The Migration of Indian Human Capital: The ebb and flow of Indian professionals in Southeast Asia 9780415481083, 9780203886274

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The Migration of Indian Human Capital

Faizal Yahya and Arunajeet Kaur’s book, The Migration of Indian Human Capital: The Ebb and Flow of Indian Professionals in Southeast Asia examines the trends and challenges faced by skilled Indian migrants in Southeast Asia. This timely volume brings together current research on Indian ITC workers in Singapore, Malaysia, Indonesia, and Thailand and is grounded in intensive fieldwork in these countries. Their study builds on their prior work but also breaks new ground, providing insight into dissimilarities in Southeast Asian states’ guest worker programs and some relevant aspects of the policy regimes and contemporary issues. —Amarjit Kaur, University of New England, Australia

In an increasingly globalized world manifested in greater economic integration, human capital is an important factor. One of the key sources of human capital in the global economy is India, and the main destinations for Indian professionals have been developed Western economies, the Middle East and Gulf regions, and East and Southeast Asia. Southeast Asia as a region has close historical, social, and cultural links with India, and India has undertaken a number of initiatives under its “Look East” policy (LEP) to enhance ties with the Southeast Asian region. The Migration of Indian Human Capital examines the trends and motivations of human capital flows from India to this region. Focusing in particular on Malaysia, Singapore, Indonesia, and Thailand, the book provides an analysis of Indian labor in a variety of sectors, including information technology (IT), academia, banking, and oil and gas. Based on empirical data, the authors provide an analysis of current trends in the flow of human capital from India to Southeast Asia. This book will be of interest to policy-makers, business people, students, analysts, and academics in the field of Asian studies, foreign relations, human capital, and labor migration. Faizal bin Yahya is a Research Fellow with the Institute of Policy Studies, a research center at the Lee Kuan Yew School of Public Policy, National University of Singapore. His current research focuses on human capital, ethnic minorities, multiculturalism, and regional linkages in the Asian region. He is the author of Economic Cooperation Between Singapore and India (Routledge 2008). Arunajeet Kaur is a PhD student at the Australian National University, and a Research Associate at the Institute of Southeast Asian Studies, Singapore. Her research is on the Indian diaspora in Southeast Asia including Sikh identity, flow of professional Indian immigrants, and the political marginalization of Indian minority communities.

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The Migration of Indian Human Capital The ebb and flow of Indian professionals in Southeast Asia

Faizal bin Yahya and Arunajeet Kaur

First published 2011 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 270 Madison Avenue, New York, NY 10016 Routledge is an imprint of the Taylor & Francis Group, an informa business This edition published in the Taylor & Francis e-Library, 2011. To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk. © 2011 Faizal bin Yahya and Arunajeet Kaur The right of Faizal bin Yahya and Arunajeet Kaur to be identified as authors of this work has been asserted by them in accordance with the Copyright, Designs and Patent Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Yahya, Faizal, 1965– The migration of Indian human capital: the ebb and flow of Indian professionals in Southeast Asi /Faizal bin Yahya and Arunajeet Kaur. p. cm.— (Routledge studies in the growth economies of Asia; 101) Includes bibliographical references and index. 1. Human capital—India. 2. Labor mobility—Southeast Asia. 3. Foreign workers—Southeast Asia. 4. Southeast Asia—Emigration and immigration. I. Kaur, Arunajeet. II. Title. HD4904.7.Y34 2010 331.12′791—dc22 2010021284 ISBN 0-203-88627-5 Master e-book ISBN

ISBN 978–0–415–48108–3 (hbk) ISBN 978–0–203–88627–4 (ebk)

Contents



List of figures List of tables Acknowledgements List of abbreviations

1 Introduction

xi xii xiii xv 1

2 India: source country for human capital

17

3 The employment market in India

50

4 Country study: Indonesia

90

5 Country study: Malaysia

114

6 Country study: Singapore

147

7 Country study: Thailand

180

8 Conclusion

202



209 223 232

Notes Bibliography Index

Figures

2.1 2.2 3.1 3.2 3.3 3.4 3.5 4.1 4.2 4.3 4.4 5.1 5.2 5.3 5.4 5.5 6.1 6.2 6.3 6.4 6.5 6.6

Recruits at an Indian IT company in Hyderabad Author with human resource manager of a leading Indian IT firm Specialized bakery in India Specialized electronics shop in India Exclusive shops in shopping malls Shopping mall in Mumbai, Inorbit Shoppers at Inorbit Mall in Mumbai Pasar Baru Textile shops at Pasar Baru Indian shops at Pasar Baru Indian restaurant in Jakarta Author at Brickfields in Kuala Lumpur Indian enclave in Penang State in Malaysia Indian shops in Penang Indian enclave Brickfields in Kuala Lumpur Indian grocers at Brickfields Singapore’s Little India at Serangoon Road Mustafa Centre Indian expatriates shopping at the Mustafa Centre Indian calling card vendors outside the Mustafa Centre Various Indian restaurants Vegetarian Indian restaurant

24 28 52 52 55 57 58 94 94 96 103 117 123 123 127 127 148 149 150 151 152 153

Tables

1.1 Indian diaspora in selected Asia-Pacific countries, 2001 1.2 Destination countries for professional and skilled workers from India in Southeast Asia 1.3 Examples of global Indians 1.4 Top four remittances recipient countries, 2003–2008 2.1 Estimated total labor force in India, 2003–2009 2.2 Average daily wage in selected Indian industries,1993–2002 3.1 Salary increases as total budget costs for several countries in 2009 3.2 Regional trends for employment in India as percentage of total employment 5.1 Main sources of foreign workers in Malaysia, 2004 and 2006 5.2 Number and percentage of foreign workers in various sectors at end of 2005 5.3 Yearly average salaries of selected professionals in Malaysia, 2008 6.1 Overall score for countries’ competitiveness and innovation, 2009 7.1 Total number of foreign employees in newly established BOI-promoted operations, 1990–2002

10 11 13 14 18 23 53 54 116 118 128 159 186

Acknowledgements

Across five Asian countries and facing many obstacles and hours traveling, we thank Almighty God for keeping us safe from harm and for his many blessings. We would like to thank our parents (Faridah, Jasbir, Jagjeet and Yahya) and for the support from friends and colleagues. No research is possible without financial help, and the main funding for this book project came from the Ministry of Education in Singapore in the form of a research grant (R-123-000-010-112). Special mention needs to be made of the networking assistance of Singapore’s Ambassador at Large, Gopinath Pillai, the Singapore Economic and Development Board, International Enterprises Singapore, the Singapore Ministry of Manpower and the National University of Singapore. Our special thanks also go out to key individuals such as Mr. Umesh. N. Khanna in Indonesia, Mr. Madhu and Mr. Deepak Wadhwa in Malaysia, and Mr. Ashish Chauhan and Mr. Ravi Puri in Thailand. We would also like to thank the following institutions and people in the various countries studied.

India Ms. Sangeeta Sabharwal, Mr. D. Morada, Mr. Anup Singh Kalsy, Mr. S.K. Raghuram, Dr. Y.P. Rao, Mr. S C Bhatia, Mr. Sirhans Peshin, Mr. K.B. Suresh, Dr. C. M. Dwivedi, Mr. Jeetendra Nair, Mr. Ramdas Warrier, Mr. Rajiv Sharma, Mr. Pratik Roy, Mr. K. Manoj, Mr. Sharma, Mr. Sunil Chopra, Mr. Saroosh Dinshaw, Mr. Virendra Gupta, Ms Mercy Christina Solomon, Mr. S. Sudarsan, Mr. Ronen Kumar, Mr. G.S. Ramesh, Ms. Aarti Arvind, Mr. V. Jayanth, Ms Veena S.S. Manian, Mr. M.C.R. Praveen, Mr. N. Kumar, Ms. Hastha Krishnan, Mr. V. Subramaniam, Mr. K Karthikeyan, the Confederation of Indian Industries, Faculty Members of the Indian Institute of Technology Madras, Faculty Members of the Indian Institute of Technology Mumbai, and Faculty Members of the Indian Institute of Management.

Indonesia [FT]Mr. Simha, Mr. Shyam Rupachand Jethani, Mr. Shivaji Pandey, Mr. Pradeep Kilpady, Ms Pooja Bhatnagar, Mr. Muktesh Pardeshi, Mr. and Mrs Shiv Dave and

xiv   Acknowledgements family, Mr. and Mrs Rajat Sagar, Mr. Minesh Dave, Dr. Satish Mishra, Mr. Anil Panjwaani, Mr. Amol Titus, Gandhi Memorial School, the Indian Embassy in Jakarta, Jawaharlal Nehru Indian Cultural Centre, the India Club, Mr. Ravi Gosala, Mr. Rajesh Kaushik, and the Indian Embassy in Indonesia.

Malaysia Mr. Ross McKenzie, Ms. Saraswathy, Ms Kavitha, Mr. Suhas, Mr. Ravi, Mr. Raghavendra, Mr. Nagarajan Thanu, Mr. Hitesh Khanna, Mr. Basha, and the Global Indian International School in Kuala Lumpur.

Thailand Director, Principal and Teachers of Global Indian International School in Bangkok, Ms Tanvi Bapna, Mr. Nitin, Mr. Amarendra Narayan, Mr. Jay Stu Raj, Ms Sonia Boonchanasukit, and Mr. Amit Saini.

Singapore Mr. Suvir Loomba, Mr. Roger Olofsson, Mr. V. Nandakumar, Mr. Pradeep Menon, Mr. Mohan, Mr. Gaurav Keerthi, Mr. Sat Pal Khattar, Mr. Sanjeev Sanyal, Mr. Madanjit Singh, Mr. Prabhu, Mr. Bob Satnam, Mr. Srinath Kesavan, Mr. Rohit Ambekar, Mr. Gangesh Chawla, Mr. Akshar, Ms Shruti Shah, Mr. Mohammed Zafar Ali, Mr. Venkataraman, Ms Surabhi Madan. the Annalakshmi Temple of Fine Arts and Restaurant, the High Commission of India, the Ministry of Manpower, Contact Singapore, the India Club, the Singapore Indian Chambers of Commerce and Industry, and the Principal and teachers of the Global Indian International School in Singapore.

Abbreviations

ASEAN ATC BFS BN BOI BPO CECA CII ECAII EDB EP EPU ERC ESC FTA GDP GIIS GMS HR HRDF IIM IIT IKTA IMF INC IPO IT ITES ITIF JB JC JNICC

Asia and South East Asian Network air traffic controllers Beverage, Food and Service Barisan National (Party) Board of Investment business process outsourcing Comprehensive Economic Cooperation Agreement Confederation of Indian Industries Economic Association of Indonesia and India Economic and Development Board employment passes Economic Planning Unit Economic Review Committee Economic Strategies Committee free trade agreement gross domestic product Global Indian International School Gandhi Memorial School human resources Human Resource Development Fund Indian Institute of Management Indian Institute of Technology Izin Kerja Tenaga Asing (work permit) International Monetary Fund Integration and Naturalisation Champion initial public offering information technology information technology-enabled services Innovation, Technology and Innovation Foundation Johor Bahru Junior College Jawaharlal Nehru Indian Cultural Centre

xvi   Abbreviations KBE knowledge-based economy KITAP Kartu Izin Tetap (permanent stay visa) KL Kuala Lumpur LEP Look East Policy M&A mergers and acquisitions MBC Malaysian Biotechnology Corporation MIC Malaysian Indian Congress Party MM Minister Mentor MMU Multimedia University MNC multinational corporation MOAI Ministry of Overseas Indian Affairs MOM Ministry of Manpower MPI Migration Policy Institute MSC Multimedia Super Corridor M Tech Masters in Technology NEDP National Economic Development Plan NGO non-governmental organization NIE newly industrializing economy NIIT National Institute of Information Technology NRI non-resident Indian NS National Service OHQ overseas headquarters PBD Parvasi Bharatiya Divas PEP Personalised Employment Pass PIO people of Indian origin PPP purchasing power parity PR permanent resident RBI Reserve Bank of India RPTKA Rencana Penempatan Tenaga Kerja Asing (Expatriate Placement Plan) SARS severe acute respiratory syndrome SDF Skills Development Fund TICECA Thai-India Cultural and Economic Cooperation Association TiE The Indus Entrepreneurs TIISC Thailand Indian Internal Security Council TNC transnational company UAE United Arab Emirates WWW World Wildlife Fund

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

2   Introduction 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, wellqualified 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

Introduction   3 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

4   Introduction 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 knowledgebased 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

Introduction   5 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 ICT sectors. However, the High Level Commission Report on the Indian Diaspora, set up by the Indian government (2000), states the number of non-resident Indians (NRIs) in Singapore is 90,000. A preliminary analysis arrived at after conducting select interviews with Indian professionals as well as government officials reveals that the bulk of the Indian professionals exercising mobility in leaving India are of a typical profile. They are generally from the Indian middle class. Those opting for the Southeast Asian region are from largely Tier II cities24 in India (the professionals in Tier I cities prefer or accept opportunities in India or the USA). They arrive in Southeast Asia to fill middle level executive jobs ranging from ICT grunt work, such as coding, to consultancy. The professionals who are in demand are those who are fresh graduates or with one to two years of experience. But of valuable significance to this research project is that these “New Indians” largely operate within their own network in a circuit consisting of India, the USA, Australia, and Southeast Asia. This network caters for them by providing information on job placements, matrimonial services, and the creation of NRI virtual communities on the net. The Indian professional is also mobile within the circuit of countries mentioned, as he is primarily concerned with attaining the highest returns for the investment he has made in attaining the necessary qualifications. In this context, this book aims to answer the following main research questions: To what extent has the inflow of

6   Introduction Indian professionals impacted upon the Southeast Asian labor markets? Does the churn or turnover of skilled workers and professionals from India influence the labor market in Singapore and competing regional economies? What is the mindset of the migrating middle classes of India as India faces economic reforms and the onslaught of a media and technology revolution? It explores the global network of Indian professionals more extensively to understand the contemporary concept of transnationalism and cosmopolitanism that is emerging out of this recent Indian immigration. Does this study have the potential to suggest a unique model of transnationalism? In the Southeast Asian region, apart from Singapore, the trend of migrating Indian professionals and skilled workers is best observed in Indonesia, Malaysia, and Thailand. The Multimedia Super Corridor in Malaysia has attracted a number of Indian IT companies such as Polaris, HCL, Satyam, and Wipro. Thailand is also in the sights of large Indian companies such as the Aditya Birla Group and has signed a trade agreement with India. Study visits to these companies, as well as interviews with Malaysian and Thai authorities, were conducted to gather a larger picture of the migrating Indian professional and skilled workers in the Southeast Asian region. Aditya Birla entered the Indonesian market in the 1970s to establish chemical and textile plants. Another Indian company, Texmaco in Indonesia, was also instrumental in the recruitment of hundreds of Indian professionals to Indonesia. Since all four Southeast Asian countries mentioned have a significant number of settled Indians among their respective populations, the paths of Indian professional expatriates cross those of the settled Indians and this book will also discuss these interactions.

Theorizing the transnational While this book can be appropriately placed within migration literature, it straddles the domains of economic sociology, human resource development, organizational, and big business or transnational companies (TNCs). However, the book will mainly focus on the specific phenomenon of transnational migrants. The concept of transnational immigration refers to transmigrants as immigrants whose daily lives depend on multiple and constant interconnections across international boundaries. They are different from sojourners because they settle and become incorporated in the economy and political institutions, localities and patterns of daily life in the country where they reside.25 The concept of transnationalism is generally used to refer to the combination of attachment that migrants tend to develop to both the host and home society and also the country, and this is facilitated by increased communication and transportation systems.26 Presently, transmigrants are engaged in maintaining connections, building institutions, conducting transactions, and influencing local and national events in countries they reside. Therefore, transnational migration is the process by which immigrants forge and sustain simultaneous multi-stranded social relations which link their societies of origin and society of settlement.27 Transmigration has become a growing phenomenon for several reasons; the global restructuring of capital based on the vagaries

Introduction   7 of capital accumulation has led to the deterioration of social and economic conditions in source and destination countries. Racism and the political backlash in the United States and Europe have led to the insecurity of new immigrants and their children. The nation-building projects of both home and host countries aimed to create political loyalties among immigrants to each nation-state in which they maintain ties. According to Steven Vertovec, the process of transnationalism pertains to a significant and new category of contemporary migrants.28 In a post-Cold War world, the process of transmigration flows is painted against the broad canvas of globalization, marked by the decreasing influence of the nation-state and the growth of global cities which serve as hubs or nodes for human capital. Another key feature of transnational social formations is the structure or system of relationships known as networks. This has led to the creation of transnational social spaces as combinations of ties, positions in networks, and organizations that cross borders. These social spaces are dynamic in nature and not pegged to static notions of ties and positions.29 Transnational spaces encompass cultural, political, and economic processes and their accumulation. Transnational webs include relatively immobile persons and collectives as well as migrants and refugees who have settled for a considerable time outside their country of origin. These links can be formal or informal in nature. Transnational social spaces are created by various forms of resources or capital of spatially mobile and immobile persons, on the one hand, and the regulations imposed by nation-states, on the other.30 In examining the outward movement of transnational human capital from India, Steven Vertovec’s theory on migration31 is helpful because his analysis covers economics, politics, society, and culture. Economically, what is the pattern of global economic networks for human capital from India? Do they have a global political network, and what is the impact of host state policies on these networks? For example, state policies could provide amenities or infrastructure that could attract foreign human capital such as international schools. In the socio-cultural sense, would these transnationals form new social-cultural institutions or belong to existing ones? What about cultural reproduction and consumption? In this regard, it would be possible to accommodate a number of activities to examine the nature of the transnationals. Portes, Guarnizo, and Landolt had noted that a working typology based on this concept was designed to distinguish the economic initiatives, from the political and social-cultural ones. Economic initiatives could be manifested in the form of transnational entrepreneurs who mobilize contacts across borders in search of suppliers, capital, and markets. This is distinct from political institutions that influence the flow of transnationals. The third category encompasses socio-cultural enterprises that are oriented towards the reinforcement of national identity abroad or the collective enjoyment of cultural events and goods.32 Hypothetically, the book will argue that a fourth category of a new breed of Indian transnationals have evolved called the Global Indians. These Global Indians are distinct in that they have loyalties and ties across borders and consciously wish to remain connected to India despite spending most of their lives overseas.

8   Introduction Building on earlier academic works, this book examines the motivations of Indian human capital to become transnational migrants. Some of the presumed motivations include career development, savings, and personal experience. In a borderless global economy, the ready availability of air transportation, longdistance telecommunications, facsimile communication, electronic mail, the internet, and technological developments like the BlackBerry enable individuals to stay connected to each other 24/7. These technical innovations have enabled governments and major corporations to accelerate the process of transnationalism as they move their staff, finance, goods, and services across borders.33 The movement of human capital across borders has impacted on the effect of chain migration.34 This book will show that Indian professionals have a network of contacts overseas whom they access for information and assistance when they are about to accept a job or new assignment overseas. These social networks have developed into a framework in cyberspace such as discussion forums or chat groups of specific alumni from different tertiary institutions and year of graduation in India. According to Stephen Castles, networks also provide the basis for processes of adaptation and community formation. This is manifested by migrant groups developing their own social and economic infrastructure such as places of worship, associations, cafés, lawyers, and doctors.35 These transnational enterprises could also be divided into two categories: transnationalism from above and from below. Transnationalism activities from above are generated by multinational corporations or the states while transnationalism from below is the result of grass-roots initiatives by immigrants and their home country counterparts.36 Portes argued that the extent of discrimination and hostility faced by an immigrant group, including those who are transnational in character, affects the motivation for such a group to reside in the host countries.37 The lack of motivation will be reinforced if the host governments also do not welcome transnational migrants.38 This book will also examine government actions in the four Southeast Asian countries mentioned to evaluate which countries are the most receptive to Indian transnationals and which are the most wary. Portes has pointed out that governments of developing countries have benefited from transnationalism by creating specialized ministries or government departments.39 The rationale by the Indian government for creating a Ministry of Overseas Indian Affairs (MOAI)40 was that the MOIA should be the nodal ministry for all matters relating to overseas Indians. The mission of the MOIA is to “promote, nurture and sustain a mutually beneficial and symbiotic relationship between India and overseas Indians.”41 With the MOIA hosting annual events such as the Parvasi Bharata Divas (PBD), greater recognition for non-resident Indians (NRIs) and people of Indian origin (PIOs) indicates that the government has realized the value of transnationalism. India has realized that the flow of technology and capital from high-income countries to India via its NRIs are very complex and decentralized. For example, in high technology clusters in the United States, Indian-born employees have provided technical advice, knowledge, and marketing connections that have facilitated both the export of software services from India and investments in the

Introduction   9 IT sector in India.42 Overseas organizations administered by NRIs such as TiE (The Indus Entrepreneurs) have funded improvements and scholarships for their alma mater IITs in India. TiE has also collaborated with local IIT alumni associations to organize events such as Innovations 2007 as a platform for entrepreneurs to showcase their products already in the market.43 The TiE have their own branches in Southeast Asia and these form useful networks for their members to gather information about jobs or business opportunities in the region. For example, the TiE website in Singapore is: TiE Singapore ([email protected]).

Globalizing networks In factoring globalization into this book, the internationalization of the world economy and the economic integration of national economies also have to be considered. The increasing irrelevance of national borders because of the enlargement of markets across borders, especially in knowledge-based economies, is influencing the flows of human capital. Manuel Castells defines this as informational capitalism “in which the main source of productivity is the quantitative capacity to optimize the combination and use of factors of production on the basis of knowledge and information.”44 He defines a network society as one “whose social structure is made of networks powered by microelectronics-based information and communication technologies.”45 According to Castells, networks became the most efficient organizational form as a result of benefits accruing from the new technological environment in terms of flexibility,46 scalability, and survivability. Apart from social networks, most transnational migrants depend on intermediaries who handle the arrangements for work and accommodation in their host country. Examples of intermediaries include personnel offices of TNCs or multinational corporations (MNCs) that facilitate the transnational movement of their staff, recruitment agencies, educational institutions, and international networks of family and friends.47 Meijering and van Hoven have commented that these intermediaries function as migration channels by channeling information and resources.48 We have conducted interviews with intermediaries such as recruitment agencies and educational institutions concerning the flow of Indian human capital. In the text, our interview questions are indicated by the use of italics.

Scope of the study and some preliminary assumptions The major migration literature has classified international migration based on “push” and “pull” factors. The major drivers for human capital are presumably the demand and supply in various countries that include job creation and wage differentials, career and earning prospects, attractiveness of the education and research systems, the global R&D activities of companies, and the strategies of individuals seeking international experience. For the receiving or host economies, the main concern would be the “crowding out” effect of nationals from employment and educational opportunities. This is connected to transparency in terms of educational and employment opportunities. These questions become more acute

10   Introduction Table 1.1  Indian diaspora in selected Asia-Pacific countries, 2001 Countries

People of Indian origin (PIOs)

Non-resident Indian (NRIs)

Total PIOs and NRIs

% of country population

Myanmar

2,500,000

2,000

2,902,000

6.4

Malaysia

1,600,000

15,000

1,665,000

7.5

Fiji

336,579

250

336,829

39.9

Singapore

217,000

90,000

307,000

7.5

Australia

160,000

30,000

190,000

1.0

Source: Government of India (2006).

during times of economic downturns and recessions. This debate regarding foreign versus local has come to the fore, especially in Singapore. The main areas of grievances are employment, housing, and jobs. For tertiary educational institutions, the intake of foreign students has been capped at 20 percent since 2000 and the quota has been reached annually. Places in junior colleges, secondary, and primary schools have also become more competitive with the influx of foreign students. Table 1.1 shows the numbers and percentages of NRIs and PIOs in selected countries in the Asia Pacific region in 2001. The more advanced economies in Southeast Asia such as Malaysia and Singapore have experienced great changes since the 1960s as they became more integrated with the global economy. Together with the East Asian economies, the more advanced economies of Southeast Asia such as Indonesia, Malaysia, Singapore, and Thailand suffered economic catastrophe during the Asian Financial Crisis of 1998 and this caused the exodus of foreign talent, including those from India, who lost their jobs. The crisis exposed the weakness of the banking and financial sectors and external influences which could cause great harm to their respective national economies.49 While there were outflows of Indian professionals from Southeast Asia, some Indian professionals stayed or returned after the region recovered economically. The Southeast Asian region also went through significant political metamorphosis after the crisis, such as the democratization of Indonesia after the fall of President Suharto. In addition, the sudden acute respiratory symptoms (SARS) epidemic in 2003 also deterred Indian professionals from moving to Southeast Asia. Table 1.2 shows the possible negative and positive impact of professional and skilled workers from India on the sending country (India) and on receiving countries in Southeast Asia. Do skilled transnational immigrants displace skilled nationals? Will the global economic downturn affect immigrant flows? In a study by the Migration Policy Institute (MPI) for the European Union, the MPI commented, in the long run, the global downturn is likely to lead to economic restructuring in the EU and some types of migrants might not return. Second, a prolonged recession would break the flow channels of immigrants to new jobs and a longer recovery would be required before these chains were reestablished. Third, policymakers may become more hesitant to welcome foreign talent in the same way as

Introduction   11 Table 1.2 Destination countries for professional and skilled workers from India in Southeast Asia Sending/source country – India

Receiving/destination countries – Indonesia, Malaysia, Singapore, and Thailand

Positive impact

Positive impact

·    Knowledge flows and collaboration, return of natives with foreign education and financial capital ·    Remittances and venture capital from Diaspora networks ·    Successful overseas entrepreneurs bring back valuable management experience and access to global networks

·    Increased R&D and economic activity because of availability of foreign human capital ·    Entrepreneurship in high growth areas ·    Knowledge flows and collaboration with sending countries ·    Fostering diversity and creativity ·    Export opportunities for technology

Negative impact

Negative impact

·    Brain drain effect, the lack of local talent to sustain economic growth and development ·    Loss of returns of state funding for local talent in educational institutions

·    Decreased incentives for natives to seek higher skills in certain fields ·    Crowding out of natives from employment and educational opportunities ·    Friction between Indian transnationals and settled Indians ·    Lack of transparency – issues of loyalty and promotion of patronage system ·    Perception that locals are not as good – leading to the hiring of second string or third string foreign talent ·    Perception that locals are paid more ·    Foreign talent are paid more for same type of work than locals

Source: Adapted from “International Mobility of the Highly Skilled,” OECD Proceedings (2002).

before the economic downturn.50 Another trend that has influenced the flows of human capital in India is returning migrants, especially in the IT sector. Since the IT “bubble” burst in 2001, a growing number of Indian IT professionals have returned to India especially from the United States.51 India’s economic boom has offered returning professionals opportunities and lifestyles that did not exist in India until the 1990s.52 These included gated communities with amenities such as swimming pools, shopping malls filled with international brands, and international schools for their children.53 In 2000, it was estimated that some 1,500 highly qualified Indians had returned from the United States alone but more than 30 times that number leave each year.54 Nonetheless, the numbers of returning well-trained human capital increased to an estimated 30,000 technology professionals by the end of 2005.55 Some of the main attractions for Indian professionals included the narrowing lifestyle gap

12   Introduction between India and the West. The salary gap has also narrowed. In 2005, starting salaries for engineers in India was estimated at US$12,000 compared to US$60,000 in Silicon Valley. However, annual pay packages of US$500,000 are common in Bangalore even among those taking a pay cut to return to India.56 The impact of returning NRIs has had a direct impact on the Indian economy, especially in R&D. For example, according to the Society of Indian Automobile Manufacturing, by mid-2007, about 250 Indian expatriates had returned to work on R&D in domestic automobile companies such as Mahindra & Mahindra, Ashok Leyland, Tata Motors, and Hindustan Motors.57 Fresh challenges and an economically resurgent India are also important to NRIs heading back to work in India. Indian professionals who had fled an impoverished India governed by socialist ideals until the 1990s are returning as economic growth has expanded, partly fueled by US MNCs that have outsourced many of their high-level jobs. In developing India, executive salaries even for returning NRIs are enough to hire servants, chauffeurs, and purchase homes in exclusive areas.58 NRI executives have realized that the Indian market contains a unique value proposition for them in terms of personal and professional development.59 As the Indian economy expands, the NRIs feel that the Indian experience will add a lot of value to most global résumés. In this context, the main challenge for these NRIs is to re-establish or “start from scratch” relationships and social networks. The other is that in areas such as the internet and technology products industry the environment is less mature in India than, say, the USA, indicating that returning NRIs from the USA will be sought after for their expertise and knowledge.60 While these professional NRIs benefit on returning to India, they remain connected to their friends and business networks overseas and would probably send their children to be educated overseas as well. This has also opened the way for discussion regarding the emergence of Global Indians. Who are these Global Indians? In 2005, the BBC undertook a survey to profile the Global Indian. In the BBC survey, the Global Indians are those who have an international outlook, with progressive mind sets and influence. They travel to and from India and invest or work in India and overseas. At the personal level, the Economic Times of India argued that the Global Indians started to appear in the 1970s and 1980s as graduates of top technical universities in India who moved overseas in search of postgraduate degrees and stayed overseas to build successful careers. While the IT professionals led the way, the Global Indian has morphed into other fields and could be called a roving diaspora or Indian transnational.61 It could also be argued that as more Indian companies acquire foreign companies overseas, their professional staff that man the main company in India and their overseas acquisitions to ensure a successful merger are in a position to become Global Indians. Many Indian companies are creating specialized sections within their Human Resource (HR) departments to deal with issues related to immigration. The problems range from visa delays to acquiring vegetarian food.62 Western Europe, especially the United Kingdom, is popular, so is North America but the United States has tougher work permit regulations. Work permits are hard to obtain in the

Introduction   13 Table 1.3  Examples of global Indians Chief executives

Companies

NR Narayana Murthy

Infosys Tech

Ratan Tata

Tata Group

Mukesh Ambani

RIL

Nandan M Nilekani

Infosys Tech

Azem Premji

Wipro

Anil Ambani

Reliance ADAG

Vijay Mallya

UB Group

Sunil Mittal

Bharti Enterprises

K.V. Kamath

ICICI Bank

Kumar Mangalam Birla

AV Birla Group

Source: “LN Mittal leads list of most influential global Indians,” Economic Times, 23 March 2007.

Netherlands, Mexico, and Israel. Language is an issue in China, France, and Germany. Among the most difficult places to attract human capital to work are the non-Gulf Middle East, Central Africa, Eastern Europe, and South America. Southeast Asia has become popular especially Singapore but Malaysia has a history of cracking down on IT workers.63 Table 1.3 shows the expansion of Indian companies overseas and their Chief Executive Officers who could be categorized as Global Indians. In addition, a number of very influential Indians overseas such as steel magnate Lakshmi Mittal, Pepsi CEO India Nooyi, Nobel Laureate Amartya Sen, Ajay Banga of Citigroup, and Arun Sarin of Vodafone could be classified as Global Indians. These Global Indians who form the apex of the Indian diaspora should be viewed as a brain bank for the Indian government.64 Overall, the IT sector has directly created about 1 million jobs and indirectly generated an additional 3.5 million jobs but India needs to create millions of jobs. For example, more than 1 million applicants apply for jobs in the IT sector but less than 2 percent met the companies’ requirements. Kamal Nath, India’s Minister of Commerce and Industry, has said that India’s skills are in surplus but the challenge will be to ensure that the “level” of India’s human reservoir does not go down and this will be done through increased education and more training facilities.65 For those who failed to meet the job criteria and face lack of opportunities in India, their best choice is to move overseas. According to the World Bank, India is the world’s top receiver of remittances. In 2008, remittances to India were US$52 billion66 compared to US$17.4 billion in 2003. This was a significant increase compared to some US$52 billion in the late 1990s.67 Table 1.4 shows that India occupied a leading position for countries receiving the most remittances from 2003 to 2008. However, the World Bank has predicted that the flow of remittances to developing countries is expected to decline from

14   Introduction Table 1.4  Top four remittances recipient countries, 2003–2008 (US$ billion) Countries

Amount 2003

Amount 2005

Amount 2007

Amount 2008

India

17.4

21.7

27

52

China

4.6

21.3

25.7

40.6

14.6

18.1

25

26.3

7.9

11.6

17

18.6

Mexico Philippines

Sources: India Times, “NRI remittances tops in the world,” 18 November 2005 and “Remittances to India touch $52 billion,” The Financial Express., 15 July 2009, and Dilip Ratha, Sanket Mohapatra and Ani Silwal, “Outlook for Remittances Flows 2009–2011: Remittances expected to fall 7–10 percent in 2009,” Migration and Development Brief 10, World Bank, 13 July 2009.

US$328 billion to US$304 billion in 2009.68 The top destinations for Indian human capital are the English-speaking developed countries and the Middle East/ Gulf States.69 In 2007, increasing oil prices fueled a building and economic boom in the Arab economies. With more companies establishing themselves in the region, more foreign talent was being sought including those from India.70 Developed English-speaking economies like Australia welcome Indian talent. Indians are the third largest group of migrants to Australia behind the British and New Zealanders.71 Human capital from India often develops scientific and entrepreneurial networks sponsored at the local and institutional levels. The Indian government has contributed to the emergence of these networks through legislative and fiscal rules that foster remittances and investments from overseas Indians.72 For example, in 2004, India established the Ministry of Overseas Indian Affairs (MOIA) whose remit was the protection of emigrants. An Overseas Indian Workers Welfare Fund was established and the Department of Education reserved university places and scholarships for people of Indian origin and non-resident Indians.73 Social capital is an important component of these networks. The most important form of social capital is information channels. Although this book presents an argument that communications technology like the internet does influence the flow of Indian human capital from India to Southeast Asia, it is not so in all cases. For example, among students or semi-finished human capital, information channels74 are more rudimentary in the form of news by returning friends and relatives about foreign scholarship opportunities and scholarship advertisements applications placed in newspapers.

