Can India plug its brain drain?

As a growing number of Indian executives achieve corporate success in the US, questions persist about India's inability to retain its best and brightest.

Graph for Can India plug its brain drain?

Microsoft announced Tuesday, Feb. 4, 2014, that Satya Nadella will replace Steve Ballmer as its new CEO. Nadella will become only the third leader in the software giant's 38-year history, after founder Bill Gates and Ballmer. (AP Photo/Microsoft)

When Indian-born Satya Nadella became the chief executive of Microsoft last week, the news was greeted with jubilation in his country of birth. Nadella is the latest example of a growing legion of Indian executives who have scaled the highest peak of Mount Corporate in the United States.

India’s best and brightest have been going to the US in search of better opportunities since the 1960s. Unlike the previous waves of migrants, who took many generations to move up the social ladder in their new adopted home, Indian migrants managed to shatter the glass ceiling within a single generation.

Seventy per cent of Indians in the US have bachelor degrees, compared to just 28 per cent nationally and their household income is almost twice that of median American household income. The first generation of Indian migrants has stormed Silicon Valley and as well as Wall Street.

Indian migrants ran or are running some of the largest American and International companies including Microsoft, PepsiCo, MasterCard, Deutsche Bank, Citigroup, Vodafone, Motorola and McKinsey.

The Indian Institute of Technology (IIT), the country’s most prestigious educational establishment, acts almost as a training school for American executives, engineers and tech entrepreneurs.

IIT was established by Jawaharlal Nehru after India gained independence from Britain.  It has been described as “a beacon of excellence in an India bedeviled by cronyism and back-scratching”, according Anita Raghavan’s The Billionaire’s Apprentice: The rise of Indian-American Elite and the fall of the Galleon hedge Fund.

Vinod Khosala, a billionaire venture capitalist, a graduate of IIT and co-founder of Sun Microsystems, told US broadcaster CBS: “I can’t imagine a major area where Indian IIT engineers haven’t played a leading role.”

US Congress even passed a resolution in 2005, which praised their contributions. “The graduates of the Indian Institute of Technology in the United States have made valuable and significant contributions to society in every profession and discipline.”

The extraordinary success of Indian migrants in the US is a resounding endorsement of America as the mecca of entrepreneurship and innovation. At the same time, it is an indictment of India’s inability to retain its best and brightest.

Former Prime Minister of Singapore Lee Kuan Yew sums up America’s primary strength in his typically blunt way. “For the next few decades, the US will be a virtual American empire. Whether you are Africa, or South American or Indian or Filipino, or Chinese or Korean, Americans will let you work for them in America and in their multinational corporations abroad.”

Throughout history, all empires that have succeeded have embraced and included in their midst people of other races, languages, religions and cultures,” according to Graham Allison and Robert Blackwill’s  new book Lee Kuan Yew: the Grand Master’s Insights on China, the United States and the World.”

Nadella’s appointment has also provoked profound soul-searching in India. Writer R Jagannathan asks: why is it that India’s tech and other geniuses flower only in the US or Silicon Valley? Why is that every Indian Nobel prize winner after independence in the sciences is not an Indian citizen anymore?

Jagannathan argues they have succeeded because they left India behind.

He has a different take on the celebrated IIT.  The true value of an IIT education is not the intellectual capital that it nurtures, but its “filtering expertise”, which only admits the best of the best.  They will flourish regardless whether they attend IIT or not.

India’s notorious legacy of License Raj (a system of elaborate regulations and red tape required to set up businesses from 1947 to the early '90s) is also hampering the country’s innovation. There is still endless paperwork and bureaucratic red-tape for simple things, such as opening a bank account or buying a mobile phone.

“If Satya Nadella had remained in India, he would probably be working as a coder in Infosys or TCS. Earning a high salary no doubt, but an unlikely candidate for CEO,” says Jagannathan.

The same questions raised in India have also been asked in China. Of 11 ethnic Chinese Nobel Prize winners, only two are still Chinese citizens and one is behind bars. All of its science prize winners have either studied, worked or lived in the US or Britain.

We should have the same debate here. We often boast about the fact that this country has produced 15 Noble Prize winners, including scientific giants like Sir Howard Florey, who played a pivotal role in discovering life-saving penicillin.

However, like Indian expatriates, Australian over-achievers have been scattered around the world.  They hold some of the most prestigious positions in the world of science and humanities such as President of the Royal Society, a position once held by Sir Isaac Newton, and the Regius Professorship in Modern History.

The question Australia should be asking is why the best of the best from this country are seeking opportunities abroad, and why Australia is incapable of commercialising some of the most ground-breaking technological breakthroughs produced in this country.

Follow Peter Cai on Twitter: @peteryuancai

Subscribe to the China Spectator newsletter:

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles