The e-brain drain puts strain on domestic job market

European IT specialists are stretching out in business class and anticipating greater remuneration in the west. Given the state...

European IT specialists are stretching out in business class and anticipating greater remuneration in the west. Given the state of the old world's new economy, who can blame them? asks Lindsay Nicolle

Europe and the US's love/hate relationship with immigrants is again being put to the test over the increasing brain-drain of skilled IT professionals from Europe to the country they see as the "promised land". The steady haemorrhage of talented IT people raises questions about Europe's future as a major power in the global digital marketplace.

But as they fly over Ellis Island heading for the US West Coast, defecting European analysts, programmers and Web technicians are unlikely to spare a thought for the economic repercussions of their actions in the lands they've left behind since the lure of the dollar is just too great.

History is repeating itself as these talented people tread a well-worn path. They follow in the footsteps of yesteryear's European emigrants who went to the US in the first half of the 19th century in search of a better life. Their hopes and dreams are made of the same stuff as those earlier, desperate people. However, other than their flight, their situations cannot be compared.

Today's European IT staff earn good money - very good money, in fact. They also get a lot of perks, not least being the joy of possessing a skill in such demand that there are on average five employers chasing every jobhunter, according to research by recruitment firms.

However, as everyone knows, you only value your lot if it measures up against what your peers are getting, and the fact is that European computing professionals get a raw deal on money and share options when compared to their American counterparts.

It's all too easy to resolve this situation simply by catching a plane west. And that's exactly what Europe's IT elite are doing, according to UK entrepreneur Alex van Someren, founder, president and chief executive of nCipher the e-business security firm.

"There's a flow of European IT people emigrating to the US to work in the new economy because the remuneration they can get, plus incentives like share options, are vastly superior and taxed less heavily," he says. "It's a significant issue and one that EU countries have been slow to address."

Many Europeans also leave the Continent in retaliation for having to pay two lots of national insurance - one to their country of origin and one to the country in which they work. Solutions to this problem are still being debated by individual EU member states.

Meanwhile, promoting job opportunities in the knowledge economy is a central part of the EU's employment strategy and critical to Europe's future development, according to the European employment commissioner, Anna Diamantopoulou. She says that by 2010, jobs in industries that depend heavily on information and communication technology will account for half the total in Europe.

This raises the question of how will workers acquire the necessary skills? Without a Europe-wide plan of action the shortage of IT specialists in western Europe could reach 1.6 million equivalent jobs by 2002 - at a time when average EU jobless figures are still nearly 10% and employment rates for women well below those for men, says Diamantopoulou.

Europe clearly has a large pool of untapped labour that it could harness for the digital age - not to mention the 81 million Europeans currently in education. This Internet generation could give Europe the opportunity not only to thrive in the global marketplace, but also to seize the lead.

So far, Europe is managing to hold its own against its global competitors, despite the continuing loss of good people to the US. The UK is doing particularly well.

Research confirms that is vying for the lead in e-business adoption with the US, with forecasted sales of $65bn (£43bn) by 2001, according to a survey of 700 companies in Europe and the US by Mori for Intentia, the enterprise applications global software group. Respondents were drawn exclusively from board directors - 100 each in the UK, France, Germany, Sweden and Spain, and 200 in the US - with responsibility for e-business or business development strategies.

The UK forecast is equivalent to 15% of total sales, and almost 5% of GDP. This compares with an average 12% of total sales in Europe as a whole (equivalent to $152bn), and 14% in the US (equivalent to $118bn) - almost 1.5% of GDP.

Companies have also set ambitious targets for return on investment (ROI) by 2001. In Europe, companies expect to achieve an average 20% ROI, and in the US 27%. In the UK companies anticipate an average 23%.

Moreover, confidence remains high in the outcome of an e-business market on the verge of a massive explosion. UK firms lead the pack in acknowledging its future importance (64%), ahead of Europe (55%) and the US (60%).

However, while e-business is on course to become a major competitive weapon for Europe against the world, there are some intimidating hurdles to clear in the development of digital commerce by EU countries before it will really fly. The three most cited obstructions are:

  • time taken by customers and suppliers to adopt e-technology

  • concerns about the security of financial transactions and

  • worries that competitors, customers or suppliers will gain unauthorised access to information.

    "There also needs to be harmonisation of the individual ways businesses have to interact with local national governments," says Eduardo Loigorri, managing director of financial software developer Exchequer Software. "There are still major problems with a UK company actively selling into Europe, such as VAT levels. Increasingly, each country wants its slice of VAT revenue and is starting to impose horrendous reporting burdens on pan-European companies."

    One approach could be to revise tax policies to favour more pan-European high-entrepreneurship, along the lines of Chancellor Gordon Brown's revisions to UK tax policy in his last Budget speech. Clearly, Europe must act quickly otherwise the transparency of price so eagerly sought by the creators of the euro - and by consumers - will never materialise.

    It seems that the Single Market remains very much in name only, but the jury is still out as to the outcome of the displacement of jobs and capital which is accompanying the growth of Europe's information marketplace.

    The longer we have to wait, the more planes will take off carrying away a little more of Europe's IT future. As with many farewells, the situation can only end in tears.

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