Can India Plug Its Brain Drain?
Image Credit: Flickr (harshilgupta)

Can India Plug Its Brain Drain?


Through much of the 1960s to the 1990s, India suffered from a brain drain. Each year, graduates—especially those in engineering, math and other sciences—would leave India to access superior post-graduate education and research opportunities available abroad, with the United States near the top of the list. For decades, Indian students have been one of the largest groups of foreign students in U.S. universities. In the past ten years, college and university campuses across the U.K., Australia and Singapore have also been inundated with Indian students.

Yet, even as student outflow continues, over the past 15 years—and most briskly, through the mid-2000s—India has witnessed a promising reverse trickle, buoyed both by the potential of its economy, the romanticized idea of coming home, and a slowdown in the developed world. It’s a trend I personally benefited from as close friends and cousins moved back home to work in the Indian offices of large multinationals, or to open consulting firms, architectural practices and design outfits. Their reasons were quite clear: to be part of the exciting Indian growth story. Unfortunately, the last six months have seen the coin flip again. A sputtering economy and a dithering government have again made going overseas a smart career move for technology professionals and mid-level corporate managers.

As somebody who tracks entrepreneurial activity in the country, it’s difficult to ignore this trend in India’s start-up scene, especially in the technology sector. Several fledgling technology companies I’ve spoken to have recently moved their bases to Singapore or Silicon Valley, or are contemplating doing so. Soumitra Sharma, who is part of the investments team at IDG Ventures India, a venture capital fund focused on investing in technology and technology-enabled businesses, attests to this new movement.

Enjoying this article? Click here to subscribe for full access. Just $5 a month.

“As far as early-stage technology companies are concerned, it’s very clear that most of the enterprise markets are global,” Sharma told The Diplomat. “And the reality is that it’s very difficult to build a large enterprise company based out of India because the India market when it comes to enterprises (not consumers) is not very large. For start-ups to scale, they have to go global, and it’s important for founders to base themselves closest to where there markets and customers are.”

Sharma explained that although India still features in the scheme of things, the reality is that for Indian entrepreneurs who want to build global companies in the technology product space, it’s prudent to move to the talent-rich, capital-enabled, mature markets of Singapore and the Bay Area. You start out in India, he says, to build your credibility and gain early adopters, and then move on.

“Nobody thought along these lines four or five years back,” Sharma said. “But, now, most VCs that have invested in companies that work in the enterprise segment, immediately encourage part of the founding team to move base, or to expand the one or two-man sales teams that most people would earlier have located out of the U.S. or Asia-Pacific.”

Could Indian policymakers have done anything to change this? Maybe, says Sharma. “Of course, there is no doubt that India can be turned into a friendlier place to do business. Look at Singapore. It’s able to attract entrepreneurs from the world over to set up bases there. Much more needs to change in the Indian ecosystem – especially capital and talent – to make it a good place for companies to scale up.” 

But, he prefers to err on the side of optimism, saying, “Driven by the pessimism and sentiment in the market, this trend seems to signify a loss for India. But, that’s not all true. On the five to seven year horizon, which is what early entrepreneurs work on, there is still growth that’s going to happen in India. The back-end engineering talent will still come from here.”

Sign up for our weekly newsletter
The Diplomat Brief