Structure of the book In the chapters that follow, we will examine the flow of Indian professionals and students to and from Southeast Asia. This introductory chapter has provided the background to the book and contextualized the problems and issues to be discussed. The key areas of research interests and the main questions have been highlighted. The study of the migration of Indians to the Southeast Asian region will focus on Indonesia, Malaysia, Singapore, and Thailand. The flows of Indians

Introduction   15 to Southeast Asia will be examined against the background of Indians moving to Western developed countries and the Middle East. The emergence of Southeast Asian countries as newly industrializing economies in the 1970s and 1980s is contrasted with the closed Indian economy in the same period. The economic liberalization of India in 1991 through reforms then established the momentum for India’s economic engagement with the region through its Look East Policy. India’s continued engagement with the Association of Southeast Asian Nations (ASEAN) has resulted in a free trade agreement with ASEAN. India has also signed bilateral free trade agreements with ASEAN member economies such as Singapore. Chapter 2 will examine India as the source country of outward-bound professionals. Some issues raised are the impact of the outflow of Indian human capital on the Indian economy and the global financial crisis of 2008. Interviews with recruitment companies and tertiary institutions in India were undertaken to establish trends for the outflow of Indian talent. The chapter also examines the movement of Indian talent from the South and links with Southeast Asia, especially in the IT sector. Chapter 3 examines the employment scene in India to discover the perspectives of employers regarding the outflow of Indian talent and how they are aiming to attract and retain their own talent. Several of the companies interviewed have altered their recruitment strategies such as hiring more people than required to build a buffer for increasing rates of labor attrition and recruiting from Tier II and III cities. The companies interviewed have leveraged more on their training capacity and expanded this aspect of their human resource departments to train recruits from less well-known colleges who are likely to be more appreciative of the investment made in training them and will stay loyal to the respective companies. Chapter 4 examines Indian professionals in Jakarta, Indonesia. Each of the four country chapters, including this chapter, will begin by establishing the historical, social and cultural links between the host countries and India. This approach will reveal the convergences and divergences of historical experiences among the four countries studied. Similar to Thailand, English is not commonly used in Indonesia and this initially created problems for Indian expatriates relocated in Jakarta. Jakarta also has a large number of settled Indians and we will examine the interaction between local and foreign Indians. This chapter will feature interviews with Indian professionals, and Indian institutions both foreign and local. Chapter 5 examines the flow of Indian professionals to Kuala Lumpur, Malaysia, and the government policies meant to regulate and manage this flow. Malaysia has ambitions to transform itself into a developed economy by 2020 and the evolution to a knowledge-based economy is crucial. In this context, the Multimedia Super Corridor plays an important role and India has the largest source of IT professionals in the world. In addition, with the largest number of ethnic Indians at 1.7 million among its population, how has this impacted on the recruitment of Indian professionals from India? What has been the level of interaction among local and foreign Indians? Given that there is no shortage of

16   Introduction graduates in Malaysia, the employment of foreign talent has become a politically divisive issue with local graduates unable to find employment. Chapter 6 will focus on Singapore and its need to recruit foreign talent because of declining fertility rates, the outflow of talented Singaporeans and the changing nature of the global economy. The chapter will examine governmental policies and position on recruiting foreign talent. The social and economic impact of recruiting foreign talent from India will be examined and this includes the interaction between local and foreign Indians. The motivations for Indian professionals moving to Singapore will be examined and whether they will reside in Singapore in the long run. We both were based in Singapore and undertook the most extensive interviews in Singapore. Chapter 7 examines Indian professionals in Bangkok, Thailand, and how they manage their work and lifestyles. Government policies to recruit foreign talent will be examined. In the context of Indian professionals, those with families who have relocated to Bangkok now have the option of an Indian education system for their kids in the form of the Global Indian International School (GIIS). However, given that English is not commonly used in Thailand, this has posed problems for Indian professionals. The interaction between local and foreign Indians will also be examined. The interviews in Thailand were fewer because of budgetary constraints. The second study visit to Bangkok did not go ahead as planned because of the political instability and the coup which removed Prime Minister Thaksin Shinawatra. Chapter 8 will conclude the book by providing a summation of the main points and key findings of the research. It will then provide possible future research on Indian transnationals in the Southeast Asian region. The approach and presentation of the book rely heavily on the extensive interviews conducted with highly skilled Indian migrants, their families, companies employing skilled Indians and recruitment agencies. In the places where we felt that the authenticity of the material was crucial to demonstrate the constraints, challenges and issues facing the migrant Indians, the interviews have been left in their “ad verbatim” original format.

2 India

Source country for human capital

The global economic downturn The global economic outlook towards the end of 2008 took a downward dip with the global financial crisis. India’s economic growth in the second quarter fell by 1.3 percent to 7.9 percent over the same period in 2007.1 According to Montek S. Ahluwalia, Deputy Chairman of India’s Planning Commission, India’s economic growth for 2008–2009 had moderated from 9 percent to between 7 percent and 7.5 percent due to the global financial crisis. He added, “Even if you take growth at 7 percent, it is 2 percent less than what we have had but still higher than what we had four years ago,” he added, “This is not an Indian crisis. We are being impacted by a global crisis.”2 Reportedly, the Indian economy was growing between 6 to 7 percent in 2009 amidst signs of a global economic recovery. In order to boost the domestic economy, the Reserve Bank of India (RBI) reduced the interest rate the RBI uses to inject short-term money into the banking system (repo rate) to 4.75 percent from 5 percent.3 In terms of employment outlook, the job market in India in the third quarter of 2008 was a mixture of caution and optimism. In mid-2009, India recorded a 6.7 percent economic growth rate,4 which was one of strongest growth globally apart for China. The aim of this chapter is to examine the influence of the Indian economy on the outflow of professionals and skilled workers. Furthermore, despite India rising, there is a constant outflow of talent from India, suggesting the inability of the domestic economy to absorb its talent, or other motivations that are driving Indian professionals overseas. One possibility could be increasing competition by returning NRIs or the IIT and IIM graduates who are taking all the best jobs in India. The employment prospects for the information technology (IT), information technology-enabled services (ITES), infrastructure development, manufacturing and engineering sectors remained buoyant while financial services and telecoms are projected to face a reverse swing in hiring activities.5 The IT and ITES companies are expected to increase recruitment, while financial services and telecom firms will reduce hiring. Entry-level recruitment has increased but hiring at the junior management level has seen a marginal decline. The International Monetary Fund (IMF) had forecast that India’s gross domestic product (GDP) growth would shrink to 6.9 percent in 2009. India’s estimated total labor force in 2009 is shown in Table 2.1.

18   India: source country Table 2.1  Estimated total labor force in India, 2003–2009 (millions) Year

Labor force

Rank

Change (%)

Date of information

2003

406,000,000

2

2004

472,000,000

2

16.26%

1999

2005

482,200,000

2

2.16%

2004 est.

2006

496,400,000

2

2.94%

2005 est.

2007

509,300,000

2

2.60%

2006 est.

2008

516,400,000

2

1.39%

2007 est.

2009

523,500,000

2

1.37%

2008 est.

2003

Source: CIA World Fact Book.

In mid-2009, we asked several recruitment agencies for their opinion on the movement of Indian professionals overseas because of the depressed global economic scenario. They replied that there were large movements of Indian professionals overseas to assume employment opportunities. The Gulf region has seen a mixed trend with many expatriates returning from the United Arab Emirates (UAE), especially Dubai. However, the labor attrition rates have been more stable in Saudi Arabia, Oman, and Bahrain. There is also less inclination for professionals to move to the United States and Europe but IT professionals are still venturing to those two regions. In terms of Africa, trends indicate that there is no significant slow-down in employment.6 The returning non-resident Indians (NRIs) have made a dramatic and immediate impact on sectors such as information technology. In April 2009, India’s own IT hub in Bangalore had some 1000 IT firms and 160,000 IT workers compared to 175,000 IT workers in Silicon Valley in the US.7 Salaries are becoming more comparable to firms in Western countries despite the increased cost of living in Indian cities. What is triggering the flow of NRIs from the developed economies back to India? While India’s economy is still coupled to the US economy, its own economy is more financially resilient than in the late 1990s with lower borrowing costs and healthier debt-equity ratios. India has accumulated reserves of US$295 billion and this would provide a cushion to overcome a pessimistic economic outlook. The recent fall in commodity prices could also reduce inflation and thus benefit the imports bill, leading to a positive impact on currency reserves.8 To stimulate its economic demand as a means to partly offset weaker exports, India could turn to its own expanding middle class and increased infrastructure spending. Among India’s middle class, personal disposable income has almost doubled since 2000 and consumer spending is increasing and could drive a demand-led growth cycle. The savings rate in India is nearly 35 percent of GDP and its investment rate stands at 35.9 percent of GDP. Could India retain its talent by expanding economic growth? In 2008, in order to sustain its economic growth, India doubled its investments in infrastructure development to US$475 billion until 2013 or about 8 percent of GDP a year.9

India: source country   19 However, in 2008, after the global financial crisis, investments in infrastructure projects were reduced to 4.6 percent of GDP and it was uncertain where the additional funding would come from.10 The Indian government also then ran a large budget deficit, roughly 4 percent of its GDP. In this context, the government is utilizing a portion of domestic savings and increasing the cost of capital. This has a negative impact on productive capacity.11 In Bangalore, the Silicon Valley of India, the competition for jobs became harder because returning IT workers from abroad had returned to India to look for employment. In 2007, it was estimated that some 60,000 professional NRIs have returned to India since 2002 and most of them have settled in the suburbs of Bangalore, Hyderabad and Delhi,12 where most MNCs have started their Indian operations. The returnees have also transformed several Indian cities including those mentioned because they normally live in exclusive gated communities.13 With the expansion of the IT sector, the salaries of those in the IT sector have risen significantly. An Indian professional told us that his daughter had graduated as an engineer and she was offered a job based on selection from a campus interview. However, the prevalent mindset among the young professionals in India is that the accepted norm is move on to a different job on a regular basis. For example, a fresh graduate may work in a company for one or one and half years and then switch employment to a company with a better salary package. The respondent confided that for his age, between 30 to 35 years, in the 1970s, a fourfigure salary was considered a “big deal.” In those days, in terms of arranged marriages, if the groom was earning a four- figure salary, then the marriage would surely take place but now only when arrangements talk about Lakhs (100,000 rupees = US$2,174) are they seriously considered. The diversity of India with 30 states indicates a segmented labor market. Post 1991, the countries in Southeast Asia such as Malaysia and Singapore sought to link up with India through ethnic ancestry. The British had brought thousands of Indians from South India to serve as low-level administrators in its civil service and to work in various plantations in Southeast Asia. As a result, thousands of Southern ethnic Indians are living in Malaysia and Singapore. In this regard, is Southern India the main recruitment region for companies in Southeast Asia? Are governments in Southeast Asia like Singapore leveraging on the southern Indian connection to enhance links with India?

Southern India The four Southern Indian states of Andhra Pradesh, Kerala, Karnataka, and Tamil Nadu were especially important as sources of foreign talent for countries in Southeast Asia. ASEAN states like Malaysia and Singapore have large numbers of ethnic Southern Indians among their respective populations. Due to the social and historical ties, Singapore had initially employed a “Southern” strategy when it began to invest in India on a large scale.14 Tamil Nadu produces about 75,000 engineering graduates a year and Andhra Pradesh produces another 90,000. Together, the four southern Indian states produce about 200,000 engineers per

20   India: source country year.15 Despite the stiff competition for employment, there seems to be shortages of available talent in southern India. To facilitate the recruitment process, one of India’s revered national newspapers organized Job Fairs every year which attract some 40,000 people. The Job Fairs are located in five different areas in Tamil Nadu and about 30 to 40 companies are invited to each of the fairs. In terms of employment trends in the South, two seem to stand out. First, graduates who have completed their undergraduate degrees and moving abroad for higher education. The main reason is that if they are from an upper caste, it will be harder to attain postgraduate places because of the caste reservation policies.16 In the IITs and IIMs, about 27 percent of the places are reserved for the lower and scheduled castes. Despite opposition and the government’s decision to increase places by 50 percent, the 27 percent reservation policy still holds. The main impediment besides funding for the expansion of the IITs and IIMs was the shortage of quality Faculty members required to teach in these famed institutes. The second is the reverse brain drain that is bringing NRIs back to work in India. For example, numerous NRIs working with MNCs abroad are returning to India to start subsidiaries or the Indian arm of their MNCs. Both the NRIs and MNCs benefit from this reverse brain drain. The MNCs have managed to reduce their wage bill by paying their Indian staff rupees 30,000–40,000 (US$652–870) per month instead of US$3000–4000 per month. For the NRI, the chance to move back to India especially if they have young children is appealing, with additional perks like housing and education for their children included in the package.17 In terms of range, the upper middle class would have monthly salaries of around rupees 100,000 (US$2174), the middle class about rupees 50,000 (US$1087) and the lower middle class about rupees 20,000–50,000 (US$435–1087). Whole communities of these NRIs have emerged in the southern half and metro cities of India and usually live in gated communities. In these gated communities they can have an American lifestyle in India with all the amenities. The following section examines the factors which influence the talent flows in India such as the education system and economic cycles in India.

Talent flows What is the motivation for an Indian professional to stay or move overseas? A banker in India explained to us that because of the “IT boom,” the IT professionals are handsomely paid and the real estate market has “skyrocketed” in India. The IT professionals are being paid rupees 100,000 (US$2223) per month and they are prepared to pay rupees 50,000 (US$1112) a month for installments on housing and car loans. For example, an engineer will be paid rupees 80,000 (US$1778) per month at Reliance Corporation. However, while the wage levels have definitely increased, they are also related to individual performance. Some Indian professionals have been dreaming of overseas posting. The Indian banker said: “Most of the NRIs in the higher income bracket, creamy layer are always going for wealth management.” The Indian elites with surplus cash are purchasing property and shares to multiply their wealth. His bank has a large presence in

India: source country   21 Africa to serve the Indian diaspora. He believes in the huge potential in Africa but it is not being exploited. For example, in the UAE in the 1970s, the influx of NRIs to Middle East was very great but now it has stagnated. He said: “Since salaries are stabilizing, there are no incentives.”18 There are several streams of talent flows in relation to India. One of the main talent flows is direct recruitment at source from the various colleges and or companies. The other main talent flow concerns the NRIs who have worked overseas for between five and 15 years. As India has progressed economically and been able to offer a lifestyle that the NRIs have become accustomed to, the trickle of NRIs returning to India has steadily increased. The flow of NRIs moving back to India is encompassed within a larger debate about the circulation and recirculation of Indian talent in the global economy. The main drivers of the circulation of talent would include transnational entrepreneurs and scientific/academic networks.19 For example, the emergence of similar “silicon valleys” worldwide copied from the original Silicon Valley in California has circulated immigrants who have brought back valuable skills and experiences to sending economies like India. Some of the more successful Indian entrepreneurs, having acquired wealth and expertise in the US, have returned to India to establish start-ups and venture capital funds. Established diaspora networks promote active circulation of scientists who assist the sending economy. The sending country in networking with its intellectual and scientific diasporas could also mobilize their resources while they are still abroad for home country development. What are the factors driving the return of the NRIs? With increasing numbers of MNCs locating subsidiaries or opening branches in India, NRIs offer a competitive blend of having the experience, expertise of the global market and the cultural understanding of the Indian market to succeed. However, the actual conditions in the field suggested that a significant number of NRIs will face difficulties settling back in India. For the married NRIs with children, they face competition in terms of schooling for their children, adjustment for their spouses and their ability to establish a new network in India. At least one NRI who was interviewed, who works in a senior position in the banking sector in Mumbai, confided that he faced problems in placing his children in “good” private schools, living costs in Mumbai were very expensive especially for housing, and that the “new” India is a very different place from the one he understood when he left as a bachelor. This returning banker NRI also lamented that he should have returned to India in 2005 when the demand for NRIs were much greater and they secured better terms than in 2007. Many companies established relocation programs during the initial phase of the returnees’ re-entry back to India. Professionally, the NRIs face challenges in terms of work culture, approach to time management, the need to deal with ambiguity, various levels of formality and leadership styles in India. The longer they have been away, the harder will it be for NRIs to re-enter the Indian market economy.20 The India they know as conservative is gone and their peers have also moved on in their careers. Those NRIs who fail to adjust and lose patience with the Indian system will then seek alternatives outside India again. In this regard, economies

22   India: source country like Singapore that are keen to attract foreign talent from India will provide an attractive alternative. As recognition of the importance of NRIs, the Indian government has established the Ministry of Overseas Indians and hosts the Pravasi Bharatiya Divas (PBD) on an annual basis. The main objective of the Ministry is to connect India with its diaspora.21 How important is the Southeast Asian region to the Indian government? A mini-PBD was organized for the first time outside of India in Singapore from 9 to 11 October 2008.22 While countries in Southeast Asia are looking to attract Indian talent, they are also aware that there are varying standards of talent due to the non-uniform quality of tertiary institutions in India.

Spending on human capital India is recognized as a labor surplus economy and human resources are an important component of economic development and competitiveness. In 2008, approximately 63.3 percent of the population was between 15 and 64 years of age.23 However, India’s investment in human capital remains weak relative to the needs of a growing economy.24 By the end of 2006, the job market for India’s 11 million students in 18,000 colleges had polarized. At one end of the spectrum are India’s elite colleges such as the Indian Institutes of Technology (IITs) and the Indian Institutes of Management (IIMs).25 These elite institutions only admit several thousand students every year. At the other end of the spectrum, most of India’s millions of students received inferior training that are heavy on discipline and rote leaning and lean on useful job skills.26 The difference in pay is that those from the elite colleges expect a pay of around US$300 per day, while those from the inferior colleges will receive about US$2 per day. The ITES sector created about a million jobs in 2007 and even if the manufacturing and other services sectors such as pharmaceuticals created another 2 million jobs, this would not even provide a quarter of employment opportunities for India’s annual graduates. Table 2.2 shows that the best average paying jobs in the services sectors paid at the most US$8 per hour in 2002. In 2006, the majority of India’s graduates without indemand skills are expected to go into the sales line such as selling phone cards with average starting salaries of US$2 to 4 per day.27 With the huge gap in wages and the shortage of employment opportunities, this suggests that the majority of these not in-demand graduates would readily seek employment opportunities abroad. Regions such as Southeast Asia may benefit from this outflow. Demographically, India’s huge pool of young talent indicates a potential source of human capital for India and the global economy. However, although India produces 300,000 to 400,000 engineers in 2008, as many as 10 to 25 percent of them are not employable as they lack the related skills needed in companies. Figure 2.1 shows one of the authors at a training seminar for IT recruits at an Indian IT company in Hyderabad. The following section examines the views of faculty members from the elite IITs and IIMs on the demand for their graduates in India and the outflow of talent from India.

India: source country   23 Table 2.2 Average daily wage in selected Indian industries, 1993–2002 (US$) Sector

Daily wage (US$) (1993–2002)

Manufacturing sector Petroleum refineries

5.14

Chemicals and gases

2.12

Fertilizers

2.9

Drugs and medicines

2.4

Soap

2.4

Cements

2.9

Iron and steel

3.3

Machine tools

2.2

Electrical industrial machinery

2

Ship building

2.9

Motor vehicles

1.8

Mining sector

Daily wage US$ (1993–2002)

Iron ore mines

2.8

Service sector

Daily wage US$ (2002– )

Electrical generation

6.2

Railways

5.3

Public motor transport

5

Ports and docks

7.8

Source: Occupational Wage Surveys, Labour Bureau, Government of India.

IITs and IIMs: sources of top Indian talent We interviewed two faculty members at IIT Madras, in Chennai, India, on 18 December 2006. The aim of the interview was to discover the competitive nature of placements in the IIT and the alternatives available for students as semifinished human capital such as moving overseas on scholarships. We began by asking what the process of selection at the IITs is. According to the faculty members at IIT Madras, the IIT admission process is very streamlined and time-tested and they received the “cream” of the students from the Indian population. They added, the process of selection is very rigorous and annually at least 200,000 students will sit the IIT entrance examinations but less than 3000 are selected and there were approximately 500 students in each IIT28 (before the establishment of new IITs in 2007). What is the typical profile of an IIT student? The IIT faculty members stated that these students are very focused from the beginning because they have a certain objective or target in mind. For example, by the time they are in their third year, they have already decided whether they would go abroad for higher education or accept employment in reputable firms. Approximately how

24   India: source country

Figure 2.1  Recruits at an Indian IT company in Hyderabad.

many students move overseas? Until the early 2000, some 60–65 percent of undergraduates would move overseas and among the postgraduates about 40–45 percent. The percentage for postgraduates are lower because they have the option of pursuing their MBAs at the Indian Institutes of Management (IIMs) and thereafter they will be in great demand in the private sector. The entrance examinations for the IIMs are just as tough with almost six months for preparations for the CAT examinations.29 The faculty members commented that from the 1960s to 1990s it was the “motto” to go overseas because India was completely in internal disarray which limited the opportunities for its “best and brightest.” A strong argument for the export of Indian talent was that it was better to have a brain drain instead of brain in the drain as Indian industry was not ready to absorb the employment. However, since the late 1990s, NRIs have returned to India and India has become a brain bank. For example, several of their IIT colleagues had decided to return to India. What is the process of recruitment for IIT graduates? They disclosed that during the Placement Week which is undertaken every December for the outgoing batch of graduates in the following May, recruitment was strong. The Placement Week takes six months of planning and faculty members have to decide which companies come on Day One and Day Two. The recruiting companies prefer the earliest possible slots but the IITs can influence which slots are allocated and the kind of salaries companies

India: source country   25 intend to offer. An alternative will be to charge the companies a registration fee which the IIMs have already implemented. The students who attend these company interviews during the Placement Week are subsequently short - listed and by the end of the week, all students will have found employment. What are some of the criteria students use to decide which company they ought to join? Normally, the students look at the brand image of the company and “perks” (company benefits). For example, a well-known US new company and a famous US manufacturing company have placed their recruits abroad for employment exposure for up to 8 weeks. The average annual salary being offered is around rupees 600,000 rupees (US$13,334). How do students adjust to these high salaries? The faculty members replied that their students are able to adjust to this and manage their own finances. What is the attitude of a typical IIT student? The students are serious when they talk business and this includes the student and teacher relationship. What role do the IIT alumni play in the development of the IITs? With regard to keeping track, they have a very strong alumnus and the IITs update their information through networking. The alumni contribute in various ways to their alma maters by spending time at the respective IITs and giving guest lectures. What about financial assistance? The alumni also give money and establish donations, for example, the ladies’ hostel at IIT Madras was built with overseas funding. The School of Management at IIT Mumbai is being funded by its alumni. The School of Management at IIT Kharagpur is also being funded by its alumnus such as Vinod Gupta. In addition, there are several alumni who are connected to universities overseas and they try to establish MOUs with their respective IITs. How does this work? The process is two-way, involving the exchange of faculty members on both sides to give lectures in the other’s institution. This created a regular back and forth in almost all faculties. There is also the faculty exchange and communications network and fellowship programs as well as the Fullbright Fellowship program. Moreover, there is a distinguished alumni award for the alumni. In 2005, IIT Madras started a five-year integrated program for both the Bachelors and Master’s degrees plus research. What happens to the IIM graduates? Some graduates get into the IIMs and thereafter receive very good offers and their careers can take off in India. Alternatively, the other 50 percent will head overseas for further education and then get job placements over there. Wide media coverage had been given to the team work among Indian student elites, how does the IIT foster the team spirit among its graduates? The interviewees shared that some are very good team players and during the last week of each term there is a cultural program called Sarang, in which other colleges also participate. What does the future hold for the IITs? The IITs are an ISO certified association and they function like a corporation and not like a school. They said: “Till now we have not had any attitude problems and we can approach the Director.” What would happen to the IITs given the news that more IITs will be established? Expansion can’t be done overnight because of the difficulty of recruiting good faculty members. Every two years, a high level committee from the various IITs goes to the US and tries to persuade their older batches of alumni

26   India: source country to come back as faculty members. Besides the IITs, what other sources of good technical graduates are available? Besides the IITs, the second layer institutions like the National Institutes of Information Technology (NIITs) and several statelevel universities as well as private sector tertiary institutions are also producing varying but good quality technical graduates. For example, a report published indicated that employers cannot distinguish between the first 2000 and the next 6000 candidates of good technical colleges. The differences in ranking are based on fraction of percentages and because each individual is given a second chance to sit for the IIT entrance exam, some do sit the examinations again and are accepted into the IITs. How will the implementation of caste quotas affect the IITs? The implementation of the caste quotas need not necessarily dilute academic standards because there are students in that category who can do well. The motivation for IIT graduates to move overseas is decreasing and more are choosing to remain in India. The future of the IIT and its legacy as a branded institution appears to be under threat as more IIT colleges are established but a growing difficulty is how to hire good faculty members. Moreover, the imposition of the caste quota on the student intake is challenging the principles of merit for entry into the prestigious IITs. The next section examines the perspective of an IIM faculty member from the Lucknow campus. This interview was undertaken in Delhi on 6 January 2007. We asked what the typical profile of students who enroll at IIMs was. Typically, they are students who come after college and a small number of students who join after two to three years of work experience, and on average they are 21 and 22 years of age.30 Generally the MBA is similar among the six IIMs but IIM Ahmedabad has started an executive MBAs and so has IIM Noida. The IIM faculty member explained that finance and marketing was where the students usually take up the elective modules because of market demands. Although the programs are similar across the six IIMs, there are also differences. For example, IIM Ahmedabad and IIM Lucknow have focused on agriculture but IIM Bangalore might have more focus on IT because of the IT companies clustered in Bangalore.31 However, it was not an aim that the IIM institution needs to have a niche area. What are the entry requirements? The main requirement is the CAT examination which is quantitative but also has an analytical component. While students from the Arts and Social Sciences do apply, the engineers have the advantage because of their educational background. The ideal expertise combination is engineering and management. How did the IIMs manage to achieve global branding? The IIMs have maintained a high standard in terms of teaching and strong links with industry. The IIMs admit the “cream” of the best students who have consistently performed at 99 percent across all types of assessments. There is practical orientation. However, there is a quota assigned to the lower classes and every IIM is required to take 27 percent of lower classes. The intake is increasing and the average class size has 60 to 65 students. What about the alumni, as this would demonstrate the extent of social capital available to the individual? The IIM alumni are strong and are always having extravagant functions in locations like Goa. What are their networking abilities?

India: source country   27 They keep in touch and they do meet and they also have started thinking in terms of the long-term development of their institute. While the IIMs are reputable, such institutions are known for their research and the IIM do not invest enough in research. This is because emphasis has been placed on teaching which is important but a lot more has to be done in terms of publications. What about the recruitment of faculty members? The recruitment of faculty is a big problem. Although academia is a respected profession but in terms of remunerations, it pales besides the private sector with “sky rocketing” salaries especially in areas like computing and IT. The IIMs are constantly looking for new faculty but they are also competing with private institutions that have opened up recently and pay their staff very well. Until 2005, Indian human capital was moving overseas but now there are many opportunities in India so that Indian talent is staying there. Moreover, India is a great place to live if you are financially secure. How do the students secure employment? There is an established recruitment process in the IIMs. There is a placement committee and two windows for hiring companies, one is the summer placement and the second is final or end of year placement. Companies who come to IIM pay a recruitment charge about a lakh (Rs 100,000, US$2223) to recruit a student. The IIMs also receive remunerations or perks for students. There are also companies that give a pre-placement talk. A lot of companies make presentations and students also go to these companies. It is a very vibrant environment with selected companies that are doing well and the companies can afford the salaries. The IIMs have a placement week and all the companies compete to bid for the earliest time slots. The process of selection includes interviews, group discussions and psychological tests. For most of these students, their decision is based on the name of the company and the salary. They are less concerned about exposure, work environment and portfolio. The huge pressure to get into a brand company is there. The attrition rate is high but they are straight out of college and they feel they don’t know what they are looking for. The average salary is about 10–12 lakhs (rupees 100,000, US$2223 to 266,667) a year. However, IIM Ahmedabad has the highest salary offered at 35 lakhs (rupees 3,500,000 (US$777,778). Nonetheless, salaries will stabilize but these high salaries are not for the majority. But the salary is actually cost to company. Sadly, loyalty is no longer a factor in job placement and staying on. People are leaving the public sector even at senior levels to join the private sector. Many have joined big businesses like Reliance. For example, in the Armed Forces, many are leaving the Armed Forces, the IIMs has designed six-month courses for uniformed personnel to join the corporate world. Similar to the IITs, the IIMs have the problem of recruiting good faculty staff. While the IIM students are still in high demand, increasingly they are opting to start their careers in India. Unlike the IITs, the IIMs charge a placement fee for every student recruited by companies during placement week. The reserve quota for the lower and scheduled castes will have an impact on the IIM brand. The following section examines how recruitment agencies attract and process Indian professionals for overseas recruitment. We interviewed several recruitment agencies in Chennai, Mumbai and Delhi.

28   India: source country

Figure 2.2  Author with human resource manager of a leading Indian IT firm.

Recruitment agencies were an important source of information on employment trends both locally in India and in the overseas market. Interviews with them revealed the preferences of the individuals as well as the factors and constraints that compelled the individual to gain employment overseas or to remain in India. Figure 2.2 shows one of the authors with a human resource manager at a leading Indian IT campus in Hyderabad.

