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A Shift in India’s Brain Drain

Up until 2017, many of India’s top engineers, doctors and science, math and management graduates chose to pursue advanced degrees and jobs in America. This was because of reputed colleges, good prospects for finding work visas and superior financial rewards compared to those found in India as well as in Canada, Australia and the Middle East. But since Donald Trump became President, fewer American visas are being issued to Indians and Indian information technology (IT) companies, due to policy changes and restrictions imposed by his administration. The Indian government has little economic clout to pressure Trump to withdraw his work visa policies. So it is quietly pushing geo-political strategies to try to gain some leverage. India is strengthening its ties with China, even as America is eager for India to ally with it against China. Prime Minister Narendra Modi and Chinese president Xi Jinping have held several meetings and declare that they have a close relationship. In the 1950’s, before India and China fought a war in 1962, leaders of both countries spoke of a similar close friendship. Indian school children were taught to recite a slogan “Hindi-Chini Bhai Bhai” (“India and China are brothers.”) In April 2018, the Indian media revived this slogan when Modi visited China for a series of meetings with Xi.

Modi is also encouraging Chinese companies to invest more in India. They are already providing capital and technology, including to mobile-based consumer businesses which face stiff competition from American companies. It appears Modi is thereby seeking to curtail the growing dominance of Google, Uber, Facebook, Amazon, Disney and other American digital and media companies in India. He cannot directly impose restrictions on these companies for fear of retaliation by President Trump.

Meanwhile Trump’s work visa restrictions, along with sharp cuts in financial aid for advanced degrees at American universities, have helped answer some key questions for Indians. It is often asked what will it take for India’s top engineers and other professionals to stay in the country, instead of emigrating to America? This issue is widely referred to as India’s brain drain. And if they stayed, can the engineers build world-class technology companies in India, like they have done in America?

Recent graduates of the Indian Institutes of Technology (IIT) are not taking on $180,000 plus in bank loans to pursue Master’s degrees at American universities. They fear they may lose their family homes since they are unlikely to find the high-paying foreign jobs required to repay the loans. Most IIT engineers are taking up jobs with large foreign companies operating in India, especially Google, Apple, Microsoft, Uber and other American companies. They are not keen on working for Indian-owned companies since the wages are far lower and there are limited prospects for career advancement and big financial rewards. They may soon emigrate to Canada in large numbers, despite the cold weather, since the prospects look very good. Or they may work for Chinese companies, at their offices in Southeast Asia or the Middle East or even in China.

IIT engineers, like other professionals, typically do not want to start a business. Only a few of them are willing to risk personal losses and career disruptions to pursue potentially lucrative financial rewards on their own. But as more top engineers stay on in India, some of them are starting their own enterprises. The process is similar to what occurs in America, though the number of start-ups are far fewer in India due to constraints of capital, technology and talent. Since the 1980s, driven by both frustration and ambition, Indians in America have followed the example of Americans and founded businesses. While a small fraction of the Indians in America, they number in the thousands. In India, the post-2010 wave of successful technology entrepreneurs are mostly benefitting from the rapid growth in mobile internet users. The start-ups are more numerous and in a wider range of businesses than the IT services outsourcing companies founded in the 1980’s. Several recent start-ups are valued at over a billion dollars, ranging from the taxi-hailing service Ola to online retailer Flipkart. Both these companies were founded by engineers from IIT who had earlier worked for American companies in India. Their business success and wealth, after overcoming hurdles, will lead more professionals in India to risk starting a business. ,
The global success of American companies clearly shows the importance of hiring the best talent by offering superior financial rewards. More start-ups in India, as well as groups controlling the larger Indian companies, need to attract key employees by giving them bigger financial rewards, including part ownership, than those offered by American and other foreign companies. This will help them create big, global Indian competitors to the giant American and Chinese companies.

One potential for India is attracting mid-career Indian professionals from America. While financial rewards are high in America, the number of years during which most professionals earn their peak salary is at best a decade. American companies regularly sack employees, especially during recessions, due to constant pressure for higher revenue growth and profits. Most of those losing jobs are mid-career employees, in their 40’s and 50’s, since they cost more to a company to retain. While they may find jobs at another company, especially as the economy picks up, the jobs pay less and often last only a few years. Perhaps businesses in India can benefit by hiring middle-aged Indian-Americans professionals by paying them reasonable salaries. Many Indian-Americans will be happy to contribute to India, while they continue to be able to access their savings and homes in America.

India’s top engineers and other highly-skilled talent will choose between emigrating to Canada, working for a Chinese company or working in India for an American or Indian company, based primarily on financial rewards and long-term career prospects. In addition, professionals seek a fair, merit-based system and laws that apply equally to all. Prime Minister Narendra Modi should prosecute and jail business owners involved in fraud, not just managers and corrupt officials. The government should ensure that the assets of bankrupt companies do not end up owned by the same group that burdened them with large bank loans. These actions will help reduce future bad loan losses at the big government-owned banks, making it easier for them to make new business loans and fund economic growth.

The government should severely punish those lynching Muslims and low-castes and raping women. While this would advance human rights, it is also good for economic and national security reasons. India needs to attract more foreign investments as well as minimize the risk of radicalizing its 180 million Muslims. Anand Mahindra is the 62-year-old chairman of the $19 billion Mahindra Group of companies, including Tech Mahindra an IT company. In 2018, after news of the rape of two young girls, including the killing of an eight-year-old Muslim, he tweeted to his 8 million followers: “The job of executioner is not an aspirational job. But for the execution of brutal rapists & murderers of young girls I would volunteer unhesitatingly. I work hard to stay calm, but my blood boils over to see this happen in our country.”

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