The Migration of Indian Human Capital

The Ebb and Flow of Indian Professionals in Southeast Asia

Faizal bin Yahya, Arunajeet Kaur

• Publisher: Routledge
• Year: 2010
• eBook ISBN: 9781134018161
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

In an increasingly globalised world manifested in greater economic integration, human capital is an important factor. One of the key sources of human capital to the global economy is India, and the main destinations for Indian professionals has been Western developed economies, the Middle East and Gulf regions and East and Southeast Asia.

Southeast Asia as a region has close historical, social and cultural linkages with India, and India has undertaken a number of initiatives under its "Look East" policy (LEP) to enhance ties with the Southeast Asian region. This book examines the trends and motivations of human capital flows from India into this region. Focusing in particular on Malaysia, Singapore, Indonesia and Thailand, the book provides an analysis of Indian labour in a variety of sectors, including information technology (IT) sector, academia, banking, oil and gas. Based on empirical data, the book provides an analysis of current trends in the flow of human capital from India to Southeast Asia. It will be of interest to policy makers, businessmen, students, analysts and academics in the field of Asian studies, foreign relations, human capital and labour migration.

1
Introduction

Societies on various continents of Africa, Asia, and Latin America have been affected by migration driven by the broad processes of social transformation. Stephen Castles has argued that the various stages of this process have included colonialism, imperialism, decolonization, neo-colonization, and currently globalization.¹ Castles added that highly skilled Indians predominantly head for the United States, Canada, the United Kingdom, and other European countries. In documented trends, the lower-skilled head for the Gulf region but also to other parts of Europe, Japan, Singapore, and Malaysia.² However, even skilled workers and professionals have moved from sending developing countries like India to receiving developed countries. The post-Cold War world, lack of opportunities in their home countries, greater ease of air travel, and better communications have facilitated the mobility of skilled workers. This has created groups of people living across borders who have affiliations in more than one society and these are known as “transnational communities.”³ With the increasing integration of the world economy, this has further accelerated the increase of international labor migration.⁴

India is poised to have a huge impact on global human resource needs in the face of declining fertility levels, especially in the developed countries. Since 2005, when executive talent was at its peak in the developed economies, their numbers have been steadily falling. In the most productive age group from 35 to 44 years, executive talent has declined in the United States by 14 percent and 27 percent respectively. In the United Kingdom, executive talent has decreased by 21 percent and in Italy, another G8 economy, the decline has been by 24 percent.⁵ In addition, shortage of executive talent has also spread to other regions such as Southeast Asia. In Southeast Asia, as a result of declining fertility in some economies and lack of appropriate local executive talent in others, India is increasingly becoming a source for foreign talent recruitment. Historically India has been a source of labor with its sustained total fertility rate⁶ of 2.76 in 2008. India is poised to overtake China as the world’s most populous economy by 2050 with an estimated 1.7 billion people. In 2050, China will have an estimated 1.4 billion people, while the United States is a distant third at an estimated 439 million. India will also have the world’s youngest and most productive population. At the start of 2006, India’s economy grew by 8 percent and it produced at least 400,000 engineering graduates, and half of its population is under 25 years of age.⁷

Arguably, India as an emerging market could itself face a talent crunch as its companies expand overseas and foreign multinational companies (MNCs) establish their subsidiaries in India. For decades since its independence from Britain in 1947, India has seen an outflow of human capital, especially from its prestigious Indian Institutes of Technology (IITs).⁸ A mixture of longing to venture overseas and inability to find challenging employment in India has meant that some 30 percent of every IIT graduating class has gone overseas.⁹ In the late 1990s, some of the leading global corporations were staffed and headed by IIT graduates. However, post 9/11 and in the aftermath of the IT bubble bursting in 2001, well-qualified Indian human capital are either staying put in India after graduation or returning to India because of growing employment opportunities.¹⁰ A number of these employment opportunities are in the IT-enabled services (ITES) sector such as call centers.¹¹ By 2003, it was estimated that India had captured about 16.4 percent of the global IT businesses.¹² India’s “best and brightest” are no longer heading for Silicon Valley in the United States but are heading for Bangalore, the Silicon Plateau, and IT hotspot in India.¹³ While their pay may not be as high as what’s available in Silicon Valley, by Indian standards it is more than adequate to lead a comfortable life. This demonstrates that global economic trends are making it increasingly difficult to predict employment and migration trends of highly skilled Indians.

