The recent white paper by Manpower Borderless Workforce 2008 brings out the great churn that is happening in international labour markets. Workers are migrating permanently or on a short term basis, within a company or changing companies, sometimes changing occupations in search of a more fruitful work profile and lifestyles. Companies in turn are hiring internationally – sometimes for employment in a single location and sometimes moving their employees across national borders. The world may not have become flat yet, but it is rapidly becoming borderless. India is a significant contributor to this phenomenon; it is exporting talent internationally in a big way and is considered to be a significant ‘threat’ internationally. India, of course, is not alone. But given its vast and rapidly increasing English speaking workforce India is emerging as a major supplier of international talent. This is all happening at a far more massive scale than ever in the past. When aggregate national economic growth is on an average 8 percent per annum, but is characterized by large regional variation, it is evident that relatively greater opportunities will act as a magnet for all those willing and able. And what is happening across national borders is also occurring across sub-national borders. IT professionals of Tamil descent form a large part of the Bangalore story, labour from Bihar is benefiting agriculture in Punjab, large numbers are moving from rural to urban areas in search of a better livelihood and lifestyles. The debate on international and domestic migration has attained significant importance on the national as well as international platform. Growing mobility of labour in a global economy, consequent population and demographic impacts , coupled with enhanced security concerns, have together underlined the importance of good migration management policies to transform it into an efficient, orderly and humane process. The question is no longer restricted to whether migration should or should not be allowed, but has shifted to , how to manage migration effectively to enhance its positive effects on development and mitigate the negative (MOIA, Annual Report, 2007-08). Migration has enormous potential to contribute to development and alleviate poverty for a country like India, but the process needs to be understood better if we are to put in place policies that maximize gains from migration. What will be the consequences of large scale international migration from India? What will be the developmental consequences of migration of highly skilled workers from India? Being one of the main exporters of technical talent to the world economy, these concerns are important. To address these issues it is important to have a better understanding of talent migration in India; both internal as well as international. This background paper provides a comprehensive analysis of the process of migration in India. This analysis is undertaken under three broad themes with Section 2 covering issues such as: What is the scale and scope of talent migration both (i) within India and (ii) between India and the world? Section 3, primarily covering the supply side issues, will describe the demographic dividend of India and provides a perspective to the same by discussing the employability constraints of the working population of India. In this context the following questions become important: (a) how to convert this demographic dividend into an employable dividend; (b) Whether and how short term training by hirers (with an international/domestic orientation) can improve the employment potential of the Indian workforce?; (c) Whether and how domestic skills shortages result in leading Indian companies seeking talent overseas? Finally, Section 4 of the paper briefly discusses the gains and costs of migration and follows that with a discussion of related policy issues. The background paper concludes by providing

1. India’s Talent
Migration
Whitepaper
Laveesh Bhandari and Payal Malik
Version: November 2, 2008
Prepared for Manpower Inc.
Research Team:
Monica Jaitly
Ramrao Mundhe
Indicus Analytics
1

2. Table of Contents
Introduction..............................................................................................................................4
Scale and Scope of Migration..................................................................................................5
International Skilled Migration ...........................................................................................5
International Low-skilled Migration .................................................................................12
India’s internal migration ......................................................................................................15
The Three Dangers.................................................................................................................18
Demographic Dividend and Talent Shortage.....................................................................18
Rapid growth and Social Unrest........................................................................................22
International Slowdown.....................................................................................................23
Gains from Migration.............................................................................................................24
Remittances........................................................................................................................24
Brain Gain and Brain Circulation......................................................................................25
Enabling Networks.............................................................................................................25
Knowledge Diffusion.........................................................................................................26
Costs of Migration .................................................................................................................26
Brain Drain.........................................................................................................................26
Loss of Investment in Human Capital...............................................................................27
Exploitation by Middlemen and Agents............................................................................27
Access to Basic Services....................................................................................................27
Migration of laborers from Orissa to Surat........................................................................28
Government Action................................................................................................................28
Employer Action....................................................................................................................31
Academia-Industry partnerships .......................................................................................31
In House training by Companies to build talent pipeline..................................................32
Selected References...............................................................................................................33
2

3. List of Figures
Figure1: Inflow of Indian Workers into Principal Destination Countries
Figure 2: Occupational Profile of Indian Legal Permanent Residents in
US
Figure 3: Country wise Percent Share in Skill Visa Outcomes, Australia
Figure 4: Share of India in Total H-1B Visa Approvals
Figure 5: Country wise Percent Share in H-1B Visa Approvals
Figure 6: Percent Share of Top Two Countries in UK Work Permit
Issues
Figure 7: Percent Share of Top Countries in UK Work Permit Issues
Figure 8: Country wise percent Share in Temporary Skilled Visa
Grants, Australia
Figure 9: Annual Labour Outflows from India
Figure 10: Annual Labour Outflows to Gulf Countries
Figure 11: Occupational Profile of Indians in UAE, 2001
Figure 12: Growth of net migration of workers in selective states
during 1991 to 2001
Figure 13: Distribution of interstate migrant workers (in millions)
Figure 14: Population Pyramid 2026
Figure 15: Estimated number of individuals in 15-60 age group across
general education level for 2025.
3

