Almost every Indian school kid from the late ’70s to the late ’90s dreamt of migrating to the United States and upgrading their standard of living. It was India’s very own American dream. But then, something strange happened in the early 2000s. The great land of opportunity that inspired a generation of young Indians to pursue careers in IT and become Silicon valley captains of industry suddenly instilled a yearning to create a better future in their homeland, creating a rise in “reverse brain drain.”  

The great Indian brain drain

According to an Expat Insider 2021 survey, 59% of Indians moved abroad for their careers, more than 10% higher than the global average of 47%. This in itself sounds very arbitrary but when you start to drill down multiple causative factors come into play.

I think the most important question to ask is if the Indian job market at the time was well-equipped to accommodate the sudden influx of talent. During the dotcom bubble in the mid to late ’90s, Indian education shifted its focus to computer science and information technology. Naturally, impressionable youth at that time were inclined to specialize in those subjects, only to realize four years later that the demand for software engineers and IT professionals in the Indian job market wasn’t as robust as they thought. With the IT sector in India only accounting for 1.2% of the GDP in 1998, the IT job market was flat, and especially for young IT professionals.

Business process outsourcing (BPO) saw a rapid boom in the 1990s, especially within the tech sector. This became the fallback plan for many of the talented, but overqualified individuals in the IT sector in India. Having to take up jobs that had nothing to do with their skillsets, these skilled workers were subjected to unrealistic service level agreements, challenging work hours, and worst of all, meager salaries, which discouraged them from pursuing careers in technology within the country. Consequently, many tech graduates and those looking to pursue higher education in technology, sought options abroad for more rewarding and fruitful careers.

What triggered reverse brain drain?

As of 2021, Indian-Americans account for 6% of the tech workforce in Silicon Valley; it’s safe to say they’re doing pretty well for themselves on a global scale. Although the future looks promising for the relocated Indian professionals, the idea of going back to their roots and returning to their homeland has been in execution for quite some time now. The early 2000s was a crucial time in this repatriation process, particularly for Indian talent in the US.

Over time, a few entrepreneurs from the US decided to take advantage of the improving job market back in India by starting their own firms, giving rise to new jobs and new opportunities. One such Indian entrepreneur is Sridhar Vembu, CEO and founder of Zoho Corporation, who takes this concept one step further by repatriating US-based Indian tech talent to rural villages which, in turn, is inspiring rural youth to become future entrepreneurs.

At a surface level, it seems like Indians are ready to be entrepreneurs. A 2018 report summarized that 83% of the Indian workforce would prefer to be entrepreneurs than employees, far more than the global average of 53%. In particular, 2021 saw a sudden spike in Indian entrepreneurs, rising to 14%, up from 5.3% the previous year.

How repatriation of talent to India is creating an impact in technology

Spurred by the recent big tech layoffs in the US, and with insurmountable H1-B visa renewal issues, Indians in the US especially, are summoning their entrepreneurial spirit, capitalizing on the knowledge they obtained, and creating new opportunities for many when they return to their homeland. These techies are coming back with a wealth of experience from the big tech world and are adapting this knowledge into a model that’s more suited for their environment. The recent SaaS boom in India over the past decade or so bears witness to this surge in Indian entrepreneurship driven by talent repatriation. India is now the second largest SaaS ecosystem in the world by volume, behind the US.

Geo-specific pain points call for geo-specific solutions. Big tech companies offering mostly bloated expensive software, consistently discouraged Indian small-medium businesses from embracing digital transformation during the early stages. This is where Indian SaaS companies determined they could close the market gap. Indian tech startups invested time and talent, and now often provide business software for a fraction of the world marketplace price, making their IT products accessible to even the mom-and-pop shops down the street.

However, there might be certain factors that could put a damper on this progress. The global market is currently inundated with “cheaper alternatives” for SaaS products, most serving the same verticals. This gives rise to copycats and oversaturates the market. As a result, venture capital funding for Indian startups has plummeted by 71.5% over the last year alone. A cause for concern, maybe, but in the long run, this will inspire entrepreneurs to avoid replication and start addressing newer pain points with their offerings.

The list of top Indian startups in 2023 looks promising. Ranging from simplifying grocery delivery through technology, all the way up to space exploration and research, it looks like the warnings are being heeded and the startup ecosystem is taking steps in the right direction. We strongly believe many more will follow suit and explore less traveled roads. Overall, it’s safe to say technological prowess in India is inevitable.

“Our target is that technology and the digital economy would be 20% of the total GDP, which also is growing at about 8%, 7.5% per annum, by 2025-2026,” said Mr. Rajeev Chandrashekhar, India’s IT Minister. If the reverse brain drain trend continues at the same rate or higher, India could very well reach this goal at a comfortable pace and soon place themselves as global leaders in technology.