Euro researchers more loyal and cheaper than Silicon Valley folk

Comment Classic and enterprise HPC storage supplier DDN Storage has opened up a Research and Development centre in Paris to help grow its European business. Its experience exposes the strengths and weaknesses of the European IT skills and startup scene, it says.

The centre has 25 staff and should double that by the end if 2017.

DDN says Europe produces high quality researchers who are more loyal than Silicon Valley equivalents. But they lack implementation skills and Europe generally doesn't have a Silicon Valley entrepreneurial infrastructure and mindset, which holds it back.

At a launch event in the Paris centre, DDN CEO Alex Bouzari says there are energetic and great IT development environments and companies in the USA, China, Taiwan, and India but not in Europe, not at the same level. Why is that?

In France, particularly, employment laws are a hindrance, with permanent staff being a burdensome resource, and in Germany, company close-downs can be lengthy and difficult. It is far easier to set up startup companies, and regroup if they fail, elsewhere in the world, than in Europe; witness the number of object storage startups founded by Belgian and French entrepreneurs that operate in the USA. Shall we mention Scality for one? DDN, too, was founded by US-resident French entrepreneurs.

For France, IT startup activities can generally be classed as an offshore activity.

Back before client:server computing really got off the ground Europe had a number of mainframe, PC and minicomputer-era IT companies - Amstrad, Bull, Nixdorf, Siemens, ICL, and Olivetti for example. They all faded, with Siemens buying Nixdorf, partnering with Fujitsu, which bought ICL Siemens IT activities retreated into the background, Olivetti faded from the scene, as did Amstrad, while Bull went into ATOS.

Generally US suppliers colonised the European IT business and pretty much dominate it now. They developed products faster, had their vast home market to gain manufacturing efficiencies, and Silicon Valley and other startup areas fed them a constant diet of new product technologies to be acquired. In contrast Europe was a startup desert, with culture, employment and company law disinhibiting startup formation and development.

Particularly for hardware startups, DDN CEO and co-founder Alex Bouzari says: "The implementation part, which is hardware, requires great investment and that's easier in the USA. ... You don't really see hardware startups in Europe because they can't get the funding."

There are some advantages though. Bouzari said: ’”It’s easier to retain top notch engineering talent here than in the US.”

President Paul Bloch says Silicon Valley engineers cost more and have less loyalty. Bouzari points out that: “The talent pool in Europe coming out of university is really very good. … There are lots of great people in Europe and less opportunity to do great and interesting things (than in Silicon Valley and the USA).”

Bouzari says that US engineers are high cost. India and China are low cost, with roughly a 1:4 ratio. France is in the middle, at 1:2.

He says: “France has been good at theoretical innovation and that's what we need. They're as good as it gets.. … We'll invest more than $30m here over the next three to five years. It's a long-term, strategic investment.”

Things are changing: “In France there was a more rigid mindset 20 or 30 years ago. Now there's a lot more flexibility in the young engineers' thinking.”

However, it appears there is no less rigidity in French company and employment law, or Germany either. Silicon Valley’s pre-eminence in venture capital, theoretical innovation and practical implementation is not about to be challenged by any mainland European alternative. ®