4. Introduction
The recent white paper by Manpower Borderless Workforce 2008 brings out the great
churn that is happening in international labour markets. Workers are migrating
permanently or on a short term basis, within a company or changing companies,
sometimes changing occupations in search of a more fruitful work profile and lifestyles.
Companies in turn are hiring internationally – sometimes for employment in a single
location and sometimes moving their employees across national borders. The world may
not have become flat yet, but it is rapidly becoming borderless.
India is a significant contributor to this phenomenon; it is exporting talent internationally
in a big way and is considered to be a significant ‘threat’ internationally. India, of course,
is not alone. But given its vast and rapidly increasing English speaking workforce India is
emerging as a major supplier of international talent.
This is all happening at a far more massive scale than ever in the past. When aggregate
national economic growth is on an average 8 percent per annum, but is characterized by
large regional variation, it is evident that relatively greater opportunities will act as a
magnet for all those willing and able. And what is happening across national borders is
also occurring across sub-national borders. IT professionals of Tamil descent form a
large part of the Bangalore story, labour from Bihar is benefiting agriculture in Punjab,
large numbers are moving from rural to urban areas in search of a better livelihood and
lifestyles.
The debate on international and domestic migration has attained significant
importance on the national as well as international platform. Growing mobility of
labour in a global economy, consequent population and demographic impacts ,
coupled with enhanced security concerns, have together underlined the importance
of good migration management policies to transform it into an efficient, orderly
and humane process. The question is no longer restricted to whether migration should
or should not be allowed, but has shifted to , how to manage migration effectively to
enhance its positive effects on development and mitigate the negative (MOIA,
Annual Report, 2007-08).
Migration has enormous potential to contribute to development and alleviate poverty for
a country like India, but the process needs to be understood better if we are to put in
place policies that maximize gains from migration. What will be the consequences of
large scale international migration from India? What will be the developmental
consequences of migration of highly skilled workers from India? Being one of the main
exporters of technical talent to the world economy, these concerns are important.
4

5. To address these issues it is important to have a better understanding of talent
migration in India; both internal as well as international. This background paper provides
a comprehensive analysis of the process of migration in India. This analysis is
undertaken under three broad themes with Section 2 covering issues such as: What is
the scale and scope of talent migration both (i) within India and (ii) between India and
the world? Section 3, primarily covering the supply side issues, will describe the
demographic dividend of India and provides a perspective to the same by discussing the
employability constraints of the working population of India. In this context the following
questions become important: (a) how to convert this demographic dividend into an
employable dividend; (b) Whether and how short term training by hirers (with an
international/domestic orientation) can improve the employment potential of the Indian
workforce?; (c) Whether and how domestic skills shortages result in leading Indian
companies seeking talent overseas? Finally, Section 4 of the paper briefly discusses the
gains and costs of migration and follows that with a discussion of related policy issues.
The background paper concludes by providing a policy recommendations focused on
fully harnessing the gains and mitigating the costs in Section 5.
Scale and Scope of Migration
The willingness of all people to move from place of residence to another location is
driven by economic and lifestyle aspirations. This is true internationally, as well as in
India. But the core engine that powers migration is that for employment, and there are
many different characteristics contained in this broad term. Manpower recognizes this
(Manpower Borderless Workforce, 2008). There are different categories of workers, blue
collar and white collar, with quite different aspirations and patterns of movement. There
is another divide between skilled employees and the unskilled: skilled employees benefit
from steady market demand for their services; unskilled workers continue to struggle to
get a foothold on the economic ladder. There are two kinds of borders – national
borders, of course, but also explicit and hidden within countries that affect the
movement of people.
International Skilled Migration
It is estimated that less than a million people migrate out of the country in any given
year. As per various government documents there are about five million Indian
migrants working internationally, our own estimates are a bit higher at about six million.
But Indian talent migration is creating a significant impact on both the host country as
well as in India. Traditionally the major destinations for highly skilled Indian migrants
have been the US, UK and Canada and that for unskilled, semi skilled and recently
professionals have been the high-income countries in the Gulf mainly to the Gulf
Cooperation Council (GCC) countries.
5

6. But this is changing rapidly. Destinations such as Australia, New Zealand, and
Singapore are also attracting Indian professionals. In the past, it was the construction
worker that characterized Indian talent movement to non-English speaking countries.
Now countries in Europe and Japan are now also steadily becoming larger recipients of
Indian skilled talent. In the Gulf as well, skilled talent in-migration is steadily becoming
more important vis-à-vis the unskilled.
In a very short span of time India has become the top two or three most important
sources of talent in-migration in a range of developed countries including the USA, UK,
Australia, Canada and of course the Gulf region. Figures 1-8 indicate an increasing long
term trend in these countries.
Figure1: Inflow of Indian Workers into Principal Destination Countries
60
Australia Canada United Kingdom United States
50
40
30
20
10
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: OECD
6

7. Figure 2: Occupational Profile of Indian Legal Permanent Residents in US
60.00
49.28
50.00
43.19
40.41
40.00
31.20
30.00
20.00
9.72
9.26
10.00 7.57
5.50
0.00
2001 2003 2004 2005
Professional, Speciality and Technical Executive, Administrative and Managerial
Farmer, Forestery and Fishing Service
Others
Source Profile on Legal Permanent Residents, www.dhs.gov
Figure 3: Country wise Percent Share in Skill Visa Outcomes, Australia
30
25
20
15
10
5
0
1999-00 2000-01 2002-03 2003-04 2004-05 2005-06 2006-07
India UK South Africa China
Source: Population Flows: Immigration Aspects, Department of immigration
and citizenship, Australia.
7

8. Figure 4: Share of India in Total H-1B Visa Approvals
350000 Total India
300000
250000
200000
150000
100000
50000
0
2000 2001 2002 2003 2004 2005
Source: Sasikumar and Zakir Hussain (2006)
Figure 5: Country wise Percent Share in H-1B Visa Approvals
50
45
40
35
30
25
20
15
10
5
0
2004 2005
India China Canada Philippines Korea
Source: Sasikumar and Zakir Hussain, 2006
8

9. Figure 6: Percent Share of Top Two Countries in UK Work Permit Issues
40
35
India
US
30
25
20
15
10
5
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: Sasikumar and Zakir Hussain, 2006
Figure 7: Percent Share of Top Countries in UK Work Permit Issues
40
35
2002 2003 2004 2005
30
25
20
15
10
5
0
India United States Australia Phillipines South Africa
Source: Sasikumar and Zakir Hussain, 2006
9