Is Indian talent likely to move to Southeast Asia? To begin with, there are historical links, the countries in Southeast Asia were heavily influenced by India and this gave rise to several Hindu kingdoms in the region. The era of colonization by the British further strengthened ties between India and colonies in Southeast Asia through increased immigration of Indian communities and joint administration. Historically and culturally, the settled Indian communities in Southeast Asia provide current Indian migrants with available social and cultural capital. This book examines the flows of human capital from India to four Southeast Asian countries, namely, Indonesia, Malaysia, Singapore, and Thailand. The human capital¹⁴ referred to here is skilled and highly educated workers, usually professionals, who are in demand in Southeast Asia. The book will examine the motivations for the migration of Indian human capital overseas, their move to third countries, and their possible return to India. It will examine state policies towards the attraction and regulation of human capital from India. The book will attempt to shed light on the economic, political, and socio-cultural impact of Indian transnational migrants to the Southeast Asian region. To a large extent, human capital mobility is integral to the process of globalization. Migrants impact directly on the innovative capacity and growth of economies, especially in science and technology.¹⁵ This is manifested in the immigration policies of a growing number of countries that are more selective based on skills and qualifications.

Aims of the book

This book aims to investigate the intricacies involved in the employment of Indian knowledge workers, particularly in generic professions such as in the information and technology (ICT) and finance sectors for the economies of Southeast Asia. The research will focus on four countries in Southeast Asia, namely, Indonesia, Singapore, Malaysia, and Thailand. These particular countries have been selected, as the presence of Indian skilled and professional workers is most evident in these countries. We both visited each of these countries to attain data through participant observation of the social interaction, activities, spatial enclaves, purchasing habits and lifestyles of newly migrating Indians to these Southeast Asian host countries. We conducted intensive interviews with highly skilled Indian migrants in these countries. The questions examined include: the attraction and pull factors of these four countries to Indian professionals in economic and fiscal terms. The restructuring of the Southeast Asian economies, as influenced by globalization and the “knowledge economies” phenomenon, has created the demand for knowledge workers which the Indian human capital has been recruited to fill. In order to analyze the ebb and flow of Indian professionals into the Southeast Asian region as determined by the economic scenarios of the region and the individual countries, key questions are examined. For example, what is the significance of “India Rising” as the other Asian economic giant besides China and how does this influence the circulation of Indian talent? While perceptions about Indian talent in the region are undergoing positive changes, the increasing demand for talent in India, especially in the high technology areas and finance, might restrict their supply overseas. With the Indian economy recovering after the 2009 global financial crisis, Indian professionals might be increasingly reluctant to move overseas if India provides them with greater employment opportunities. The book attempts to determine the significance of the Southeast Asian region within the global network that has emerged among Indian professionals and to comment on the global network of middle-class Indian professionals as new realities of immigration and immigrating communities are emerging.

In the context of economic globalization, this book will analyze the consequences of the arrival and placement of these Indian professionals in Southeast Asia. Besides the economic advantages of recruiting talent from India is the need to assess their social contribution and impact on societies in Southeast Asia. For example, this could be in the cultural and educational spheres with the expansion of cultural centers and schools initiated by Indian nationals. This book is timely because it attempts to understand the phenomenon of migrating Indian professionals focusing on the period since the early 1990s and the geographical region of Southeast Asia. The migration of Indians in the Southeast Asian region is a very broad area of research; it has the potential to stretch from an ancient perspective to the contemporary era. It provides content to examine as well as challenge the heavily discussed concepts of diaspora, transnationalism, and migration. However, for the purposes of this book, the time period under examination is only from the 1990s onwards, due to a confluence of events: the economic liberalization in India, the proliferation of new communication technologies, and the realization of greater integration of financial markets and “transborder” economic processes. The focus on a contemporary time frame will allow for a fresh analysis as these events have restructured perspectives of migration. For example, the consideration of push–pull factors has become more sophisticated through the emergence of migrant networks of professionals,¹⁶ and the factor of immigrant “rootedness”, particularly for the middle income strata and above, has increasingly become subject not only to the political and social stability of a host country but also to market forces that determine salary and value of investment, fixed, or otherwise.¹⁷