Recruitment agencies Recruitment Company A We started by asking the recruitment agents, what are the major employment trends in India? The recruiters responded by saying the difficulty in recruitment is at the junior and middle management level because there are now more opportunities in India. In addition, in terms of wage differentials, the wages in India in terms of purchasing power parity (PPP) is not much different from those in Singapore.32 In specific niche areas like banking, companies like Citibank want to hire and they will be able to attract talent. Comparatively, if an unknown Singapore company is also seeking to employ in banking and finance but their salaries are not that attractive, then they will lose out to firms like Citibank. For well-known MNCs in good niche areas like finance and IT, vacancies for any

India: source country   29 specialist options at a fairly senior level would attract attention. When compared to the early 2000, there are more opportunities in India and the lifestyle has improved tremendously. In terms of geographical proximity, Singapore is nearer to Chennai than Delhi and this works to Singapore’s advantage. What are the average trends/rates of labor attrition? The rate of attrition varies from sector to sector. Moreover, it also varies between salary levels, for example, at the junior levels it may be different compared to the middle and senior levels. For example, in the BPO it can be as high as 40–50 percent and among IT companies at the junior level it could be as high as 20–25 percent. The manufacturing sector has lower attrition rates in the single digit range compared to the IT sector. Is the rate of attrition higher in bigger or smaller companies? IT companies would have higher attrition rates but in smaller IT companies with niche areas like product development the attrition rates might be lower. Why are attrition rates in manufacturing lower? There are more opportunities in IT compared to manufacturing. Since the beginning of 2005, more companies have been established in Chennai. The manufacturing hubs are expanding and existing companies like Ashok Leyland are also recruiting. Moreover, other car companies like Hyundai and Ford are present, not to mention the auto ancillaries. Does the size of the recruiting company matter to potential recruits? Huge companies like Infosys might be growing at 10–15 percent but smaller ventures might be enjoying greater growth rates. The scale of operations is important, in a company of 200 to 250 people, the growth might be much higher than in a 30,000– 40,000 staff company like Infosys. The type of recruitment also matters because in R&D centers, an American software organization might be employing only 1,500 people but will be doing very high-end work with high salaries and low attrition. However, lower-end IT companies that provide services might experience higher rates of attrition. Are the smaller companies losing a higher number of people because they have a smaller scale of operations and are they likely to be acquired by bigger companies? Branding of the company, does it help in retaining talent? According to the recruiters, in 2005, in the context of Chennai, if “I were to talk about an MNC brand company he would be terribly excited, today the excitement is not there because there are too many MNC brands.”33 In 2007, there are more important issues such as compensation, job scope, on-site opportunities, growth opportunities, proximity to work and work culture among others. Increasingly recruits are more selective about brands, roles and career prospects. Are potential recruits concerned about prospects of career development considering the high rate of labor turnover? Any potential recruit with more than three years of work experience will emphasize career prospects. Which option is more attractive to potential recruits? How would job candidates compare an overseas posting or a job in India with an MNC? Until early 2000, there was a craze for the US for consulting assignments during the phenomenon of “body shopping.” In those days, the mentality was, if recruits had an opportunity for a direct on-site assignment, they would be really interested, provided the money was suitable. They did not think too much about the brand but that changed in 2006. In 2006, if a potential recruit works in a branded company in India, he will

30   India: source country not be attracted to an unknown entity in the US because they will receive opportunities to go on-site with their branded companies. The Beverage, Food and Service (BFS) sector has the highest job offer rejection rates. The final number of recruits who joined our clients was less than 50 percent. Potential recruits examine various factors such as how enriching is the work experience because the experience from finance to consulting is different and the learning potential is great. People working for an MNC in India have experience of Indian regulations and the American way of doing things. They also get opportunities to travel back and forth from India and the US and the salary is good. Moreover, they are able to be with their families. Is foreign experience valuable to recruiting companies? Recruits don’t regard foreign experience as any more valuable than local experience. Initially, moving overseas followed a sense of adventure but the adventurism spirit has waned and now only a minority crave adventure overseas, whereas it used to be at least 40–50 percent recruits wanted to try on-site experience, and even the IIM and IIT graduates prefer jobs in India. The trend in 2006 seems to be “get inducted into an MNC here and you still get to travel and those stints are fairly long, could be anywhere between three months to a year with frequent travel. They are comfortable with that rather than you go away for two years and then you come back once in those two years.”34 MNCs are now trying to make workers spend time with their families and take holidays and are even paying for their holidays. There are also work from home schemes, for example, work for an hour or two in office or you don’t have to go to office except for a few times in a week and this saves time on commuting. Has your company managed to place any skilled labor in East Asia? Until the end of 2006, the recruiters have done some but not huge placements in Singapore but not for Singapore-based clients. For example, there were some clients in West Africa or the UK that recruited people for their Singapore office. However, in general, the recruitment company does not have transactions with Singapore but focuses on the Gulf and West African markets. What are the reasons for rejection in not moving out to Singapore? Singapore is an attractive destination for South Indians. For example, if someone from Chennai is offered Saudi Arabia or Singapore, he will definitely choose Singapore. This is because of Singapore’s proximity to India and cultural similarities but cost is a growing factor. Singapore is one of the world’s most expensive cities and this would impact on their savings potential. What about job security? Most recruits feel that if it is a known brand, then it is safer, especially if they are well known in India. Job seekers will be inclined to look at an opportunity if it comes from a known company. Which are the most popular destinations for Indians? They mostly aim for the Gulf, West Africa, and the US. In the US the opportunity is more for IT while for finance is more for West Africa. The US is a harder market to get into because Indian MBAs and medical degrees are not recognized in the US. What is the percentage of local recruitment placements compared to foreign placements? In general, in 2006, across the board, 60 percent of applicants chose domestic jobs and 40 percent foreign went overseas. In 2004, it was 60 percent for foreign jobs

India: source country   31 and 40 percent for domestic jobs. Of the foreign component, the West African and Gulf States take up 30–35 percent. For West Africa, the demand is for finance, sales and marketing, operations, commercial, technical people, and expertise in plastics and rubber. In the Gulf States, the in-demand sectors are construction, banking, IT, and trading. Are there returning Indian professionals? There is an increasing trend of returning NRIs and they are coming back to India for various reasons. First, for family reasons such as their parents are aging and they want their own children to grow up in Indian culture. Second, for employment opportunities, since 2004, a lot of R&D companies have moved to India so there are equal opportunities in India available. For example, in the IT sector, Oracle and Microsoft have established R&D centers in India. Is it easier to place locally or overseas? The recruiters said that comparatively, the “gestation” period is longer for overseas assignments and our staff have to be very sure if they choose a candidate. As a “rule of thumb” if the recruitment process is longer than two weeks the candidate might not be interested in the overseas job. Usually, the job placement is faster for local jobs. Moreover, the company adopts proactive strategies such as keeping in touch with people in finance, HR and marketing. They also have a referral network, and a validation check could be carried out on candidates and it would take about two weeks to confirm. The networking system includes their former recruits and as a goodwill gesture they will seek references from them. These guys, if they are well placed, will refer only competent potential candidates and over time their network keeps growing. The process is slow and systematic and does not occur overnight. Sometimes the company has to advertise because it could be a turnkey assignment and the clients need engineers, technical and finance people. If there are only a few positions available, their recruitment agency can usually cope but they will undertake an “All India” advertising campaign if they don’t have suitable candidates available. Are the pools of talent and competition adequate in Tamil Nadu? The usual stereotypes are that the southern graduates are good in numbers (academics) and the northern ones are more entrepreneurial. This is generally true but things are also changing. How many of the recent college graduates are ready to take up offers in the corporate world? The academic institutions and private sector are collaborating to determine how graduates could be more corporate ready. There is a gap between what colleges produce and what industry can hire. Through experience, there is possibility of graduates faring poorly in communication skills. The colleges are of varying standards and they are located in tier I, II and III cities. There is a definite shortage of quality talent with good analytical, communication and soft skills. An engineering graduate or those in the technical field will be easier to place. The job recruitment field is very competitive and their company has five branches throughout India in the metro cities. What are the trends on intra-state mobility and placement? Where do the job candidates originate from? Normally, job candidates are likely to move across states and to different cities depending on the available opportunities. Generally candidates are more mobile today and need to be because the big companies have

32   India: source country operations throughout India, for example, a company may have a presence in Bangalore but its head office is in Delhi. The metro cities are becoming more cosmopolitan and southern India is growing at a frantic pace. The travel facilities have also improved and people travel over weekends. With increasing opportunities in all metro cities, every weekend people working in other cities can come back home. What about poaching? It will continue to be a problem. If the demand is exceedingly high, it will be there but there are some agreements in airlines and telecoms companies not to poach each other’s staff. This is because it is very disruptive for the sector, given the time taken for training and to settle down into a routine. Usually employers try to make their employees feel comfortable and provide bonuses, holidays, and overseas assignments. Is that good or bad for your recruitment agency? With greater economic expansion and churn, opportunities do increase for recruitment agencies but there are also more challenges. In 2006, the recruitment firm experienced good business and they don’t have to pitch aggressively for business. For example, for the IT and BFS sectors, the IT professional with seven to eight years experience and looking for a change, can accumulate as many as seven to eight job offers. The BPO sector for a time experienced a boom with more lucrative jobs coming in, and low-end jobs moving to the Philippines, Africa and Eastern Europe, and it was becoming more cost effective and with technology you can integrate. Recruitment Company A have clients in the US who want to move their back office work to an Indian company and the Indian company could distribute the jobs throughout India or to third countries. Typically, the high-end work resides in India and lower-end work will move “elsewhere” but they are then integrated back in India. Indian companies are also establishing outsourcing centers overseas to compete for business and to be cost competitive. Recruitment Company A deals with different types of clients depending on the demand of their economies and the operating processes in the different economies are varied. In 2007, there seems to be an equal mixture of international and local clients35 but the skew is more towards international rather than local. The highest numbers of job placements are in Africa followed by the Middle East and a very small portion in Southeast Asia and Russia. The company undertakes only senior level positions, such as General Manager and Head of Business. Usually financial expertise is in major demand because CEOs view finance as one of the most critical posts in their organizations. Due to the demand in this profession, there is a shift of graduates moving into the financial sector. The major recruitment demands are from countries like Nigeria, Tanzania, Ghana, Ethiopia, and Uganda. Why Africa? Primarily, the reason is that the majority of the businesses are being run by ethnic Indians and they believe in the capabilities of their Indian counterparts. From 1975 to 1980, the overseas movement trends towards Africa were evident and Nigeria became a big draw since they became an oil-producing country. Comparatively, the numbers moving to Africa will be much higher today than they were in the 1970s. The Middle East has its own share of Indian professionals. In terms of numbers, it has been a preferred destination because it is in closer proximity to India.

India: source country   33 Most Middle East countries like Dubai and Oman have the majority of its foreign workforce about (60–70 percent) recruited from India. While Indian professionals were repatriated during the First Gulf War, it has been a stable market for Indian expatriates since. Initially the Middle East hosted the majority of blue-collar workers but now the majority were white-collar workers. The company does not place professionals in Southeast Asia in countries like Singapore, Malaysia, and Indonesia because only a narrow section of professions are open to foreign talent because of government regulations and it could take weeks or even months to obtain a visa or work permit. Industry may not be very widespread or the profession might be too generic. In contrast, in Africa a visa could be issued within four days. If a person stays three to six months to Africa, they are unlikely to return because lifestyles are fairly comfortable in Africa. The company has not received too many complaints from their placements in Africa and the media has been biased in the past towards Africa and even towards India. The main objective for Indian professionals overseas is to save money and the savings are very good in Africa. Indian employees come back to India every six months to a year and aware of what is happening in India and they know the employment scenario in India. The company does not handle recruitment at entry levels but focuses on the managerial level and above. The workplace is so dynamic that the concept of a database has a very short shelf life. The media and the internet have opened up possibilities to source more talent but there is a need to look at proven talent because the candidate that is sought after has to “hit the ground running.” The best way is to poach talent and the rate of attrition is the next biggest challenge of HR. It is an ongoing challenge until 2011 because demand is greater than supply of professional talent. While companies have become leaner, employees are also more inclined to look at their salaries. Singapore does have a positive mindset and image in India but Singapore is looked upon more as a holiday destination than a work destination. In terms of image, it seems closed to outside talent. For the average Indian, Singapore is seen as a family destination. The candidate will examine factors like family, health, education and savings in comparison to Africa. If they have aged parents, Singapore will offer a better quality of life. Moreover, Singapore is closer geographically to India and has many social and cultural similarities. For example, if Indians can fly from Delhi to Calcutta, they can definitely fly from Singapore to Delhi. Indian professionals are also able to purchase decent vegetarian food in Singapore. The other concern was education for their children, and Singapore has schools offering the CBSE education which is important to Indians. Instead of coming back, I see Indians who move from one job in Africa to another job. If they have an aged mother, or have made enough money, they will likely start a business. Recruitment Company A has its corporate office in Bombay and from Bombay the entire overseas business is managed which manifests in most of the overseas recruitment. Recruitment is handled based on sector specialization and one person manages textiles, another handles IT, another oil and gas, and so forth. The

34   India: source country Delhi, Hyderabad, and Chennai offices handle recruitment and assessment of the market. Bombay was the first office, it is 30 years old while the next oldest is Bangalore which is six years old. In terms of comparing the volume of Indian professionals relocating overseas, the majority were heading to the Middle East and the volume to the US is miniscule compared to the Middle East. Annually, over 300,000 Indians head to the Middle East. While the Indian professional might migrate and settle down in the US, Europe or Singapore, they can’t do so in the Middle East because you can’t obtain residency, citizenship or buy property in the Middle East. It is not only the oil and gas sector that is attracting Indian talent but other industries that are energy-intensive like steel. They don’t have the manpower in the Middle East and India has manpower in all fields since we have all kinds of industry like steel and glass. What are the other large recruiting regions overseas? A lot of recruitment is undertaken for Africa but even then the Indian professionals do not settle down over there. In Africa, companies are looking for people who are finance professionals. In the Middle East, the sweeper to the high level talent is Indian but in Africa they only take professional talent. Professionals that go to the US have mainly IT backgrounds or IT enabled services (ITES). The Middle East doesn’t have much of a choice and they recruit from India and the other South Asia countries. The Middle East could attract from countries like Lebanon but they don’t have the expertise and they are expensive. What about East Asia? In Singapore, we have worked with Exxon Mobile and in Malaysia they have undertaken placements for Petronas (the Malaysian state oil company). In Southeast Asia, the majority of Indian workers heading there were semiskilled or unskilled labor. Only a minority, about 5 percent, are professional labor (human capital) but the rest are mainly in construction or factory labor. With rising wages in India, it is becoming increasingly difficult to recruit talent for overseas clients. The opportunities are increasing especially for people who have the right skills at this point of time but there are millions and millions of people who don’t have the right skills. The people with the right skills are giving HR management nightmares in terms of attrition rates. How does your company hire and retain talent? Engineers, for example, in the cable industry with 10 to 12 years experience drawing an annual salary of rupees 400,000–500,000 (US$8889– 11,112) but the telecom industry are really facing attrition. Getting talent is not a problem, it is how your company can devise a package that can attract them. For example, the Middle East is tax-free. If he is paid rupees 50,000 in India and rupees 450,000 (US$10,000) in the Middle East, he will be saving 45 percent in Middle East in taxes. There are various angles that one has to source for talent and it would depend on which angle is best to entice the candidate overseas.36 There are many foreign companies in Africa and employees have two packages. One package is termed “local salaries” and it is enough to take care of needs in the country and there is another salary which is called the “dollar salary,” which is effectively repatriated into your overseas account or bank in India. Indian professionals know that if 2000 dollars is their dollar salary it is 100 percent savings and they can’t take the money out until after their contract is

India: source country   35 completed. If Singapore can devise a way that taxes are reduced and savings are enhanced, this might attract more foreign talent. However, Exxon Mobile in Singapore also told us that a person working with them for six months can apply for citizenship. The husband has Singapore citizenship and the wife has the Indian citizenship, so it is “the best of both worlds.” Has the recruitment environment changed in India? Yes, since 2004, in early 2000, if a job for Exxon Mobil in Singapore was advertised, there would be “millions of people standing at the door to apply and that too at a time where there were no emails.” They explained that even with the internet and emails, they receive very few résumés because, “The number of people interested in overseas jobs are very low.”37 Moreover, a lot of Indian professionals who have settled outside (NRIs) are approaching the company for a placement in India. Since 2004, every month there are at least two to three applicants (NRIs) wishing to return to India. Not just Indians, other nationalities are also keen to work in India like the British, Americans and Middle Easterners sending emails to come work in India. The reason being that to have work experience in India on the résumé is very important. What about changes in lifestyle? There is a lot of disposable income in India because awareness of and exposure to retail have grown. There are several car companies manufacturing cars in India, and Indians with disposable incomes would like to travel the world. Global brand names are in the Indian market such as Walmart, KFC, and McDonald’s. Some foreign talent would like short stints of one to two years in India on their résumés. The MNCs have realized that professional talent is available in India and why should they want to pay in US dollars if they can pay in rupees? The MNCs have also realized that some NRIs would want to return to India and they could pay these NRIs in rupees instead of US dollars. Numerous foreign companies are into the acquisitions mode to have their presence overseas. For example, Datamatics hired foreigners for its overseas offices in Australia, Japan, Germany, the UK, and the US. The availability of education in the Indian system was a problem but now Indian curriculum schools have opened overseas. In terms of salaries and compensation, it is a question of which industry you are in. For example, in the textile industries, there are huge amount of properties, but it has died a natural death in Mumbai. There is no point having a textile mill when you owe a lot more interest on the land. Investors in India would prefer to enter the telecoms market and reap huge profits. In 2006, the trends reversed and the recruitment agencies are after candidates. On average, salaries in various industries have risen by 20 percent. The rates of attrition are very high and a professional might be poached with as high as 50 percent increase in salary. Belatedly, employers are realizing that there is no point in pricing themselves out of the global job market and inviting competition from countries like the Philippines and Sri Lanka. Indian MNCs like Infosys have resorted to training their own recruits because of the shortage of talent. In the short term, employers in India will not be able to cope with the salary hike. Even competitors like China are now keeping pace by training children from birth in English in order to neutralize India’s advantage. There are more than one million jobs in the IT industry and it will keep on growing with the size of the industry.

36   India: source country If the trend continues, it will no longer be worthwhile to send IT businesses to India. Recruitment Company A is not into entry level jobs but specializes in the middle and senior level job placements. How do you recruit candidates? The company has its own databank through personal networks and they post adverts in job portals and on various internet sites. Business is very good and there are a lot of placements and requests but the company can only handle about 25 percent of the assignments that it receives leading to the refusal of a lot of companies. The company prefers to increase its commitment by dealing with companies exclusively and avoid a prospective client company if they have two or three recruitment agents. The company charges a “holding” fee and has business in various sectors like insurance, finance, IT, manufacturing, and telecommunications. In early 2000, 80 percent of the business was for overseas clients but from the mid-2000 onwards, local demand has expanded. Since 2006, has the trend changed for overseas employment? The Southeast Asian region is known to the Southern Indians but to recruit in the north, it would require more advertising to market the region. In Southeast Asia there was some recruitment (about 20 hires in a year), for Exxon Mobil in Singapore and some for Petronas in Malaysia. Indian talent will move to Southeast Asia but they want to see the total salary package before agreeing to relocate. They prefer Southeast Asia to the Middle East. It is increasingly more difficult to hire Indian talent for the Middle East because the employment there is based on contracts and has no stability. Moreover, the Indian recruits will also have a fixed salary for the duration of their two-year contracts. The recruits might also use their Middle East job offers as leverage for better pay by accepting the offers but then going back to their present companies for more pay and usually their companies will match the Middle East offers rather than losing them. It is becoming more difficult to hire good candidates because each job advertised has a 25–30 percent hike in salaries because the of the many opportunities in India. In order to retain talent, companies in India are offering advanced training and have offshore assignments for their employees. In India, the company also provides accommodation. The MNCs in India are also providing the same challenges and salaries as their overseas offices. What about the trend of returning NRIs? Daily he receives ten CVs from NRIs wanting to work in India. Numerous people in the Middle East also want to return to India because of the increased living costs in that area. Many NRIs in Dubai in the UAE and Qatar want to return, however, in Oman they are happy because companies there have provided allowances for accommodation and transport. What are the trends for the African region? The salaries in Africa are much higher which translates to better savings potential but the personal safety factor is not good in Africa. The majority of the recruitment agents are in Mumbai. But Indians are moving out from various points in India. In the non-IT sector like oil and gas, what are the recruitment trends? Huge conglomerates like Reliance and the MNCs will require more talent in future and that is when the real churn will occur and they will experience high turnover rates. What about in terms of age

India: source country   37 group and experience? The greatest churn is happening with those with less than five years of experience. Usually those with five or more years will marry, have kids and are more committed to their jobs. At that time, they will then be team leaders and into management capacity. Would they move abroad if they have five or more years of work experience? This would depend on the sector of employment. For example, an engineer in the cable industry with 15 years will earn rupees 40,000–500,000 (US$1112–8889) in the IT sector, with six months experience they would earn rupees 700,000 (US$15,555). In comparison, the skilled worker in the cable industry will be more motivated to move overseas. What about the retail industry? The projected turnover rate in this sector will be huge and they are experiencing the greatest churn because personnel in the retail sector with experience are very limited. So poaching will occur in India and they will also look in the Middle East. Apart from retail, the construction industry is also booming and salaries in this sector have increased substantially. For example, a company wants to hire 20,000 men for the construction industry. A lot of Singapore companies have joint ventures with Indian companies and are doing well. What about the quality of the recruits for the hires in Southeast Asia? The recruits gain the experience in India and job offers were given to five people and three have accepted the offer. Is a different or better lifestyle a selling point for recruitment overseas? Yes, to a certain extent, if the recruit values a better lifestyle. Daily in India, most people have to spend about four hours commuting, which takes a toll on the quality of family life, therefore this is a selling point for moving overseas. Good and affordable education is always an issue for the recruits’ children. Not many people in India can afford to send their kids to be educated in the US or Europe. Now in the IT sector, companies will send their employees anywhere. In Africa, while there is potential for good savings, there is no lifestyle. For example, in Malaysia, the state-owned oil and gas company Petronas has built a refinery away from the city but they have links to international schools and will pay for the children’s education. Indian professionals can afford to go away for holidays so they don’t need to work overseas but they will always need to save money. The exposure in the Indian market also makes them competitive. In India now, there are a lot of products and exposure. A lot of Indian doctors want to work in the metros but they are unable to open a clinic because of the costs. Therefore, these doctors and nurses are in great demand and will move overseas to accumulate savings. Generally, it is getting more difficult to hire and more work has to be done so the fees are increasing. What are the common strategies adopted for hiring? First, it is better to avoid the metro cities and go to the second tier cities and smaller towns. While the recruits may be good, their communication skills might not be good. Nonetheless, some companies do not mind because these guys are technically oriented and not frontline staff. In the more senior positions in India because of the expanding market, salaries were the main selling point. Does the recruit’s family have a role in the hiring process? Most definitely, the families for the potential hire are important. For the senior positions, recruitment companies even fly these people

38   India: source country to meet their potential employers overseas. What about ranking of colleges and IIMs? Some IIMs could be tougher like that in Ahmedabad. The recruits receive very good salaries but the unskilled would move overseas. Is there a talent crunch? The rate of churn is expected to increase in most sectors. Some new trends would include foreign expats working in India. Indian firms are also acquiring companies overseas and will have foreign expats on their payroll. The banking and insurance sector is also booming. Nonetheless, recruits prefer to work for MNCs because salaries and benefits at MNCs were higher than that for an Indian company. In another sector, foreign banks are recruiting through their subsidiaries in India. These foreign banks pay better than Indian banks and are able to compete for the best talent. In terms of total hires, the percentage of overseas recruitment is just under 50 percent but it used to be 60–65 percent of total recruitment. The bulk of overseas recruitment demand is from overseas clients who pay for middle and senior management levels. Most of the client requests come from Africa and the Middle East. Indians are the largest segment of expatriates working in East and West Africa (English-speaking countries) in places such as Uganda, Zambia, Ghana, among others. Although, many MNCs recruit from Europe, Indian professionals still offer good value for money. What was the main motivation for moving overseas? The major driving force for an overseas move is money because, in the past, housing loans and finance were not easy to obtain. Either work in India or work in Africa, or the Middle East to earn tax-free dollars. The only option is to move out to earn money. Even household furnishings were hard to obtain in India so Indian expats used to bring lots of things home. The US dollar used to be very strong against the rupee, hence another attraction to move overseas. Today the opposite is happening, bank and personal loans are available and the Indian rupee has strengthened against the dollar. The move overseas to the US market is a trickle of the original flow. Moreover, lots of things sold in India are now price-competitive. How has this affected business for overseas placements? Now the recruiter has to put in a lot more time to motivate his own staff because there are deals which have been signed but broken. Commissions of about one million rupees have been lost because job seekers have withdrawn from the offer. The recruitment agency welcomes job seekers bringing their family because it’s a big decision to move overseas. In most cases, neglecting the spouse’s views and inputs could derail the proposed overseas move. Numerous job seekers for moves overseas have reneged on their word so he has not interested in the reasons why job-seekers back out of deals. More importantly, current employers in India are willing to match the demands of their employees to prevent them from moving overseas. How often does Southeast Asia feature in overseas recruitments? Recruitment company A did manage placements for a small number of people, in Singapore, Malaysia, Indonesia, and Thailand. What strategies are used to place job seekers in this region, given its unpopularity? No strategy required to recruit people, the main incentive is money. There are more overseas choices such as Europe that used to be closed but now Germany, Holland are actively looking for human

India: source country   39 talent in India. These countries face a severe talent crunch, and this impedes their economic growth and they recognize that Indians are much sought. Present employers might not be able to offer really high wages such as in Europe and will lose their talent. Any country that wishes to attract talent has to have a reasonable working environment and good pay. Some countries like in the Gulf are tough on Indian professionals and these guys used to accept that but now they would pack up and return to India where the jobs are booming. What strategies are companies implementing to reduce loss of talent in their companies? Companies do not understand that the remuneration and wages for Indian professionals have increased. Recruitment Company A used to recruit from Unilever but now Unilever is aggressively fighting to hold on to their talent. Now, their Indian talent do receive two passages home every year and the same remuneration as their European counterparts. There is also the problem of quality because good Indian graduates are hard to find and only select schools produce good graduates. In order to retain their talent, Unilever’s HR Department has revised their pay packages upwards but besides money, they also provide overseas postings as exposure for their staff. In terms of demands and placements, the general trend is that all companies need accountants such as chartered and cost accountants, engineers, and, at one time, manufacturing, plastics, and chemicals personnel. What are the differences between the global regions in terms of recruitment? Africa is different from the Middle East, but when one company enters a market and succeeds, other companies will follow. For example, one East African client is a Lebanese bottling company, their top directors are European and Australian, but they also need personnel for marketing, ancillary units, and bottle manufacturing. In the Middle East, the construction sector is big, other dynamic areas are manufacturing and packaging. For example, a Dubai petroleum company client had interviewed potential recruits. What about employment demand in the Far East? There were few advertisements from the Ear East but it used to have a strong demand for computer professionals but that has been overtaken by demands from commodities trading and financial companies. In the 1990s, the US IT sector had great demand for BPO and offshore development centers but these have shifted to India. This gives companies the cost advantage of shifting their operations to India. Recruitment Company A did not receive requirements from the US in 2007, despite shortages in sectors like healthcare for nurses. Where is the best Indian talent located? One should look at this in terms of needs, in the past, some Indian professionals were doing well in India but still chose to move abroad. Now because pay packages haven’t increased overseas and the pay is getting better in India, it becomes harder to entice professionals overseas. Companies used to demand degree holders such as MBAs from the IIMs but Recruitment Company A has advised them to forget it because these guys are in very high demand. There is no ignorance factor about the Indian market but recruiting companies are constrained by their finances. The Indian professionals who had moved overseas earlier also do not know the present market realities in India. Now, Indian professionals are much bolder in demanding better

40   India: source country pay packages because they lead more comfortable lifestyles in India. The standard of living in India has always been a factor but only a very small number of affluent Indian professionals would complain but the majority will put up with traveling two to three hours a day in the traffic jams because they have the comfort of their family around them. The issue of law and order is a big factor but it is probably safer in Africa than in New York in terms of personal safety. But even in India, certain cities like Delhi have a bad reputation. The majority of job seekers turn down job offers overseas. There is a need to educate the Indian about myths in Africa. There is also a morality hazard because Indian professionals are now used to turning down offers and have no qualms rejecting a move overseas. Job seekers now do not feel morally bound to follow through on their acceptance. For example, Recruitment Company A had sent a senior air conditioning technical expert from Dubai to Nigeria. He accepted and moved, his family also moved, while he was there, some kidnappings took place involving Indian expatriates. His wife insisted that they go back because of the kidnappings. Recruitment Company A then worked on finding a replacement. To make matters worse, Indian newspapers had also highlighted the kidnappings of Indians in Nigeria. Another example, Recruitment Company A hired an Indian from a Swedish company for another MNC in Papua New Guinea. This Indian is not from Mumbai but had demanded higher pay, and it was agreed, but the Indian kept asking for more perks and the process dragged on. This guy then traveled to Sweden and Finland because he wanted to attend his company’s training program. Recruitment Company A had applied pressure but the Indian job seeker delayed and finally chose not to move because he had a family and a 5-year-old daughter. What about perceptions of safety? Not many Muslim candidates opted for Africa but Muslims prefer the Middle East. What can Singapore do better to attract Indian talent? Singapore does not need to market itself to attract people because there are adequate paying jobs and it might be more attractive than the US. Some Indians study abroad and get used to the overseas life and then work abroad. They might apply for residency in the US, Canada, and Australia. Foreigners are working in India because lots of MNCs are available and are able to post their senior expatriate staff to India. India is valued add to their CVs and it provides unique challenges. Since 2002, the employment market has improved in India with increasing wages and better lifestyles. In 2006, there is growing reluctance for job candidates to move overseas. In 2004, of the total job applicants, 60 percent wanted to move overseas and 50 percent stayed. In 2006, 60 percent of job applicants will stay in India and only 40 percent will move overseas. Small firms overseas will not be able to withstand competition from the larger firms if they don’t at least offer similar wages. The rate of labor turnover or churn is highest for the BPO sector at 50 percent and 25 percent for the IT sector. However, IT companies able to offer more challenging career opportunities or undertaking more product development or R&D activities will have lower rates of labor attrition. There are more employment opportunities in Chennai because of its growing status as a

India: source country   41 manufacturing hub and knowledge-based industry like IT. The IT sector has been able to attract talent from all over India. IT professionals with more than three years experience will be keen to know about career prospects. The manufacturing companies are continually losing talent to the IT sector. Of all the sectors, the Beverage, Food and Service sector has the highest amount of labor attrition at 50 percent and has the highest rate of job rejections across the whole economy. Southeast Asian countries like Singapore have the ability to attract Indians, especially those from South India, because of its proximity to Southern India and the similarities of culture and religion in Singapore. Recruitment Company B We asked another well-known Indian recruitment firm whether the southern Indian states like Tamil Nadu have been active in promoting foreign investments and whether they have gained with the entry of large car manufacturing companies like Ford, Hyundai and BMW.38 Tamil Nadu is a large state and numerous IT companies are also establishing themselves in the state. IT companies are relocating to Hyderabad and Bangalore, the IT hubs of India. What about the reverse brain drain back to India? After 9/11, Indian professionals in the US are increasingly heading back to India to find better employment opportunities. Has the entry of more MNCs into the Indian job market improved professionalism? The MNCs have tried to put in their own systems. For example, in the Human Resource (HR) departments, systems which they use in their other set-ups in other countries. The MNCs are beginning to discover that India is not a “bad” place to work and the systems in India are on par with any foreign companies overseas. However, sometimes the MNCs may have to restructure their systems and operations in India. For example, a well-known Korean MNC establishing its operations in India has had to work with an Indian mindset but has managed to train its staff to achieve its aims and objectives. The Korean MNC had worked with Recruitment Company B over a period of time in relation to consulting, HR outsourcing and automation. While recruitment is Company B’s main objective, the company has two other different subsidiaries. There is a subsidiary company that handles “Search” recruitment for senior consulting. The other subsidiary is an IT company which takes care of their IT requirements locally and overseas. Recruitment Company B has the third largest staffing group in the world. In general, for their clients, Recruitment Company B helps them with HR policies, establishing their procedures and registration with the local authorities because there are a lot of employees and labor-related registrations. For example, India has provident fund and insurance registrations. Foreign MNCs have to fit in with the Indian way of working with formalities which are mandatory laws. Complicating administrative matters, there are central laws, state laws and these laws keep changing. The company takes care of staffing from the top level to the junior level. How does Chennai compare to other metro cities for recruitment? Tamil Nadu has the potential for recruitment or consulting work. In the past, the lifestyle in Chennai was always thought to be of a lower standard of living than other metro

42   India: source country cities but today Chennai can compete with Bangalore, Hyderabad, and Mumbai. NRIs are actually attracted to return to Tamil Nadu and other parts of India. The differential between what a person is paid in Chennai and what a person is paid in the US is not very much. You get all the benefits in Chennai which the NRIs are used to in the US. There are people who have left IT companies in the US and returned to India. It is happening not only in IT but also in other sectors. There is great demand for quality IT talent and IT companies like Wipro are willing to pay rupees 600,000 (US$13,338) for an entry level graduate. The shortage of human capital in the IT enabled services is keeping the wage costs high. Moreover, IT companies are establishing their data and backroom operations in India to reduce their costs. How are manufacturing companies able to compete with the high salaries offered by IT firms? Why are IT companies willing to pay such high salaries? Usually IT companies are looking at the potential of the recruit rather than trying to pay the lowest salary.39 This is in the software development sector and not in the ITES and BPO sector. For example, in 2006, an IIT graduate from the campus in Gurgaon was given a starting salary of rupees 10,000,000 (US$217,391) a year by a software company but in the ITES sector companies will pay an annual salary of about rupees 100,000 (US$2174) per year which suggest a monthly salary of about rupees 10,000 (US$217.4) per month. Besides IT, the other expanding sector is the construction industry. Manufacturing companies can’t compete with IT companies and have to keep their costs low. For example, in the automobile sector, the auto ancillaries have to compete with other companies and can’t increase salaries beyond a certain threshold. Moreover, the profile of recruits and qualifications of people in manufacturing does not merit the kind of high salaries and overall packages are not very high and are segmented into various levels.40 There are also constraints built into manufacturing. For example, on the production or “shop floor” there are numerous workers with different specializations and the capital investment is very high. The investments for the IT and ITES may be high but most of them except the Indian companies have their equity based overseas and receive funding from their parent companies. Nonetheless, in 2006 and 2007, even manufacturing companies have to pay higher salaries because of increasing employment churn. If an engineer was given a choice between an IT company and a manufacturing company, they will usually choose the former. How will the trend of rising salaries affect future compensation for manufacturing companies? In 2006, a manufacturing giant had asked Recruitment Company B to undertake a compensation survey. Usually manufacturing companies would scout their own sector but the client had List number 1 within the industry and a List number 2 of companies which had nothing to do with his line of work. However, List number 2 is very important because it contains the companies the manufacturing giant was losing people to.41 Why is there increasing turnover or churn in employment? There seems to be a lot of cross-functional work and a lot of specialized people are sought after in cross-functional areas. If a candidate is offered more than four times his usual salary, he will definitely switch jobs and the manufacturing sector has no option but to increase pay

India: source country   43 packages. However, in late 2006, the kind of packages being paid in the IT had stabilized. For example, a rupees 600,000 (US$13,044) starting pay is still being offered but the next pay increase will no longer be a 100 percent jump. Rather, the next jump might be a 10 percent or 12 percent rise. Employers are also questioning the potential value of the recruit with a rupees 600,000 (US$13,044) starting salary. Companies have also started creative costing to justify paying higher salaries such as putting values on the chair that the recruit sits on and the depreciation of the machine that he uses which resulted in the “take home” pay being only a percentage of the total pay package and the take home will be in the range of rupees 25,000–30,000 (US$543.5–652.2) per month. What talent attraction strategies do companies implement? When an agency goes on campuses recruitment, they want to attract the best talent and the students are aware of this. For example, the companies may start with a monthly package of rupees 30,000 (US$652.2) which will be very attractive for a fresh graduate. The minimum starting pay offer will also vary according to market conditions and the sector. When the attrition levels are very high in the IT sector, it is not unusual for attrition rates to be 50–60 percent. Every company will have problems of high attrition and each candidate has a minimum of five offer letters when they are being interviewed. The other concern is training because training costs are also high and usually a company puts their recruits through a probation period of three months. However, when the trainee is job ready, having completed the required training and has sat the relevant examinations, then he might be poached by a rival company. The candidate usually gains because he might be on training for three to six months and then within a year he would be accustomed to his new job. To prevent poaching, some companies have tried to put in legal clauses in the worker’s contract but this is difficult to enforce. However, in 2006, HR managers are networking to “blacklist” the candidates who use job offers as leverage to extract more pay from their employers. Is the supply of job candidates a concern? The southern states have the largest numbers of tertiary educational institutions and thousands of graduates are produced each year. For example, Tamil Nadu has a few thousand colleges spread beyond Chennai in the rural and semi-rural areas but the quality of education varies and only about 10 or 20 percent of the graduates will be employable. The number of business or “B” schools is also very large. When a company goes for recruitment to a B (Business) school they will encounter varies categories from A, B ... down to D, E, F. Every college in India will have an MBA and business administration graduate courses. The IIMs will be at the top of the ranking, next comes certain private colleges ranked among the top 100 like SP Jain which produces graduates that manage to speak English and can put to use what they have learnt. The next 2000 to 3000 colleges will not provide graduates that employers are looking for, therefore, you get a lot of highly qualified people who are getting into lower ranking jobs. While they may have the degrees, their skills are lacking. In certain sectors like ITES, where recruitment is very competitive, there are companies that look at tier II cities, especially those who are transaction-oriented like call centers when speaking skills are essential. The companies have to