10. Figure 8: Country wise percent Share in Temporary Skilled Visa Grants,
Australia
35
30
25
20
15
10
5
0
1999-00 2000-01 2002-03 2003-04 2004-05 2005-06
India UK USA SA
Source: Population Flows: Immigration Aspects, Department of immigration
and citizenship, Australia.
10

11. None of this would have been possible without the active recognition of governments
internationally of the important role that talent in-migration plays in their countries.
Given the stagnating and ageing workforce in developed countries the need for sourcing
talent from oversees is natural. Moreover, employers in developed countries need easy
access to the “best and brightest” from around the world to attain a competitive
advantage in the international markets. For example, in the nineties the expansion of US
H-1B program, that targets specialty occupations, was justified on these grounds.
(Martin 2003). As per US immigration data nearly three-fourths of all of the systems
analysts and programmers are from India. Across all recipients of new H-1B visas India
was the leading country of origin comprising almost half of all of the new arrivals in FY
2005. Consequently, many governments have taken significant steps to increase the
inflow of Indian skilled talent into their countries.
There are similar programs in UK and Australia is the Highly Skilled Migrant Program
(HSMP) and Skilled temporary resident program respectively. India leads in work permits
issued to foreign nationals in UK, surpassing the USA from 2001 onwards. The majority
of the work permits issued in the UK are acquired by IT and health professionals.
Temporary business visas that are nominated by employers in Australia display a similar
pattern. In the year 2005-06 India accounted for 10 percent of these visas. Here as well
the top occupational groups included IT and IT related fields.
But the IT sector is not the sole beneficiary of Indian skilled talent migration. In 2004,
over 38,000 physicians of Indian origin accounted for one in every 20 doctors practicing
medicine in the US. Another 12,000 Indians and Indian-Americans are medical students
and residents - doctors in specialty training - in teaching hospitals across the country.
And Indians made up roughly 20 percent of the quot;International Medical Graduatesquot; - or
foreign-trained doctors - operating in the U.S.1 India is also the country of origin of
27,809 of the 68,836 registered doctors in UK who earned their medical qualification
outside the European Union (GMC, UK 2008). Not just doctors, India is the second
biggest exporter of nurses to the UK, after the Philippines.2
The impact of Indian talent in-migration is not limited to English speaking developed
countries. Significant numbers of Indian professionals are now heading towards new
and emerging destinations in Continental Europe and East Asia. Germany for instance
introduced the Green Card Scheme in 2000 to attract IT specialists. It is estimated that
more than 60 per cent of those who have been admitted under Green Card Scheme are
1
http://yaleglobal.yale.edu/display.article?id=3340
2
Mixed feelings among Indian doctors as NHS turns 60, Deccan herald, July 6, 2008
11

12. Indians. Also nearly 10 per cent of the total IT engineers admitted to Japan during 2003
were Indians (Sasikumar & Zakir Hussain, 2006).
This is only the beginning of a long term trend. The demographics indicate an ever
ageing and stagnating workforce in developed countries, the need to supplement
domestic talent with that from other countries will only grow. The developed countries
are feeling this talent shortage for the past few years. But this will impact all the rapidly
growing countries of the world in coming years. South-east and east Asian countries’
fertility rates have been falling consistently for many years and their age structure is no
longer pyramidical. Indian talent has so far not made a great dent in non-English
speaking countries, but in those countries as well there is a growing need that can be
serviced. Of course, this would require Indian talent to be well prepared for the
emerging requirements; we discuss that in later sections. Overall, it can safely be said
that India has already made a head start in international market for talent. And with the
demographics on its side, it is well placed to service the world’s requirements for many
decades ahead.
International Low-skilled Migration
The bulk of migration taking place from India is unskilled in nature. There are about five
million overseas Indian workers in this category all over the world. The Gulf has
traditionally been the recipient of a large number of semi and unskilled labour, and the
numbers continue to grow. More than 90 percent of these workers are in the Gulf
countries and Southeast Asia. Figure 9 depicts the annual outflow of labour from India.
The outflow is consistently rising from 2000 onwards.
Figure 9: Annual Labour Outflows from India
900000
Labour Outflow
800000
700000
600000
500000
400000
300000
200000
100000
0
90
91
92
93
94
99
05
06
07
95
96
97
98
00
01
02
03
04
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
12

13. Source: Annual Reports, Ministry of Labour, GOI, Various Editions
[Note: This data pertains to workers requiring emigration clearance. The emigration
permit is mandatory for unskilled and semi skilled labour before leaving the country.]
According to the MOIA, Annual Report 2007-08, during 2006 about 670,000 workers
emigrated from India with emigration clearance. Out of this about 255,000 workers
went to UAE and about 134,000 to Saudi Arabia. Outside the Gulf region, Malaysia is
also emerging as an important destination for intake of Indian labour - about 36,000
workers migrated to Malaysia in that year. This is yet another example of new locations
opening up for Indian talent.
Figure 10: Annual Labour Outflows to Gulf Countries
300000
Bahrain Kuwait Oman Saudi UAE
250000
200000
150000
100000
50000
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: Annual Reports, Ministry of Labour, GOI, Various Editions
A large majority of about 70 per cent of the Indian migrants in the Gulf has comprised
the semi–skilled and unskilled workers, the rest being white–collar workers (20%) and
professionals (10%). Though the latter are becoming more and more significant in
recent years (Khadria, 2006).
This follows the economic structure of the host countries. After the initial years of the
oil boom, large infrastructure investments and those in basic industry led to the creation
of great opportunities for low skilled labour. However, with the advancing of the Gulf
economies the requirements are more and more towards services and high value added
activities.
13

