While there are good examples of some countries putting emphasis on changing their education systems to be more business-ready (or what I call “increasing employability”) in most parts of the world, education and employability are not in step with each other, resulting in individual companies having to pick up the slack with significant investments in training.

From my point of view as a CEO in the IT industry, there are three trends that will drive talent demand in the future — and should hence be driving talent development in the present:

1. The global IT industry has been a big employer of young talent across the globe because of the increasing influence of IT in business transformation. The global meltdown is being seen as an opportunity to transform by many CEOs across the world and they are looking at IT to lead this transformation.

2. IT has become “glocal” — it has to transcend geographic and demographic barriers to deliver this transformation.

3. Technology innovation is driving IT complexity and strict compliance norms & concerns of business continuity is driving a need for repeatable processes and assured performance.

When we look at talent hiring, development and deployment on a global scale, we cannot afford to create artificial boundaries that global commerce does not support. At the same time, we cannot make the mistake of assuming that talent from a handful of countries can meet the new demands being made on Global IT; being local is a critical factor that will drive our ability to truly partner with our customers where they are.

These employability challenges are universal. This includes countries like India and China where there isn’t a dearth of education institutions, but “employability” issues persist. And it includes the US, where President Obama has argued that expanding access to higher education is essential for America to recover its superpower status.

The four parties who need to play a role in addressing this critical challenge are the Government, education institutions, industry, and the students themselves, who need to better understand the changing role of technology and innovation in driving transformation. None of the four can make this work in isolation — it will take a well-coordinated approach.

Thus the real debate is not about who is smarter or how can we create trade barriers to protect jobs — the real debate is about how we invest in every country and ensure we create rich, employable talent that is globally available that will drive efficiency and innovation in our businesses.

We have a large pool of talented and educated youth. It is our responsibility to invest in them — intelligently.

Vineet Nayar is CEO of HCL Technologies Ltd., a global IT Services Company. He also serves on the board of the company as a Wholetime Director.

Nine in 10 companies are performing formal ethics and compliance risk assessment, with more than half integrating it into other business risk assessments. Despite this growth, only half the companies surveyed indicated that their executive team or board become involved in the assessments.

The top two ethics and compliance risks for companies are compliance risks and electronic data privacy. Electronic data protection led the list and concerns for risk and data privacy was a close second. These concerns out ranked other risk factors such as sexual harassment, environmental safety and heath issues, anti-corruption, and bribery.

Companies remain challenged in engaging international locations and supply chains. Less than one-third of multinational companies are extending ethics and compliance efforts to parties that work closely with them, even though their violations could directly affect their company.

In terms of prevention, companies are making education a higher priority and are increasingly offering employees relevant education. Six in 10 companies admit to lack of resources as their biggest challenge in providing relevant education. More than four in 10 companies indicate making education relevant as their next most significant challenge, with engaging employees being a major concern.

Multinational companies are having trouble communicating with their regional management. Multinational firms gave themselves lower ratings for both accuracy and timeliness of their risk management efforts at their regional offices than at their headquarters. The further away from headquarters that a manager is located, the more difficult the company finds to to communicate risk management concerns.

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Return on Education

If you look at studies showing the rates of return for government investments in education, you will find that the highest rate of return comes from early childcare education and the second highest is from elementary school. Government investments in high school have a higher rate of return than college. Investing in elementary school computes to 18 percent over a 40-year period or 1,000 times your money. These are amazing rates of return and, as we know, government investments generally don’t achieve those rates.

Now, look at the private sector, or your own investment in your child’s education. It is estimated that $1 million will be invested in the education of a child born in America in 2007. With 4.6 million people expected to be born this year, we are talking about a $4.6 trillion investment over their lifetimes. Who’s going to pay? The parents, the grandparents, aunts and uncles, the state, local governments, federal governments, employers, and the individuals themselves. Looking at this as an asset, it represents an enormous investment with a very high rate of return.