44   India: source country undertake a lot of expense to make these tier II cities’ applicants qualified to work in call centers, such as conducting transition courses and language courses. In Coimbatore, colleges are trying to have tie-ups with companies to see if training costs can go down. The graduates who come from the colleges should be able to do their jobs adequately but due to caste allotments in colleges, standards can be compromised. To avoid additional training costs, companies would “zero in” on certain key institutes for their recruitment. Is there a returning flow of NRIs? Yes, a lot of friends, relatives are planning to come back and a lot of smaller IT companies are planning to establish start-ups in India. Establishing an office in India is much easier than in the past and labor laws are becoming more manageable. In the days of “offshoring” in the early 1990s, in the IT sector, after training the first three months or six months there was waiting on the bench to accept an assignment. In 2006, the IT workers are no longer “benched,” after three months of training, they are immediately sent overseas and after another three months overseas they are then sent for another assignment. Therefore, the allure attached to going abroad has been lost. During the three months overseas, the IT workers have a good time and then they come home to their families. In this regard, the IT workers receive all the advantages for travel and do not lose out on the advantages of staying in India. This is also one of the main reasons why people have stopped leaving to settle abroad. The large IT companies have offices and site offices everywhere in the world. Personnel from India can rotate between overseas stations and then return to India. Moreover, going overseas has become more common for work and holiday. What about destinations in Southeast Asia? Indian candidates are still looking at Singapore and Malaysia in sectors such as telecoms, oil, and gas. Several highend infrastructure companies and numerous mechanical engineers and those in petroleum and construction are looking for opportunities. To potential recruits, Singapore stands for oil and gas, financial and telecoms employment. Moreover, when you need to apply for a visa to the US, it helps to have worked in Singapore. As a brand destination, Singapore does not have too much “buzz” and is no longer a buzz when compared to the US and Europe. Where are the emerging specialization hubs in India? Bangalore is the Indian hub for IT and Chennai is the manufacturing hub. People are moving around and becoming more cosmopolitan in the various metro cities. Regions are becoming industry-specific, therefore people are moving towards job suitability. For example, in Mumbai there are lots of financial professionals, while Delhi, Noida and Gurgaon are becoming IT hubs. What about lifestyle trends? Comparatively, in the US you can’t afford a car and a house as quickly as you can as a professional in India. In India, graduates within two years can own a car today and accommodation is becoming more affordable. Some IT professionals want to retire by the time they are 33 or 34 to run their own businesses. There are various entrepreneurs emerging in the 35 and 40 years age group. There are various employment trends as well. For example, there are graduates seeking employment in non-traditional sectors like with non-governmental organizations (NGOs). The reason seems to be the thrill of “doing good” and NGOs

India: source country   45 like the World Wildlife Fund (WWF) and Greenpeace also pay well. Normally a management graduate receives options from NGOs and Greenpeace has hired management graduates and the Bill Gates Foundation in Chennai were looking for graduates. Recruiters emphasized that India is no longer a low cost sending (source) country and hiring an Indian professional is no longer easy. The pool of talent is not as large as it first seems because 60 percent of Indian graduates would not qualify for jobs in MNCs. Usually, these 60 percent are employed in small Indian companies. Moreover, engineering graduates in the same college batch might hold differing positions like senior and junior levels due to differentiation in personal analytical and other skills. For example, in terms of job specifications of a company, an MBA might have to settle for an ordinary position at a junior level due to his low competitiveness, little experience or his skills might not be as relevant. When recruiting, a company might want someone who has worked on specific systems for a given number of years and other specialized requirements. At senior positions, companies would look for someone who is multi-functional and not just someone who is in finance but someone who has a HR background, a finance background and is no longer a specialist in only one area. The advice for candidates as they become more senior would be not to stick to the same line of work and to accumulate experience and expertise as they progress in their careers. Recruitment Company B knows that a person needs a change. The company has a lot of employment options and an employee has a lot of openings and opportunities. For example, one of their employees known as Praveen has a varied portfolio selling nine different products. A lot of companies allow movement across different platforms but retention remains a key ingredient of HR strategy. Recruitment Company B offers a lot of room for learning and Praveen might want to get into IT and start coding. Recruitment Company B has 53 locations in India and the company is growing at two offices more per month. There are seven overseas offices such as in the US, Europe, London, and Malaysia and others, offering the same services within the context of their country. Tier I cities like the metros, Mumbai, Chennai, and Delhi are saturated markets. Their focus in Tamil Nadu is the colleges, but it is not sufficient to meet the kind of demand the industry desires. Therefore, Recruitment Company B has to look to Tier II cities to attract talent as well. The MNCs are also picking up on this strategy and moving into satellite towns and tier II cities like Mathurai, Tiruchy in Kernataka, Dharwar, Mysore, and Shimuga. In other large cities like Hydrabad, it is easier to access human capital. Recruitment Company B undertook a survey on employment trends and discovered that attrition varies from one industry to another. For example, in the manufacturing industry, it is about 12 percent which is remarkably high. Indian IT professionals prefer to move to the US while finance professionals prefer the UK. The UAE is losing its attraction whereas previously tax-free salaries used to be an attraction. However, now, salaries in India have risen so much that even with tax-free salaries, the UAE is not as popular.42 The companies in India are able to match the expected salaries and the standard of living is going up in

46   India: source country Dubai. Those Indians who have been living there for the past three years may find it livable but those who are fresh in Dubai are finding it very expensive to stay so this affects the savings potential. It is getting more interesting in India and even the quality of living is going up in India. The general preference would be to stay in India. What about East and Southeast Asia? Thailand, Indonesia, and Malaysia are attractive to professional workers and now even China.43 In the huge global energy sector, professionals in the energy and the manufacturing sectors are interested in Indonesia. For Indians, Singapore will still rank as number one as a preferred destination for work. Singapore is attractive to IT, finance, banking professionals and in the legal profession. Quality of life is crucial for professional Indians. What is the biggest attraction for talent? The job content is the biggest factor in attracting talent. Candidates crave exposure in larger regions and greater job specialization.44 In China, Shanghai and Beijing are attractive. Candidates want the China experience because they want to see what China is all about. In contrast, Japan does not draw that many professionals but the interest is improving. Japan has a very closed economy but a lot of people are learning Japanese. People are moving into the IT sector with Infosys and Tata are creating more jobs. The manufacturing sector has high attrition levels because people are moving into the IT industry. Even the BPO sector is absorbing engineers. Financial institutions like JP Morgan are also setting up back offices in India because they find the quality of people extremely good. At the beginning of 2006, major clients had shared their hiring plan with Recruitment Company B. They do campus recruitment as well and there are stringent tests, analytical skills, group discussions, tests of communications skills. Typically, there is a pool of people to draw on, a grand recall if people are required in a short time and even through advertisements. Getting good talent is not difficult for Recruitment Company B as their processes are very stringent. They could also advertise for clients, plug into Yahoo groups to spread the word and a mapping of organizations and even targeted “head hunting.” Their networking is of a very high level so a phone call can get people to a job. Normally, the starting graduates from an NIIT get between rupees 2,000 to 25,000 (US$48 to 595). New multinationals whose brands are not very well known need organizations like Recruitment Company B to do the start-up and the recruitment. So we do it on their behalf. The talent pool can’t “dry up” in India but the quality of graduates is questionable. If a college is not up to the required standard, the next time we don’t approach that college for recruitment. The crème of India is no longer shattered if they can’t go to an overseas destination. A lot of bright graduates are moving into NGOs, what they have learnt they are applying to running the NGO. Recruitment Company B has its Foundation that focuses on education. Recruitment Company B has four businesses: staffing /executive search/consulting /IT software. Business caters for senior level education. The office we went for was senior level management. There is also a staffing office in Delhi. How was Indian talent recognized in the global market? It started with technical talent and specifically engineering talent, then the IT boom occurred and thereafter the

India: source country   47 finance sector expanded. Moreover, there is an entrepreneurial spirit in India with two IIM graduates from Ahmedabad refusing high salary offers to establish their own start-up company.45 What are the movement trends overseas for Indian professionals? There seems to be two levels of migration, one at entry level and the other at mid-level management. Even in the IT sector, it used to be that if you were an IT professional, you would move to the US but with the emerging opportunities in India, more IT professionals are thinking twice about such a move. The other concerns about moving to the US are cost of living and style of living. On average in 2006, there has been a 15–20 percent hike in salaries, especially in the IT, telecom, banking, finance and retail sectors. There are differing rates of increments. The manufacturing sector doesn’t have that drastic an increase of wages but there will be a stabilization of the incremental rate of the wages, despite the shortage of talent. What is a Global Indian? A Global Indian is an Indian professional who is able to align himself to opportunities the world over in relation to the kind of skills one really needs. With the usual factors being considered such as lifestyle, the cost of living, and the savings potential in working in an overseas destination, Global Indians also have this tremendous ability to take risks. For example, more young people in India are willing to work for blue chip welfare organizations or NGOs. While it is still true that some young graduates want to command a ten million a year rupee salary (US$250,000) but they also want to do something different. The idea of the global citizen is nothing new because MNCs have been circulating talent for a long time because it is also a good way of retaining talent. Unlike most Indians, Sangeeta believes that there is enough happening in India to enhance graduates’ employability. The reasons for the difficulty in finding placements could be other non-educational matters such as soft skills like communications skills. However, there is a large variation in the types of graduates that are being produced in different universities. In India, there is a need for all kinds of professionals and the recruitment company’s academy does manage courses to enhance employability.46 In recruitment, the company turns to various sources such as the internet, newspaper reports, word of mouth and recommendations. What are the main overseas destinations? The favorite destinations would be the US, Australia, the UK, and even Singapore but the emerging destinations are China, New Zealand, Europe, and Africa. Singapore seems to be losing out in terms of entrepreneurship. In moving to an overseas destination, it is important for the candidate to ask of themselves, what experience are they seeking that they can’t receive in India or elsewhere? Responses from the recruitment agencies indicated that talent from India were generally not keen to move overseas because of more employment opportunities and better lifestyles in India. Those talents from the famed IITs and IIMs are giving back to their alma maters in the form of financial assistance and expertise. The salaries offered in India, especially to graduates from the IITs and IIMs, are huge. However, the quality of graduates varies and there is polarization from the very best in the IITs and IIMs to the very worst in privately run tertiary institutions. For those without good qualifications the move overseas is desirable.

48   India: source country However, some good talent was still willing to move overseas because of the overseas acquisitions made by Indian companies. Due to the strong competition for talent, especially after the recovery from the global financial crisis, companies are hiring graduates from tier II and tier III cities and inducting them into inhouse training programs. The MNCs have an increasing presence in the Indian market and increasing competition for talent. The brand name for MNCs gives them an initial advantage in hiring talent. MNCs are also contributing to the circulation of talent across boundaries by hiring in India and then relocating these talents to their other branches overseas. The opportunities to work on overseas projects for MNCs for several months to a few years have reduced the desire for talent to move overseas. This is because they are able to receive foreign exposure and retain their seniority in their respective MNCs. The MNCs are retaining their talent by circulating them. The talented graduates are widening their exposure, for example, they are looking for employment with well-known or “blue chip” NGOs like WWF or Greenpeace. The lifestyle in India is improving and in terms of purchasing power parity, professionals have better lifestyles in India compared to their counterparts overseas. The rate of labor attrition or churn is increasing. Companies compensate for this by recruiting more than the available places and aggressively nurture to retain their core talent. The Beverage, Food and Services have the highest rate of attrition. The US, the UK, Africa, and the Middle East are the major overseas attraction for talent from India. The public sector was losing personnel to the private sector from teaching institutions like the IITs and the armed forces. There is also a growing trend of returning NRIs and they return to take care of aged parents, to raise children in an Indian culture and to have a better lifestyle despite the competition for scarce facilities and amenities. Some Indian professionals are also classed as Global Indians because of their ability to straddle and contribute to more than one economy. The talent pool in India is not as large as most people believe because at least 60 percent of Indian graduates do not qualify for jobs with MNCs and will end up working for small Indian companies or alternatively moving overseas for better job prospects. The southern states in India such as Andhra Pradesh, Karnataka, and Tamil Nadu have the most number of tertiary institutions especially in the technical fields like engineering. In this context, MNCs in the IT and manufacturing will usually locate in southern India. The IT companies are setting the pay bracket for graduates and the manufacturing companies have to compete but they usually lose out to the IT companies. The job candidates also leverage on job offers so that they can extract the best pay package from their potential employers. Due to the strong competition for the best job candidates, the recruitment companies interviewed are looking more towards the tier II and tier III cities for job applicants. The recruitment companies are also targeting specific institutions that produce graduates with particular skill sets that specific client companies need. The MNCs in India are fighting hard to retain their talent by offering them high pay increases, more job scope and the chance to be posted overseas. The cost of training is high and companies know that training will increase the value of their

India: source country   49 staff, therefore, companies offer more perks to retain their staff after investment in their training. While the flow of NRIs returning to India is increasing, they will have problems in adapting to the Indian work environment and lifestyle. Southeast Asia is still an attractive option for Indian graduates especially Singapore but Indonesia, Malaysia, and Thailand also have job openings. The various sectors that require Indian talent in the Southeast Asian region are banking and finance, oil and gas, and telecommunications. Besides Southeast Asia, Indian talent is also exploring China and Japan. Chapter 3 examines companies in India, their views on the Indian job market and strategies that they are implementing to retain their core or most talented staff.

3 The employment market in India

Introduction With a workforce of more than 400 million, India is often regarded globally as a main source of human capital. However, paradoxically, illiteracy rates are nearly 60 percent and less than 12 percent or 48 million people are college graduates.1 India’s talent pool is, arguably, not large enough to sustain both domestic economic growth and an outflow of human capital. Recruiting workers with the right skills is a growing problem among employers in India. While the state has authority over India’s educational system, when it comes to implementation, it has relatively less control and standards vary across provinces. The training in many tertiary institutions falls below global standards and below the expectations of most large Indian firms and multinational companies (MNCs).2 For example, India produces approximately 300,000–400,000 new engineers every year but only between 10–25 percent are considered ready for the job market by employers. Companies are being forced by market conditions to inflate salaries to attract college graduates from top business schools and elite colleges. Entry level workers are commanding higher salaries and the rate of labor turnover or churn is rising.3 This chapter will examine the employment market in India to understand why there is still an outflow of human capital in India despite the growing job market. This chapter will also record the perspectives of both employers and Indian professionals. In 2006, numerous knowledge-based employment opportunities in India were generated by MNCs and family-owned enterprises in sectors like information technology, business process outsourcing (BPO), and pharmaceuticals sectors. These companies usually are located in the large or tier I metropolitan cities like Delhi and Mumbai, where they have easy access to the largest pools of skilled talent but where they also face the strongest competition for talent with the highest compensation costs. Therefore, some companies have relocated to smaller tier II cities where there is still a reasonably skilled workforce but with less competition and lower compensation packages. Moreover, in tier II cities, the rate of attrition will not be as great as in the metro cities. The high rate of attrition is an accepted phenomenon and successful organizations recognize this as

The employment market in India   51 a way of life and adopt innovative ways to mitigate the effects of labor attrition. Companies claiming success in battling growing rates of labor attrition usually plan for three to four years average term for new employees and plan how they can receive productive input from the employees in that time frame. The challenges of attraction and retention of human capital are the same for both Indian companies and foreign MNCs although its impact may vary in terms of degree. Adding to the uncertainty of the labor market, skilled and professional Indian workers often give long notices of acceptance to their new employers of between four and six weeks in order to survey other job prospects and to receive counteroffers from their current employers. In this regard, to examine further how the Indian employment market influences the outflow of human capital, this chapter will examine the trends of hiring among recruit agencies and companies in the metro cities of Chennai, Mumbai and Delhi between 2006 and 2008. It also will examine the strategies companies in India adopt to retain and recruit talent. While employers were increasingly concerned about an overheating employment market, the global financial crisis in 2008 at a single stroke cooled the job market and enabled employers to rethink their human resource strategies. Companies had revisited their recruitment strategies in a bid to manage costs with the decrease in economic activity. In India, the economic sectors that have put a freeze on hiring are consumer goods (70 percent), manufacturing (63 percent), and banking, financial services, and the insurance sector (57 percent). However, only a small percentage of companies in the financial services sector have considered layoffs, although 43 percent have opted for selective hiring. Overall, the percentage of companies hiring in the finance and insurance sector dropped from 56 percent to 33 percent. For the IT and IT-enabled services sector, the hiring outlook dipped from 58 percent to 47 percent.4 In contrast to earlier years, in 2008, the talent shortages which have plagued Asian employers, including those in India, over the past year have given way to an employers’ market. Most companies now see little need to increase salaries aggressively as they did in the past. Many have taken the opportunity to freeze salary costs. The drop in inflation rates has further eased pressures for salary increases. Despite the global financial crisis, some Asian economies were still experiencing an overall salary increase. As shown in Table 3.1, China and India were still experiencing an increase in salaries in early 2009. The same table shows India experiencing a dip in salary increases from 14.1 percent in July 2008 to 6.9 percent in March 2009. A similar dip in salary increases was evident in China, Indonesia, and the Philippines. However, of all the Asia Pacific countries, the hiring confidence of employers in India was the strongest for the first quarter of 2009. The net employment5 outlook in India is a positive 23 percent with 30 percent of employers expecting an increase in staff, 7 percent predicting a decrease and 45 percent experiencing no change.6 Figures 3.1 and 3.2 show some of the amenities and boutique shops that have opened in India in response to growing consumption trends.

Figure 3.1  Specialized bakery in India.

Figure 3.2  Specialized electronics shop in India.

The employment market in India   53 Table 3.1  Salary increases as total budget costs for several countries in 2009 2009 Salary increase budget (%) Locations

China

July 2008

March 2009 (including salary freeze)

March 2009 (excluding salary freeze)

GDP projections as of May 2009 Source: EIU (%)

9.8

5.0

7.1

6.0

5.0

1.9

2.8

-5.9

India

14.1

6.9

8.9

5.0

Indonesia

12.8

8.6

8.6

-1.4

Japan

3.9

1.0

1.9

-6.4

Malaysia

6.6

3.9

5.1

-3.0

Philippines

9.5

5.4

7.0

-1.9

Singapore

5.3

2.1

3.4

-8.8

South Korea

6.2

2.1

4.9

-10.1

Taiwan

4.2

1.6

3.0

-9.3

Thailand

7.0

5.2

5.4

-4.4

Hong Kong

Source: Jeric Ramos, Director, Data Services Asia Pacific, [email protected]

Regional trends Chapter 2 raised the issue that Southern India is the preferred destination for MNCs because of the larger numbers of graduates available. This section examines employers in all four regions in India. Employers in India did anticipate positive hiring activity over the next three months though all indicate a sharp decline in hiring intentions when compared to the last quarter and year. Hiring intentions are strongest in East India, with a net employment outlook of plus 20 percentage points. This is 21 percentage points softer than last quarter and 17 percentage points weaker than last year. Employers in South India report a net employment outlook of plus 19 percentage points. The weakest hiring intentions are reported by employers in West and North India, each reporting the net employment outlook of plus 18 percentage points. In successive years, the outlook among employers in West India has declined by a considerable 29 percentage points. Table 3.2 indicates that South India is growing strongly in terms of employment trends in late 2008 compared to other parts of India. While companies could compensate for the lack of suitable talent by their ability to train poorly qualified graduates, this does not detract from the strong competition for talent at good colleges such as the IITs and IIMs. In this context, companies were compelled to work on strategies to attract new and retain their existing talent. While raising salaries is one way to retaining talent, it is not sustainable in the long run. Companies have instead resorted to using variable pay and expanding the use of long-term incentives that give employees a direct stake in the organization’s continued success. Companies have also segmented their

54   The employment market in India Table 3.2 Regional trends for employment in India as percentage of total employment Q1 09 Q1 08

Q4 08

19

46

43

North

18

43

43

East

20

37

41

South

19

46

46

West

18

47

41

National Total Regions

Source: Manpower Employment Outlook Survey.

workforce such as in the IT sector. Human resource departments are looking at rewards that are built into careers and softer aspects such as visibility to senior management, learning and development programs. At least one large and wellknown IT firm has even talent-spotted its “best and brightest” and called these employees the core of the company’s future success; they have been individually assigned a mentor to develop their role in the company. These selected individuals are also exposed as a group to senior managements’ thinking and vision and challenged to undertake creative endeavors for the company. Figure 3.3 shows the branded goods being sold in shopping malls in India. Restructuring and more resources need to be directed to the education system. For example, in the IT sector, the need to develop a credible hardware base requires the training of microelectronics engineers. In 2005, India was producing less than 250 Masters in Technology (M Tech) postgraduates. Tata Consultancy Services and IIT Mumbai started to collaborate to produce 50 M Techs in Microelectronics. IIT Mumbai could also mentor and monitor the M Tech program as other suitable engineering colleges and physics departments join the M Tech collaboration.7 The need to retain the intellectual core of human capital in various companies is pressing because it is an important component of creating present and future value for companies.8 This has a direct bearing on managing their intellectual capital well to enhance shareholder value. The following section discusses a selection of homegrown Indian companies whose growth has also provided employment opportunities for thousands of Indian graduates. Their human resource strategies will be examined as a means of training new recruits, impart new skills and retain their “best and brightest.” The following section examines the views of employers in the metro cities of Chennai and Mumbai. A profile of each company will also be provided together with their area of business interests. The employers will then be questioned on the trends and conditions of the employment market in India. In addition, they will also discuss the inflow and outflow of human capital from India and whether the Southeast Asian region features greatly in the minds of Indian professionals and skilled workers.

The employment market in India   55

Figure 3.3  Exclusive shops in shopping malls.

Chennai employers Chennai conglomerate, Chennai, 13 December 2006 This Chennai conglomerate is involved in various economic sectors such as chemicals, engineering, shipping and biotechnology. However, its main area of interest is polymers and plastic manufacturing. They are in the process of acquiring a company in Egypt and are looking for business opportunities in Germany. On average, the company recruits about 100 to 120 engineers per year and have a total staff strength of 3000. Is Singapore a known destination for Indian talent? The managing director of the conglomerate commented that Singapore is receiving the recognition that it is doing something new and has more opportunities beyond just being in the service sector. He believes there is interest among Chennai graduates in going to Singapore but salary levels have to be much higher. Mainly, the professionals who are attracted to Singapore are those with 8 to 10 years of experience. In terms of proximity, it is close to India and professionals with aged parents will find that appealing. However, Singapore also faces competition from its regional economies because human capital from Chennai would also move overseas to Malaysia. We asked whether his company experiences difficulties in recruitment. The company does experience difficulties in recruiting young people who are mobile and they go to the best job opportunities. In late

56   The employment market in India 2006, the company and the whole of India were facing recruitment shortages in manufacturing, especially in engineering. The manufacturing sector in India, because of the shortage of personnel, began recruiting staff from lesser known colleges. The company’s main competitors for human capital are the software and the IT-enabled services (ITES) companies that specialize in business process outsourcing. The manufacturing sector is disadvantaged because of lower salary packages. For example, a mechanical engineer in manufacturing has a starting pay of rupees 5000 (US$107) per month but in the IT sector the companies offer a starting pay of rupees 8000 (US$174). On average, the engineer’s salary is about rupees 7250 (US$158) a month in the manufacturing sector and in the IT sector it is about rupees 12,000 (US$400) a month. Moreover, the IT companies give more exposure to their staff compared to the manufacturing sector. He lamented that while ranked the highest in terms of salary scale in the manufacturing sector in Chennai, his conglomerate still faces strong competition from the IT sector. We asked about the company’s recruitment strategies. The company uses various strategies such as college recruitments by campus interviews, plus advertisements. Where is the available talent in Chennai? There are some 70,000 engineers coming from the same source every year. While there are competent graduates for recruitment, the company has to train them in soft skills (communication, interpersonal skills, and others). In this regard, the company engages an NGO that trains recruits in English, presentation skills, and general communication skills. The length of training is about five weeks. However, despite the training, corporate lifestyle and other benefits, the rate of attrition is very high at 16–18 percent of total employment. How does talent circulate in Chennai? Talent is circulating among companies within Chennai and moving overseas has decreased in its appeal. He opined that the main movement overseas will be for postgraduate studies. How does he think the Indian job market is influenced by the entrance of foreign companies from countries like Singapore? He said India welcomes companies that help in infrastructure development and the Port of Singapore Authority (a Singapore company) has taken over our Chennai port in terms of container shipment. Due to their good infrastructure experience, Singapore companies are also needed in urban planning, city planning, managing environment, and pollution alleviation projects. There are infrastructure shortages across all sectors such as airports, roads, and ports. However, he admitted the focus on infrastructure in India has come late. What other benefits does the company provide for its employees? He said the company builds and provides schooling for its employees’ children in areas where it establishes its factories. He added, the lack of educational opportunities in India is a key reason why a lot of students are attracted to Singapore’s education system. How could Singapore attract Indian talent? Reputedly, Singapore is a safe country with a large number of expatriates and this is a major selling point to Indian professionals. What other factors will influence the labor market in India? Another factor is the huge number of non-resident Indians (NRIs) returning and wanting to return to India.

The employment market in India   57

Figure 3.4  Shopping mall in Mumbai, Inorbit.

The interviewee remarked that, unlike Indian professionals, people in Singapore are protected and they are hesitant to come to India to work. One way to encourage Singaporeans to move overseas is to give better tax incentives. What is the level of understanding by Indian students about Singapore? He said that the company had undertaken exchanges of students with Singapore. For example, the principal of their school had taken students to Singapore (Shiv Shankar School). Students from Singapore should also bring other students here but they don’t want to come. He felt that most Singaporeans feel that they can’t learn from India but can learn more from the West. What are the consumption patterns in India? He said the economy is doing well, there is more money among the middle class and this promotes a cycle of consumption growth. Figures 3.3 and 3.4 show the shopping malls in Indian metro cities. In 2003, the majority (80 percent) of the middle class still had a son abroad who will earn more than he might have done in India. Nonetheless, he also admitted that the middle class has many options to earn money in India and fewer numbers are moving overseas. South Korean MNC, Chennai, 15 December 2006 The interviewee has been a Vice President for a Korean MNC for 10 years. The company started in 1996 and in 1998 produced its first car and he marveled that

58   The employment market in India

Figure 3.5  Shoppers at Inorbit Mall in Mumbai.

the whole development project was done in 18 months. How did he manage to recruit talented individuals for the MNC? He explained that employment with an MNC is the fulfillment of a dream for many people but the manufacturing sector was not glamorous to most people. His company did not recruit from elite institutions like the IITs and other branded institutions because these personnel will leave for better employment. Therefore, they recruited the next “layers of talent” called the “B class” and “C class” and focused on turning them into “high-flyers.” The critical factor for its Indian employees was that they should have a cosmopolitan outlook. This was not difficult because people in Indian metro cities usually deal with diversity. The company did not choose to recruit from an agency because he knew which personnel to recruit from the automobile industry and the source was limited. He and his team “head-hunted” specific and key personnel by flying to various other car companies in India. The other strategy was to directly contact the personnel being targeted in other companies. He established a recruitment task force and contacted people via company directories, and said the entire process reminded him of an army operation. What was the main motivation for Indian talent to leave another company and join his company? Many joined the Korean MNC because they were southern Indians working in the North who wanted to come back to the South. In terms of talent and quality of workforce, the southern Indians are more intelligent and

The employment market in India   59 submissive compared to northern Indians. Moreover, the cost of living in the South is lower and the attrition rate in the North is higher. Overall, he stated they had used the correct manpower plan and the correct mixture of professionals in the various sectors like IT and finance. Did the company suffer from high attrition rates? They have lost people to the fast expanding IT sector and the marketing sector in Delhi. In other service areas, insurance, and banking have also poached talent from the company. In 2003, the attrition rate was 6 percent but in 2006 it went up by 11 percent. What is the average pay for the IT sector? The average minimum wage for the IT sector is 20,000 rupees (US$435) per month which excludes incentives like housing, transport, and medical coverage for family, including parents, and canteen facilities which are subsidized. How many people are recruited on a yearly basis? This would depend on how much work we are doing. In 2006, the company recruited 2000 people because they were building a second plant. The Korean company was the first to establish operations in Tamil Nadu, next came Motorola and other foreign MNCs. Therefore, with more employment opportunities, the rate of attrition is likely to increase. The company believes in investing in people and in general does not recruit experienced personnel. If the fresh graduate is trained well, they are more loyal and likely to stay with the company for at least four years. The company does not conduct any placement talks and asks, what do you know about the Korean MNC? If the interviewee doesn’t know about the company, then he need not join and only those who are interested should come and apply. The company receives 2000 applications every year and those selected are assessed through various tests, discussions and interviews. The company does not have or enforce any “bonding” practices because it has no legal standing in India. In terms of in-house training, the company has various plants in many parts of the world and sends staff for training to these overseas plants. For example, it has established a college for “in-house” managers where a full time program is conducted in-house. The company has also sponsored executives to study in Korean universities for up to two years for a Master’s degree in management. The company is establishing an R&D center and will recruit 1000 engineers. They have also recruited talent overseas from their huge database and through their internet portals. Plans are under way to move the Indian workforce to other countries’ plants in 2009. For example, they are opening a plant in Georgia in the United States. What is the approximate strength of a plant? The actual strength of this plant is 3000 with 1000 lower-level employees and 800 junior management staff. What are the starting salary scales in Chennai? An engineering graduate with one year’s experience is paid rupees 400,000 (US$8696) per year but in manufacturing they might start at rupees 340,000. An IIT graduate might have a starting salary of rupees 700,000 (US$15,218) per annum and an MBA from a good business school such as an IIM might be paid rupees 600,000 (US$13,044) per annum. Are employers concerned about the escalating salaries? There was a meeting of the major employers to discuss the problem of attrition and it was highlighted, for example, an employee was receiving an 86 percent hike in salary. In another human resource case, after three years with the company an MBA

60   The employment market in India graduate was paid rupees 400,000 (US$8696) but joined another consulting firm for rupees 900,000 (US$19,566). On average, the salaries are on a 30–40 percent hike per annum. In addition, the costs of living have escalated and it might require rupees 50,000–60,000 (US$1087–1304) a month to retain good talent. Since 2001, the land prices have increased. Employers are bidding for professionals and an ordinary commerce graduate working in the BPO sector will receive rupees 20,000–25,000 (US$435–543) per month and they are buying cars and houses. Industries cannot afford the exponential pay rises of Indian human capital. The spillover effect is that nobody wants to leave India. What about returning NRIs? On average, the company receives more than 20 requests monthly from abroad for placements in the Korean MNC. Since 2004, it has been difficult to keep talent in the company. A 40 percent increase in salaries is not unusual. Are MNCs better able to attract talent? In some aspects MNCs have the advantage of branding but company loyalty is now non-existent. The human resource department is constantly facing a challenging task concerning staff retention and recruitment and sometimes they have adopted an appeasement strategy. In 2006, the emphasis was on engineering, services and finance and no longer on traditional professions like doctors and lawyers. Indian IT company, Chennai, 13 December 2006 The interviewee has been with this Indian IT company since 2001. She completed a BA in science and a Master’s degree in Management. Thereafter, she had her own business in marketing for a couple of years but changed to working with the Indian IT company in management and recruitment. Her company’s niche expertise is business requirement assurance which is a combination of services to banks and financial institutions. She said, “We are more in terms of domain side in terms of testing documents and plans for automation but from the bankers’ point of view and testing.” Since 2004, the market has really grown as people are beginning to test their programs and the diversity of the workforce is there. How are personnel recruited in your company? The freshers (new graduates) were recruited from group discussions and interviews undertaken by the company. In addition, a common test is also conducted as part of the selection process. No other requirements for the job? At the entry level, freshers expect to earn a lot of money upon graduating. What are the rates of labor attrition in the company? The level of attrition varies because of personal factors like marriage and then relocating to other cities for various reasons. However, a new trend is emerging with more women looking for employment opportunities. The attrition rates are dependent on industry variants and if a sector is booming, it will recruit heavily, if it is in decline, it will lose people. The company’s recruitment strategy is based mainly on project basis in terms of number of personnel and skills required. In 2000, the company had staff strength of 150 people but this had grown to 450 at the end of 2006. The larger IT companies have people specializing and moving on to higher-end job requirements or verticals, for example, they undertake all the data warehousing and also offer

The employment market in India   61 services like development and testing. The Indian IT company was focused only on one area such as banking and finance. Brandwise, the company will lose out to the bigger IT companies like Infosys and they are not linked to the big IT companies. However, in terms of work on testing, a lot of people working in big companies are linked to them because the only way people could get access to the Chennai market is to go through the company. In 2001, companies wanted to go on site overseas to reduce costs but in 2006, employees are happy in India and do not need to move overseas for employment like to Singapore. Moreover, in India, young people between 21 and 25 years stay with their parents, unlike in other countries, they are independent so there is no housing cost. What about indicative wage figures? In 2001, a college graduate would have earned rupees 10,000 (US$238) monthly but in 2006 it ranged from rupees 15,000–20,000 (US$357–476). Some brand companies in India will even pay rupees 25,000 (US$595) monthly. The IT companies on average have salary increases of 15–20 percent per annum. Manufacturing is also paying a lot because of the competition from the IT sector. The interviewee admitted that there is a shortage of quality IT professionals and freshers have to be recruited and trained. The company does not look at the colleges the recruits originate from because students join colleges for various reasons. The company recruited from any group and all colleges. Initially the company decided to recruit non-engineers but subsequently it recruited engineers for the technical work. Some companies wanted to recruit engineers instead of IT professionals because the former will stay a little longer since the demand for them will less compared to the IT professionals. For example, a fresher with a background in statistics or commerce is perfect for the company. What about the salary structure in the company? She replied that the company pays a little bit less than the market but is willing to recruit freshers and on average they will stay with the company for two years. She also said that engineering graduates are different from management graduates. She explained that for graduate hires, the top schools will be the IIMs, IITs and then the second, and third rank colleges. Are the salary increases sustainable? She replied not indefinitely because customer rates are not going up as quickly or as much as salaries are increasing. Companies also prefer to recruit fresh college graduates rather than experienced workers because the former’s salaries are lower. If there are “lateral” requirements, the company will place job adverts with consulting firms and job sites and usually receive adequate applicants. For college graduates, the company will place advertisements but don’t usually opt for campus recruitment because its demand is not that great and in a 450-staff organization it can’t spare staff for campus recruitment. What strategies are used to assess candidates? In 2003, we conducted a test and 7500 candidates registered for the test, of which 6000 took the test. In 2006, it is harder to get candidates and maybe only 15 percent of 7500 candidates might apply. She confided, if the company needed more recruits, it would have to dilute the quality and take more recruits from lower rank colleges. For example, a candidate who scores lower for a test by a point might be accepted but he might be able to speak well, communicate his ideas well and do his job well. In contrast, some candidates with high scores might not be able to communicate.