14. Indian Government statistics reveal that the socio economic profile of Indian migrants to
the Gulf has been shifting since the late eighties. There has been an increased flow of
professionals and white collar workers. There is a significant change in demand for skills
away from construction towards operations and maintenance, services, and transport
and communications. In general there is a tendency to hire more professionals and
skilled manpower as opposed to unskilled and semi-skilled workers.
Consequently, countries such as the U.A.E are shifting focus away from unskilled to the
skilled and professionals category. Apart from highly qualified professionals such as
doctors, engineers and architects, bankers and CA’s, many white collar workers are now
working in Government offices and Public sector enterprises. Others are engaged in
gold, electronics, motor spare parts or textile trades, construction industry, managing
hotels and restaurants (Indian Council of World Affairs, 2001).
But despite this trend in the Gulf, the overall low skilled workers are increasing. These
semi- skilled and unskilled workers are mostly temporary migrants who return to India
after expiry of their contractual employment. Figure 10 shows the annual outflow of
labour to GCC countries.
Figure 11: Occupational Profile of Indians in UAE, 2001
Equipment Operators and Related Workers 35.84
Production and Related Workers, Transport
Farmers, Fishermen and Related Workers 0.6
Service 9.04
Sales 13.25
Clerical and Related Workers 14.76
Percent
Administrative, Executive and Managerial 5.72
Workers
Professional/Technical and Related Workers 20.78
0 5 10 15 20 25 30 35 40
Source: Zachariah et.al. 2002.
In sum, whether it is skilled or low skilled, in totality there is a great demand
internationally for international talent. And this demand is only going to grow. Among
14

15. all the major countries of the world, India is the best placed to service this international
requirements for many years to come.
India’s internal migration
There are many factors that drive migration - lifestyles, incomes, employment,
education, marriage, family movement, etc. But the bulk of domestic migration is
directly for employment. Among the rest, though more than half of the women migrate
due to marriage and many children migrate as their parents migrate, ultimately almost
all of the long-term location choice is for employment opportunities of household
members (Bhandari, 2007). Out of total population that migrated to other state 48
percent were workers as per the last census.
Talent migrates locally, across regions within countries and internationally. Unlike in the
case of international migration, government intervention plays little role in controlling
domestic movement of workers in India, as in most countries. Consequently locations
that have greater incomes and greater creation of opportunities tend to be the largest
receivers of migrants. Conversely, states that have low incomes and low economic
growth tend to be the net suppliers of talent.
Consequently, states such as Gujarat, Haryana, Punjab, and Maharashtra are among the
largest net receivers of in-migrants. And low per capita income and low growth states
such as UP and Bihar are the topmost sources of out-migrants. Maharashtra tops the
list with 3.76 million net inflows of migrants. Followed by Haryana (1.46 million) and
Gujarat (0.81 million). On the supply side, Bihar (-2.89 million) and Uttar Pradesh
(-1.44 million) topped as major states with net out flows of migrants.
Growth of net migration in some states has been phenomenal. Net migration in Haryana
increased about 3.5 times during 1991 to 2001, to a large extent this was due to the
rapid growth of areas in Haryana surrounding Delhi – Gurgaon being a well known
example. It almost doubled in Maharashtra during the same period. Gujarat (68%) and
Delhi (35%) were other territories which experienced large increases.
Among the major cities, as many as 16.4 percent of the total population of Delhi
consisted of in-migrants in 2001 (arrived in the period 1991-2001). Greater Mumbai and
Bangalore followed at 15 and 13.4 percent respectively. These are among the most
rapidly growing Urban Agglomerations in the post reform India.
15

16. Figure 12: Growth of net migration of workers in selective states during 1991
to 2001
343
350
300
250
200
172.8
150
in percent
100
68.4
50 35.1
0
-50
-60
-100
-112.3
-150
MH DL GJ HR UP BH
Source: Census of India 2001. Data highlights, migration tables.
Figure 13: Distribution of interstate migrant workers (in millions)
16

17. 9.00
7.71(34)
8.00
7.00
5.98 (26)
6.00
4.90 (22)
5.00
4.15 (18)
4.00
3.00
2.00
1.00
0.00
R-U R-R U-U U-R
Source: Census of India 2001. Note: R-U: Rural to Urban; R-R: Rural to Rural; and
likewise. Note: figures in parenthesis are percent of total
Of course rural to rural inter-state migration is also not insignificant (about 26%).
However this class of migration benefits from the migrant having relatively greater
familiarity with his new environment and is more like local migration. Moreover, such
migration is characterized by extremely low or no education, low skills, and agriculture
related occupations.
Urban in-migration on the other hand is more likely to occur among those who are
relatively better skilled and educated. Consequently manufacturing, trade, and services
such as finance tend to be the more likely occupations. These differences are also
reflected in data from a large survey on employment and migration conducted by India’s
National Sample Survey Organization. About 90 percent of the rural migrants had
secondary/matric level education or below, while the figure was 79 percent for the
urban migrants. Only 10 percent of the rural migrants were either graduates or post
graduates or technical diploma holders. For the urban area literate interstate migrants
with graduate or post graduate degree were 38 percent.
17

18. The Three Dangers
Demographic Dividend and Talent Shortage
India is perhaps the only nation which will have the youngest workforce amidst the
aging economies of world in the coming decades. It is estimated that globally there will
be a skilled manpower shortage of 56.5 million by 2020 and if India gears itself properly
it could have skilled manpower surplus of approximately 47 million by 2020.3 This
presents India with a unique opportunity to harness this dividend through skill
development of the youth.
Figure 14: Population Pyramid 2026
3
Eleventh Plan Document, Volume I, Planning Commission, Government of India.
18