As most of you know, in the United States particularly, jobs have changed dramatically and today’s labor market is totally different than it was a couple of decades ago. But in 1950, when I was young, most of the jobs were unskilled. You could work for the United Auto Workers, you could work for the United Steelworkers, or you could have many other jobs and achieve a middle-class life without any significant skills. A willingness to work hard was enough.

But that is no longer the case. Today, more than 85 percent of jobs require at least some higher level of skills. This century, in my opinion, will be defined by a worldwide competition for human capital. But when you recognize that two-thirds of the children in Los Angeles cannot read at the basic level—and by basic I mean they can not read simple three- and four-letter phrases: “Where is your mother? Is your Dad at home?”—you can see they are at a huge disadvantage. The result is that of these children, 50 percent will not graduate and probably 60 to 65 percent will never really be educated or prepared for the work force. So we have enormous challenges in our system, and we’re looking for the wake-up call in education.

Global Competition for Leaders

The Biopolis in Singapore, headed by Philip Yeo, is rushing to become the world’s leader in medical research. They’ve also recruited two of the leading scientists in the United States in stem cell research at the National Institute of Health. In fact, many of the leading scientists there are from different countries. And they are not alone. Imperial College, one of the two leading science colleges in the United Kingdom today, has enjoyed great success recruiting foreign students, for example. It has 14 Nobel Prize winners, almost as many as Berkeley. (I went to Berkeley, so there’s some bias here.) In the years from 2000 to 2006, largely because of the immigration difficulties in the United States after 9/11 and the difficulty for foreign students to come into the United States, there’s been an eight-fold increase in students from China going to the United Kingdom. Many of those students would have been here. The future has already been changed. The thousands of young scientists and young scholars who didn’t come to the United States that might have, in the last years—their lives have been changed. Any breakthroughs that they might have achieved or contributed to will happen somewhere else.

There is an example that is relevant to this point. There are two countries, both part of the British Commonwealth and both given their independence, Singapore and Jamaica. Lee Kuan Yew, who was the prime minister of Singapore, actually went and visited Jamaica and looked at Jamaica. They were very similar. They both had per- capita income in 1960 of $1,900. Both focused on tourism and agriculture. They had similar weather. But one managed to grow per-capita income at 12 percent per year for the last 47 years, while the other grew at about 1.5 percent. One chose to build a society based on human capital; and one continued with tourism and agriculture. And there’s almost nothing in common today with Jamaica and Singapore except the weather, because of decisions that were made based on human capital.

I want to step back for a moment and talk about a change in my own life. There was something called Sputnik that went up in 1957. The general reaction was that this was a great victory for the Soviet Union and for the Communist system. And those of you in school will remember our duck-and-cover drills. I went to school in the San Fernando Valley and had this fifth-grade teacher who kept trying to convince me that if a nuclear bomb hit Hesby Street School, I’d be safe under my desk. And if I wasn’t under my desk, that was it for me. We argued back and forth until we reached a compromise: I wouldn’t disrupt the class anymore and she wouldn’t try to convince me that I would be safe under my desk.

But the Soviet Union thought that the day that Sputnik launched was their great day. It was not. It was the end of the Soviet Union. This was the first step, because it woke up a sleeping giant here in the United States. It focused a whole nation on science and mathematics. We had a president say we were going to send someone to the moon. And so you’ll find today, if you go to a company like Lockheed, that almost 50 percent of their mathematicians and physicists went into those fields because of Sputnik. That was the wake-up call. And I think one of the things I want to say is: Where is Sputnik today? Where are these wake-up calls today that could mobilize an entire nation to focus on some of our big challenges?

The Laws of Economic Growth

Let’s look at some of the economies of the world today. The United States is the largest, Japan second, Germany is third. China is probably going to be moving up to fourth by the end of this year, passing the United Kingdom and France. What countries will be the largest economies in the future? You can take our projections at the Milken Institute or others, but China will become the world’s largest economy some time in the next few decades. The United States will then be second, India third, Japan fourth. Brazil, Russia, Indonesia, and Mexico will replace France, Italy, Spain, and Canada as next in line.

