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Silicon Valley expats spur innovation in India

By R. Sean Randolph - posted Wednesday, 15 September 2010

Throughout history, diasporas have reflected economic or political disruptions, ultimately enriching the receiving countries. Silicon Valley’s dynamic churn is the latest example, as many Chinese and Indian migrants are returning home, ready to lay a new foundation for innovation and growth.

For some Chinese, immigration to the United States reflected despair in the wake of the 1989 Tiananmen massacre; for others, it represented economic opportunity at a time of economic stagnation. Indians left for similar reasons, though less political: India’s economy offered little future for the talented and ambitious, while opportunities abroad promised a better life. Seeking jobs and education, many of the best and brightest came to Silicon Valley.

Powerful push-pull dynamics made California a draw. Its universities offered world-class education. Programs in engineering and computer science drew Indians in particular. This coincided with the run-up to the dot-com boom and was accelerated by the Y2K scare, which generated massive demand for programmers to fix the problem. The gap was filled by importing engineers, primarily from India.


By 1986, nearly 60 per cent of Indian Institute of Technology engineering graduates were migrating overseas, mostly to Silicon Valley. Research by Berkeley’s AnnaLee Saxenian found that by 1990 a third of the Bay Area’s science and engineering workforce was foreign born. One fourth of its engineers - 28,000 - were Indian, more than half with advanced degrees. By 1998, as the tech boom neared its peak, 774 of the 11,443 tech firms started since 1980 had Indian CEOs. From 1995 to 2005, 15 per cent of Silicon Valley startups were launched by Indians - the largest number for any immigrant group.

Today about half of California’s 475,000 Indian immigrants live in the San Francisco Bay Area, making it the second largest community in the country after New York. Its profile is unique: median income is $107,000, 75 per cent of adults have at least a bachelor’s degree, and 70 per cent are in management or professional positions.

The economic contributions are impressive. Immigrants from India have founded iconic Silicon Valley firms such as Sun Microsystems (Vinod Khosla), Brocade (Kumar Malavalli), Cirrus Logic (Suhas Patil) and Hotmail (Sabeer Bhatia). Behind this lie pivotal contributions to technology innovation, including ethernet (Kanwal Rehki), fibre optics (Narinder Kapany) and the Pentium chip (Vinod Dham). Many Indian entrepreneurs, having achieved success, have gone on to become venture capitalists, investing in and supporting a new generation of startups.

Now a new migration is underway, which promises to jumpstart innovation in India. It has three drivers: reduced opportunity in the US after the dot-com collapse and the second recession in a decade; sustained growth of 8 to 9 per cent in India, which may now offer more entrepreneurial opportunity than the US; and India’s development as a technology platform and market with global scale.

Students are part of the story. India sends more students to the US than any country, including China. Most study computer science, business and engineering at the graduate level. But while many of the best students continue to come and Silicon Valley remains a draw, perspectives are shifting. In the past most planned to stay indefinitely, but many now arrive expecting to return home, perhaps with a few years work experience. Regressive US immigration policies are a factor, but opportunity is the driver.

Those who return - and others assigned by their companies short-term - find a receptive environment. While not lacking for business leaders or entry-level engineers, India is short on middle- and upper-level managers with the skills needed by global companies. Venture capital is also in its infancy. This is where Silicon Valley comes in.


In addition to employing tens of thousands of engineers, companies such as Intel, Google, Cisco and Oracle are staffing top levels of their India teams with California employees of Indian origin. The India offices of venture firms such as IDG Ventures and Sequoia Capital are also led by returnees, who team with local partners. As many as a third of the participants in entrepreneurial forums such as Delhi’s “Startup Saturday” are returnees. Conversations readily turn to schools, colleagues and favourite restaurants in San Francisco. Flights between San Francisco and Bangalore, where many Bay Area firms have R&D centers, run full as entrepreneurs, employees and investors travel both directions. Lufthansa’s “Bangalore Express” is one of the airline’s most heavily trafficked routes and its second-largest long-haul market.

Institutional intermediaries also play a role. The Indus Entrepreneurs (TiE) started in San Jose in 1992 as a dinner group of Indian expats, with the idea of supporting local entrepreneurs. Eighteen years later, TiE runs a global network of 53 chapters with 11,000 members in 12 countries. The largest contingent outside the US is in India, supported by active links to the mothership, TiE Global, in Santa Clara.

The Bay Area-based Wadhwani Foundation, led by Aspect Development founder and Symphony Technology Group chair Romesh Wadhwani, also promotes entrepreneurship. Projects include the Wadhwani Center for Entrepreneurship Development at the Indian School of Business, and the National Entrepreneurship Network. The network, which aims to help Indians start companies, engages 233 institutions, 350 instructors and 250,000 students. Faculty from Stanford and other US universities help with curriculum and faculty development.

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Reprinted with permission from YaleGlobal Online ( Copyright © 2010, Yale Center for the Study of Globalization, Yale University.

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About the Author

Sean Randolph, president and CEO of the Bay Area Council Economic Institute, is the author of a recent study Global Reach: Emerging Ties Between the San Francisco Bay Area and India.

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All articles by R. Sean Randolph

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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