19. Source: Registrar General of India
The numbers are large and potential scale massive. The population for the age group
15-60 group is expected to increase by 114 percent by 2025 (from 589 millions in
2004-05 to 1261 millions in 2025). As per Indicus estimates, growth in the population
having education of diploma/certificate course or graduation or above, would be as
much as 237 percent. Growth in the population having education level secondary or
below level would be 170 percent.
In spite of all these demographic advantages India currently does not have training and
education policies that can meaningfully convert this demographic dividend into
employable dividend. On the one hand skill shortages is due to the general academic
orientation of the education system leading to low levels of employability of the
educated. Moreover 90 percent of the school students drop out at different stages thus
very few reaching the higher education levels. Even for less educated vocational / skill
training structure leave much to be desired. In this regard the Eleventh Plan document
reports that among persons of age 15-29 years, only about 2% are reported to have
received formal vocational training and another 8% reported to have received non-
formal vocational training.
Figure 15: Estimated number of individuals in 15-60 age group across general
education level for 2025.
300
250 2004-05 2025
200
in millions
150
100
50
Lit W/O Formalsch.
Lit- Below Primary
Higher Secondary
dip./certf course
Grad_&Above
Secondary
Primary
Others
Middle
-
Tlc
Not Literate
Source: Estimates by Indicus Analytics
19

20. India’s transformation to a knowledge economy and the associated change in profile of
employment opportunities has created a demand supply gap in skills in new economy
sectors. In addition old economy sector also face deficiencies on the skill front. Recent
industry wise survey by FICCI throws light on the emerging skill shortages scenario in
the country. The survey highlights the large requirement of skilled workers on one hand
and world class professionals on the other. For instance the IT sector may face a
shortage of 500,000 technology professionals by 2010. Also in the education sector 25%
to 40% shortage of faculty members in disciplines like engineering, management,
economics, computer science in Central Universities is anticipated.
The survey also highlights talent shortages in sectors like Health, Engineering/ Heavy
equipment industry, Insurance, Automotive industry, mining, textiles, civil aviation,
environment and oil and gas. Thus talent shortages exist across wide range of sectors in
the economy.
20

21. • 80% of new entrants to workforce have no opportunity for skill training. Against
12.8 million per annum new entrants to the workforce the existing training
capacity is 3.1 million per annum.
• About 2% of existing workforce has skill training against 96% in Korea, 75% in
Germany, 80% in Japan, and 68% in the United Kingdom.
• 38.8% of the Indian labour force is illiterate, 24.9% of the labour force has had
schooling up to the primary level and the balance 36.3% has had schooling up to
the middle and higher level.
• About 80% of the workforce in rural and urban areas does not possess any
identifiable marketable skills. Structure and absence of quality consciousness are
said to be major reasons for the current state of affairs.
Eleventh Plan Document, Vol I, Planning Commission, Government of India
• Only 5% of the Indian labour force in the age group of 20-24 has received
vocational training whereas the percentage in industrialized countries is much
higher, varying between 60% and 80%.
• The illiterate and literate up to primary level of education constitute a very high
proportion of the existing work force, the two together account for nearly 67% of
the work force.
• The educated without professional skills constitute 69% of the total unemployed.
• 90 % of the school students drop out at different stages.
• Only 2.5 to 3 million vocational education and training places are available in the
country.
Report of The Working Group on Skill Development and Vocational Training,
Eleventh Plan, Planning Commission, GOI
21

22. Rapid growth and Social Unrest
Rapid growth in an area can be well sustained if it can draw on the skill capital of other
states. This enables such areas to maintain high growth levels and also build a
competitive economy.
But there is a negative outcome as well. Rapid in-migration may change the social and
cultural characteristics of a particular location. This can create dis-satisfaction on the
part of local communities.
Moreover, as migrants are often willing to undertake the same task at a lower
remuneration than demanded by the locals, it also creates competition between the two
groups. This can result in an ironical duality in high growth regions. While recent
migrants are able to find a job that allows a better life, local residents find it difficult to
find a job of their liking and remain unemployed. The taxi drivers in Mumbai are a very
good case in point. Locals are much more familiar with the city, and therefore should
generally be better at this job than migrants. Driving a taxi however requires irregular
working hours, is physically and mentally taxing, and is not the most desirable of jobs
for local youth. Consequently most taxi drivers in Mumbai are migrants.
The combination of these two forces has been known to bring about extra-legal and
harmful acts by local interest groups against migrants. The recent experiences in
Maharashtra are a well known example. But that is just one example among many in
India and abroad. But if no dealt with properly, such situations can harm both the
potential migrant as well as the host economy and community.
Take the example of India’s three most important cities. Cities such as Delhi for
instance have an insignificant proportion of its population that is its original inhabitant.
In the process its socio-cultural character has been ever-changing since the nineteen
fifties. But unlike in Mumbai in recent times, and Kolkata in the seventies, Delhi has
largely welcomed in-migrants. That has enabled Delhi and surrounding areas to grow
and prosper in a sustainable manner and en-richening its socio-cultural heritage
simultaneously. Cities such as Kolkata on the other hand created barriers for particular
groups, they were no doubt able to retain their socio-cultural character, but lost out on
the richness and depth that comes with a more cosmopolitan society, and also lost out
on economic growth.
All large cities of the world and all successful economic centers have a history of
inclusiveness within their respective domains. When they have controlled the entry of
people from other cultures they have limited their own economic potential and have also
arrested their growth as socio-cultural centers.
22

