Brain Drain 2.0 Is Taking Place In India

The migration of domestically developed intellectual property to foreign corporations within India reflects an anomaly in the demand pattern of the country's job market, points out Kanika Datta.

Arvind Krishna, chairman and CEO of IBM, recently said he was bullish about the innovations coming out of the conglomerate's India R&D centre.

This is the point at which we pat ourselves on the back for our indigenous tech prowess.

Indeed, the staggering range and quality of artificial intelligence and semiconductor research being done in India by multinationals is a largely unacknowledged aspect of the global high-tech boom.

This is one element of the new brain drain.

Unlike the earlier version, which saw qualified engineers and management students, many educated at government cost at top-notch institutions, head out to the West for job opportunities that would absorb their skills and offer dynamic career advancement, Brain Drain 2.0 is taking place right here in India.

A blue-blooded US company such as IBM is, in effect, extracting value from India's intellectual capabilities in India. But the commercial applications accruing from those innovations will benefit the bottom-line of a company headquartered and listed in New York.

The migration of domestically developed intellectual property to foreign corporations within India reflects a standard anomaly in the demand pattern of the country's executive job market.

In order of preference, foreign companies, preferably in tech, engineering or consumer goods, top the totem pole.

The Indian private sector follows, but the universe of aspiration is extremely narrow to maybe the Tata group, Reliance, Bajaj, Mahindra and the homegrown tech giants such as Infosys, HCL and so on.

Government jobs tend to figure low on the scale if you are ambitious.

Earlier, the public sector was considered a safe harbour for those interested in cruising through their careers; now, the increasing contractualisation of even executive level jobs in the public sector is changing that.

The preference for employment in a Western/multinational company is understandable since such corporations offer higher salaries, the prospect of travelling (and maybe emigrating) to some First World haven and prospects for meaningful professional advancement.

India Inc has an inherent disadvantage in this competition for talent because of its innate domestic focus and family-controlled culture.

That is a result of the long years of autarkic economic policy and the easy advantages that companies with lobbying power derived in staving off global competition.

But the striking fact is that even three decades after liberalisation India Inc retains the lightest of global footprints.

Defenders might argue that this is principally because the Indian corporate sector is relatively youthful compared with the age and experience of the US giants.

This argument may hold for 112-year-old Big Blue or 131-year-old GE. But consider the FAANGs, whose institutions dominate India like colossi.

All but one of them have entered middle age. That's Apple at 47 years, positively elderly compared with Amazon, 29, Netflix, 26, Google (on which I am checking this information), 25, and Facebook at just 19.

Compared with this the biggies in terms of Indian stock market capitalisation are aged.

Reliance, at 50 years, stolidly remains a powerful domestic giant.

TCS and Infosys, which have extensive global operations by virtue of their business model, are 55 and 42 years old, respectively.

Bharti Airtel will qualify as an international giant by virtue of its African operations but the continent is not yet an aspirational destination for outward-oriented executives.

Sixty-eight-year-old State-owned State Bank of India has overseas branches but it cannot be considered a major player in international finance or a go-to bank for finance professionals.

If India's best and brightest still prefer employment with foreign corporations, whether in India or abroad, to maximise their highly prized skills honed in the very best of Indian institutions, India's wealthiest are also increasingly cashing in their chips.

In June this year, the Henley Private Wealth Migration report predicted that 6,500 Indian millionaires are expected to leave the country in 2023. This is slightly lower than the 7,500 who left last year.

Why are they leaving? A senior Henley partner elliptically put it down to "recent and persistent turmoil".

Significantly, he added, more investors are considering relocating their families for safety and security, education and healthcare and climate change resilience.

In other words, not only are rich Indians uneasy about India and exiting with their resources, the country's future talent -- their children -- are leaving too, and are unlikely to return with the fruits of their foreign education.

Henley seems unworried by this trend, suggesting that India was producing plenty of millionaires every year. But given the accelerating rate at which Indians are giving up their citizenship over the past decade, the double brain drain could seriously impair India's human capital at a time when public investment in education is sub-par.

That's a reality that surely must be addressed with as much intensity as India's status as a world power.

Feature Presentation: Rajesh Alva/Rediff.com