Indian High-Skilled Migration Fueled Silicon Valley and India’s IT Export Rise

Gaurav Khanna presents high-skilled immigration as a circulation story, not a one-way “brain drain.” The movement of Indian computer scientists and programmers into the United States during the internet-era technology boom helped expand American technology production and innovation. The same migration channel also helped create the skilled workforce and return-migrant networks that later supported India’s rise as an IT exporter.

High-skilled immigrants, in this framing, include technology workers, physicians, international students, and faculty. The central example is Silicon Valley in the 1990s and 2000s. The commercialization of the internet produced a large increase in computer science employment in the United States, and Khanna says that increase was “essentially driven by immigrants.” In 1994, only 6% of computer scientists in the United States were born abroad. By 2007, on the eve of the Great Recession, one in four was foreign-born. Those immigrant computer scientists were disproportionately from India.

The immediate labor-market intuition is competition: more programmers and software developers from India might compete with US-born computer scientists and programmers. Khanna treats that as a reasonable hypothesis, not a straw man. But it is incomplete because technology firms do not hire programmers in isolation. More programmers can also mean more managers, more human-resources workers, and broader growth in technology production and employment.

That is the first break from the zero-sum version of the story. The second is innovation. High-skilled immigrants are not merely additional workers performing fixed tasks. They can create new technology and new software. That changes the incidence of immigration’s effects: the benefits are not confined to the technology sector or to the firms that directly employ the workers.

The US-side effect depends on software spreading through the rest of the economy. Indian programmers working in Silicon Valley contribute to advances in software; those advances affect consumers through faster phones, faster computers, and better everyday technology. But the larger economic mechanism is downstream adoption by other industries.

Car manufacturing and banking are the examples. These sectors use software in production processes and, in the case of cars, in the products themselves. When software improves, the benefit can travel from the firms creating the software to the sectors using it. Khanna describes this as a productivity boost for the broader US economy and as value-added growth generated through downstream impacts.

This is why the immigration question cannot be reduced to whether an immigrant programmer takes a job that might otherwise have gone to a US-born programmer. The programmer may also contribute to technologies that make other firms more productive and support complementary employment within technology companies. Amazon is the firm-level illustration: if Amazon hires more programmers, it also has to hire more managers and warehouse workers, increasing the wages and employment of other workers in those sectors.

The claim is structural: with high-skilled immigration, especially in software, the innovation and complementarity channels can make the aggregate story very different from a one-worker-in, one-worker-out calculation.

Computer science wages in Silicon Valley were about 600% higher than computer science wages in India, according to Khanna. For Indian students and workers, a US technology job looked “almost like winning a huge lottery ticket.” That wage gap encouraged more people in India to acquire computer science and engineering skills with the prospect of migrating to the United States.

But US immigration policy limited how many people could actually make the move. Khanna says the United States capped the number of immigrants coming from India, so many students and workers obtained the skills needed for a US technology career without ultimately migrating. The result was an expanding skilled workforce inside India.

Khanna also points to return migration. He says US immigration policy is such that visas expire after six years, and many computer scientists went back to India. These returnees brought skills, technologies, connections, and networks. He calls this “brain circulation”: workers move to Silicon Valley, accumulate human capital and professional ties, and then return to India with assets that help develop the Indian technology sector.

The distinction matters because the standard “brain drain” framing describes origin countries as losing skilled workers to richer destination countries. This account is more complicated. The chance to migrate induced skill acquisition among many more people than could actually migrate, creating “brain gain” in India. The people who did migrate and later returned created a circulation channel that transferred knowledge and networks back to India.

India’s technology-sector growth was, in Khanna’s telling, partly connected to US immigration policy. The United States attracted Indian technology workers with much higher wages, capped the number of immigrants coming from India, and had visas that expired after six years. Together, those dynamics helped create conditions Khanna emphasizes in India: a larger pool of trained computer science and engineering workers, and return migrants with US experience.

Indian firms then tapped into that workforce. Over time, production began to be offshored from the United States to India. The work included low-level coding sent to India by large companies, but also multinational firms opening their own operations there. Khanna’s example is the contrast between “Google Silicon Valley” and “Google Vizag,” referring to a city in India.

The long-run result was structural transformation: high-skill technology services grew in a developing country. India became the world’s largest exporter of IT products, overtaking the United States around 2005 after decades in which the US had been the largest exporter. Khanna attributes that shift partly to the brain gain and brain circulation generated by the migration dynamics between India and the United States.

The important feature of this account is that the same migration channel affected both countries. The United States gained high-skilled workers, innovation, and downstream productivity effects. India gained skills, return migrants, networks, and eventually a globally competitive export sector.