23. This is an aspect of domestic migration that India will have to come to terms with.
Currently less than a third of India resides in its cities; this will very soon be greater
than half. Large numbers will move from low growth to high growth and from rural to
urban centres. The more the differences between two areas the more rapid would be
the migration, and if not handled properly, the more harmful would be the responses.
International Slowdown
The past few months have revealed that the international economy has very rapidly
turned from a high growth phase to one of low or even negative growth in all countries.
As the first few quarters of the recession pan out, firms in across the world would be
expected to reduce new hiring, and even lay off talent. According to the UN Secretary
General workers in construction and tourism are losing jobs in affected countries and
remittances have slowed. In his speech at the Second Global Forum on Migration and
Development in Manila, he has urged the governments to cooperate across borders to
exploit the benefits of the migration process even under such conditions.
According to the Director General ILO, the current crisis would hit hardest such sectors
as construction, automotive, tourism, finance, services and real estate. He also noted
that the new projections “could prove to be underestimates if the effects of the current
economic contraction and looming recession are not quickly confronted”.
In other words, the jobs will once again come at a premium. Governments across the
world will be pressurized to build barriers against international talent. In times like these
inward looking pessimistic immigration policies may be populist responses but the
dynamics of migration are so strong that the governments may not take such knee jerk
reactions. Indians have started to feel the heat of the slowdown with many top end
entry level international job offers being revoked.
The global slowdown may possibly hit the Indian outsourcing industry the most. Already
there is some news of projects being cancelled and/or postponed. India's IT firms derive
40 percent of their global revenues from financial services clients, with 61 percent of
total sales from the U.S. and 30 percent from Europe. Some of India's IT majors have
already revised their sales growth forecasts for the year downwards by 5 to 6
percentage points. However, Infosys, like other IT firms, is hoping that short-term pain
will give way to long term gains, as U.S. companies are forced to make deeper cost cuts
and, potentially, outsource more work to India (Associated Press)
23

24. Gains from Migration
Remittances
Migration, whether domestic or international, results in a better matching of a person’s
inherent ability with employment and income options. This results in greater
productivity, output and remuneration. The net result is a win-win situation where all
three – the employer, the employee, and his family benefit. The success of the Green
Revolution in the states of Punjab and Haryana is dependent upon the cheap agriculture
labor from states such as Bihar and Uttar Pradesh.
Hard data on domestic repatriation is unavailable, but there are many examples in low
growth low income states where families have been able to beat the poverty trap on
back of migration. However, some indirect evidence adduced from the NSS surveys on
migration and consumption and employment/ unemployment by a research study4
showed, in 1992–93, 89 percent of permanent outmigrants sent remittances. The
percentage of all rural households receiving remittance income is also fairly high – in
some regions of the country, one-quarter to one-third of the households receive
remittances. The other source of resource flow that can alleviate poverty is the savings
brought home by migrants in cash or kind.
Remittances are also the most immediate and tangible benefits of international
migration. India was the largest recipient of workers’ remittances, which amounted to
US$ 27 billion in 2007. Incidentally remittances have outstripped net foreign direct
investment and official financial flows in India.
With the profile of the migrants changing to the highly skilled, remittances are only
expected to increase further. This is already evident as from the 1980s the share of the
Middle East region in the total remittances decline from 77 percent (1980-81) to around
61 percent in 1990-91 to and further to 22 percent in 2003. This was accompanied by a
consistent increase of remittances from the industrialized countries’ especially from the
United States, in the same time period of reference. This trend becomes pronounced
from the mid 1990s. The share of America in the total remittances increased from 37
percent to 51 percent between 1997 and 2003.
Non- Resident Indian (NRI) Deposits have been the other main source of attracting
savings of Indian migrants. Various NRI deposit schemes with varying incentives have
been in place since 1970. Though it is debatable in this era of free and fair markets
4
Ravi Srivastava and S.K. Sasikumar “An overview of migration in India, its impacts and
key issues”, Migration development pro-poor policy choices in Asia, 2003.
24

25. whether the NRI should benefit from special privileges, nevertheless, the fact remains
that the NRI deposits have contributed significantly to the large foreign exchange
surpluses that India enjoys (S.K. Sasikumar and Zakir Hussain, 2007).
Brain Gain and Brain Circulation
The rapid expansion of IT and IT enabled industry in India during the last decade is also
encouraging a large number of Indians to return and set up business ventures,
especially in key IT centers in India like Bangalore. Such a trend of to and fro movement
of professionals and ideas require that the discussion of the impact of migration of high
skilled labour on India should be within the framework of ‘brain gain’.
It is estimated that at least 35000 IT professionals have returned to either work in IT
companies or set up business enterprises in Bangalore alone (S.K.. Sasikumar and
Hussain, 2005). A recent comprehensive survey of India’s software industry showed
strong evidence of brain circulation, with 30-40 percent of the higher-level employees in
India having relevant work experience in a developed country (Commander et al.,
2004). About a third of GE India’s R&D staff has returned from the U.S., while IBM
India identifies half of the company’s PhD researchers as returnees.
In Pharma R&D as well, the evidence is very much in line with that in the IT sector. A
survey conducted by Duke and Harvard university researchers in India found that a
majority of the PhDs in drug discovery by sector leaders such as Ranbaxy, Dr. Reddy’s
Laboratories, and Aurigene, received their degrees in the USA (Harvard Law School,
2007).
Moreover NRIs temporarily returning to India as intra-company transferees of
multinational corporations facilitate the smooth setting up of FDI entities, acting as
facilitators that smoothen the wrinkles faced in matching different work cultures
Though, specific experiences apart, return skilled migration remains relatively limited
and is often more a consequence than a trigger of growth in the home country.
Companies like Yahoo, Hewlett Packard, and General Electric opened operations in India
largely because of the confidence infused by the presence of many Indians working in
their U.S. operations.
Enabling Networks
Kapur and McHale, 2005, argue that the more recent Indian migration streams draw
significantly from the middle class and skilled labour force, which can contribute in many
ways over and above the stereotypical remittance contribution. The story is now of
Indian nationals after receiving their higher education in the US becoming successful
25