62   The employment market in India Therefore, after the test, the company will evaluate other soft skills like values and communication. For example, in a group discussion, candidates are observed whether they can communicate and speak logically. Are the graduates motivated to move overseas for employment? Some leave India and some just join other companies in India. Moreover, some of the IT companies that are based in Chennai are employing many graduates and graduates are consciously deciding not to leave India because it is possible to have a good lifestyle in India. Employees from Chennai are able to remain close to their parents and families. In addition, if a sibling is overseas then the other sibling usually stays behind to take care of the parents. Earlier you had joint family systems with several aunts but now everybody is moving apart and living separately. Therefore, if you have parents, it is only the children who are there to take care of them. Usually, in India, parents are not placed in old folks homes. In India, women now are also working to have a double income household. If the husband has to move, then the wife is obliged to stop work, but women now working is not a problem. Do you have support for childcare? In India, there is good support help here with parents and grandparents around. In terms of household expenditure you can afford a maid in India but in the UK it is difficult. What are the trends for returning NRIs? It is only since 2004 or 2005 that the NRIs have been returning in large numbers to India. The NRIs returned for various reasons such as the booming economy and to care for their aged parents. If the NRIs are earning a lot, they can easily afford a car and domestic help. What are the consumption patterns of the NRIs? In terms of consumption patterns, among the NRIs, the kind of durable consumer products being bought include microwaves and fridges. In terms of lifestyle, for the lower middle class, they are not used to spending on luxuries and only those from the upper middle class and exposed to an extravagant lifestyle are used to spending on luxuries. The upper middle class goes abroad on holidays but the lower middle class don’t go abroad unless they have a child working overseas. So the lower middle class who migrates would have luxuries they would not normally spend on in India. For example, a person who is an engineer will have a bike here but in the US he will own a car. In India, they do not have the modern electronic gadgets that they will get in Singapore. What about international exposure? Quite a number of people will move overseas for short stints on projects abroad such as those in the IT sector in Bangalore and Hyderabad. What are the approximate numbers of graduates being produced yearly? She replied, thousands graduate every year but out of every hundred, only 10 graduates are ready for the work environment. Some graduates are not able to communicate effectively or analyse problems. This is because the schooling system in India does not focus on communication and analytical skills but mainly rote learning by memory. For graduates from the illustrious IITs and credible engineering schools, they will initially examine IT jobs, next manufacturing and the final option will be to move overseas for a Master’s degree. In the management sector, it is overseas for a finance job and, second, consulting firms. What about her educational aspirations for her own daughter? She plans to send her own daughter to the UK to study since the US requires strict migration and visa

The employment market in India   63 requirements, or, alternatively, Singapore might also be an option since it was not very different from India. How does she rate Singapore as an employment destination? As late as 2005, Singapore companies were not able to attract Indian talent based on career choices but this has changed since 2006. For example, in IT, banking, and finance, more career opportunities are emerging there. Furthermore, companies in Singapore are outsourcing to India and the job requirements have increased and Indian companies have stationed their staff in their subsidiaries in Singapore for longer periods of time. How does she view the impact of returning NRIs on the Indian job market? Her company has employed people who have worked in the UK, the US, Switzerland, and now Singapore. She said, Indian professionals were still looking to Singapore because of its proximity to India. Proximity places Singapore at an advantage because the UK is much further away and most NRIs working in the UK could only have a two-week break in India before returning to the UK. In contrast, it is easier to visit India from Singapore. Furthermore, in terms of culture, Singapore is not that different from India and food is not a problem, making it easier to adjust to the Singaporean way of life style. If the Indian professional misses his family, he can always return to India. The savings potential in Singapore is higher than in other countries but the Singapore real estate has gone up a lot recently, which is a major problem. People find that what they are earning is not the same anymore. With increasing attraction, Indian professionals are moving to Singapore but the cost of living has really gone up and the number of apartments available has decreased. If someone has the opportunity of a job in Singapore, China, and the UK, they will “100 pick” (usually choose) the UK. They will also choose the UK for better savings potential and the great difference in work experience because Singapore might not be that different from India in terms of work experience. Working in the UK might also enhance the value of their résumés. Consultancy company, Chennai, 13 December 2006 The interviewee, a financial consultant, said that salaries in India are increasing and if you are qualified and innovative, you do not have to look abroad for a job. Is there still an attraction to work overseas? For technology and innovation, every young Indian graduate would like to work in the US. If they can afford it, parents aim to send their children to study or work in the US. However, there is an emerging trend for returning NRIs, even those that have worked 10 or more years overseas. What are the reasons for the returning flow of NRIs? In the early stages of their career, there was an initial euphoria about working in big MNCs to gain international exposure and to be involved in global research and development (R&D) initiatives. However, the emerging trend is that even after settling down in the US, the NRIs might decide to return to metro cities in India like Bangalore, Chennai, and Mumbai. How does Singapore rate as an overseas destination? Frankly, there is not much to attract graduates to Singapore. Although the workers might be paid about SGD$3000 or more, in the US they will be paid the same amount but in US dollars.

64   The employment market in India Moreover, foreign companies are opening branches in India to undertake back office work. In 2006, employment in the IT enabled services (ITES) sector was quite prestigious. How would he gauge the quality of graduates in Chennai? He replied, quite phenomenal numbers of manpower were being produced by Indian engineering colleges but he emphasized that Indians are naturally good at Mathematics, English, and Science. He added, South India is famous for education with the IITs and engineering colleges. What are the employment prospects for these students? Premium colleges are able to place students in the fourth year with top Indian companies, while the graduates in the second tier colleges, once trained, can become an asset to their companies. What are the approximate wage ranges? From the top colleges, monthly wages starts from SGD$1000 (US$714). Indian IT companies like Satyam and Wipro offer attractive work campuses that are modern with air conditioning and cafeterias. There is also a gym for employees to exercise after work. India companies are now able to create an extraordinary environment for comfort during working hours. Will there be a future shortage of Indian professionals? There are enough engineers to cope with the demand for professionals because the southern states of Tamil Nadu, Karnataka, and Andhra Pradesh all churn out engineering graduates. However, all the engineering graduates are keen to work in the IT sector and there is concern that there will be shortages of engineers in other sectors like manufacturing. Is there still motivation for graduates to work overseas? Indians will still move overseas for the savings potential and the “US dream” is still prevalent but the appeal of the US is subsiding because more employees are able to work on shortterm assignments in the US. However, the US is still seen as a land of opportunity and meritocracy. What about working in Singapore? He said it is difficult to work in Singapore because it is not as transparent as people believe. For example, it is relatively harder to extract payment from Singaporeans but the Americans will “deliver.” Moreover, for the Indian IT professionals, they are prepared with contingency plans in case of crisis but this is not the case for Singaporeans. In this context, has Singapore lost its attraction for Indian professionals? Singapore has always been a favorite among certain circles of Indian professionals but since the mid-1990s, Singapore has been aggressively courting more Indians to work there. He confided that Indians are comfortable with working in Singapore because there is “Serangoon Road. You have a settled Tamil-speaking community in Singapore.” He stated in relation to Singapore that, “You will only keep professionals who have seen the US. You can’t keep those that haven’t seen the US.” In contrast, there are not many Singapore companies investing in India and only the government-linked companies are keen to invest in India.

Mumbai employers Indian conglomerate A, Mumbai, 7 December 2007 This Indian conglomerate operates in a completely integrated business environment and employs a diversified range of employees, from management graduates

The employment market in India   65 to chemical engineers, but it has become a challenge to retain them and sustain them in the job. What are some of the initiatives taken to retain talent? Some of the initiatives taken to retain them were to provide challenging career opportunities for them and benchmarking compensation packages with other companies across India. There are various types of compensation packages like different compensation and variable pay plan and soft compensation packages. However, part of the main challenge in retaining talent is due to the location of some of their remote facilities. Until 2005, Indian companies were looking at fixed and variable compensation packages. The Indian conglomerate was the first company to link its compensation in terms of variable pay. He often advised his employees that if they worked hard enough, they could increase their compensation (salary) levels. Gradually, over a period of time, at a remote location such as in Orissa state, the company has also managed to develop a group of employees who have projects that have attained worldwide benchmarks. What recruitment strategies were adopted by his company? He replied, the recruitment is totally based on the company’s manpower plan. They do not advertise but entry-level salaries have “gone through the roof” (increased drastically) and each company tracks their local hiring practices carefully. How large is the company’s recruitment? In 2006, about 200 engineers were recruited but in the years to come projected recruitment will be around 2000 engineers annually because of various projects. However, annually, the company also trains batches of engineers. Does the company use networks for recruitment? His company maintains a strong network whereby they identify people based on performance and potential, for their future growth and development within the company. The company provides opportunities for people who want to rotate within the company. He said that proving new challenges and opportunities is a key strategy that has helped to retain talent. No area of the conglomerate is being neglected in terms of amenities to maintain staff contentment. For example, in remote locations there are full facilities and amenities for housing, schooling and medical purposes. What is his company’s strategy to manage underperforming human capital? He stated that for staff who do not perform to expectations, there is a strategy to assist them to meet company expectations through mentoring and coaching. What is the average rate of labor attrition in his company? The general rate of attrition is about 11 percent. What are the salary scales at entry level? He said the entry level salary is about rupees 250,000 (US$5435) per year and recruits are put through the company’s own training program and then it is dictated by marketdriven salary levels. For example, in the different compensation plans, those able to perform at a high level are given different salaries. He said “fast track” employees are placed on a different staff development program and the company locates high performers on a systematic basis. What are the recruitment strategies undertaken by his company? Usually, at the entry level, recruits are hired from college campuses while the middle and senior levels are recruited from the job market. At the middle level and senior management levels, the NRIs are returning to add to the pool of talent. He said, for those with “hard core” technological skills, the world is their market and they can have the pick of any job. What is the company’s

66   The employment market in India rate of attrition? He said the company was losing technical people to worldwide destinations or to higher education. Is his company able to meet the demands of growing salaries? He said productivity is helping to keep salaries affordable. Indian conglomerate B, Mumbai, 9 December 2007 Indian conglomerate B is the largest conglomerate in India. It has a diverse corporate portfolio, and until 2010 will be creating more assets than they have done since 2004. Which economic sector will be the largest employer in the short term? The vice president of conglomerate B said that until 2012, the largest recruitment will be in the retail sector. He added, based on the forecasts, there will be an estimated million skilled workers in the retail sector by 2012. In terms of retail, his conglomerate’s strategy is not only to focus on the consumption side but rather be transformational. This means developing the consumer market by increasing the capabilities and capacities in the rural areas. Through increasing the income of rural India, they become part of the consumers. Comparatively, India’s growth is much higher than China’s because China is investment-led growth but India’s growth is more balanced, based on consumption plus expansion. The productivity of incremental capital employed is much higher in India than in China. Is there a concern about the talent crunch? He replied, despite the worries about the shortages of skills, there are huge pockets of educated skilled workers. For example, in 1997, when building the conglomerate’s first refinery, which is the third largest in the world, the company required several thousand welders. They were not available in the area where the conglomerate was establishing the refinery. Therefore, they had to establish training schools to train welders and then they were employed by the contractors working to build the refinery. There are about 1000 workers on any given plant owned by the conglomerate. Apart from training, what other skills is the conglomerate able to impart to its workers? He said the conglomerate is able to recruit talent able to learn on the job (on the job training). For example, when the refinery project was completed, the welders were able to move onto other projects in the world like Southeast Asia and the Gulf. In the Gulf and the Middle East, the skilled welders benefited from the construction boom with their higher skills and greater exposure. What prompted the conglomerate to invest in training? He said people with “brilliance” (innate intelligence) are available although they might not have the skills. For example, when the conglomerate started its foray into the telecoms sector, there was a shortage of professionals but they created their own training program. The training for their telecommunication technological professionals was established as part of a university set-up. What is the average period of training required? Training varies from seven weeks to several months depending on the role they are playing. Training is also a good strategy to recruit talent. For example, the company has a graduate trainee program that is advertised and those who graduate as engineers could then apply for a job with the company. What is the average rate of labor attrition for the

The employment market in India   67 company? He said, “We lose people but we also gain people. It is a continual churning that is taking place.” He added, in 2006, the company carried out its largest recruitment at the Indian IIMs campuses. The conglomerate’s human resource staff also visited engineering campuses and all types of campuses but they also hire through recruitment agencies. This is, because of their name recognition, they will receive a good response from potential job applicants. How does the conglomerate assess its recruits? He said the elite recruits like the IIM graduates and ISB graduates will get what is comparable in the market. He added, employees are also allowed to move laterally but staff poaching is the norm in India. Are there any training links with universities? There is a program with IIM Bangalore but many employees go on sabbatical. For example, there are specialized training programs in cornea replacement and health care for the rural population. The conglomerate spends large amounts on social welfare to run educational foundations and to build hospitals. There are also scholarships for company shareholders. Why is there a need for huge investments in education? Education is government-controlled, therefore, staff salaries are low and the result has been high labor attrition rates. What is the trend for moving overseas for employment? He commented that there seems to be a “two-way flow” because there are people who want to go abroad and there are some who want to come and work in India. In 2007, the emerging trend was a large number of Indians (NRIs) coming back and even non-Indians seeking jobs in India. What about other sources of talent? Training aside, on a case-by-case basis, the company does take advantage of expatriate skills. There are people who want be part of India because it is a “happening place” (booming economically). He explained the NRIs are starting to come to work in India because government regulations that were previously restrictive have been liberalized. The company also employs several hundred expatriates who are non-Indians. The company is able to compete for the best global talent because these talented individuals want to work in India because of the rapid growth and challenges. Indian banker, Mumbai, 12 December 2007 The Indian banker completed his degree in 1988 in electronic engineering. He stated, among his “batch mates,” 70–80 percent had already migrated after completing their bachelor’s degree in technical subjects. The majority of his friends migrated to Silicon Valley in the United States and were doing very well for themselves. However, when they came back from the US for a holiday, they could see for themselves that he also had all the luxuries they have in the US, plus, unlike them, he had a chance of being with his own people. Moreover, he commented, if he worked overseas, like in the US, seldom would he receive the opportunity to be a “top grade” citizen in that country in question. In 2006, he spent 10 to 11 months working in the United Arab Emirates (UAE). He was keen because he didn’t mind working in a neighboring country where the travel time is only two to three hours away from India. He described it like traveling from Delhi to Mumbai but unlike traveling from the UK or the US to India. Due to the proximity of the UAE to

68   The employment market in India India, even though he was working outside India, there was the advantage of being close to family, which you can visit over the weekend. He explained that countries such as those in the Middle East, Singapore, and Hong Kong are like Calcutta and Delhi. Besides proximity, it depends on what kind of opportunities the companies are able to offer. He said Indian professionals did not mind working in these destinations because they will not miss out on family and culture. He explained that he went to the UAE for the experience, the money and the opportunity. The challenge was exciting, and he was able to save money because of the higher salary. The UAE is not far from India and in his eight months there, he visited India 12 times and more than half of those trips were official. It was not exactly the same as Singapore because the UAE is dominated by Indians and you have an Indian atmosphere and culture. This made him feel that he was working in a neat and clean advanced Indian metro. Did he ever consider migrating? He never considered migrating because of his staff seniority and he is happily settled in India. However, he does not mind a short stay as a deputation from an Indian organization up to a three-year period. It’s not that you can’t adjust, it is that your seniority is maintained. From the professional perspective, Singapore is followed by Hong Kong as the destination of choice. To some extent, Bangkok, but he is not keen to relocate to China. There was a temptation to stay in the UAE but there was a change in management decision and he was wanted back in India. He tried to look for opportunities but it is very difficult to get a senior position in these countries. His experience and ancestry (he is a Punjabi Sikh) do not permit him to undersell himself. He also stated that, in India, the financial sector, because of its large scale, is very challenging. The kind of business volumes he handles in India is greater than Singapore and Dubai. Therefore, unless the overseas banks handle volumes like India, he is unlikely to be interested in moving overseas. There is the potential for Singapore to handle more financial volume for the Southeast Asian region. What are his career plans? He does not intend to retire for at least another 5 to 10 years (2011 to 2016). He would like to move into slightly lighter roles and ideally would like to open a training center in a nice remote location. He believes there is a need to continue earning because there is no social security. People live till they are 75 to 80 years old now and he can’t totally retire and there is a need to continue working. What are his views on the NRIs returning to India in the banking sector? He said many can’t adjust back to living in India. They got married overseas and they are not able to adjust. Many have middle-class kids and they find it difficult to adapt to the Indian lifestyle. What are the trends concerning labor turn-over rates? Stereotypes about the North and South India financial sectors do not apply because there wasn’t staff poaching similar to the extent of BPO and IT firms. In absolute terms, percentage attrition might not be very high. Attrition is mainly at the junior levels. Attrition in banking and the financial services is high, as high as 10–15 percent. Many IIT graduates also join the sales sector because it is growing. Financial professionals are commanding the same salaries as those in the IT sector, especially in the core finance area and for those selling financial products. Those selling financial products

The employment market in India   69 command more. They can earn up to 1 Lakh (rupees100,000/US$2389) plus a month. This has to do with the opening of the insurance sector. The South of India has higher density of engineering colleges and they have attracted a lot of children from wealthy families. Investment manager, Mumbai, 11 December 2007 The interviewee had left India in 1985 but had never planned to go abroad. He used to work for a Japanese company. He studied French and the instructor told him to go to a French institute to study management and he did his GMaths entrance examinations. He gained admission but instead of going to France, he went to the US. He looked for a job in the US since opportunities in India were limited at the time but in the US things were very different. For example, corporations and business transactions in the US were much bigger than India. The US seemed so systematic and things operated at a different pace. From Philadelphia he moved to Wall Street. He had chosen to come back after being in the US for a decade and then in Thailand where he ran a private equity fund for four years, focusing on the ASEAN countries. He had always considered Hong Kong and Singapore but found these locations expensive. Like his counterparts, he found it more convenient in Thailand. He believes that things have changed in India and the economy has taken off. The Hindu growth rate is behind them and the politicians can’t “muck it up” (derail growth) too much now. He said opportunities for the financial sector were still at an early stage but are taking off. His considers his return to India rather late but employers globally wanted a lot of India experience. In 2004, employers would have paid a premium for graduates with a Western education but in 2007 they are looking for Indians who have been working in India with at least two or three years experience. This has made a big difference and the retail sector and consumer banking are growing. He said India Incorporated (Inc.)9 is growing, the deals that have been made among corporations are showing vision and growth instead of being purely dependent on foreign direct investment (FDI). Previously, companies weren’t permitted to append forex (foreign exchange) but that has now changed. Indians are buying companies overseas now. How would he define India Inc.? India Inc. is a euphemism for the large business houses in India, and they act in their own interests. There isn’t a government policy that controls their direction. But because they are in one geographical location, they are referred to as India Inc. Large corporations do act together FICCI and CII. Indian companies come together and promote India overseas. If one Indian company makes inroads in China, for example, another Indian company is close behind. The environment in India has become a lot more open and it is no longer the case that the government regulates everything. What are his views on consumer demand? This is related to Indian talent remaining in India because credit is now available and consumers have the benefit of mortgages and access to consumer durables and services. However, in his own case, readjustment back to India has proven to be difficult. Of all his relocations

70   The employment market in India overseas, the move to Bombay (Mumbai) has been the most challenging. Why has it been so difficult? He said it is a difficult city “to come to grips with.” Finding good accommodation is a real challenge because the available flats are small and the facilities provided in his building are limited. The construction is poor but the supply is limited and the cost is exorbitant. Moreover, his place is far away from his office and he spends three hours daily commuting. He said, “Spend an hour and half in the morning (to get to work). Can’t find relief, spends time going round the CBD (Central Business District).” The relocation to India has been challenging physically and emotionally but he has managed to find accommodation but at an exorbitant price. In India, things don’t work as smoothly as he wants them to and he feels Bombay may be losing out on growth because of high real estate prices and traffic congestion. He said, “People do conference calls instead of meetings.” The rental cost for office space is very high and in terms of real estate one would be paying the equivalent of USD$3000 to 9000 per square foot. With all the challenges of returning to India, why did he return? He said, “Upbringing and nurturing family environment helped me keep rooted. My family connections brought me back. I kept my business involved with India.” He added, “India provided an opportunity to be connected with it workwise. He can be an American and can be Indian too.” He also returned to India partly because his wife wanted to be back in India. His children have had a few moves, they are resilient, but they also gain from living in various places. His children are better equipped to handle many situations and have been in American schools in the different destinations of his job postings. In the mid-1990s he was in Delhi for two years. There he found people who were not that responsible and refused to take ownership of things. Now he is dependent on the mother bank. Someone with a financial background from an IIM with four years of experience will cost the company rupees 200,000 (US$4445) a month. Banker B, Mumbai, 15 December 2007 Banker B commented that since 2006, salary levels have risen substantially. The top management may have salaries in the range of 5 to 10 crores (10 million rupees, about US$1,111,112–2,222,223) at the top per year. They get bonuses and perks and there are close to 500 people in India’s top management who get salaries as high 23 to 24 crores (50 million rupees) US$5,111,112–5,333,335) to a low of rupees 5,000,000 (US$111,112) per year. In Bombay, the “cream” of talent is more or less the same everywhere. They have the same houses, cars, bars, offices. If he moved to an office in London, he would be “up and running” (working) within three days. He said the infrastructure is really bad in India and it’s a case of “Islands of excellence and oceans of mediocrity.” A lot of labor “turnover” is happening in the BPO sector and financial services. In his own bank, they are experiencing a lot of turnover because recruitment agencies and companies are poaching graduates right after they complete their college requirements. There is a mismatch of demand and supply of talent, however, India is growing too fast in certain sectors and people are paying to get the talent they want, but some people still go abroad. He added,

The employment market in India   71 one of his colleagues had just resigned to join Standard Chartered in Singapore. What about the lifestyle in Mumbai? He said, “You may have the money but the clubs are few, the schools, very few, are good. The roads are still clogged.” He explained, from the Bombay point of view, they are paying more for hotels there than in New York and London. India does not have enough hotel rooms. But things are changing and their biggest advantage is that they are a democracy and they speak English. This gives India an edge over China and Vietnam. The Indian stock market has done well but everybody has done well. There are a lot of people coming back from the US. Is there still talent outflow? He replied, there is an outflow of talent, for example, the blue-collar workers are still migrating and most never return. But India’s “best and brightest” are coming back and employers in India are paying good salaries and perks by way of stock options. Could he explain why he returned to India? He finished his commerce and law degrees in Bombay and he went on to work in the US. He had a wonderful job but in the US but because of family constraints he had to return. He added, “Then I was reluctant to come back but now I feel it was a good choice.” What about problems in settling back in India? He said, “The fact of the matter is you can’t get a good house in Bombay. For 5 kilometers of prime land in the South of Mumbai, it is one and half million US dollars. As a result, people are moving all over the place. Even quality schools are scarce.” How have lifestyle and consumption patterns changed in India? He said India has every brand of car available to the consumer. India is a great place to live but people will still migrate because of the overall quality of life because normally they will spend two hours in the car or train to commute to work. They may commute in a Mercedes but it is still two hours in the car. What are his future plans and would he move again overseas? He won’t move in the long term. If in the short term, an interesting job comes along, he will look at it very hard. However, a lot of Indian talent in the banking sector will move because everybody wants the experience overseas. However, unlike in India, in the US, Indians get help from extended families. How do countries in Southeast Asia like Singapore benefit from this? In certain areas like education, if he was to choose between Insead France or Insead Singapore, he would choose Singapore because it is closer to home and cheaper. Moreover, Asia is a growth area and all the sign indicate that he has to be in Asia. He said numerous professionals including NRIs from Europe and the UK are coming to India. What about the outflow of Indian talent? A lot of Indians will migrate to Asian countries like Singapore. They will move to Singapore because of its system and process-driven ways of working as it is like Switzerland. Not many people will opt for other destinations. From a work perspective, it might be Vietnam, Shanghai. It seems like a hardship posting but Singapore will be a perk. If we traveled abroad, it was shopping in Singapore and Heathrow duty-free. Up to 5 years ago, flying to Singapore was attractive to buy your laptop. Soon Indian promoters started opening up shops to promote Indian tastes and preferences. Describe the changing consumption patterns in India. The youngsters have more money and more branded goods are available. Brands like Dockers and

72   The employment market in India Gucci are all available in India. He believes Indians are mainly browsers but there are fridges and TVs even in the slums. Even in villages and tier II cities there are mobile connections and money is circulating. What about the middle-class consumption patterns? He said if he were earning between 5 and 10 lakhs (100,000 rupees/US$2380) per month, that would be middle class. In terms of housing, they will move to the suburbs and put 15 percent down-payments and take on loans. He said, “There are so many loans on credit cards, loans to buy cars and houses.” In the past, in India, families still lived together under a single roof, so there was a lot of cost saving. In the US, he did not need a nanny or help and there was Mediclaim for which he paid 3000 rupees (US$71) a year and was covered up to US$6000 dollars a year for medical care. Infrastructure development, Senior Vice President, Mumbai, 3 January 2008 The interviewee is a Senior Vice President for an Indian conglomerate that recruits hundreds every year and specializes in building infrastructure in India. He has worked for the conglomerate for more than 12 years. We began by asking his views on the labor market in India and his views on Indian talent. He said that the difference in salaries will be more or less level globally and that the output of people are tradable and transboundary in nature, except for services that are not exportable like haircuts and massages. He added, talent will seek its highest return, and for talent to migrate from India, it will not happen at the same price. He stated that there is uniformity in terms of culture globally but family relationships were irreplaceable and these relationships are strong in India. Is there an outflow of Indian talent despite India booming economically? People do find opportunities overseas but increasingly people are coming to work in India. Which are the growing economic sectors in India? There are strengths such as in technology. For example, in construction, opportunities are opening up in terms of infrastructure and chemical refinery and design and manufacture of engineering products that go into process plants. There will be opportunities in infrastructure development for the next six years (until 2012) and the estimated amount required to upgrade India’s infrastructure in that period is US$300 billion dollars. In 2007, the Indian government spent US$35 billion dollars annually but this is expected to rise. Investments have to come from other sources such as insurance companies and multinational agencies. His conglomerate is the biggest construction company in India and it builds infrastructure such as airports and roads. What is the staff profile in his company? Predominantly engineers are needed from any talent pool, but his company also recruits from the IT sector and business. Is there a talent crunch occurring in India? Previously, the human resource departments had operated in a protected environment. In 2007, job opportunities increased and retention of talent was a growing challenge. However, he said that most developing and developed countries are having problems retaining talented staff. What is the rate of labor attrition in his conglomerate? Attrition is a given fact of life in his company. Rather than resist it, his company have to deal with

The employment market in India   73 it. One strategy to meet this challenge would be recruiting more than the company requires so that they have the margin to lose some recruits at a later stage. What are the recruitment strategies employed by his company? The HR department undertakes visits to campuses and employs the services of recruitment agencies and advertisements. Recruitment can occur at a junior level up to the board level. His company is recruiting 2000 people a year. Predominantly they are from an engineering background but the stock of educated people coming onto the Indian market is increasing. What qualities does his conglomerate look out for in the applicants’ résumé? The conglomerate examines family backgrounds, extra-curricular activities, educational qualifications, ability to handle senior positions and how recruits treat fellow workers. He confided, at the fresher level, the company has the hardest time in the first and second years and usually face high attrition rates because money is most important for employees at that point of time. However, there is a gap between what the IT industry is paying in wages and what the other sectors could afford. There was a lot of movement to the IT sector. There are many NRIs returning to India after 20 to 25 years working overseas. Why are they returning to India? India is a happening country. He asked in return, if Westerners are attracted to India, why not Indians themselves? There are opportunities in India but there are also constraints on finding quality professionals. Manufacturing company, Mumbai, 21 December 2007 This manufacturing company started in the 1980s and produces laminated tubes. In 2000, the company merged with another company which was producing polymer tubes. Then it was a new concept in India. In 1989, aluminum tubes were still predominant but firms started to change to polymer tubes. In 1992, the company’s operations stabilized and a second plant was established as the company ventured into Egypt. Their main client, Proctor and Gamble, stressed that they have to be near to their customers because the tubes are bulky and it is not viable to transport them over long distances. This manufacturing company was one of the earliest Indian MNCs to go global. In 1995, the company faced more obstacles to higher growth because of larger competitors, therefore, they decided to diversify and produced catheters for surgical uses as well. The interviewee is a manager in the human resource department. What is the typical profile of the company’s employees? There are about 2100 workers from 20 nationalities with a presence across the globe, apart from Australia. What is the skills’ composition of the workforce? The workforce is mainly composed of technical people based in production plants. The other personnel are in manufacturing, sales, finance and accounts, information technology, supply chain management, maintenance, and mechanical engineers. What strategy does the company employ to recruit and retain talent? He confided that in various niche areas it is hard to obtain people with experience, hard to poach talent from competitors such as Alcant. There are some alternative sources from smaller companies and related industries like paper tube manufacturing.

74   The employment market in India What qualities does the company look for in potential recruits? The workers have to understand the principles and dynamics of the company but they have to recruit what talent is available and mold it to the company’s needs. Describe the training process in the company. Their HQ has developed various strategies. On-the-job training has been developed with a mixture of workers with experienced and fresh new graduates from specific industries such as polymer plants. There are various types of training programs based on the level of expertise required. For example, in tubing courses, workers could be taken from one plant and trained in another, with on-the-job training. What is the learning process? Higher level positions, such as plant heads, have to learn from more senior people to gain more exposure. Some new hires could not join on time because they have to do a “hand-over” at the former company. So the transition is handled by human capital from HQ, on a temporary basis, HQ has people with manufacturing exposure. When the new hire comes in, the new hire will then learn from the transition. What is the average rate of labor turnover? This would be similar to the industry average but different countries have varying rates. In India, there is a higher rate of labor turnover because of more opportunities being made available. For example, the printing department has a high turnover. The department hires freshers but usually after four to five years of experience they move to the Gulf region, because they are paid higher there. Their employees are well trained and are in demand in the Middle East and African countries like Kenya, South Africa, and Tanzania. He acknowledged that despite increasing their wages, a portion of the company’s talent will leave. In 2007 to 2008, there was a high labor turnover because India is booming economically. What strategies does the company implement to retain talent? At the more senior levels there is a lower level of labor churn. For example, some of the longer-serving senior staff included head of medical devices (12 years) and head of design of fluorescent tubes, new designs, anti-counterfeit measures for pharmaceutical products (17 years). The company has a structured policy concerning human capital and many companies have learnt from their model, as they had also learnt from their client companies. For example, in the informal work structure, it may be difficult to meet various people simultaneously, therefore, the human resources department may have to meet one staff member at a time. They learnt from Proctor and Gamble the strategy of flexitime, but staff must keep the boss informed. This is attractive for workers and they are committed to completing their job or tasks and they are also able to work from home. Workers compensation in the case of death, a senior person could decide on the matter and release the ex gratia payment (given to the family) to take care of expenses/funeral rites. This has happened on two occasions. Medical insurance coverage is mandatory and the company has exceeded the mandatory medical insurance needed. With the shortage of niche talent, does the company recruit foreigners? He said the hire is “open” to any national but this practice is not prevalent. In 2000, when the existing company acquired another company, the latter company had manufacturing plants in several countries like Colombia, Venezuela, and different parts

The employment market in India   75 of China. Hence, they also acquired human talent via acquisitions of different companies. In the US, they did hire mostly a new team to establish a manufacturing plant. The hires from the various plants are mainly locals because it is not practical to send Indians to work in the US for a long time, especially if there are already qualified people in the US. In order to start new plants or operations, they have sent people from India to train the local talent or if the need to “troubleshoot” arises. When a new plant is started, the company may dispatch personnel from India for a few months to a year. In the case of acquisitions, people from HQ or Indian plants will be sent abroad in stages, like manufacturing and finance, to gauge the operations of the acquired company. In India, they have not hired from Western countries but in their overseas plants they have cross-posted their staff. For example, British workers could be posted to Poland. Some staff might have exposure in East Asia and they are versatile and can be moved around the globe. Describe the thought process that is taken in hiring staff. He said, for the recruitment of new talent and freshers, the company implemented many hiring strategies. The company looks at competitors, other packaging industries, raw material producers, talent in FMCG companies to help with sales and after-sales services. Finance graduates are recruited from colleges, but they face competition from consultancy firms like McKinsey and foreign MNCs. The company would also examine the smaller colleges and diploma holders with some relevant training, attitude and drive. In addition, the company has its own procedures and screening process, qualifications, for different staff. The human resource department do not implement written tests for candidates but when recruits are hired, there is a very thorough induction process. The company also has a scheme of acknowledging who has joined based on recommendations from existing employees. There is talk of giving a fee as an incentive to workers who recommend good hires. The recruitment agencies are also used to fill senior and technical positions because it is not possible for the company to spot all the available talent. Does the company hire NRIs? Some NRIs that are working overseas may wish to come back to India and there appears to be an increasing trend of NRIs returning to India. There are many NRIs in the company, especially in the printing sector, who have come back and they are taken back because they had left for legitimate reasons, for example, to get more experience overseas. There are many husband and wife teams working in the company. Many have also left for a competitor company but after two years they are still accepted back because they realized that this company is an open and welcoming company which has a “human touch.” Financial services company, Mumbai, 27 December 2007 This company provides training for Indians in the trading services and stock exchange. They are a market leader for the stock exchange training and software. The company has some 800 employees. Their average turnover daily is US$3 billion dollars and they have links with several companies. It is a technologydriven company that provides technology solutions worth up to US$3 billion dollars. What kind of human capital does the company recruit? The company

76   The employment market in India usually hires talent that are either technology specialists and business analysts. Where does the company hire from? They hire from management institutes and engage the services of recruitment agencies. What are the capabilities of their hires? They receive good quality people who have taken written tests, panel interviews and job tests. The company is facing more competition for talent because various MNCs are heading for India and they are employing in the thousands. For example, firms like Walmart, EDS, IBM, in various sectors. Does his company suffer from staff poaching? He said the company has experienced poaching but the government cannot regulate an anti-poaching law. The challenge is human capital retention, for the HR must be the innovator and facilitator to retain talent. Does the company hire expatriate staff? Since 2005, the company has used expatriate talent from Europe and the US at senior levels. Is there an Indian way of running a business and working? Not really, there is only the company culture which stresses transparency and treating employees well. What are the main challenges for the human resource department? The main challenge of HR is to align with the business strategy of the company. The HR manager should be part of the business in order to measure and quantify the performance of the employees. Second, to differentiate between the performers and non-performers and, third, to develop different career plans for the achievers and performers. The HR manager has to deal in a focused manner with the nonperformers for skills development. Indian human capital is generally cost effective. Is there a talent crunch in India? There are large numbers of technical colleges and management institutes locally which produce vast numbers of graduates who are ready to take any assignment. There is a high level of competition and high compensation. Usually, there are greater expectations from the graduate staff especially in the IT sector with at least four to five offers at the entry level. Even those at the senior level and the retirement level are being reemployed. People in the defense industry and the academic field are also moving into the corporate sector where the salary packages are much better. What are the rates of labor attrition experienced by your company? He said, in 2007, the attrition rate is not high across the board and becoming more stabilized apart from the IT and BPO industries. Graduates not keen to move overseas because of the high compensation and opportunities in India. This is a different scenario from four to five years ago. There is also a reverse flow of talent and salary levels have increased. He said, in 2005, US$300,000 per year was a dream salary but now it was quite common at a senior level. He said talent management is a challenge for the HR department. Talent acquisition is not difficult but the problem is in retention and skill development. What about the outflow of talent? Personnel in the IT sector with less than five years experience are still leaving and staff in the R&D business are keen to move on. Have the standard of living and consumption patterns changed in India? Is this a push factor to move overseas? He said no, because the quality of life overall has increased. At the age of 25, graduates are purchasing houses and cars, whereas, in the past, only those in their forties and fifties could purchase houses and cars. He added, the infrastructure and public amenities need to be improved, especially in the metros but its better in the smaller towns.

