source of growing concern for us. Without these workers, many of our projects will be harmed, and our core business objectives will be compromised. Over time, and it will not take much in the fast paced world of the high tech industry, this deficit of skilled workers will lead to lost business opportunities, slower innovation, and an erosion of the dominance of U.S. high tech companies in the world market. That, in turn, will translate into a weaker bottom line for Sun, and a decline in the tremendous rate of job creation that we have enjoyed to date thanks to the success of our company. In certain instances, we may even be forced to move production to locations overseas to make sure we can find the workers we need. If we cannot fill these positions with the best workers here at home, it will mean fewer dollars for the American economy, and fewer new jobs for American workers.
There are some who claim that the solution to this problem is simply to step up efforts in the areas of education and training. This is not enough, and, unfortunately, belief to the contrary is little more than an exercise in wishful thinking. Make no mistake, Sun believes strongly in cultivating American talent. We spend approximately $50 million per year on training and education efforts. That sum represents about 3 percent of our total annual payroll. We have an outstanding internal training program called Sun U that offers a wide range of courses to any interested employees. Through these courses we are constantly improving our employees' skills in the areas of technical education, leadership and management, project management, sales, customer service, and productivity. Sun even offers a generous tuition reimbursement program to aid those employees who are pursing degrees. Even outside the company, Sun has trained thousands of high tech workers around the country in Java programming through our Sun Service division.
Sun is also reaching out to schools to help nurture the learning and development of the children who represent America's future. Through its Open Gateways Program, Sun has made a commitment to lead and support the efforts that help K-12 school districts - particularly those in economically disadvantaged areas - gain access to the Internet; train teachers and staff to use the Internet effectively; and design innovation curricula that take advantage of the Internet's resources. The program integrates the networking knowledge of Sun employees with the creative visions of modern educators to prepare today's youth with the skills essential for the 21st Century. For NetDay, a popular part of Sun's Open Gateways Program, Sun Champions adopt a school in their community, and lead a team of Sun volunteers in a range of activities- from network design and wiring to web page development and teacher training. As of the year 2000, Sun employees will have contributed over 20,000 volunteer hours to wiring schools around the world. To date, the Open Gateways Program has awarded donations of over $2 million in cash, products, and training to over 300 schools and districts throughout the United States. But these efforts are inherently long-term approaches. It takes time for the fruits of these labors to develop. Until that time, there has to be a bridge to sustain us.
The answer for the short term is the H-1B worker. Unfortunately, there are not currently enough H-1B visas available to satisfy the growing demand for our industry. Last year, we hit the annual 65,000 cap on H-1B visas at the end of August, and were unable to bring on any new workers in that status until after October 1, 1997. This year it is probable that we will run out of H-1B visas far earlier - possibly as early as May according to some estimates. This cap on H-1B visas needs to be lifted to give us access to these foreign professionals so our industry can continue to thrive.
In fact, the contributions made by these foreign-born workers actually help to create jobs within the U.S. For example, James Gosling is a Canadian national who developed Java, Sun's revolutionary computer language that can help enable business to flourish across all computers, networks and operating systems. Currently, well over 400,000 software developers are using Java technology. Anant Agrawal, a native of India, started a division at Sun responsible for producing the SPARC chip, a powerful microprocessor that implemented a new type of computing architecture. Sun now bases its business on that microprocessor.
Still, there is another factor at work here beyond the raw numbers that exacerbates this workforce shortage problem, and that is the intensely competitive nature of the high tech industry. Competition to attract the best workers is fierce among high tech companies. In fact, it is not uncommon to have competitors aggressively plotting to seduce your best talent right out from under you. It is hard enough under these conditions to hold on to the skilled workers who provide the brain power for our company - and rest assured that Sun goes to great lengths to ensure that those workers are well compensated and well cared for as evidenced by our special Sun services including a dedicated concierge service for employees, a Sun store, our SunWare catalog items, and our 5 and 10 year anniversary parties for employees. The challenge of finding the right worker to fit our company's needs in the first place can be even tougher; and let me stress this point about needing to find the RIGHT worker, and to match that worker with the right position at the right time.
The information technology industry is advancing at a whirlwind pace; with product cycles and time-to-market periods shortening, and demands for continued innovation and productivity growing with each passing day. The shelf life of a typical product in our industry is only about one year...and dropping. What we will offer to the world next year has not been invented today. In this environment you either get the RIGHT worker who can do the job and keep you ahead of the rest or you can call it a day. Because of the staggering pace of innovation and change in the high tech industry, you either produce on time and keep up with the cutting edge, or you become obsolete. There are days when the breakthroughs in technology we see at Sun come so quickly and are so dramatic, that I half wonder how far behind I might be by the time I get back to my office after testifying here today.
I earlier referred to H-1B workers as a sort of stop-gap measure to help carry Sun through an interim period while we work to educate and train U.S. workers so they can fill needed positions. However, there is more to it than that. Many H-1B workers fill a particular, time-sensitive need for a very specialized set of skills or knowledge that is in short supply in the U.S., and cannot be covered by simply retraining some other worker. The Tools Engineer position I referred to earlier is an example of this type of situation. Another case in point is someone for whom we are currently in the process of applying for an H-1B visa. This person came to the U.S. from France to start up a smart card company that was particularly successful. Smart card technology is just taking hold in the U.S., but is already well established in Europe. Sun acquired his company in 1997, and is hoping to bring him on to give us a big leg up in this technology area. His industry knowledge and technocal expertise will prove extremely valuable as we develop our product offerings in this emerging area. General competence is not enough to make our business successful. The most valuable worker is often the one with the most unique set of skills.
Other H-1B workers are indispensable because of their unique experience with overseas conditions and markets. Those particular international professionals provide an asset that cannot be replaced by U.S. workers no matter how much extra training they receive. Sun needs these workers to stay competitive in an increasingly global market. Sun's Jakarta Project Division, for example, is hiring Japanese National to fill a Business Development management role because of his specific experience with business development in the areas of interest to Sun both domestically and internationally, as well as for his multilingual skills in English, French, and Japanese. This hire brings us an international network of business contacts directly related to the areas we need to cultivate. His unique international experience makes him a critical component of our group's ability to partner with key companies in order to have a successful product launch. We tried for 8 months to fill this position through domestic recruiting to no avail. It was only through an H-1 visa that we were able to meet this pressing need.
Mr. Chairman and Members of the Committee, I am delighted to see the attention you are giving to this serious issue, and I urge you to help us find ways to meet our workforce needs. Sun will continue its investments in the areas of training and education, but focusing exclusively on domestic solutions will not save the day I am afraid. That is why we need to see some relief from the current cap on H-1B visas-a cap we are likely to run up against by early summer of this year. The future of the American high tech industry depends on our ability to find an adequate supply of workers with the skills we need to move forward regardless of their national origin. I appreciate the opportunity you have given me to add Sun's perspective to this discussion.
Thank you.