There's an opportunity for India in this brain drain

The US will experience a reverse flow of skilled immigrants for the first time, warns a report

The ability and willingness to attract talent from around the world is widely acknowledged as one of the key factors behind the dynamism and leadership role played by the US. The country has also been a magnet for relatively less skilled individuals. As a group, the immigrants have been younger, with above-average fertility rates. Therefore, unlike Japan and Western Europe, which have been less welcoming, the US has avoided gross imbalances in its demographic structure. 

But, while highlighting the contributions of the immigrants, a 2007 report by the Ewing Marion Kauffman Foundation, titled Intellectual Property, the Immigration Backlog, and a Reverse Brain Drain - America's New Immigrant Entrepreneurs (Part III) has also expressed concerns about the reverse brain drain being experienced by the US.

The Report notes that between 1998 and 2006, the share of US-registered patents by the foreign nationals more than tripled from 7.3% to 24.2%. In part-I of the report, the authors reveal that between 1995 and 2006, one in four of the sampled engineering and technology firms in the US was established or co-established by an immigrant. Together, these firms employed 450,000 people and generated sales worth $52 billion in 2006. Indians founded more firms than immigrants from UK, Japan, China, and Taiwan combined.

The report, however, cautions that for the first time in history, the US may experience a reverse flow of skilled immigrants, most of whom are likely to return to their home countries. A majority of these returnees are Indian and Chinese nationals. The report attributes green card delays, and short-period visa extensions as contributing factors to the reverse brain drain.

This is illustrated by the fact that the current waiting time for employment visas for Indian nationals range from 4 to 6 years, and indications are that this may well increase. The H-1B visa regime is fairly restrictive, both in terms of the number of such visas per year, its country allocation, and in the terms and conditions imposed.

In April 2007, the US Immigration and Citizenship Service stopped taking applications for fiscal 2008's allotment of H-1B visas, just a day after filing began, as the number of applicants was already more than twice the 65,000 slots available. These visas permit US firms to employ a foreign worker up to a maximum of 6 years, prohibit promotion, and limit job switch. The report estimates that about one million such high-skilled persons are experiencing what it terms 'immigration limbo'.

This has resulted in a significant lag in manpower planning and deployment of the high-technology companies, resulting in greater uncertainty and high transaction costs. The restrictions imposed on the visas diminish job satisfaction and career prospects of foreign professionals.

For the US, this creates lose-lose outcomes. According to the report, besides losing critical talent that has enabled them to innovate, compete and grow, their departure also drains the US corporations of the resources spent on training such employees to their markets, technology, and way of doing business. Secondly, such professionals with considerable experience and knowledge of American businesses run the possibility of becoming eventual competitors in their respective domains.

The study does not provide the exact number of people returning to India, but some estimates put the number of highly-skilled return migrants from the US to India at between 35,000 to 60,000 in recent years. Not all of the reverse flow can be attributed to US immigration policies. Other pull factors such as India's sustained high growth (India's $1,100 billion GDP is expanding by $130-150 billion per year), internationally competitive compensation packages, and personal and family reasons have also played a part.

To secure the benefits of the reverse flow over a longer term, India must strive to substantially improve its social amenities and physical infrastructure while continuing to expand economic opportunities. This will have to be undertaken in the context of greater mobility of labor and intensified competition for talent, both domestically and internationally.

India's demographic profile is currently skewed towards a young workforce, and there is no looming danger of a labour shortage. However, even with such favourable demographic profile, there is increasing evidence of massive skill shortage being faced by the MNCs operating in India. Nasscom, for example, has estimated that there could be a shortfall of 500,000 IT professionals alone, by 2010. Some progress in increasing the supply of persons with employable skills is being made, but more systemic reforms, including re-balancing the public-private sector mix in education are required.

There is also an attitudinal factor that needs to be urgently addressed. Unless the policymakers and other stakeholders demonstrate respect for skilled workers and professionals, India will find it difficult to sustain benefits from the reverse flow or retain its talent. In addition, career prospects and job satisfaction issues must also be addressed. 

The extent to which Indian practices and mindset need to be more attuned to the above is illustrated by the recent press reports that some of the doctors at the All India Institute of Medical Sciences, India's leading institution for training doctors, have not received their degrees two years after graduation. That such an essential routine task has been neglected to the serious detriment of the career prospects of the medical doctors, among the most respected and essential profession, without anyone being held accountable is a discouraging sign.

The reverse brain drain from the United States has significant implications for India's aspirations to increase its weight in the world economy, and to emerge as a knowledge-economy. The reverse brain drain provides the country with an opportunity to undertake systemic reforms to retain and expand the supply of skilled manpower for sustaining high growth and international competitiveness of its businesses.

Mukul G Asher: Professor of Public Policy, National University of Singapore
Amarendu Nandy: Research scholar, LKY School of Public Policy, Singapore