The focus of this book is the Southeast Asian region as this area has not been addressed as actively as the phenomenon of the migration of Indian professionals to the United States and Europe.¹⁸ Malaysia and Singapore, apart from being cited as “global gateways” for Indian professionals in Xiang Biao’s article, “Indian information technology professionals’ world system,” have not been explored in scholarly work, despite the significant presence of Indian professionals in the finance and ICT sectors of these countries. In the case of Thailand, there is mention of a significant number of Indians in the MNCs, financial institutions, and the ICT sector,¹⁹ but again, nothing has been written about the inflow of Indian professionals in Thailand since the early 1990s. This is unfortunate because, given the level of economic and political links being cultivated between India and Southeast Asia at the regional and bilateral levels (free trade agreements), the recruitment of Indian ICT workers is and will continue to be a growing phenomenon. This is due to the shortage of home-grown ICT professionals who could cater to the emergence of ICT clusters in the ASEAN region specifically in Malaysia (the Multimedia Super Corridor, MSC), the Philippines (Subic Bay Industrial Park), Singapore (the science parks) and Thailand (the software parks in Bangkok and Phuket).

Moreover, the Comprehensive Economic Cooperation Agreement (CECA) signed between India and Singapore in June 2005 directly addresses the need to facilitate a greater circulation of human capital between both these economies. Given these developments as well as the phenomenon of “India Rising,” the flow of Indian human capital will likely accelerate, adding to the debate on the brain drain and brain circulation. Hence, this makes this research cutting edge with the ability to comment on greater human capital management in the global knowledge-based economy (KBE). It is hoped that this study of the migration of Indian professionals to Southeast Asia will present an interesting case study to exemplify certain contemporary economic and migratory trends as well as argue the validity of academic epistemes such as the diaspora, transnationalism, and even globalization.

The Southeast Asian region

Each of the specific countries chosen as case studies already has a settled Indian community, who entered the region most conspicuously during the colonial era. Even though more research could have been done on the Indian communities in the Southeast Asian region, some work has been done to document their presence there.²⁰ Since the 1990s and the information revolution, when e-banking and e-commerce became integral to the functioning of economies, there has been a significant inflow of Indian EPs into Singapore, Malaysia, and Thailand. They have been termed the “New Indians”²¹ and have differing tastes, social involvement, characteristics, and orientation as immigrants in comparison to the Indians already settled in Southeast Asia. The most noticeable cache of professional Indians in Kuala Lumpur is the 3000 Indians employed at the Multimedia Super Corridor (MSC), while in Thailand as a whole there are over 600 ICT companies and some 40,000 ICT professionals overall. Several ICT clusters have been established in Thailand and every year there is an expansion of 3000 ICT workers. The Thai government has targeted Southern India in particular to help it develop its own ICT sector.

It is in Singapore that the attempt not only to court but also to retain Indian professionals or talent is most vigorous. In 1990 and 1992, Indian Members of Parliament, S. Jayakumar and Dhanabalan gave official backing to the government endeavors to attract Indian talent to Singapore to compensate for the drain of the Indian-Singaporean elite.²² It was also hoped that incoming Indian talent would be able to boost the status of the ethnic community by contributing more significantly to the economy and improving its educational abilities, particularly in the hard sciences and mathematics.²³ The government subsequently engaged in tie-ups with the private sector to encourage the employment of Indians from the subcontinent and even set up a “Contact Singapore” branch in Chennai. These initiatives have paid off and through simple observational analysis, it is common to find the freshly arrived Indian expatriates making their presence known, dressed in executive wear on public transport or unwinding after office hours along Orchard Road instead of simply being confined to the Indian enclave of Serangoon Road. In terms of official statistics, government sources have quoted the conservative number of 20,000 Indian professionals employed in mainly the finance and ...

Table of contents

• Routledge Studies in the Growth Economies of Asia
• Contents
• Figures
• Tables
• Acknowledgements
• Abbreviations
• 1 Introduction
• 2 India
• 3 The employment market in India
• 4 Country study
• 5 Country study
• 6 Country study
• 7 Country study
• 8 Conclusion
• Notes
• Bibliography
• Index