26. host country entrepreneurs (e.g. in Silicon Valley) and on account of their knowledge of
the work cultures and bureaucratic systems in India they serve as bridges between
Asian and American markets. Their contacts and access to technology and capital in
both markets and societies is also an asset for businesses.
A survey of Silicon Valley’s Asian population in 2002 by AnnaLee Saxenian, has some
interesting results about the potential role of the elite Indian professionals belonging to
this group in building networks. From those surveyed 77 percent had one or more
friends who returned to India to start a company, 52 percent travel to India on business
at least once a year, 27 percent regularly exchange information on jobs or business
opportunities with those in India, and 33 percent regularly exchange technological
information. As for their potential role as “reputational intermediaries”, 46 percent have
been a contact for domestic Indian businesses. On the investment side, 23 percent have
invested their own money into Indian start-ups—10 percent more than once.
Knowledge Diffusion
There is a substantial skill upgradation when Indian technology professionals work in an
international environment. The Indian diaspora is thus expected to play an important
role in technology diffusion in the country. According to Pandey, et.al. 2004, this
happens through the following linkages:
• Facilitating the evolution of IT and ITES sector towards higher value-add, knowledge
intensive outsourcing through mentoring and coaching the incumbent offshore
vendors.
• Leveraging the Indian network to create mutually beneficial situations with other
Diaspora and other IT communities, e.g., the Chinese Diaspora and the Chinese
software and hardware manufacturing communities (in China, Taiwan, and Hong
Kong).
Even in the low skills sector such as construction, the large returnee temporary migrant
labour that was familiar with international methods and technologies could rapidly be
deployed in the construction sector boom in recent years.
Costs of Migration
Brain Drain
Unless there is a clear surplus of skills and human capital, large scale migration indeed
has a possibility of creating an enormous shortage of resources that are drivers for
26

27. development, institutional creation as well as building and economic well-being. This can
range from the loss of a dynamic segment and the youth on local/domestic
entrepreneurship, to very deleterious consequences for future generations of scarce
talent in universities.
It should be recognized that a large majority of the migrants do not return. This is true
for both domestic as well as international migration, and aptly reflected in the high rates
of urbanization growth within the country, as well as permanent work Visas and
citizenships granted to international migrants from India.
Loss of Investment in Human Capital
The government, at the central, state, and local levels invests substantial amounts in
education and health. In the case of professional and high human capital the
investment is significantly higher than for a low skilled worker. Migration imposes a
double hit on the government.
On the one hand, the investment in the development of the migrant is lost to some
other state or country. And on the other, the potential economic and tax base is also
lower as productive and energetic individuals are lost. In both cases there is a negative
long term fiscal impact.
The new paradigm of “brain gain” and “talent circulation” of viewing talent migration
may be relevant in some fields in others like higher education, medicine and health care
this may not be the case. As teachers, doctors, nurses and medical professionals leave
an area they create a major service gap adversely affecting those who remain.
Exploitation by Middlemen and Agents
In the case of both domestic and international migrants there are many cases of
exploitation and fraud by agents/contractors/employers. Since the migrant is in a new
environment, it is difficult for him to access institutions of law and justice. In some
cases language barriers also adversely affect access to such institutions. This
phenomenon affects both domestic as well as international migrants.
Access to Basic Services
Migrants find it hard to access public facilities such as healthcare, access to ration shops,
education, clean water and sanitation at the new place. This is mainly because migrants
lack basic identification and proof for place of residence in the new place, which is
important for accessing the basic public amenities in India and also in most other
27

28. countries (Laveesh Bhandari, 2007). If there are language differences, the problem is
worsened. And children of migrants need special care and coaching in being able to fit
into the new educational environment.
A study on the vulnerability of the workers in an industrial area in New Delhi show that
in the absence of proper observance of existing labour rights, the migrant labourers
work in a hazardous working atmosphere. Working condition in industries like cotton
mills, small tile making factories, salt making fields expose migrant workers to
occupational hazards like lung ailments, body ache and skin diseases.
Many times, the lack of knowledge of rights combines with lack of access to facilitating
institutions. This causes undue hardship and exploitation to the migrant.
Migration of laborers from Orissa to Surat
An estimated lakh laborers from Ganjam district of Orissa make Surat their city of
livelihood. They prefer to migrate to Surat as there is little scope for livelihood near
their homes. Rohita Pagada of Lundajuadi village (Orissa) said that he knew he was
returning to `hell-like living conditions.' But it is a compulsion. Most Oriya migrants in
Surat live in slums. At times around 20 people share a single room house with no water
or sanitation facilities. The migrants work in shifts allowing half of the group to sleep at
night. When it is a holiday some may sleep in the streets and on the footpath, said
Mohan Nayak, a migrant laborer of the Khalikote area.
These migrants also say locals treat them as second class citizens. They alleged that as
there are no government records, both Orissa and Gujarat governments never address
their problems.
- The Hindu, Monday, January 22, 2007
Government Action
It has now been demonstrated that talent migration can contribute in ways unforeseen
and governments at the state and central level need to facilitate the smooth and safe
flow of talent as well as a good work and living environment.
28

29. Turning ‘Demographic Dividend’ into ‘Employable Dividend’
For India to benefit from the opportunities that are emerging in the world, Indian talent
would need to be appropriately educated and skilled. The government recognizes this
and apart from rapidly increasing expenditures on education, is also instituting many of
vocational and skill development programs. However, given the scale of the problem,
these efforts are inadequate. For this purpose ensuring greater private sector entry into
the educational and vocational training sector will be critical. The entry of international
educational and skill development organizations needs to be encouraged and facilitated.
Safe Immigration
Complaints are often received about cheating of intending emigrants by touts and
recruiting agents and exploitation and ill-treatment of emigrants by their foreign
employers. Malpractices like substitution of contract, underpayment and delayed
payment of wages, denial of contractual facilities etc are frequent.
The Emigration Act of 1983 needs to re-looked at and changes that clearly delineate the
roles and responsibilities of critical stakeholders including central government, Indian
Missions, Protector General of Emigrants and Recruiting Agencies and Employers
need to be laid down. Perhaps even more important, the implementation of the Act
needs to be tightened.
Identity, Database and Information
Domestic migrants require proper identity of temporary residence that can then help
them avail of government services in their new location. This is currently missing in
India and local government services such as basic health and education are inaccessible
for the large numbers of domestic migrants. A proper registration system that identifies
the migrant and his/her family as such and allows them access to these services
requires to be put in place. Proper documentation would also facilitate access the
judicial and policing system.
International migration has a different set of issues; the out-migrant requires support
from the embassies; an understanding of activities and occupations Indian migrants are
involved in would also enable better promotional action on the part of the government
and its agencies internationally.
Special criteria for migrants in government services
29