The employment market in India   77 With the entry of MNCs, what has been the impact on the Indian companies? The challenge of compensation for Indian-based companies is increasing. What are the human resource strategies adopted by these MNCs? Generally, it is to recruit freshers and train them but they also poach at the senior level from Indian companies. Is there a talent crunch? He said this depends, because there is talent from the semi-rural areas that has ability and potential but is poor in communication skills, therefore, there is a need for companies to nurture and develop these recruits. There is a talent crunch at the experience level of four to five years and at the senior level but not a freshers level. Mumbai and the quality of life in this metro city have changed with new trends in consumption patterns and the emergence of shopping malls. Salaries and wage differentials have risen more than 100 percent at least in the past two years (i.e. since 2006). Would he contemplate moving overseas? Now the eagerness and restlessness to move overseas are not there. He believes that he has a better life, better self-esteem, more respect than his colleagues who have moved overseas. In the past 10 years (i.e. since 1997), his former peers are coming back, and would work under him and start from scratch and need to readjust. The foreign experience since 2005 does not account for much because it might not be relevant for India. Are there differences in the HR practices in India compared to those in the West? Possibly, for example, on Independence Day, every employee in his company donated blood and the company also donated cloth and sweets to charities. This type of corporate responsibility instills a sense of pride and emotional bonding in his country. He feels there is a sense of family and cultural values that is not found overseas. Is this sense of culture and pride missing among the NRIs? He said yes, because after seven to nine years overseas, they “lose touch” with this aspect of Indian culture. However, this sense of cultural pride is becoming stronger because apart from money, there is a need for family and sense of selfactualization or social recognition. What about talent attrition and the mobility of talent? Are Indian companies moving their Indian talent outside? He said yes, talent rotation and exchanges are happening. Are NRIs returning to India? Are they bringing experience and changes to India? He said from 2007 to 2010, more will be returning because he receives about 20 to 40 résumés every day inquiring about job opportunities. In all sectors of the economy, India is no longer a hardship posting. Is there a knowledge gap about current Indian wages for employers in Singapore? He said yes, and if foreign companies are not aware of this, they will suffer. He said, if MNCs such as Microsoft, IBM, EDS, HSBC, and Barclays realize this, Singapore companies should realize this as well. Are Indian companies able to compete internationally? Indian companies are competing even in China. Is infrastructure an important factor in economic development? He said in terms of economic competition between China and India in IT, India is still ahead in design, planning, innovation. Is there security sensitivity surrounding China investing in India? He replied, China is giving tax relief, and free infrastructure services to attract Indian companies. Lots of Indian companies are receiving collaborative help and support in China. Are there differences in business styles between China and India? He said the management and leadership capacity

78   The employment market in India in China are behind that of India and the English language is a strong point for India. Rising expectations of employees? He commented, staff with two to three years experience in India might still be excited or be enticed to move overseas. However, now they are able to get loans, and in terms of marriage proposals, girls working overseas for more than eight years would find it hard to get a marriage match. Are East Asian destinations attractive to Indians? He said yes, Indian graduates are still willing to move to these places. Why would they move to East Asia? They would move for career advancement, lifestyle and opportunities. Nonetheless, there is a two-way flow because NRIs are also moving back from these countries to India and companies in India are also giving provisions for the NRIs to return. Oil and gas company A, Mumbai, 24 December 2007 The interviewee is a mechanical engineer who has been in the oil industry for 25 years and started his career with the Indian Oil Corporation. He worked there for 13 years before moving on to a French oil company and had worked in the French company for eight years managing technical product development. Thereafter, he joined another oil company which was specializing in chemicals for the petroleum industry to make lubricants. In the past six years (i.e. since 2001), he has developed core expertise and worked in all aspects of the petroleum industry. His present company started in 1934 and he is currently heading the product development with 24 company regions. He said India is part of the Europe and East Africa region, and he reports to London. The Far East region is a separate entity, including China and Southeast Asia. He graduated in 1980, so why did he not move overseas for employment? He was not keen to move overseas. It was not easy to move overseas because he would require family support. Soon after his graduation, his father passed away and he had to help his family. Financially, a lot of resources had to be put into stabilizing his family. He did have ambitions to move overseas but faced personal constraints. Is there a reverse flow of NRIs to India? Was he ahead of his time in remaining in India to build his career? He feels a part of developing India. The Indian economy has grown slowly but he is now ready to reap the dividends when the economy is finally taking off. If given the choice, where would he like to move to overseas? The only destination he would look at would be in Europe, especially London, if he has to move on from his present job. Would he move for a more senior position in Southeast Asia like Singapore? He would move for a more senior position to Singapore and Europe but not to Dubai. Dubai’s lifestyle does not attract him, if forced to he would move to Dubai for a year at most. What about Kuala Lumpur or Bangkok? No, he is not keen to move to these cities. Was he ever tempted to work abroad? No, he is happy to work in India in the oil and gas industry because of the economic boom in India. In view of the costly lifestyle in Mumbai, would he have a better lifestyle overseas? Yes, Mumbai lacks infrastructure and is lagging behind economies in East Asia. Traffic is very bad. But there is basic water and electricity supply. Life is difficult but he learns and

The employment market in India   79 is able to manage his way around. He is from originally from Bangalore but spent a major part of his career in Mumbai. Had only brief working stints outside of Mumbai. He has never worked overseas but has travelled overseas regularly on business. Therefore, there is foreign exposure for him. Moreover, he has reported to London since 2007 and three to four times a year he has been to Singapore. He has also been to Dubai regularly. Challenges in the petrochemical sector? This sector has changed in terms of the structures of duties for imports. It has become more conducive to venture overseas. Indian companies have reaped the benefits of doing business overseas. On average, Indian companies do not have the resources to make their products internationally competitive at this point in time. A lot of petroleum products and chemicals are still produced overseas and imported. Is there a shortage of human capital in the oil and gas sector? Is there a talent crunch? Yes, there is a huge shortage because of the demand from the services sector. While sectors like IT, insurance, banking and retail have attracted a lot of talent, there is a big shortfall in India in the oil and gas sector. What is the rate of labor attrition? The product development side is hard to gauge but in the refinery segment or upstream in drilling and exploration, there is a huge shortage of talent. His views on the rising wages in the oil and gas sector? The industry on average has increased wages by 10 percent but, since 2005, the wages have risen by more than 40 percent. Younger professionals are receiving wages that are very high compared to previous levels. The oil and gas sector is not attracting good people or new talent unlike the services sector. This is because of the better conditions and pay in the services sector. Despite the boom in the oil and gas sector, the new graduates are not very interested and the sector receives very mediocre talent. The vast majority of graduates go into the IT and services sector. In his downstream industry in the larger oil and gas sector, the niche is more specialized and the talent is not really moving overseas. Would he train the fresh graduates coming in? Yes, there are training and induction programs. His company has spent a great amount of resources on R&D and product development. So the person selling this product need not be so talented if the product is good. R&D – is there sufficient talent for this? How would India be rated in the oil and gas sector? Globally, India does have good technical people, but the vast majority do not stay in India and move overseas. Would it be advantageous to lure these talented people back? It would be advantageous for India to attract NRIs to return to India. However, it would take time because India’s progress in this sector has been slow. There is a reverse flow of NRI talent returning to India. His conglomerate is also hiring expatriates (both Indian and non-Indian). Where do these non-Indian expatriates come from? They come from everywhere and especially from the US, the UK, and Europe. Their pay and remuneration are different because they have to be internationally competitive. There is no hesitation for internationally competitive talent. His company deals a lot with other large Indian companies and has developed good relationships and he has seen this developing over 20 odd years. He has seen his client’s company evolve in the past two decades. The profile of the workforce is changing. For

80   The employment market in India example, the head of department in the R&D section of his Indian client’s company is British, there are two other expatriates at senior levels. What are the characteristics of the Indian employment market? There are several industries which use the global talent hunt to gain international competitiveness. He predicted there will be increasing shortages of good quality people in India. It will be very difficult for HR departments to retain talent and they have to evolve or develop new strategies. Is the IT sector too attractive to talent? He said the IT sector’s attraction is cyclical because people with core strength and values will probably move on to the next “big thing” and not remain in that sector, especially if they are in the ITES industry. What are his views on the NRIs? He believes the overseas Indian talent wishes to maintain strong links with the “motherland” (India). The NRIs might also prefer to have their children educated in India especially if they are working in the Middle East and the Gulf states. Is there a reverse flow of NRIs? He said definitely, even NRIs who are quite senior in their organizations are returning. For example, he has a friend in Intel Corporation, who been in the US since 1986. His friend became a US citizen but he moved all his family back to Bangalore in 2006 and applied for jobs with MNCs. He got a job with IBM and settled in India because he wants his daughter to grow up in an Indian culture. However, some NRIs are unable to make the adjustment back to working and living in India. For example, his own brother, who is in the steel industry, was working in Mexico and tried to move back to India three times but was not happy and left, but he had settled his own family in India. If he came across ethic Indians overseas, is there any affinity to them? He said yes, but he found Indians who were born and residing overseas different from those in India. He thought it could be that the upbringing in Singapore and other overseas countries is different. He added, between Singapore Indians and those in India, there is a gap in their relationship. Indians brought up in India have more cultural values and are more orthodox than in Singapore. He said, “You may not find the same element of orthodoxy outside of India,” For example, he does not eat meat but the ethnic Indians in Singapore do not have such qualms because it is their way of life. In particular, the Gujarati community are very orthodox and superstrict vegetarians but some have migrated to Fiji, Holland, or Surinam where they have changed their food and eating habits. However, he said, “There is no harm in eating beef.” In what other ways are NRIs different from the Indians in India? The NRIs are more professional and have developed a disciplined mindset which is not evident in India. For example, Singapore demands an element of competitiveness and discipline which is not evident in India. Is India booming a hype or reality? He said, in 2007, India booming is real. He admitted that even in 2005, he was quite cynical about the booming Indian economy but he is now convinced that changes are happening on the ground to support this. For example, he was asked to develop a business plan for the US and had to examine different sectors and pored over a lot of data. Then he began to realize that India is a country that has been waiting to “explode” (take off economically) since 2005. He looked at the hard facts and data but the lack of infrastructure was retarding the boom. Nonetheless, economic growth has “kicked” in and the

The employment market in India   81 consumption patterns of the middle class in particular are becoming more obvious. He gave a banker’s view of India in a measured tone. He managed to get hold of a Deutsche Bank presentation of India and this opened his eyes to India booming economically. What are his future family plans? The world is shrinking and the faster he “plugs” (connects) into the global community, the better he will be in adapting to different cultures and work environments. He has a son and a daughter. Would he send them overseas for tertiary education? He wants them to finish their basic education in India and then show them what is available after that. Universities in Singapore are attractive, such as NUS and NTU. His son has been to Singapore and likes the environment in Singapore. He will monitor his son’s academic performance and assess whether it’s practical to move his kids overseas. India is competitive. He does not have the financial resources to support his son to study in the US but Singapore and India are definitely options. India is very competitive and is good for exposure and experience. He would leave the choice of working in India or overseas to his son. Does he see a changing mindset in India? Is the Indian way of doing business changing? India is progressing in other sectors besides IT, such as petrochemicals but incrementally. India’s domestic growth is both a boon and a curse because there is great demand domestically so normally Indian companies have not had to look overseas. Oil and gas company B, Mumbai, 2 January 2008 The interviewee works for an oil and gas company. He has a PhD from the Ministry of Technology in Delhi, and an MSC from Agra University. He is married with two kids and his daughter has completed college in commerce and working. He has 25 years working experience in the oil and gas sector. He has work experience in downstream oil and gas technology, related to fuels. He started his career in 1983 in Bharat Petroleum (a state-owned company) in the technology sector. He headed the product development section at Bharat Petroleum. In 2004, he left to join a private oil company. Presently he is working on international product technology support. Why did he make the change from the public to the corporate sector? He said during his time at Bharat Petroleum, some senior employees were given the opportunity to leave the company under a “Voluntary submission scheme” with compensation to work elsewhere in the private sector. He realized there were overseas opportunities like in the US and he could gain from global exposure. Has he managed to attain more global exposure? He said yes, because he is responsible for product technology in 70 countries and this was not present in his earlier assignment. What are the new trends emerging in the oil and gas sector? He explained, there are changes happening in several ways and the sector could be considered the most dynamic after the IT industry. Apart from the sheer need for energy resources as India expands its economy, the country is also concerned about standards such as carbon emissions and environmental standards (climate change effects). What about the motivation to move overseas? Some of his college mates

82   The employment market in India did move overseas but he did not feel inclined to do because obtaining a job in the 1970s was difficult and he felt comfortable working in his organization (Bharat Petroleum). Comparatively, in terms of career development, he felt that he did not miss out by not moving overseas. He feels he has done reasonably well by continuing to work in India. Regarding the phenomenon of returning NRIs, is he ahead of the curve of returning NRIs? He admitted this may be true because local experience does help in the working environment in India but the returning NRIs will also bring in valued skills and experience from overseas. He feels there is scope for greater human capital movement in the oil and gas sector both upstream (refining/marketing) and downstream (exploration and extraction). What are the rates of attrition in the oil and gas sector? In the mid-1990s to the mid-2000, only the private sector was involved in the upstream aspect of the industry. There were low attrition rates of 2 to 3 percent. The lubricants sector started to liberalize in 1991 and the rates of attrition started to increase because more employment opportunities became available. In 2007, most global brands are available in India and the rate of employment attrition has climbed to 20 to 30 percent of the total workforce. What kind of talent is required in the industry? Technical people, especially engineers, are required in the sector but also chemical engineers and IT specialists. The refining sector always had higher levels of attrition and professionals are now receiving perks such as extensive travel to the US and Europe. What about employment in East Asia? He said, in the sector, there is not that many who would go to the Far East. Moreover, the retailing side in the oil and gas industry has also improved. Where do large companies like his obtain their talent? Big companies like his can recruit senior people from the public sector companies and with further expansion they will recruit freshers. However, while numbers are available, the skills might not be up to the mark for the company and these new recruits might require further training investment by the company. They might have to develop skills-specific colleges for the sector. They might have to start their own training institutes like Infosys at Mysore. They need the numbers so it might be worth their while to take this approach and train their own talent pool in a six months to one year program. Public sector companies have a training program but in the private sector this might not be available. The time frame is also important because in the short term there will always be a shortage of experienced and senior people. Describe the “wage gap” between the IT and non-IT sector. In 2000, there was not much of a gap at the initial level but this has increased over the years. The non-IT sector will face a continuous lag in wages. What about his children’s future? It’s up to them to decide whether they want to stay in India or move overseas to further their careers. He believes Indian human capital will continue to move overseas especially in the IT sector. What are the challenges facing the oil and gas sector? Are they being addressed by the government? Oil pricing is a major problem because the price of major fuels is indirectly still controlled by the government. What would it take now for him to move overseas? Looking at the senior level, it would be wages, compensation, lifestyle, work challenges, but all these are also

The employment market in India   83 available in India. Are global mobility and exposure still relevant to Indians in the sector? Yes, these are still important for survival and to thrive in career development with the need for adaptability to different cultures. His exposure in the oil and gas sector in India was very challenging. His view of young professionals in India? Despite the high rate of turnover, his generation still preferred to stick to a single company and see it developing. His views on this? In terms of skills sets, it might be better to stick to a single company for a few years. Switching companies often does not translate to acquiring experience. One should stay five to seven years to absorb experience and learn from the company. Oil and gas company C, Mumbai, 20 December 2007 The company is part of the French MNC which is the third largest oil company in the world. It is also one of the largest lubricant companies in India. When the oil and gas sector was liberalized, there was the upstream and downstream sector. The French MNC is in the downstream sector in India. The company’s gross earnings were about US$100 million a year and they have a presence in lubricants, gas, chemicals, a joint venture with Shell at Hazira Terminal (Gujarat) for liquefied natural gas. His own background? The interviewee is an instrumentation engineer and a projects engineer. He has worked in Singapore and Indonesia but he had earlier worked for an Indian company called IM Exchange but moved to a completely different field. He joined the MNC in 1993 and from 1997 onwards he obtained more opportunity to move around. For example, in terms of water treatment companies, most are in Singapore and the Middle East with support structure from India. After the mid-1990s, a lot of Indian professionals moved out. What opportunities were available? He managed to find opportunities in Singapore in a water treatment company in 2000 but chose to stick with oil and gas. He is not averse to moving overseas and his MNC also has opportunities for its employees to move around the world. He explained, about 60 percent of Indian professionals would move for five to seven years but a permanent move is more difficult because they need to feel comfortable. Since 2004 in India, there has been a reverse trend emerging for talent flow because more job opportunities and better salaries are available in India. What are his preferred career opportunities? He would prefer to move to Europe as a posting in his MNC, then Africa, and finally India. The salaries overseas are still higher but the gap is narrowing fast with salaries in India. What about the social aspects of career development such as standard of living and infrastructure? The government has not been able to solve the infrastructure problem. But now there are more demands such as from motorists. More foreign car companies are emerging and his MNC will benefit due to product demand from motorists. Quality of life as well as money is important. The majority of Indian professionals prefer to live in India. The stock markets and the economy are booming. Not many people would feel the need to move or migrate overseas. Does he mind moving around to other parts of India? No, because he is from

84   The employment market in India Kashmir and adaptability for Indians is a factor. Furthermore, distance is not a problem with the development in aviation and air connectivity. Banker, Mumbai, 19 December 2007 The banker we interviewed said China has shown the way for India. The Indian financial elites believe that India is the place to be for the next five to seven years. He added, for the first time, Indians can invest abroad up to US$200,000 a year per person. Since 2005, the stock market has provided about 20–25 percent returns. In terms of employment, salaries are increasing and “poaching” is going on at the highest and lowest levels in the financial sector. Employees at his bank have made money on employee stock options. There are greater demands on human resources, and a high rate of turnover. It is still expensive to live in Mumbai but the companies are taking care of that. Are Indian bankers moving overseas for employment? He does not see what the attraction of the US or Singapore is because India is “where it’s happening.” This may change but in the English-speaking countries, Indian professionals can make an impact. What are some concerns for the growing economy? Infrastructure in India is sorely lacking. But an investor from abroad should note that India has “islands of excellence in an ocean of mediocrity.” However, India can make up on governance to compensate for its lack of infrastructure, especially in the financial sector. The return on capital in India is very good with proper governance in place. What about the lifestyle? The standard of living has deteriorated because of the lack of infrastructure but this is happening in most cities. What are some of the trends in increasing wages? There have been marked increases in salary levels and at a senior level in the financial sector, a salary level of US$250,000 per year is the norm. The levels of poaching and attrition rates are higher than in 2006 but this is due to retention strategies where companies are trying to give more “perks” like stock options. The government is doing what it can economically but the private sector will demand more things like increasing liberalization. Nonetheless, given the importance of the sector, the government will still be involved in policy and planning. The general macro-economic policies are doing well and the various trade chambers are doing a good job of promoting trade. What about the property prices and housing development? Those who own old bungalows in Mumbai would want them to build condominiums and maybe there is more demand for such housing than in Singapore. However, he is happy with his family bungalow but when the time comes he will sell to the developers at the correct price. In areas in South Bombay, such as in Worly, a nice flat will cost about US$2 million but at Nariman Point it will be closer to US$10 million. The shortage of land is also due to the fact that many properties are locked up because their owners live overseas or in other parts of India and they don’t like to lease to individual tenants. For example, the interviewee has three flats but he would only rent them to an institution not to an individual. This is due to the risk involves in leasing to tenants that they will not vacate once their lease is over and the courts take a long time to decide but corporate Indians have learnt to live with this.

The employment market in India   85 What are the changes in consumption patterns? Some of the manifestations of changing consumption are as follows. Due to the heavy congestion employees have cars but use it only on weekends, they will commute by scooter or train on a daily basis. In the retail side, a lot of supplies are coming in, over-supply, people live on arbitrage. Rents have gone “through the roof,” for example, in shopping malls, the rentals are increasing and tenants are shopping around for better deals. In one instance, to prevent lack of tenants, the House of Tata did a revenue share with its builders. Despite the lack of infrastructure, there are “hot spots” in terms of “livable cities” and the trend is to start satellite cities. Mumbai is evolving, there are planned areas now. For example, the Reliance group is actively building key infrastructure and the second bridge is coming up (has opened for public use). Planned cities are happening with the involvement of the private sector. India’s model of development is different from Singapore and China. Is there an abuse of democracy in India? China is a “top-down” approach. In India, a lot of this is happening in the special economic zones. He added, in India, everyone has to be on board in terms of development. The Indian private sectors are taking their own initiatives to develop the economy. Is there an Indian way or an Indian mindset to business development? Since 1991, Indian professionals have been going to Singapore and elsewhere they will have a higher level of exposure. In terms of Indian talent in India, bribery is important in the government area, there are good bureaucrats, ministers, but also corrupt officials. In India, there is a lot of respect for people with good governance and system such as those from Singapore which is shown by Indian companies collaborating with their Singapore counterparts. Engineer turned banker, Mumbai, 19 December 2007 The interviewee graduated as a mechanical engineer and had worked for Tata Engineers before undertaking his MBA at IIM Lucknow. He initially worked for three years in core supply chain management but made the switch to the financial sector by working with JP Morgan and then moved to his present bank employer. He is from a brahmin family, married, and his wife is a banker working for Kotak Mahindra Bank. In 2007, after six years of working life, he has held four different jobs but this is the norm in India. He believes that Indian graduates from elite institutions like the IIMs are quite versatile. At their formative stage of learning, Indian graduates move to various places during the “soul-searching” phase. When he ended up in JP Morgan, he realized that the banking investment sector was his favorite choice. He is not a banker but an investment manager, which is a niche area. Would he move abroad? He had been in New York for a few months, a good experience and a change of perspective, but he believes he had overstayed his time in JP Morgan having worked on Knowledge Process Outsourcing (KPOs) and supporting Wall Street firms. He is not consciously trying to move overseas but would stay open to options. Moving abroad? His wife is keener to move abroad but he is not that keen but will keep an open mind. He wants to have a

86   The employment market in India global perspective for future kids as well. While he is open to having a global career, having kids might be a constraint. Friends from JP Morgan and IIM are in Singapore. One friend is working for Standard Chartered Bank, another for JP Morgan in New York. What does he like about his niche banking sector? Investment business is about relationships, an exit barrier is the loss of this network which is not transferable, which is not the same as banking skills which are transferable. Does he keep in contact with his college mates? Yes, most of his peers are engineering graduates and in 2000 when he graduated, IT was very popular but he has no yearning for IT and moved into engineering. Where are his peers now? Collectively, of his college mates, 5–10 percent are in banking, 60–70 percent in IT, 10 percent in manufacturing and 5 percent had moved abroad and 5 percent are undertaking their MBAs. However, from MBA colleges, most have gone into the banking sector. With India Rising economically, will the Indian economy be able to sustain its economic growth? When he was in New York, there were two schools of thought on India: (1) India Rising and we know about India; and (2) India is a competitor so we should have a “hands off” approach to engaging with India. Infrastructure is lacking in India and this impedes the India Rising supporters, while Mumbai is attractive but it is only attractive in pockets. Besides infrastructure, what is there about the Indian mindset that is unique? He believes that it is harder for India to pick up things from abroad. Though they make good hosts, they find it harder to interact with foreigners. What prevents foreigners from interacting more with Indians? Indians are entrepreneurial. How can foreigners connect better with the Indian psyche? Indians like to have a personal touch, a total professional approach might not help, the Indian generation now is a spoilt generation and the highhanded approach will not work in India. He believes India will be an economic superpower because market forces are good but the Indian government might “mess this up.” Can Indians handle democracy? He said a free liberal environment is good. The Indian civilization is thousands of years old. The government might not be able to keep up with India’s economic progress. How would the global community reach out to the new generation of Indians? How to convince the US that India is not a problem to US interests? The world has changed because the onus of initiating a relationship is now on both sides. During his New York stint, his colleague remarked, “You guys are just like us.” India needs branding and advertising, there are more commonalities than differences and so the government has to market that Indians have more in common with the global community than differences. Development company, Mumbai, 3 January 2008 The interviewee is a senior manager in an Indian conglomerate in the construction industry. We asked about the trends in the construction industry and how this influences the labor market. He said, as India globalizes, opportunities in the market will increase. In terms of infrastructure development, his company is a surrogate for the infrastructure industry because they are into construction, power

The employment market in India   87 projects, mining, ship building and their order books are full for the next two years of business (i.e. until 2010). The cost of doing business in India is attractive because of the human capital but this is increasing the cost structure. The company will meet the conditions of the market to acquire talent. The company is well respected in India as a brand and evokes a sense of national pride in building the nation. People feel happy to be working for the company and they work on the relationship and pay market rates compensation. The staff will continue to learn and gather experience and the company provides an environment that is comparable to the best working conditions in the world. People are happier to work in their own home countries unless their home countries can’t meet their expectations. Now, it is possible for Indian companies to provide what they couldn’t in the past with a good job, family bonding and other things. With more MNCs competing for the same talent pool, how does your company compete? The MNCs operating in India have raised the cost of hiring. This has increased salaries but they can’t compete solely on wages, his company is able to offer empowerment to their employees to make decisions which MNCs find it hard to do. The company was still able to attract the highly influential government policymakers to their events because of their contribution to nation-building. The recruitment of talent in a competitive market indicates that the employees will be well looked after, and they are empowered to make decisions. The rates of labor attrition range from 11 to more than 30 percent and good graduates have several opportunities. The new generation is also pampered and, as well as money, they will want to have meaning in life. Self-development is important, experience is important. While, recruits have become more demanding but at the same time, the company is not interested in job-hoppers because “these guys are not builders” (committed to the company). The company prefers to recruit staff with long-term commitments. There is a new emerging pride about India. What about the trends for returning NRIs? He commented, more NRIs are able to come back and work in India if they are not well looked after in their current jobs overseas. Do the returning NRIs bring back relevant skill sets? He said yes they have employed returning NRIs but some do not fit into the working environment easily. However, the younger generation found it easier to adapt but the more senior executives start to feel lonely and want to return to India with their spouses and retire and they find it hard to adapt. Are there programs to assimilate NRIs back into the company? He said yes, the company has these programs and they also meet ex-employees. People of Indian origin (PIOs) overseas might also take a wage cut to return and work in India because they are empowered. Is the talent crunch harder in the metros? He replied, yes, but it’s a sign of reality in India so the company has to cast a wider net for talent. The mobility factor is not a major issue for some employees but is a big issue for others. Some talent might not be available in the metros because they have commitments. Therefore, if the conglomerate starts recruiting from areas at the outskirts, this would create opportunities for talent in those areas as well. Is there an emerging class of Global Indians? Yes, he believes that Global Indians are those with increasing overseas

88   The employment market in India exposure and experience. How does the company provide overseas exposure to its employees? They have a lot of exposure in the Middle East and want to build infrastructure. Therefore, his company is well known in these markets and also have an IT business in the US, Japan, and Southeast Asia. They are also prepared to move people around and to move people back to India if they so desire. Is India really rising or is it just hype? Since 2004, India has shown signs of being a growing economic power and these are manifested by more access to consumption, lifestyle products, a better quality of life and positive economic indicators around in Mumbai, and more people travel overseas. The economic figures are not distorted because India is democratic and the government has to support the weaker segments of society. In terms of corporate culture, is there an Indian way of doing things? It’s focused on relationships and commitments are for life among family and friends. The relationships are important and they extended to the networks of friends and business associates. Business partners will step up to help in general. Among Indian MNCs, when working overseas, it’s best to adopt the customs and practices of the host country to survive. They will have to adapt and employ the correct people who have exposure to these foreign countries even if they are of Indian origin. With increasing attrition levels, how is the company coping? The attrition rate has risen all over the world and is a fact of life. The company is recruiting more freshers as employees. The economy is growing so they are able to absorb without much cost burden and able to pay competitive salaries. Is the company hiring foreigners? Yes, in limited numbers but they are not averse to hiring foreigners but they are paid slightly higher to relocate. What are the main talent recruitment strategies used by the company? The HR department does advertise for talent through recruitment portals and could recruit in the thousands every year. For example, the company can recruit more than 10,000 every year. What is the average rate of employee churn or turnover? They experience the average rate of turnover. This is a business and they have no qualms about hiring to meet their talent needs even for overseas, for example, in the oil and gas sector. Which sector will be booming in the next few years besides IT? It’s definitely the infrastructure sector to develop ports and highways, even agriculture will boom because of global food shortages but water availability could be a problem. In Mumbai, the main issue is land constraints because of limited supply. Moreover, the legal infrastructure in India is sound but slow to produce results. Would overseas job opportunities still tempt Indian professionals? They will leave for higher financial rewards, opportunities to work in a more developed environment. In contrast, it is not easy for a foreigner to work in India and they would need a support system. India is not organized in the same way as developed economies but there will be more systems in place to increase the efficiency in India, however, the regulation and systems might reduce profits. Conclusion During the global financial crisis of 2008, Indian companies restructured their recruitment strategies. There was a general freeze on hiring and this was implemented

The employment market in India   89 instead of massive labor layoffs or retrenchments. However, there still were some layoffs in the financial sector. In 2008, talent shortages had given rise to an employer’s market and a salary cap was put in place in some companies to halt the exponential rise in salaries. The hiring outlook was the weakest since 2005. The business and HRD strategies in several companies were discussed in various metro cities. Southeast Asian countries like Singapore were able to attract talent in the banking and financial sectors. Singapore is attractive because of its proximity to India, culture and pay but the high cost of living is a deterrent as well. Talent from India, even among the elite IITs and IIMs, is not keen to move overseas because their pay and lifestyle have improved by a large margin in India. India has a huge pool of scientific and technical talent and while countries in Southeast Asia like Singapore are trying to woo them, they are unlikely to stay especially after they have worked in countries like the US. In East Asia, Hong Kong appeared to be the main competitor for talent. The emergence of MNCs in India created an initial euphoria among job seekers because of the potential to gain international exposure and to be involved in global research and development initiatives. The flow of returning NRIs is increasing and they are settling down in metro cities like Bangalore, Hyderabad, and Mumbai. The NRIs are valued because of their capital and expertise. A large number have established their own start-ups and venture capital funds. During the economic recovery after the global financial crisis, the competition for talent looks set to continue as manifested by the increasing rate of turnover and labor churn. There is an emerging trend of Global Indians who are transnationals with transboundary interests. The following chapters are country study chapters and will look at the various issues discussed in greater depth.