It might surprise some to hear that in 1820, China was the world’s largest economy. For most of the last 3,000 years, China has been the world’s largest economy. India is a similar situation: if you went to sleep in 1820 and woke up after 200 years, you’d think that nothing happened, nothing changed. But the United States, this amazing country with property rights, rule of law, freedom, democracy, and a bunch of other things, went from 1.8 percent of the world’s economy to 40 percent of the world’s economy at the peak, with only 5 percent of the people on the planet during that time. So we have to remember the lessons of what fueled that growth.

The two things that changed the world more than anything are advances in telecommunications and computing power. Some companies thought telecom was a for-profit business, not recognizing it was foreign aid, and a trillion dollars was lost in telecom overbuilding. But the beneficiaries were the rest of the world, particularly India, where the cost of a telephone call went from $10 a minute to four cents in 2007, and it is going to zero. So one of the things to focus on in change that’s going to occur, is that telecommunication costs are going to zero. You’ll be able to call anybody, any place on the planet, for zero—or at a cost so low it’s equivalent to zero. (Unless you stay in a hotel room and use the hotel’s phone.) So therefore, at the speed of light, you can send your digital output any place on the planet. A brilliant young mathematician in India doesn’t have to leave India and come to the United States anymore. They can stay right where they are—or in Kenya, or any place else on the planet.

The other thing that happened is the growth of computing and data storage power. The supercomputer that I moved onto my trading floor in 1976—the first one on any trading floor—was easily surpassed. The iPod today stores 7,500 times as much data as my supercomputer did then. The cost of data storage is now fractions of what it was 30 years ago. So you’ll be able to move anything that exists digitally to any place in the world for zero, or close to it; store any quantity of digital data for close to zero; and analyze it at trillions of calculations a second.

Access to Capital

It is amazing when I think of these events in my life and what has changed. I came home to Los Angeles in 1965 and it was on fire. It was the middle of the Civil Rights movement and the draft for Vietnam. But you didn’t have to go to Vietnam; you could see armed personnel carriers right there in Los Angeles. And why was Los Angeles burning? I had to know, so I met an African-American, a young man, who told me he wasn’t part of the American dream. And he taught me that civil rights were not just about where you could sit on a bus, or where you can go to school, or where you can go to the bathroom, or where you can eat, but part of the American dream is having access to money and capital based on your ability, not what you look like, not who your parents were, not even what school you went to. And he didn’t have that. He wasn’t part of the American dream. So I had to change my major again. I had to go back to Berkeley and switch to business.

I put a formula together that basically said prosperity was dependent on financial technology, access to capital—which has a multiplier affect on human capital, the world’s biggest asset—social capital, and real assets. Without access to financial capital, the greatest ideas might never have come to fruition. Most of you don’t remember who created air conditioning in 1835 because he died broke–no one would give him any money–but we think 70 years later that it was Carrier, because he got access to capital.

So what are all these financial technologies that today we take for granted, that didn’t exist when I was at Berkeley or Wharton? They all changed the world greatly. And this democratization of capital– there are more financial institutions listed on the New York Stock Exchange today than there are industrial companies. When I went to Wall Street, 10 or 12 people decided who got money. Today, there are tens of thousands of people making those decisions. No one can control access to capital, because there are all these points of light, and this democratization of financial assets leads to democratization of companies and creates a lot of jobs.

As you think of people who became household names, you can see how big a role the democratization of capital has played: Ted Turner; Bill McGowan from MCI, who really changed telecommunications for all of us; Craig McCaw, who changed cellular; Reg Lewis, the first African-American ever to borrow a billion dollars and buy a company [TLC Beatrice International]; Kevork Hovnanian, thrown out of the Middle East because of his religion, who came here with nothing, and built one of the largest home builders in America [Hovnanian Enterprises]; or Steve Wynn—the Walt Disney for adults. All of them had fantastic ability, but what they all needed was capital.

Part three of “A Capitalist’s Manifesto” will appear in the December/January issue of Directorship.