30. Temporary migrants, seasonal migrants, and recent migrants all suffer from poor access
to public services as it is difficult to identify there residency. Moreover emerging safety
procedures such as KYC (know your consumer) norms also limit their access to banking,
telecommunication as well as utilities. Regulations and procedural guidelines need to be
changed at the central, state and local government level to ensure that the migrant is
not kept out of such essentials.
Greater Portfolio Diversification
India’s migration and manpower policies need greater portfolio diversification both with
respect to the countries as well as occupations. It will be difficult for the government to
accurately and finely predict such opportunities. However certain actions such as
opportunities for learning international languages, better access to information on
emerging sectors in different countries, involvement of Indian embassies in facilitating
talent migration, all would help.
Bilateral agreements and liberalization of policies
In the absence of the liberalization of Mode Four (Movement of Natural Persons), in the
WTO negotiations this is a option available for India for increasing the scale as well as
the scope of migration. Opening up India’s borders to skilled international professionals
would facilitate this, improve the spread of technologies in India, deepen economic
networks and overall facilitate greater talent out-migration from India.
Implementation and tightening of laws dealing with domestic migrants
There are a range of laws governing migrants within the country. Building and Other
Construction Workers (Regulation of Employment and Conditions of Service) Act, 1976;
the Building and Other Construction Workers (Cess) Act, 1976; the Inter State Migrant
Workmen (Regulation and Conditions of Service) Act 1979; the Workmen’s
Compensation Act, 1923 and the Minimum Wages Act, 1948, and perhaps the most
important of all - the Inter State Migrant Workmen (Regulation and Conditions of
Service) Act 1979, are some examples. These laws currently are only on paper and
imposed infrequently and record of prosecutions and dispute settlement has been very
weak (Srivastava, 2003). The laws need to be made in line with the three imperatives of
a globalizing economy – minimizing controls on free movement of people and goods
within and outside the country, better implementation of the core property and
fundamental rights of the migrants and their employers, and ensure that universal and
even implementation of the laws occurs.
30

31. Overall the role of the government needs to be to create an ecosystem that enables the
smooth matching of the skill sets that workers have to offer with those that employers
require, irrespective of the locational differences. This would require smooth and safe
movement of individuals and employers across national and international borders,
existence of enabling organizations such as educational and vocational training
institutions, as well as a legal and regulatory regime that protects property, life and
liberty of all while ensuring minimal regulation and procedural bottlenecks.
Employer Action
Employers, whether large or small, hiring internationally or domestically, and seeking
high or low skilled talent, will face a significant bottleneck in terms of availability of
specific skill sets.
Though such proactive action is currently limited to only a few of the largest firms, they
are experimenting with various scalable options that are a win-win for all. Whether
sourcing talent for India operations, or for international ones, such last-mile training
would help employers reduce their costs and increase productivity in the long run.
The few employers, both Indian and international, that have already recognized this, are
taking a range of actions that would (a) reduce the difficulties in accessing appropriate
talent, and (b) ensure that the demographic dividend plays out as an employment
dividend as well.
The efforts can be divided into three sub-domains, namely (1) Academia-industry
partnerships, (2) In-house training and (3) Enabling institutions of learning and skill
development.
Academia-Industry partnerships
Recognizing the need to access appropriately trained manpower, one of India’s fastest
growing banks, ICICI, has tied up with 27 professional institutes for hiring 100,000
trained people in next 5-7 yrs. In the IT sector, Infosys has similarly tied up with
Vishveshwarya Tech which operates 135 engineering colleges in the country. The
company also via its “Campus Connect Programme”, provides software-training modules
to students of engineering colleges in its campus. IBM is also building such partnerships
and attempting to spread the use of open source software in academic institutions. This
will help it source the OSS skill sets in India that are hard to find internationally on a
large enough scale.
31

32. Such academia industry partnerships help build an ecosystem where the supply is
targeted to the demand for specific skill sets. It enables firms to source talent
internationally, and is a strategy best suited for their India operations.
In House training by Companies to build talent pipeline
Across almost all sectors, in services, infrastructure, and manufacturing, companies are
training new hirees in-house before putting them onto productive tasks. For instance
Management trainees in Hindustan Unilever undergo an intensive 12-month cross-
functional training programme before they start work. India’s largest automobile maker,
Maruti Udyog spent close to Rs 80 million in 2006 on training its employees across
levels. One of India’s largest IT companies, Wipro has a project management academy
where managers undergo a six months intensive programme made of 20 behavioural
models ranging from interpersonal relations to leading subordinates.
L&T has set up construction skills training institutes where 10 th and 12th pass students
are given training in masonry, carpentry, electrician. Unlike the above examples, these
students may not be hired by L&T and may be used by it as subcontractors in its
projecs.
Yet others are using their international affiliates and branches; Accenture for instance
follows a job rotation system and sends its highest performing senior managers to
different offices around the world where senior Accenture leaders coach them.
This ‘brain-circulation’ helps in the spread of knowledge and methods across the
orgaization and at the same time ensures that a strong and deep base of skills is created
within an organization.
The critical employer action therefore needs to be in the domain of skill improvement
and vocational training. It is not, of course, the task of employers to venture into the
education space as a core activity. However, a large part of the manpower requires
two-three month training and skill improvement. Employers are best suited for such
tasks, as they more than anyone else are aware of the specific requirements of specific
jobs.
***
32

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