4 Country study

Indonesia

Introduction Indians started arriving in Jakarta in 1870 through the encouragement of the British colonialists. Due to the predominance of the Sindhi community among the settled Indians in Indonesia, this begs the question why they migrated in number to Indonesia. The British conquest of the Sind province in India in 1843 had been one of the main reasons for the outflow of the Sind natives. As the Sind natives were released from the hegemony of Muslim rulers, they were allowed greater opportunities for agricultural development and trade.1 Sindhi traders often traveled the routes overseas established by their forerunners. These early Sind settlers were generally on their way to Australia but many discovered Indonesia to be both friendly and lucrative.2 These early settlers were mainly shopkeepers in Java, Medan, and Bandung. Most Indians linked to the British colonialists were concentrated in Sumatra, Java, Madura, and Sulawesi. Population data from the time also suggested that Indian migrants were likely to be single males. A Mani pointed out that there was a high rate of turnover among Indian immigrants because many came as temporary laborers and did not stay beyond the duration of their contracts.3 However, in the 1930, there was a perceptible change in trends with statistics for Java, Madura, and the outer Indonesian islands showing that a large percentage of Indians were born in Indonesia. This indicated that the process of assimilation and accommodation with locals was already occurring.4 The aim of this chapter will be to examine the motivation of Indian expatriates to work in Indonesia and the linkages of the settled Indian community and the Indian expatriates in Indonesia. Another large Indian ethnic community in Indonesia is the Punjabis. The migration of the Punjabi Sikh community in Thailand was partly a spillover from British Malaya. While Sikhs were concentrated in greater numbers in Medan, North Sumatra, the Sikhs who settled in Jakarta were descendants of migrants who came direct from the Punjab, India, through Singapore. The largest flow of Sikh migration occurred between 1920 and 1940. When the British gave Indonesia back to Dutch administration after World War II, the Dutch were keen on sporting goods and encouraged companies like Bose & Co., Bir Co., Nahar Sports and Hari Brothers to expand and establish branches of their companies in Jakarta and Surabaya. Another group of prominent Indians were the Gujaratis

Country study: Indonesia   91 who came as traders and later specialized in exporting sugar to India. In 1949, the Bombay Merchants Association was established and registered in Jakarta. Most of the members were Sindhis because they were the majority in the textile and luxury goods businesses. In time, as the Sindhis emerged as the majority community, they came to establish their own school called the Gandhi Memorial School. During World War II, the evacuation of the pre-war Indian business community brought huge changes to the settled Indian landscape. This led a shift for the Tamils and Sikhs as they moved from the rural areas and became urbanites in search of economic opportunities. In 1954, the Sikhs built their own Gurudwara at Jalan Pasar Baru because traveling to Tanjung Priok to pray at the Gurudwara there was inconvenient for Sikhs staying in Jakarta. Some of the organizations that catered to the Indian community included the Gandhi Memorial School (GMS), the Economic Association of Indonesia and India (ECAII), the Sai Mandhir, and the Radha Swamy Sat Sangh. The GMS was established in 1953 and has been one of the few stable institutions which promoted cultural identity among the Indian community.5 The ECAII was established in 1977 and its main aim was to encourage economic co-operation between India and Indonesia. The organization was also meant to provide a channel for Indian investments in Indonesia and serve as a catalyst for the transfer of intermediate technology. Its members consist of leading Indian businessmen in Indonesia and Indian and Indonesian firms involved in joint ventures.6 The Shanti Mandir is a women’s organization that attracts both Sindhi and Sikh women. Its activities revolve around talks and doing charitable work. The Sai Mandhir and the Radha Swamy Sat Sangh are extensions of the sectarian movements in India.7 For the purposes of this chapter, the Indian community in Indonesia can be broadly categorized into two groups: those Indonesians of Indian origin, mainly of Tamil, Sindhi, and Punjabi extraction; and Indian nationals or non-resident Indians (NRIs) who have set up joint ventures or are employed by Indonesian or international organizations. In early 2000, the total number of Indonesians of Indian origin was approximately 50,000, most of whom were concentrated in Medan (Sumatra) and in the Javanese cities of Jakarta (the capital), Surabaya, and Bandung.8 In 2003, the Ministry of Manpower of Indonesia stated that 16,662 foreign professionals were registered in the country including some 7000 in Jakarta.9 In 2007, the numbers of expatriate Indian families were approximately between 4000 to 500010 in Indonesia and were located mainly in Jakarta and to a lesser extent in Surabaya. In 2008, the approximate numbers of expatriate Indians were about 8000–10,000 working in various Indonesian cities, and those registered at the India Club number about 1000.11 In 2007, the number of settled Indian families was about 10,000, including Sindhis (the largest ethnic community).12 As of 2007, the Sindhi directory of Indonesia listed some 1523 members, mainly businessmen.13 In 2008, the total number of Indians in Indonesia, both settled and expatriate Indians, totaled just under 100,000 and they are concentrated in the cities of Bandung, Jakarta, Medan, and Surabaya. Companies like Indorama employ some 116 Indian expatriates in Indonesia. In terms of estimates, at least 36 are working in Jakarta, 5 in Bandung, and the others in Kalimantan. Kalimantan

92   Country study: Indonesia is an area where mines are being opened and about 500 Indian expatriate workers were working to develop the mines.14 As of 2008, the total amount of bilateral trade between India and Indonesia was more than US$3 billion and growing.15 A government official in Jakarta predicted that bilateral trade would reach US$10 billion by 2010.16 In the 1970s, investors and companies from India such as the Birla Group started to explore business opportunities in Indonesia. This is partly the result of constraints in the stateregulated Indian economy. In 1978, India and Indonesia signed a trade agreement and this accelerated the flow of Indian companies to Indonesia. Most of the Indian companies established in the 1970s and 1980s focused on textiles and chemicals. For example, Indo Bharat Rayon, part of the Aditya Birla Group in India, is very active in textiles. Other Birla companies included PT Elegant Textile Industry and PT Indo Liberty Textile. Some internationally famous Indian business tycoons such as Lakshmi Mittal, of the famed Mittal Steel company, first “cut his teeth” in an overseas venture in Waru East Java, Indonesia, in 1976.17 What caused the inflow of foreign investment from India? In the 1990s, with the economic liberalization of the Indian economy, more Indian firms came to Indonesia. In the IT sector, firms like NIIT, LCC Infotech and Aptech have established IT education centers. The Indian government-owned company called Ircon is undertaking a road construction project and building railways. In the oil and gas sector, the state-owned Hindustan Petroleum Corporation is showing a strong interest in Indonesia. Indonesia is rich in minerals and resources and Indian firms are eying investments in this sector to fuel the demands of the growing Indian economy. The Indian Commerce Minister Kamal Nath said that the pharmaceutical sector, the two and three sector and rail transportation offer scope for trade and investment.18 Since the Asian financial crisis of 1998 and the subsequent recovery of the region, the role and visibility of Indian professionals have increased.19 Moreover, the rising number of technology-related tours and trade exhibitions in Jakarta by Indian firms had impressed on Indonesian industrialists that India is a technologically developed economy.20 As of 2008, there were approximately 19 Indian joint venture companies operating in Indonesia, and Indian investments totaled some US$800 million.21 However, when the Asian financial crisis struck East Asia in 1998, several hundred Indian expatriates lost their jobs and left.22 Several international ventures also left Indonesia but the Indian companies stayed and some like Indo Bharat Rayon actually expanded their operations. These Indian firms had surplus investments and were looking for opportunities in Indonesia made attractive by the flight of some Western MNCs after the Asian financial crisis. Moreover, Indonesian investments are not taking off, apart from capital flight to safe havens overseas.23 For the banking sector, after the Asian financial crisis of 1998, the banks have consolidated.24 For example, the Bank of India and the State Bank of India are doing well in Indonesia. Indian banks are entering the Indonesian market to fund their Indian clients. One critical factor which attracted Indian professionals to Indonesia was the textile and engineering giant Texmaco. Texmaco used to employ 150,000 people

Country study: Indonesia   93 and had five factories across Java. Its core businesses were textiles, synthetic fibers, garments, textile machinery and machine tools.25 The founder of the Texmaco Group was Marimutu Sinivasan. He was born in 1937 in Medan, North Sumatra, and is of Tamil-Indian descent. He began as a trader, selling batik from Indonesia and importing cotton from Southern India. By the early 1980s, Texmaco had become a manufacturer of small-scale machinery and benefited from low labor costs, subsidized energy and low customs tariffs.26 Texmaco ran into trouble during the Asian financial crisis of 1997 when it was revealed that it had received US$754.1 million in pre-shipment facilities from the state-owned Bank BNI between November 1997 and March 1998 with the help of former late President Suharto.27 Post the Asian financial crisis, the BNI had agreed to maintain a trade financing facility for the Texmaco Group.28 To facilitate bilateral economic linkages, two trade organizations were established in Indonesia. They are an Indian Committee, established by the Indonesian Chamber of Commerce and Industry to advise Indian investors (KADIN) and ECAII to connect Indian and Indonesian businessmen. While ECAII organizes talks and luncheons, the number of Indonesian companies involved are few and the Indian Embassy should do more to enhance bilateral trade.29 In this context, the Confederation of Indian Industries (CII) in Singapore is planning to establish a forum of CEOs from India and bring them to Jakarta. To enhance bilateral links, a Festival of India will be organized in Jakarta. In November 2005, both countries signed a strategic partnership which covered a broad range of activities from defense to economic affairs.30 Indian companies are keen on investing in Indonesia because it is resource rich. For example, a number of Indian companies are keen on securing a steady supply of coal for “energy-hungry” India.31 With the rise of India as an emerging economic giant, since 2007, Indian companies have started acquisitions of coal supplies in Indonesia and next area would probably be manganese and nickel. Indian firms are looking at 5 to 10,000 MW and they prefer to have a suitable and guaranteed supply at a fixed price because they have to charge a certain price.32 The quality of coal in India is not good with more than 40 percent ash content while Indonesian coal only has about 10 percent ash. The quality of sulfur is also purer in Indonesia and it is mainly mined in the Kalimantan area. The majority of Indian companies are end users. One of India’s largest utilities company had acquired about a 30 percent share of Karti Prima Coal (KTC), one of India’s largest coal mines. This Indian utility company had a growth strategy that was initially “Indiacentric” but as a utilities company they needed to keep their energy prices stable. In this regard, this means having to secure supplies of fuel such as coal at a reasonable and stable price. Therefore, this Indian utilities company established a regional hub in Singapore and “scouts around” the Asia Pacific region for fuel resources as part of their strategic requirement. In Indonesia, the Indian power utilities company collaborates with the Bakrie Group to secure coal supplies for six to seven years in order to bid for power projects that they have planned in India.33 Figures 4.1 and 4.2 show one of the Indian enclaves in Jakarta, called Pasar Baru, and it has several textile shops.

94   Country study: Indonesia

Figure 4.1  Pasar Baru.

Figure 4.2  Textile shops at Pasar Baru.

Work permits/visas Since 2005, India has been included in a group of countries that Indonesia has permitted to be offered visa-on-arrival status for up to 30 days.34 This was a bid to boost foreign visitor arrivals to Indonesia after the SARS outbreak in 2003. However, the visa-on-arrival permit is not renewable. Foreign nationals seeking

Country study: Indonesia   95 to work in Indonesia are required to obtain several documents and references from the employing companies for immigration purposes. Every company pays a levy of US$100 per month for each foreign employee. In order to work in Indonesia, any foreign national needs to have a work permit and company sponsorship is usually required. This company sponsorship is required before a semipermanent visa and work permit can be processed. However, the Indonesian government has strict guidelines on the type of foreign expertise required for the development of the economy and they determine who can be issued work permits. In addition, national, multinational or joint venture firms have to submit a manpower plan to the Manpower Department (Department Tenaga Kerja or Depnaker) detailing their annual foreign labor requirements. Foreigners can only get a limited stay visa or permit called a KITAS card if they have already been issued a TA01 recommendation from the Manpower Ministry in the case of local companies or from the BPKM (Investment Coordinating Body) if the company is a foreign investment company.35 A KITAS card is valid for one year from the date of entry into Indonesia but can be extended for a fixed number of years. The TA01 is based on an approved Expatriate Placement Plan (RPTKA – Rencana Penempatan Tenaga Kerja Asing). Upon approval of the RPTKA, the ATA-01 is issued, followed by a work permit called the IKTA (Izin Kerja Tenaga Asing), which is issued by the Manpower Ministry after arrival and the KITAS card.36 The KITAS card can be renewed twice without the individual having to leave the country. In the case of foreign investment companies, work permits for senior positions like Director occupied by a foreigner are valid for three years and can be renewed before expiry. A permanent stay visa (Kartu Izin Tetap, KITAP) is only issued to longterm residents of Indonesia who have had five consecutive years residence on a KITAS status. Reportedly, only directors in companies can be issued a KITAP after holding a KITAS with a Director position for a minimum of four consistent years. Since 2008, the Indonesian government has received increasing complaints from many expatriates about the unnecessary bureaucracy involved in obtaining a work permit in Indonesia. As a result, a new decree was announced at the end of April 2006 that allows expatriates to obtain work permits before they arrive for work in Indonesia. Up till now, once an expatriate arrived in Indonesia, he/she would have to visit several offices and submit numerous documents and recommendations, and then wait up to three months before a work permit was issued. With no clear regulations governing the work permit application process, it was common for administrative officials to demand cash in order to process the work permit. With this new policy, employers can now apply for a work permit for their expatriate employee before he/she arrives in Indonesia; upon arrival, the expatriate can begin work immediately. Although this is one small change in the work permit process, the Indonesian government has expressed concern about the bureaucracy and corruption surrounding the work permit process and remains determined to improve the situation.37 What is the social and economic impact of the Indian expatriates in Indonesia?

96   Country study: Indonesia

Figure 4.3  Indian shops at Pasar Baru.

Social/cultural impact In Jakarta, the areas where Indian grocery and textile shops are located are Sunter, Kelapa38 Gading, and Pasar Baru. Figure 4.3 shows shops at Pasar Baru. Another Indian enclave is being established in Kemang, South Jakarta.39 Besides grocery stores, shops selling household products and accessories are also popular with the Indian community. As a means to foster closer relations with Indonesia, India has also established the Jawaharlal Nehru Indian Cultural Centre (JNICC). The JNICC offers regular classes in classical dance, music, and yoga. Cultural performances and festive celebrations have also been organized by other Indian organizations such as the Gandhi Seva Loka, which is a charitable institution run by the Sindhi community, engaged in educational and social activities. Another organization for the Indians is the India Club, located in Jakarta and established in the early 1990s. The India Club has a large membership and hosts regular events.40 As of 2007, the India Club in Jakarta had some 78 members and this has remained constant since 2006.41 The India Club is a purely cultural organization that organizes about six or seven cultural events a year.

Economic downturn The bilateral economic relations between India and Indonesia did face some challenges. For example, one of India’s top IT firms, Polaris, had a dispute with its Indonesian client, Bank Artha Graha, which developed into a diplomatic incident between the two countries. Chennai-based Polaris had signed agreements with Bank Artha Graha in June and August 2002 to undertake software work, including, central processing, disaster recovery and branch server-related work. The contract was to be completed by July 2003 but Bank Artha Graha served notice of termination to Polaris in November 2002.42 The chairman and managing director of Polaris, Arun

Country study: Indonesia   97 Jain, together with senior vice-president Rajiv Malhotra, had flown to Jakarta to negotiate with Bank Artha Graha over a commercial dispute worth US$1.3 million43 but were subsequently detained by the police.44 The incident tarnished Indonesia’s image with foreign investors, particularly those in India, because it was a commercial dispute and there were provisions in the contract between Polaris and Bank Artha Graha for dispute settlement through the Singapore Arbitration Centre.45 With the intervention of Nasscom and the Indian government, the Polaris senior officials were released after a week.46 Arun Jain said, “Indonesia is a large market but we will not look at doing business there immediately at least for six months to one year.”47 Wider repercussions relate to this incident being used as a “litmus test” for other Indian companies, especially IT firms keen on exploring the emerging Indonesian market. Smaller Indian firms will be more apprehensive of business links with Indonesia because if it can happen to Polaris, a top five Indian IT firm, it can also happen to their firms.48 In the context of Indian human capital, counseling sessions for employee morale would now have to be part of the risk mitigation strategy of any firm undertaking business in emerging markets.49 Since 9/11 and with the global financial crisis, Indian firms are keen on diversifying away from the traditional US market. This incident, in terms of its treatment of Indian professionals, to a certain degree was linked to the Palm Court incident in Kuala Lumpur, Malaysia (see Chapter 5). The economic situation was bad in Indonesia and lasted until mid-2009. Would this affect the inflow of Indian professionals? Projects have come to a halt but there are some businesses still ongoing, especially in the natural resources sector and many would still say Indonesia is an economic goldmine. After the Asian financial crisis in 1998, there was an outflow of some Indian professionals and it became difficult to recruit Indians, especially in the financial and banking sector. In 1998, some Indian professionals benefited from the exchange rate and that lasted until 2001 to 2002. However, those Indian professionals have left Indonesia because it was no longer competitive because their businesses were relocating to China. However, those Indian expatriates who have left on transferable jobs would like to come back to Jakarta to work. Another group of Indian expatriates who are relocating to Indonesia are into new ventures like the coal mines. The Indian companies are also in the IT sector, and developing their own power plants. The following section describes and examines the social and economic impact of Indian expatriates in Indonesia.

Experiences of Indian expatriates in Indonesia Indian MNC Executive, Jakarta, 17 December 2008 The interviewee is a chemical engineer who was originally from Gujarat but does not speak Gujarati. He is 49 years old, married, and has worked with the Indian MNC for 26 years. Since 2003, he has been responsible for business development. He first arrived in Jakarta in 2006 and his family moved with him. It was not easy decision to relocate but having lived here, he thought it would also be good to provide exposure for his daughter. His daughter is 16 years old and in the 11th grade while his spouse is a housewife. He had earlier been based in Mumbai

98   Country study: Indonesia and Jakarta is his first overseas posting. His daughter attends the Gandhi Memorial School, which provided a sense of continuity for her and she is comfortable at her school. His daughter is closely monitored and her routine revolves around school and the home, but she is active on email and in cyberspace. What are his social networks and interactions with locals? He had been to Indonesia before but those visits were too short for him to interact with the Indian community. Since his posting to Indonesia, it has been a pleasant experience in Jakarta. He will become a member of the India Club and he does connect with the settled Indians in Jakarta at cultural events and during temple visits. He visits a temple near his home in a gated community about twice a month, but he is not religious. He feels that his visits to the temple also enabled him to contemplate and meditate. His interaction with local Indians and expatriate Indians are different but he qualified that the opportunities for interaction are limited, even in public places like temples. Usually he interacts with three local Indians and he finds it easier to interact with a particular Sindhi who is married to a woman from India. His food habits are more Gujarati in nature but he does not feel an attachment to the sub-ethnic Gujarati group. On weekends he does not have much of a social life but his wife and her Indian expatriate friends are into sightseeing and shopping. He is learning to understand and appreciate the local culture but has not been active on the social scene. Did he find Indian organizations such as the India Club useful? The India Club is important as a means to stay connected to his expatriate friends and they will be useful in an emergency. What are his views on the Indian community in Indonesia? The Indian community is composed of two categories. The first category moved here decades ago and they are well settled here with their kids and would be hard to relocate back to India, they are comfortable, it’s more orderly in Jakarta. The second category are the recently arriving non-resident Indians (NRIs) who were coming in as professionals, single, working mainly in the IT and banking sectors. He said, as long as NRIs remain single, they will find it hard to connect with Indonesia. Have they been to the local Indian enclaves like Pasar Baru? Yes, they have been to Pasar Baru but his wife is more adventurous and would venture to various shopping centers. In terms of food habits, since he is vegetarian, he finds it hard to mix with the locals. He believes that if he does not do this, then he is seen to be aloof or alienated. The choice is limited as he is vegetarian. Does he like the local vegetarian food? He admitted he is not very adventurous and would be fine with roti (bread) and two simple masalas (spicy gravy dishes). But he has colleagues who are adventurous with food. But, in general, Indians who are vegetarian would find eating in restaurants difficult. Is he conscious of caste and religious obligations? He feels it’s more an upbringing issue because parents would inculcate their values in their children. For example, if someone works in the armed forces, he would have more exposure. Some parents are quite liberal and let their kids experiment. But most Indian parents are quite careful with their diet. His daughter is the same. Is there a growing trend towards Islamicization in Indonesia, and is he concerned? Being new to Jakarta, he is yet to form an

Country study: Indonesia   99 impression but thus far he views Indonesians in Jakarta as liberal with respect to other religions besides Islam. What about awareness of India? He feels that the locals are aware of the Hindu epic Mahabrata. He had discussed this with his local colleagues and was pleasantly surprised that they have a better knowledge than he does on this. The local names are also derived from Sanskrit, suggesting that Indonesia has a cultural connection with India. How does he rate his Indonesian business colleagues? He feels that it may be too early for him to judge but his initial impression is that the workers in Indonesia need guidance but will do the work well, unlike in India, they might have their own input. It’s a soft culture and you can’t be demanding in Indonesia and the people have been very courteous. This is in contrast to what Indians are used to, living in a competitive and aggressive environment. He added, “You never know whether Indons agree or disagree with you because they never let anything slip.” The service culture is good in Indonesia because they are not aggressive. Similar to India, there is also great diversity in Indonesia. Prior to his posting, did his company give him any help to understand the Indonesian culture? No, he had to do it on his own but the company is looking into this issue for future postings. His local colleagues have been very helpful, for example, in assisting with his daughter’s educational placement and in acquiring his driver’s license. He managed to arrange all his accommodation on his own because he could draw on the experience of the local support staff and the Bakrie partnership. Will his career benefit from an overseas posting? Because of technology he is not losing out by being posted out but in terms of his career and profile, it is more useful for him to be posted back to India. Is he Indiacentric? He tries to understand the local political and economic scene because he is curious. What are his future career plans? He is on an assignment of a few years and would be happy to go back to India. He has not seen much of Southeast Asia. He prefers Jakarta to Singapore because Singapore is too clinical and orderly. In contrast, Jakarta has some of the chaotic nature and similarities to India. What about his daughter’s continuing education? She would rather return to India, her own choice is to go back to India. If he continues in Jakarta, the college education in Jakarta is not suitable, due to language. He would consider Singapore or Australia (if he can afford it) but not the U.S. In general, most Indian parents working in India would find it difficult to send their kids overseas but if they manage to, they would prefer the US, Australia, or Singapore. Is there a new awareness about India Rising? He definitely feels there is a rebranding of India and the people he meets are more aware of this. In general, among Indonesians, the impression of Indians in Jakarta is very positive and the locals see value in Indian professionals. Did he encounter any experience of discrimination? So far he has not encountered any instances of discrimination. Even Indian companies like Tata have a good brand reputation. Insurance broker, Jakarta, 19 December 2008 The interviewee is an insurance agent who first arrived in Indonesia in 1991 from Jaipur in India. Has a degree in commerce and flour mill processing as well as a

100   Country study: Indonesia law degree. He knew about Indonesia from his two sisters who were living in Jakarta, one married to a local Sindhi while the other had moved from Saudi Arabia. His family was in the textile trade and his dad allowed him to explore the employment and business opportunities in Indonesia for two months. If he was not successful, he was to return to the family business. In two months, he had 146 interviews but no job offer but on his last day in Jakarta as he was leaving for the airport, he received a call for a job offer as a finance executive. He is now currently an agent for Zurich Life in Switzerland. How did he end up in insurance? In 1995, his working partner Manoj, who was a third generation local Sindhi, had sold his business to Anil. Tulsi who was Manoj’s older brother had worked for Zurich Life and had come back to Jakarta. Manoj had introduced the interviewee to Tulsi. Tulsi decided that the interviewee was very sociable and visible and that is what is required to run the business. They trusted the interviewee to develop the insurance arm of the group’s business and he has not disappointed them. He has made contact with all the major Indian businesses in Indonesia and among his clients are the Mittals, Jindals, Ambani, and Tatas among others. He is grateful for receiving good support from the Indian expatriate community. Tulsi operates in another office and handles reinsurance. The insurance agent was married in India and now has two boys aged 12 and 6 years old. His sons attended the international schools (Jakarta and North Jakarta International School). He has accepted that his kids have diluted their Indian culture. He is trying to inculcate traditional Indian values in them by encouraging them to speak Hindi but he himself speaks English to his kids. He and his wife would like his elder son to be educated in India but his wife disagrees. He feels that an Indian education would make his sons independent. He is not perturbed by moving overseas because most of his family is abroad, for example, all his siblings are all abroad and his in-laws are in Dubai. India is still the upcoming economy and he wants his sons to see the schools in India. He travels regularly to India, at least once a year on a family trip, but his sons are only able to stay in India for a week or two. Can he comment on his social networking? The local Sindhis speak Bahasa but the Indian expatriates speak English and their own dialect. In general, the local Indians eat Indonesian food but the Indian expat will only eat Indian food. During festivals like Navarthri, there are more expatriate Indians than locals. For Diwali, the expatriate Indians will attend the function at the India Club while the local Sindhis have their own lavish function. Only when some Sindhis are not able to attend their function will he receive the spare invitations to pass to the Indian expatriates. In terms of social gatherings, because he is able to speak both Hindi and Bahasa, he is able to network with both the local and expatriate Indians. He likes to socialize and meet people so he feels suited to this people. Being a vegetarian, how does he cope with socializing requirements? It is not a problem because he dines out on the vegetarian food. His kids love Indonesian food. He prefers other cuisine such as Chinese and Italian because he feels that Indian food is “heavy.” His diet has changed and Indonesians also like to dine out. The Indian expatriates can’t eat the “tahu” (tofu) and “tempe” (fermented soya bean). In not

Country study: Indonesia   101 being able to consume local dishes, he feels that Indian expatriates are “missing out big” by not trying the local cuisines. Some Indian expatriates do not interact with the locals and can just pack and work to complete their contracts and return to India. He feels that he has made his career and his mark in Indonesia and has nothing to fall back on in India. He tried to open a business in India but could not make any headway. He is on the executive committee of the India Club but is trying to move away from the key positions but he is still tasked with fund raising. However, the India Club has already factionalized. Initially, the India Club has only small functions but with the expansion due to new members, it has become too large. When the former President Nalin Rathore came on board, he was working with the Bakrie Group and the interviewee became the Secretary, and this raised the profile of the India Club. He said Nalin Rathore was a “heavyweight” and able to raise US$250,000 for India Club events. With the election of Dr. Prakash Maheshwari as President, the India Club has financially “come down to earth.” Is the India Club united? The North and South Indians have their own preferences. A South India Club has been started by Mr. Sundaraman who was originally at Texmaco and is now running his own coal mining business. He has encouraged all the Southern Indians to join. What about the single expatriates? The single expatriate Indians in Jakarta have a high rate of labor turnover because they serve only two- or three-year terms. While there are India expatriate enclaves like Pasar Baru and Sunter, it’s not like “little India” in Singapore. The Indian enclaves are more dispersed and there are also Chinese in Sunter. In terms of weekend activities, the local Indians appear to be more cosmopolitan in their tastes while the Indian expatriates will shop by calculating the exchange rate. However, he himself feels that shopping is cheaper in Indonesia compared to India. The insurance agent learnt his Bahasa Indonesia on his own and even made his own dictionary. His wife is able to adjust to the local scene and his in-laws have their own business in Africa. His wife devotes attention to the kids and apart from that she will visit the Radhasoani and devote time there. For expatriate Indian wives, there is an Indian Women’s Association (IWA) and Indian parents are encouraged to volunteer as sub-teachers in the international schools. The interviewee has changed his citizenship but wife maintains her Indian citizenship. He had to change citizenship because his business came under the Ministry of Finance and it eases the administrative procedures, and he was encouraged to do so by his partners. He has a PIO card though and applying for OCI status. He would also like to develop some business ties with India. What about his identity? He feels he is still an Indian and focuses a lot of time on India. He speaks Marwari and is taken as a Marwari but is a Sindhi. He can speak Bihari and a bit of Gujarati. The locals feel that Sindhis are more wealthy people, however, the locals did not feel any threat from the local Indians. The environment is refined and soft in Indonesia and the locals feel comfortable with this. The interviewee was able to create a niche market in the insurance market and cater to the “quirks” (idiosyncrasies) of Indian businesses such as being contactable 24/7.

102   Country study: Indonesia This is a key strength because the Indian businesses can’t expect this level of personalized service from the other 150 insurance brokers in Indonesia. The interviewee keeps track of all new Indian businesses and would also advise them about local practices when they are initially starting out in their business ventures. He keeps in close touch with the Indian Embassy and all the Indian expats. He supports his countrymen and they provide him with good business. In terms of local business practices, the local Indonesians prefer to meet you personally before deciding whether business will be done. He has noticed that for other nationalities like the Japanese, they will stick to a Japanese company although they pay four to five times more. Future plans? His wife prefers to live in a developed country, where things are systematic. His own plans are more flexible but his business is in Jakarta and he would find it difficult to adjust to life back in India. However, he would like his sons to study abroad and be exposed to the Indian culture. On the issue of Islamicization in Jakarta, is it a concern to the expat? No, the Indian expats don’t talk about it. He also has a travel agent business but is not able to develop this. Consultant, Jakarta, 18 December 2008, his spouse and businesswoman, Indonesia, 21 December 2008 The interviewee is an IT engineer with his own consultancy firm. He originated from Jodhpur which is close to Rajasthan, he is a Marwari and migrated to Jaipur in the 1980s. He was a qualified chartered accountant by 29. He worked for C Dot, went through the political drama and worked with the famous Sam Pitroda, who contributed to the modernization of telecommunications in India. What motivated him to work overseas and relocate to Indonesia? The IT engineer felt he needed to make a career change and he was interviewed for government subsidiary companies in India. He came close to migrating to Australia in the 1980s but decided not to. He was working here in KPMG, as a financial advisor, his work with large companies raises close to US$1 billion. Lots of transactions are done through Singapore. It was terrible for him in the first six months in the late 1980s and he went back to tell his employers he wanted to go back. During the Asian financial crisis, he got a job with KPMG in 1999. What are his perceptions of the Asia financial crisis? During the Indian economic crisis of 1991, Indians had protested. In contrast, during the 1998 Asian financial crisis, the Indonesians went about quietly in their own way to get things done. He remembered that during the Asian financial crisis, desperate people would also remove the cars’ side mirrors. However, he and his wife stayed in Jakarta during the crisis but his brother and his family left. Figure 4.4 shows the restaurant owned by the interviewee and managed by his wife and younger brother. What are his future plans? He made a change to have his own consulting company. His wife then moved into the restaurant business. He wishes to remain “invisible.” The Indian Embassy did try to arrange a trade fair but that did not take off successfully because they did not advertise well and the big Indian corporate names were missing like Tata Motors. The Indian companies did not

Country study: Indonesia   103

Figure 4.4  Indian restaurant in Jakarta.

showcase their engineering excellence. Large Indian companies did explore Indonesia but this did not involve linkages with the Indonesian companies. He said hundreds of Indian entrepreneurs are involved in mining, palm oil and chemicals. The main problem with the Indian companies was that they expect a lot but did not want to pay for extras. He said the Indian ICICI Bank came to Indonesia and had a controversial presence. He advised that Indian companies need to do their “homework” before establishing their presence in Indonesia. This requires experience and some Indians have become directors. What are his social networks? In his social circles, he mixed mostly with Indian expatriates in his own company and outside. Having been here for 15 years, he still keeps in the background but has come to know high profile Indians and Indonesians. His clientele is mainly Indonesians and he has tried to raise funding for Indian companies. The settled Indians are largely Sindhis and Punjabis in Jakarta. In India, they may have a questionable reputation but in Indonesia they have a respectable reputation. They keep a low profile and are trusted in Indonesia. What about how the Indonesian and political culture molds the Indians in a certain way? The Indian expatriates who have migrated to Indonesia have become prosperous. What are his views on the settled Indians, post-1991 Indian professionals and post-2005 Indian professionals? He said there are differences among the three groups: Indians who have settled in business like the settled Indians are not in the service sector as employees, they are not in the financial sector. Local Sindhis might not understand the questions being asked. They are quite serious in their work. The local Indians have been through the Suharto era which was tightly controlled. They could have stayed away as a means of defense not to expose themselves. They prefer to remain invisible and

104   Country study: Indonesia remain behind the scenes. The local Sindhis are very warm and courteous people. The Indian bankers have been attracted to Indonesia. There are various temples in India, a rich Indian industrialists has built his own Shiv temple. There are Gurdawaras in Sunter and Pasar Baru. Indonesia is not really safe to walk around and they are known in the area. There are still crimes in Indonesia. What are his impressions of the local business environment? There is a big difference between the Indian business culture and the Indonesian business culture. The NRIs have done well because the Indians in India “miss the broad picture and miss out on the exposure.” There is a need to share and work as a team even as a leader but this is not the case in India. The big picture is important but at the micro level the vision is lost. He said, “India tolerates shoddy work and that is why this leads to larger problem. I would like to go back and play a part in politics in India.” How does he feel about Indian democracy? Democracy might not be good for all countries, it has to be understood and not there just for the votes. For example, local Sindhis send their kids to the local schools because earlier they couldn’t send their kids to international schools but that has changed in the post-Suharto era. He said expatriate kids will have a problem with Bahasa Indonesia. The Sindhis either speak Bahasa or English and marriages are largely within the community. Settled Sindhis also marry from India. What is his view of the recently arriving Indian expatriates? The attraction evolves over a period of time because the pay is good and the domestic help is unbelievable. A lot of Indian expatriates have been given residency or citizenship in New Zealand but chose to stay in Indonesia. The Indian expatriate wives are kept occupied in various activities, take care of children and family, are actively involved in the schools, his wife had painted. Indian expatriate wives can be professionals like doctors or accountants and return to work after raising their children. Most Indian spouses don’t work because it’s quite tough to certify themselves again. His wife came from an Air Force family and his fatherin-law was a fighter pilot, it was a love marriage, he is a Brahmin. He dropped out and she also dropped out of law and came out to look after his son. She was teaching in Gandhi International, then she moved to the American International School. She is a dietician and wanted to open a restaurant. Where does he worship? He frequents the Gurdwara at Pasar Baru, the Shiv Temple at Pluit, and the Devi Temple at Tangerang. His Ganesha Restaurant is in a good location with ample parking, near to office buildings and accessible to people from South Jakarta. We observed that the lunchtime crowd consisted of 50 to 60 patrons. The restaurant has good decor with a pool table. His younger brother manages the restaurant and takes care of the entire restaurant. His wife spends her time advising on the menu but is also active in tennis and swimming, but she is not part of the Indian Women’s Association. His wife was a primary school teacher and took a degree in computing at NIIT. The clientele at the restaurant is a mixture of Indian expatiates and local Indians. The clientele also include Filipinos and Western expatriates. The restaurant also caters to vegetarians. He thought that there was a blend of Indian culture seeping into the local culture over the centuries.

