December 2004

IZA DP No. 1422: Must Skilled Migration Be a Brain Drain? Evidence from the Indian Software Industry

published in: World Economy, 2008, 31 (2), 187-211

We provide a first empirical attempt at understanding the scale and type of skilled migration from the Indian software sector and the consequences for firms experiencing loss of skilled workers. The paper draws on some unique survey evidence of software firms in India. The results are not generally consistent with an adverse or brain drain story but provide a more nuanced interpretation. Not only has skilled migration taken a variety of firms – including significant temporary migration – but the evidence suggests that the impact of mobility on performance in the sending firms has not been unambiguously adverse. There is some evidence of associated wage pressure at the height of the software boom in the late 1990s. But there is also evidence of a strong supply side response as workers acquired training and entered the sector.