Thursday, November 03, 2011

Reverse Migration: Is India Ready Yet?

Kelly Services, in a recent report, predicted that approximately 300,000 Indian professionals will return to India, mainly from Western countries, to seek career opportunities by 2015. The report has indeed started off a discussion in the English language press in India, and some HR practitioners have been quoted expressing disbelief at such a high number. Their projection is much lower than that number, somewhat in tens of thousands than hundreds of thousands, and they cite the differences in living standards as the biggest constraint these homecoming Indians may face. They point out a fundamental difficulty that these kind of surveys face: While 300,000 or a greater number of Indians may want to come back to India, a small fraction actually would.

As an Indian living abroad for a considerable period of time, I can see both sides of the coin. The world's employment balance is shifting somewhat, with more jobs and opportunities and higher salaries being offered in countries like India, while jobs in Western nations come under economic pressures. Further, usually a returnee gets a premium for global skill sets, particularly when Indian companies are expanding abroad and snapping up Western companies. Kelly Services cite uncertainties about job and better earning opportunity, alongside family ties, as the biggest motivators for the returnees. However, it is equally true that it is not an easy journey, and I have seen many people return back to their adopted land after trying to return to India unsuccessfully. The main reasons center around the quality of life, not just better weather, roads and public transport system, but the fact that as an ordinary citizen, even as a migrant, these people have more 'rights' in various Western nations than they have in India. The conniving taxi driver, corrupt police, negligent healthcare staff and ignorant teachers are the main reason many people give up their efforts to live in India.

In context, I think it is more the family ties, particularly aging parents, as a motivation than anything else. For all the euphoria, there are three reasons why career prospects in India may not be motivating enough. First, most of these migrants are very highly educated and skilled, otherwise it would be hard for them to survive in an Western economy for a number of years, because these economies are more competitive and usually they would have to face off some discrimination. However, once they return to India, they wouldn't be given a skills premium, because that particular skill of overcoming adversity may not be needed in the domestic context. I am certain that disappointment awaits those migrants who wish to be treated as expats. Settling back in India is usually as arduous a process as going abroad and settling in a different country initially, and sometimes, it is more challenging because 'return' is seen as a failure by the Indian co-workers.

Second, once a person got used to the 'rights', and normative freedom that the Western life and work offer, it is hard to adjust back in India. India may indeed be a land of opportunity, but only for those with connections, at least so far. The ordinary citizen, even the affluent ones, are left without the protection of police forces, a legal system that works, consumer rights and a decent healthcare system. Even if the earnings meet the expectations, it is difficult for anyone to make up the 'rights' shortfall. It is particularly impactful because those who go abroad come usually from families without influence: Influence makes life so good in India that you may never want to leave.

Third, the growth in the Indian economy despite global slowdown has come from the realization and expansion of India's domestic demand. In fact, in a way, it has been caused by the government's Keynesian pursuit of rural investment, raising of minimum support prices and implementation of national employment guarantee scheme, and not because of any spectacular export performance. If anything, export-led industries like software has slowed and in some cases, like BPO, have somewhat stalled. India's global skill requirement, hence, may not be as huge as it seems from outside: India now needs more professionals who can converse in local languages, handle local nuances and have local skills. The returning migrants do not fit into this need, and hence, will have less than euphoric welcome in the companies they target.

Indeed, there is a growing trend of Indian companies venturing abroad, but conscious of their global skills shortfall, most companies taking the M&A route have adapted the strategy of giving preference to local talent rather than expats in these cases. This allows them to absorb local know-how quickly: This flexibility has served them well so far and it is unlikely that they are going to abandon this anytime soon. Companies opening branches and franchising tended to employ Indian professionals, but this was more of a case of sending trusted insiders for these privileged positions rather than trying out a returnee.

In summary, then, I believe that the reverse migration that is taking place now are still based on individual preferences and family reasons rather than any economic rationale. Also, at this time, family ties play a major part in the success of the reverse migration projects: As long as family ties are strong enough to make the other inconveniences feel light, the returnee may stay back (and I have come across not inconsiderable number of cases where the mother-in-law versus daughter-in-law discord led to failures of such efforts). However, without a compelling economic reason, the numbers may still remain miniscule, and even tens of thousands may not materialize.

However, I would think India will emerge as an attractive reverse migration destination in a few years time, when the Indian economy reaches its next stage of evolution. This will be the stage when surpluses made out of domestic business will need to be invested abroad, and not just the big players, but even the small and medium size companies will start engaging in International play in their quest of growth. This is the time when India will suddenly feel an acute need of global skill set, which its domestic managerial cadre, locally successful and steeped in local practices, will not be able to provide. This is still a few years in coming, but this will happen, because the Indian education and training system is, counter-intuitively, becoming more locally orientated than the other way round (indeed, the demand is driving this). So, the peak in reverse migration will only be reached later: If I have to put a date, I shall put it towards the end of next Parliament, which will be somewhere around 2019. This is the time Indian economy has to rebalance itself, allowing new opportunities for global Indians to join the game.


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