The New Brain Drain

“Indian Scientists Return Home as Economy Moves a Step Up”

On December 14, the Wall Street Journal published an article entitled “Indian Scientists Return Home as Economy Moves a Step Up” in which it discusses the increase in highly skilled labor trained in the U.S. and Europe returning to take their next career steps in India.

This was inevitable. For years, Indian scientists have been training in the US while general labor costs in India have remained well below labor costs in the US. As US and European companies moved semi-skilled occupations to India, the Indian government has continued to spend a far higher percentage of its GDP on infrastructure and education.

As the outsourcing progressed, management of these up and coming companies such as call centers became an issue in India. As any economy grows at 8% the way India’s has over the last three years, it attracts those trained in business and management. Once managers and business owners are in place, larger projects can be sustained attracting the scientists who previously saw opportunity for large projects only in the US and Europe where large private capital investments were more common.

Although the article concentrates on the pharma industry, it mentions a chip completed by Wipro for a US gaming company. For many years, US silicon design centers have kept teams of designers in India, especially for backend layout work and sections of design that could be isolated requiring minimal Indian management. Because of difficulties in obtaining adequate management, most US companies kept the larger designs in house.

As the quality of management improves, larger projects are sustainable

As the quality of management improves, larger projects are sustainable. As larger projects begin to develop, the projects become more attractive to Indian scientists. Within the next few years, we should see a marked increase in companies in India that design and produce their own projects rather than simply outsource their talents to US and European firms. Couple this increase in project size with the continued life style advantages to highly trained Indians who choose to return to India and the process should accelerate.

As the Wall Street Journal points out, western life style companies (like specialty coffee houses) have begun to appear to serve these repatriated scientists. I believe that opportunities for these types of lifestyle support companies will continue for several years. The cultural impact to India is increased due to the service oriented nature of India’s exports. Call centers, design outsource companies, and other service businesses often train their employees in American and European culture even if they have never been outside of India. The increased interface that these employees have with American and European customers increases the rate of adoption of western culture.

China is already experiencing the same type of repatriation

China is already experiencing the same type of repatriation, but the effects, especially cultural effects, will be delayed and less pronounced. There are several reasons for this. Two primary reasons are that the number of foreign trained skilled employees is a smaller proportion of the total population than in India, and governmental control over both the economy and the culture is more pronounced. Add to this the fact that China’s export economy is based more on manufacturing than service and it all serves to help isolate the cultural influence of the returning scientists.