Country study: Indonesia   105 What are his future plans? He has to put through his daughter to school. Would he give up his Indian passport? No. Would he like to go into politics? He never attends the Indian Embassy functions because there was not much value in that but he did go to the embassy for prayers for the Mumbai victims. He is not affiliated to any parties, but would go into the federal level, state level is a waste of time. How would his family adjust when he goes back? At the time, they are able to stand on their feet, his wife knows his ambitions. Would not his talent be better used to enhance links between India and Indonesia? He is trying to place his kids overseas for tertiary education. He travels to Singapore often. His daughter is attached to Indonesia and would like to finish her schooling in Indonesia. For him, it was a practical decision. Indonesia needs to improve its education sector. A lot of the foreign students in Singapore are from Indonesia. Good but expensive private schools have opened in Indonesia. Rich industrialists would park their wealth in Singapore and Indonesia is losing out on this wealth as economic investments. Senior engineer, Indian manufacturing company, Jakarta, 20 December 2008 The Indian manufacturing company is a 100-year-old company that started with parts distribution and some manufacturing activities. Currently, it is the largest component manufacturer in India with some 30,000 employees. It has an annual turnover of US$1 billion and exports to 40 countries. The company wanted to expand beyond India and its largest markets are in Asia. For example, the largest market for two-wheelers is China (18 million bikes), second is India (9 million bikes) and followed by Indonesia (6 million bikes). Other markets in the region are Thailand and Vietnam. Indonesia is a growing market with increasing income, a low rate of two-wheeler penetration among the population and inadequate public transport system. However, he did his Master’s in the UK and cooked for himself when he was in Warwick. He knew about Indonesia from the internet before coming here. He has been with TVS group for 23 years, the company decided to establish its first overseas plant and he was put in charge. He first arrived in Jakarta in May 2004 and moved fully in April 2005. His family is with him and he has two children, a girl aged 14 and a boy 11. Both his children are attending the Gandhi Memorial School in order to learn Hindi but they are following the Cambridge examination system. How was he chosen to come to Indonesia? A few people were short-listed but he was chosen because of his versatility and experience. He is open to sending his kids anywhere for tertiary education. In October 2005, he brought his wife over to Indonesia and they talked to some Indian expatriate wives, visited some schools and houses. They all came over in 2006 from Bangalore. In terms of food, he is a vegetarian, travels quite a lot. When he is traveling, he would talk to the chef and could order a vegetarian meal. South Indians love yogurt and it’s available everywhere. In Indonesia, it’s not an issue, he used to stay at Le Meridien where there is Lebanese food. They also

106   Country study: Indonesia discovered where Indian food, especially South Indian food, could be bought. He felt very comfortable here. The country was clean and as he traveled he realized the people and surroundings are similar to that in India. His wife’s main problem was the language. He has learnt Bahasa by attending classes and conversing with his driver. What is his social network like? He does not have much of a social life because of the hectic work schedule. The temple is a place of congregation. He is from Bangalore and there is a Kannada Association. His wife is from Andhra Pradesh and she has the Telugu Association. What are his views of the settled Indians? The local Sindhis seem successful, well connected, low profile, attend the Indian Embassy functions, well integrated into the Indonesian community, they are more Indonesian in perspective. Do the local and expatriate Indians interact with one another? The local Indians and expats do mix and there is no issue of segregation. The Indo-Indians website has some good advice and is run by helpful people. How did he find the business environment? He replied, the human resource (HR) guy that came along was tasked to find out where the company’s staff could live and access education, food, groceries, they also made a booklet to guide their staff when posted to Indonesia. This was sent out as a kit. The HR guy would also help them to settle in and find a house. How do the locals view Indians? The taxi drivers see Indians as stingy, very clever people, sociable people that tend to “stick together” and have a big problem of saying no. Indians are impatient and presume to understand things before they actually know all the facts. Texmaco was a bad experience and suppliers are wary of Indian companies. For the locals, it is not wise to overload and multitask them, Indons prefer one task at a time and they will do it well. At the factory, the Indon guys are able to follow standard operating procedure better than the workers in India. He fears that in a competitive environment like India, his kids might not be able to compete because the education system is different in Indonesia. What are his future plans? He is not really focusing on sending his kids to the US. Not likely the US, but he prefers Singapore and India, maybe the UK as third choice. He would want to go back to India. Prefers the lifestyle in India, when he graduated, most of his college mates had gone to the US but not him. He also has no problems moving to third countries or back to India. How often does he return to India? He goes back to India every month and his kids every six months. His kids keep in touch with their friends in India. Bilateral trade will do well, commodities in particular, strong bilateral trade. From a business perspective, TVS has an investment arm in Singapore, thee may be logistics but in terms of manufacturing, Singapore is not a manufacturing hub. Singapore can be a business hub but for manufacturing, it would be Indonesia or Thailand. TVS did not want to go into tie-ups or joint ventures. He feels that there is no need to have the patronage of a strongman or Bapak but he has never done anything like this even when applying for his driving license. Even the tax office when they visited TVS, told them no one has the right to examine their accounts. TVS got BKPM investment approval in three days. He found that the business environment is helpful. The

Country study: Indonesia   107 system is quite simple here but he has to be careful with the law that is based on Dutch law. This is different from British law. There is also a law and implementation regulation. A manufacturing license and an assembling license are needed to generate employment in Indonesia. Has the rise of India as the other Asian giant caused influenced people to view India differently? What can be done to bring more Indonesian investments to India? In order to attract more foreign investment, institutions like the ECAII have to bring KADIN to work with CII. For a start, India and Indonesia have to establish a CEO board and a biennial trade fair, interchangeable between Indonesia and India. The Indian professionals are mainly in sectors such as finance, HR, purchasing and they have started their consultancies. After the global economic meltdown and the Asian financial crisis, the Indian expats filled the vacancies left by the Western expatriates. This time round, Indonesia is doing well but the world is in crisis. There will be more investments from India to Indonesia. There is some affinity for Indians in Indonesia, especially in Yogyakarta. Senior human resource manager and a systems engineer, Jakarta, 20 December 2008 The senior human resource manager used to work for a large Indian conglomerate. He initially relocated to Jakarta in 2002 and was there for four years. Then in 2006, he worked for an oil company in Balikpapan. He had applied for immigration to the UK like his friend. He was short-listed. But he dropped the idea of moving to the UK because of no domestic help. Indonesians give Indians a lot more respect than the respect they receive in Singapore or Malaysia. The Indians here are experienced, have worked at least seven years here, and are professionals. The image of Indians here is positive. The other interviewee is an accounts manager and he first moved to Jakarta in 1999, he is now 38. He had worked in Indonesia during the 1998 Asian financial crisis when he was in operations and the restructuring of companies. He believes that Indian professionals are drawn to Jakarta for the money and career challenges. Nonetheless the salaries in India are increasing and the differentials between the two countries are closing, but India is a more aggressive economy. He is married with a 7-year-old daughter and had left and recently returned to work in Indonesia. His daughter attends the Gandhi Memorial School. The main drawback in terms of work environment is the lack of English usage. Both managers used to work for a conglomerate called Texmaco. The accounts manager’s mother and brother are US citizens and he is a Green Card holder but he has no inclination to move to the US. He has an apartment in the US, for his daughter, when she moves there for further studies. According to the senior HR manager, most employees who worked for Texmaco wanted to come back after the Asian financial crisis. Texmaco was instrumental in the development of the expatriate Indian community because they hired Indians like Nalin Rathore and Sundaraman. These well-known Indians later became industrialists and entrepreneurs and helped form Indian associations like the India

108   Country study: Indonesia Club. Security is a very important factor and in comparison, India is not safe but Indonesia has good individual security. Moreover, expatriates are accepted generally and the locals are willing to learn. How are the locals in comparison to Indians? The locals are perfectionists and hospitable as a people. The locals can be trained and do things in an organized way. They will not find a short cut like in India. They will not experiment. The locals are good at chess which shows their intellectual creativity. Most of the Indian expatriates who left Indonesia are likely to return because it gives them a good lifestyle and comfort. The lifestyle is relaxed and the locals do not want to mix business with personal matters. The locals here are polite and very courteous and if there are disputes, the lawyers will fight it out for them. The creativity in the advertisement industry has not been translated into the economic world. His secretary is paid to work normal working hours. In India, there is a slave mentality and Indians like sycophancy but not in Indonesia. For example, the Indonesians made the Dutch learn Bahasa but the Dutch did not invest in the education system in Indonesia. Historically, there are exchanges between India and Indonesia, but a dictator like Suharto had underplayed this. Post Suharto, there is better governance and less corruption. More importantly, Indian expatriates do not really need “godfathers” (patrons) in Indonesia because Indians are generally respected. For example, Indian entrepreneurs in business here in Jakarta found it easier than doing business in India. He has a colleague who started a company in 2005 and has a US$100 million turnover. Kaushik argued that Indonesia is the only country which respects Indians wholeheartedly. What are his future plans? He is keeping an Indian passport and he might send his daughter to the US for further studies because he still has relatives in the US. He would retire in Indonesia. His daughter wants to work in Indonesia as well. He finds a common culture in relation to marriages, the epic tales of the Mahabrata and Ramayana between Indonesia and India. Is social networking important? They said, companies like Texmaco and Indorama faced similar concerns about where to settle their Indian expatriate workers. The senior HR manager said the company has about 90 guest houses, where 50 are reserved for Indian employees and 40 for Indonesians. The HR departments were told to locate Indians where other Indians reside. The rationale is that when the husbands are at work, their spouses should feel comfortable and able to socialize. Indian expatriate employees were advised to stay together and are located in apartments with other Indians. The moment their Indian employees land at the airport, they are given an induction booklet which provides information on Indonesian customs and places to find Indian shops for groceries and other basic necessities. Upon arrival at the airport on their way to Kemang, the Indian expatriates are given the induction booklet to read. They have guides to Indian shops. Where do Indian expatriates go to socialize? The Caucasian expatriates go to Jalan Palateha, in the same vicinity as Block M (a famous shopping centre). This place used to be packed with Caucasians (3–7 p.m. “happy hour”) but after 7 p.m. Indians will flock there. Another favorite pub or “watering hole” is My Bar which also serves mainly Indian clientele, the Caucasians who frequent these places are either married or have retired in Jakarta.

Country study: Indonesia   109 The senior HR manager explained that in the case of senior Indian executives, they have to interact with other Indians and also with other senior executives in various agencies. In general, the Indonesians believe that Indians are intelligent people. Interactions are often restricted to professional circles. Very few families interact. Every expatriate employee also has to be a mentor to a junior colleague, an idea which they initially refused but were forced to do. In terms of information, most Indians would only stick to Jakarta Post but the other papers like Kompass or Tempo have better information. In terms of dietary restrictions, even if you are vegetarian, it’s not a problem because there are Indonesian vegetarian restaurants. The Indian expatriates would eat Padang food and might favor this but his Indonesian friends introduced him to Sundanese, Macasar and other types of Indonesian food. However, some people also keep interaction at a professional level only. Therefore, he has managed to make it compulsory for all staff to have a dinner with their own team or department on a regular basis. The senior HR manager said that numerous Chinese companies that used to hire US or European expatriates are now hiring Indians because they are paid less. In general, he found that Indian expatriates prefer consuming Indian food and they are able to adjust their schedule wherever they are. In some places, Indians find it hard to adjust to culinary settings and this is due to their upbringing. Indian kids are protected and the parents decide what they should do. The interviewee said his medical doctor parents wanted him to go into medicine. He refused to follow this line and tried many different jobs including advertising and HR. He said creativity in Indonesia is not as good as creativity in India because of rigid parental upbringing. Both acknowledge that there are a lot of opportunities in India because of economic liberalization and consumer loans. Indians are buying housing and taking out car loans. The Indian middle class is part of the consumer society, they are in other cities in India, all are not IT-driven, the non-IT middle class is there as well. The Bangalore textile sector contributes more to state revenues than the tax-free IT sector. He said that there is reverse migration and more NRIs are moving back to India. His seniors went in search of infrastructure, new technology like Apple computers but now all these MNCs are in India. He said; “Countries are no longer relevant, nation-states are no longer relevant, there is now the Global Indians.” Financial consultant, Jakarta, 16 December 2008 The financial consultant was born in Bangalore but raised in Chennai. He is a chartered accountant by training and has worked for several manufacturing and financing companies, for example, the Asian Development Bank and the World Bank. He moved to Jakarta in 1991 to work for a small bank that had 10 branches and wanted to expand further. How did he know about the vacant position? A good friend of his was already working in the training department and recommended him for the finance department. He was given the job based on recommendation. The employers here are comfortable based on trusted recommendation.

110   Country study: Indonesia After that, he established his own investment firm. His wife from Mumbai is also a chartered accountant. In 2004, both he and his wife opened up their own firm. They specialized in financial advisory work, fund raising, mergers and acquisitions, IPO advisory, restructuring, today most businesses are in the resources and energy sector because most Indian firms are into this now. IT companies are also setting up. In the economic downturn, the stock exchange was affected. The market is down. Capital market regulations have changed, it is important to increase the liquidity rate. Their motivation in relocating to Indonesia? The main motivation was to gather exposure and the person calling had been a good friend since 1965. It was a three-year contract, therefore, he had a three-year plan and then to return to India. Initially, it was tough in the first few months because of the language but he now is learning Bahasa. In 1994, he made the switch to the IPO advisory business and during that period of four to five years he undertook numerous initial public offerings (IPO). He had a chance to go into the IPO division. What did he experience during the riots during the post-Suharto regime? Was there more antagonism directed towards the Chinese community? Yes, during the riots most of the big industries were run by the Chinese. The reaction of the Indian community was to return to India. His former employers sent him back to India for two weeks but luckily by the time he left on the third day, Suharto had stepped down which placated the rioting mobs. Did the troubled times affect the Indian community? He was staying in the Chinese enclave and had independent houses. He was lucky that the mall owner had good links with the military and had got two tanks to be placed there to protect his property as well as commandos. Some Chinese home owners had gotten together to put together a security force. The fear was that they could target foreigners. Post World War II, Indians had already settled in Indonesia and famous Indian companies there included Aditya Birla and Texmaco. Generally, it was possible to distinguish two groups of Indians: the 1991 Indians, and the New Indians or post-1991 Indians. The post-1991 Indians or the new wave have a different view, they see Indonesia as a “stepping stone” to a better life or opportunities elsewhere. They might be in Indonesia for a short while then off to a third country. After the Asian financial crisis and the Suharto regime, by 2005 to 2006, things had started to improve in Indonesia. Future plans? His two sons are aged 14 and 19 years old. The 19-year-old was 2 years old when he came to Jakarta. He enrolled into Jakarta International School and is now at Manchester University doing an engineering degree. The younger son was born in Jakarta and is in grade 8. He has another four years of schooling and may move onto tertiary education overseas as well. Among the Indian expatriate children, only a small number will move back to India because of peer pressure. The systems of education in Jakarta and India are different. How would overseas NRI kids cope with the education system in India? This was his main concern for his own kids. For example, Manchester University has a dual degree in engineering and business over four years. His kids like to visit India but most NRI kids have a problem of staying in India. The younger son is talking about tertiary education in the US. The kids and the environment are very comfortable.

Country study: Indonesia   111 Lifestyle? The Indonesians are very nice and very hospitable. What about Indonesian education and qualifications? Business families does not invest much in education. The locals speak in Bahasa and are not conversant in Hindi. Where are the settled Indians? They open shops in Sunter, a few shops Pasar Baru area, Jakarta’s “Little India.” Any signs of growing Islamization? Jakarta is different because they are a more educated lot and the religion factor is not an issue. Indians are well respected in Jakarta and Indonesia and a lot of them actually stay on. In Singapore, he had a row with the Mustafa staff, who are different from the service in Jakarta. Social networks? There are good social activities in Jakarta, on a small and large scale. For example, the India Club has a good committee and organizes interesting events. Andhra, Kannada, Marathi and other groups have emerged. They are not meant to rival the India Club. The Southern Indians found the India Club activities focused more on the Northern Indian culture. At India Club functions like Diwali, more than 1000 people turned up. There are “pockets” of Tamil and Marathi-speaking people and he did not get bored. His social life has slowed down in Jakarta compared to India, he has to call ahead or make an appointment to meet friends. He used to have more time to spare at the weekends. Describe his interaction with the settled Indians like the Sindhi community. He does not meet or interact with the settled Indians apart from his work and professional environment. He feels that language is important and his kids should be able to speak and communicate in both English and the Indian languages. The expatriate Indians had talked about having their own regional cultural activities and have their own kids participate in them. Where do the Indian expatriates go at weekends? They mainly go to the malls and they try out new shopping places and Indian restaurants. There are about 10 Indian restaurants, including Komala Vilas, which is very crowded on Sunday because the Pasar Bharu crowd goes there. In Jakarta, the majority of the Indian professionals are in the finance sector. For example, Texmaco had more than 150 chartered accountants and they were mainly from South India. Before the 1998 Asian financial crisis, Texmaco hired most of their senior staff from Madras (Chennai). With India Rising, what are his future plans? Before the global economic downturn, not many of his Indian expat friends had gone back to India but they might move on to third countries. In the professional sense, the locals are not able to multitask and he makes allowances for this. For example, he cannot disturb his staff over the weekend. There are many Indian chartered accountants but they are not registered with the professional organizations here. In Jakarta, they may prefer to attend more to the white people. But in terms of respect they think highly of Indians. Although he is holding onto an Indian passport and does not intend to change his passport, he does not plan to go back to India. Dance instructor, Jakarta, 19 December 2008 The interviewee is a dance instructor and wife of the financial consultant’s brother-in-law and has been in Indonesia since 2002. Her two sons, aged 5 and 8,

112   Country study: Indonesia were born in India and both attend the Gandhi Memorial School. Life is comfortable in Jakarta but she did not want to sit idle and took this job from 10.00 a.m. to 4 p.m. to keep her occupied. She also has a maid to take care of the kids. Most of the Indian expatriates have domestic help because this allows the wives to work if they want to. It is also good to have maids because the grandparents are not here to help them. Did they do research on Indonesia before they came? No, she followed her husband and her sister-in-law’s family was already here. Bahasa Indonesia is not a difficult language to “pick up” and she learnt it on her own because she has to communicate with the maid. Moreover, she uses Bahasa Indonesia to converse with her students or the locals. What is the function of the Indian Cultural Centre? A lot of Indian expatriates come to the center and attend the Indian dance classes. The center has good communications with the local Indonesians. It also has a dance troupe which tours the various provinces in Indonesia. The majority of expats are in Jakarta and only those managing the manufacturing plants are posted outside of Jakarta. The center has lots of students and this is useful to promote cultural diplomacy. They also provide dance scholarships and also train yoga teachers who have over time opened their own studios and teach other students. The Indonesians like yoga, especially the working people. The yoga classes are attended 99 percent by Indonesians. The NRIs are not keen on yoga but prefer the dance classes which their children also attend. Some expatriate ladies, after having children, return to school and attend dance class and yoga. They are ladies of leisure. The expatriate wives generally feel comfortable in Jakarta and safer than in India. They have a driver and a car here as well. They might come for some books and to look at a magazine. The expatriate ladies are mostly housewives, taking care of the kids, the school hours are long. If a dance troupe comes to Jakarta, the center will arrange for their accommodation and logistics. They will talk to various organizations such as the Gandhi Memorial School which has a good auditorium. Expats could also be involved. India only has about 20 cultural centers the world over. Why Indonesia and not Singapore? Basically, it was difficult to open a cultural center in Singapore. Lifestyle? Her family will visit Singapore or the US, Europe, if they can afford it. In terms of dietary needs, she is not a vegetarian and her husband manages the Ganesha restaurant. She has tried the cuisine but did not like it. She gets everything she needs in Jakarta from the Indian stores. Biennially, she returns to India where she will shop. How does her family celebrate the various religious festivals? They attend the Tangerang Mandir every Saturday. In terms of worship, there is no difference from India and it’s better in Jakarta compared to India. How does she interact with the locals? She finds the locals to be very friendly and gentle. She has nice Indonesian friends who give her new Hindi movies. What about the local attraction to Indian culture? In terms of Indian culture, the locals are attracted to Bollywood movies and some cinemas do screen selected Bollywood movies. Does she interact with local Indians? Her interactions with settled Indians were mainly with the Sindhi community but they don’t interact much with Indian expatriates. Only a few settled Indians come to learn yoga.

Country study: Indonesia   113 Settled Indians are more Indonesian than Indian in mindset but have not given up their Indian heritage. Local Sindhis will take care of themselves, have fashion sense and live in big houses. In contrast, the expats live in apartments and are not so well off and their wives join the Indian Women Association (IWA). However, the majority of members of the Women’s International Club are settled Indians from the Sindhi community and the diplomats’ wives.

Conclusion This chapter traced the close historical, cultural links and trade relations between India and Indonesia. The experiences of Indian expatriates living in capital Jakarta were generally very positive and India also has a cultural center in Jakarta. In general, Indonesians call Indian expatriates “smart people.” This could be due to the close historical and cultural links as depicted by the knowledge of the Mahabrata and Ramayana and because of the cultural center in Jakarta. In addition, the settled Indians in Jakarta, mainly Sindhis, have gained a respectable and credible reputation among the general Indonesian population. The Indian expatriates are able to lead very comfortable lifestyles in Jakarta and those who left have returned and raised families. However, in general, Indian expatriates and settled Indians do not interact socially except during festivals and religious occasions.

5 Country study

Malaysia

Introduction Malaysia is home to 1.7 million People of Indian Origin (PIO)1 and approximately 8 percent of the country’s 27 million population are ethnic Indians and some families have lived in Malaysia for at least two generations.2 The Malaysian Indians in general feel that they have been neglected by the state and society. They own less than 2 percent of the national wealth and are frustrated because they have not been able to leverage on their inherent talents nor receive adequate expression for their culture and identity. The underclass mentality that has pervaded could also be blamed on divisions within the community itself along caste and class lines. Arguably, the source of this problem could be attributed to the British colonialists who created a system of stratification with upper-caste Malayalees and Jaffna Tamils at the top and lower-caste Tamils at the bottom. While the Malayalees and Jaffna Tamils benefited from their close proximity to the British and exploited the modernizing economy to accumulate wealth, the Tamils laboring in the plantations were alienated from these modernizing and progressive influences. The aim of this chapter will be to examine the social and economic impact of Indian professionals in Malaysia. Against the background of unrest among the ethnic Indian population of Malaysia, the chapter also aims to examine the dynamics between the settled and Indian expatriate community. When Malaysia experienced an economic boom in the early and mid-1990s, the plantation Tamils suffered economically when the rubber and palm oil plantations were converted into golf resorts and new urban towns. Many Tamils were displaced and became unskilled workers living in urban slums. Trapped in these slums, the uneducated and unskilled Tamil inhabitants were exposed to crime and drugs. The arrival of unskilled foreign workers worsened the plight of the Tamils and made them redundant to the economy. Tamils were not able to exploit education for their betterment because Tamil schools were neglected by the state and community. The Tamils dominated the Malaysian Indian Congress Party (MIC) which forms a component of the ruling Barisan National Party (BN) and the MIC were meant to keep track of and take care of the Tamils’ welfare. However, the MIC leadership is stagnant, feudal and lacking in clout. The MIC president Samy Vellu was in charge of the MIC from 1979 until he was removed from office in 2008. Some Indians have done well and have managed to secure an education to

Country study: Malaysia   115 become professionals, such as lawyers and doctors. However, the majority found employment in the lower rungs of the private sector as security guards, drivers, gardeners or cleaners and often competing with foreign migrant labor.3 In 2004, minority Indians accounted for a disproportionate 15 percent of juvenile delinquents, committed 40 percent of all violent crimes and comprised 50 percent of all convicts in prisons.4 The Malaysian Indians felt that they had missed out on the “good life” and that “creeping Islamicization” is threatening their religious freedom. For example, several temples constructed by migrant workers in colonial times without formal permission on plantations or roads and railways were threatened by land redevelopment plans.5 In order to show their frustration, ethnic Indians formed a pressure group called Hindraf to bring state and media attention to their plight. Then Prime Minister Abdullah Badawi sought to soothe ethnic Indian anger by declaring the Thaipusam festival a holiday and promised a cabinet committee to look into poverty among all the races.6 The arrival of the expatriate Indian professionals as human capital in Malaysia has complicated matters because they are challenging the norms and perceptions of “Indianness” in Malaysia. The mistreatment of some Indian IT professionals in 2003 in Malaysia erupted into a diplomatic row between India and Malaysia and PM Badawi played a key role in defusing the bilateral crisis.7 With the Malaysian government calling for foreign investment in IT, biotechnology, hotels, and tourism, Indian human capital could be an important role in this regard. Prime Minister Abdullah Badawi has commented that biotechnology could be used to reinvigorate the agricultural sector. However, Malaysia does not promote foreign investments across the spectrum of its economy because foreign participation in its financial or professional services in agriculture was minimal unless it is an agro-tourism linked project. There are also foreign investment restrictions in the oil and gas sector. All foreign investments in the oil and gas sector are conducted through productionsharing contracts between foreign operators and Malaysia’s national petroleum company, Petronas.8 With the economy undergoing a structural transformation to a services-led economy, Prime Minister Abdullah Badawi had commented that Malaysia should not overly restrict the entry of skilled workers, especially in strategic sectors because it could benefit Malaysia in the long run. He said, “I believe that the Malaysian working population will benefit from having greater interaction with foreign talent. Indeed, we can only improve ourselves if we work and learn with talented others.”9 In 2008, Malaysia had reportedly some 2.2 million foreign workers. Foreign workers accounted for approximately 16 percent of the total workforce. In 2006, the three largest source countries for these foreign workers were Indonesia, Nepal, and India, as shown in Table 5.1. In 2004, there were about 40,789 foreign professionals and skilled workers.10 As of 2 August 2005, at the higher end of the skills spectrum, there were 33,062 expatriates employed as professionals including 14,432 specialists and skilled workers in services and about 14,754 in manufacturing. The majority of the expatriates were from India, Japan, and China. In November 2007, the Malaysian Minister of International Trade and Industry, Dato’ Seri Rafidah Aziz commented that Indian professionals has assumed a key role in Malaysia’s

116   Country study: Malaysia Table 5.1 Main sources of foreign workers in Malaysia, 2004 and 2006 Country

2004 (%)

2006 (%)

Total 2006

Indonesia

66.5

66.7

1,215,036

Nepal

9.2

10.8

200,000

India

4.5

7.6

139,716

Bangladesh

8.0

3.2

58,878

Pakistan

0.1

0.8

15,071

Thailand

1.0

0.4

7282

Source: Department of Immigration Malaysia and International Migration in Malaysia, Regional Census Programme for Asia & Pacific, ESCAP, Bangkok, 27–28 November 2006, Bangkok.

economic development and accounted for 19.6 percent of the total expatriate population.11 A senior Indian expatriate professional in Malaysia said that, “As far as Malaysia is concerned for human capital, there is always influx from India.”12 The figures from the Indian High Commission showed that 140,000 Indian expatriates are working in Malaysia, of which 10,000 are “white collar.” About one-third of the 140,000 are in the workers (unskilled) category. He added; “As far as Malaysia is concerned, the Indian Diaspora is around two million. We understand that it is second to any other Diaspora community in the world. That is why we have come to Malaysia because it is our policy to follow the Indian people around the world.”13 Figure 5.1 shows one of the authors buying Indian cuisine at Brickfields, an Indian enclave in Kuala Lumpur. The influx of foreign talent and workers had created resentment in certain segments of the Malaysian community because of the competition for employment. The Malaysian government would like to repatriate about 60 percent of its total foreign workers to employ Malaysians in those sectors. Home Minister Syed Hamid Albar said: There are certain sectors where we should be able to have Malaysians working in those sectors. In 2000, the unemployment rate was 3.1 percent and increased to 3.6 percent in 2001, the highest for Malaysia for over 10 years at that point of time.14 In 2001, after the Asian financial crisis of 1997, the government revised its policy regarding foreign workers so that locals would receive priority in the event of a world economic slowdown.15 The Malaysian also economy suffers from structural unemployment because it is not producing graduates with skills in demand by the corporate sector. In 2005, a study by the Economic Planning Unit (EPU) estimated that 60,000 graduates were unemployed, with many seeking employment for more than a year. Some of the reasons included, lack of job experience,

Country study: Malaysia   117

Figure 5.1  Author at Brickfields in Kuala Lumpur.

poor command of the English language and mismatch between their skill sets and the jobs available.16 A number of government initiatives were launched to retrain graduates. In 1993, the Human Resource Development Fund (HRDF) was established to encourage employers to train their own staff to enable them to adapt to a rapidly changing work environment. In 2001, another fund called the Skills Development Fund (SDF) was introduced to enhance the participation of the private sector as training providers and increase accessibility to technical and vocational training through the provision of financial assistance. The scheme is open to school leavers, retrenched workers and employees undergoing training in approved public and private training institutes.17 In 2003, a more focused program called the Graduate Training Scheme II was launched with the aim of providing selected marketable skills to graduates who were unable to secure gainful employment. Thousands of trainees and applicants have undertaken these programs. However, public resentment still lingers when these graduates remain unemployed as companies recruit foreign talent. In 2006, the majority of foreign workers were unskilled and numbered 1.82 million, while skilled and semi-skilled workers numbered 34,204.18 In 2008, the Malaysian government had also revised its policy in a bid to force employers to hire locals by repatriating 500,000 foreign workers by 2009.19 The government will also not approve work permits for unskilled foreign workers for longer than five years and ten years for skilled workers. Only foreign workers in the construction, manufacturing and plantation industries will be exempt from the plan. Table 5.2 shows the foreign workers employed in each sector of the economy, the highest being in manufacturing, Plantation, Domestic, and Construction. The other

118   Country study: Malaysia Table 5.2 Number and percentage of foreign workers in various sectors at end of 2005 Sector

Foreign workers

(%)

Manufacturing

591,363

22.48

Plantation

412,923

22.68

Domestic workers

319,383

17.54

Construction

282,361

15.51

Servicing

161,015

8.84

53,635

2.95

Agriculture

Source: Data and profile of migrant workers in Malaysia.

concern about foreign workers apart from the competition for employment is that Bank Negara (Malaysia Central Bank) had recorded that the total remittances flowing out from Malaysia is 7 percent of gross national product (GNP) or about US$1.8 billion in late 2008.

Working expatriates In 2006, the Minister of Science, Technology and Innovation pointed out that Malaysia lacks a critical mass of qualified scientists, engineers and related professionals essential to transform the country into a knowledge or (K) economy.20 The Minister commented that in 2004, per 10,000 in the workforce, Malaysia had only 21 research scientists and engineers. The target in the Ninth Malaysia Plan was to have 50 such professionals for every 10 000 in the workforce by 2010.21 One plan to offset this was to attract scientists and engineers worldwide to conduct R&D in Malaysia. In addition, Malaysia also needs to create a large pool of innovative firms and entrepreneurs with the ability to exploit new technology and knowledge for economic gains. Despite broad recognition of Malaysia’s shortage of skilled labor, most foreign firms face restrictions in the number of expatriate workers they are allowed to employ. The enthusiasm of foreign companies keen on Malaysia’s economy growth potential is tempered by the growing need to attract and retain top talent. The acquisition of talent in the Malaysian economy is fragmented with hundreds of locally owned recruitment and staffing agencies providing recruitment services. In Malaysia, recruitment services are often seen as the mass hiring of low to middle level or temporary workers undertaken by multiple agencies. While the number of expatriates in skilled professional positions in Malaysia increased by 30 percent from 2005 to 2006, most have come from other countries in Asia, yet these numbers were still not enough. High-technology companies have complained of problems attracting skilled foreign workers because of bureaucratic “red tape.” In response, in September 2007, the Department of Immigration

Country study: Malaysia   119 announced it was simplifying the entry system for skilled workers. The process for issuing skilled work visas will be reduced from 14 to 7 days.22

Visas/work permits There are various types of work permits in Malaysia. The employment pass is issued to foreigners who enter the country to take up a contract of employment with a minimum period of two years and earning a monthly income of not less than RM3000 (US$882). The visit pass (for temporary employment) is issued to foreigners who wish to enter the country for the purpose of engaging on shortterm contracts with any agency. The categories of eligible foreigners are: artistes, volunteers, filming, invited lecturers/speakers, religious course, members of international organizations, researchers recognized by the government, experts in installation or maintenance of equipment. The definition of “foreign expatriate” by the Immigration Department is foreigners who qualify to fulfill key posts, executive posts and non-executive posts. Key posts are high-level managerial posts in foreign-owned companies that are operating in Malaysia. These posts are essential for companies to safeguard their interests and investments. These senior expatriates are also responsible for determining the company’s policies to achieve its goals and objectives, for example, executive chairman, chief executive officer and general manager. Executive posts are intermediate level managerial and professional posts. These posts require academic qualifications, practical experience and expertise that are related to the particular position, for example, marketing manager, logistics manager, investment manager and others. Non-executive posts are positions for the performance of technical jobs which require specific technical or practical skills such as welder, mold maker, tool and die maker and others.23 The employment of expatriates usually involves two phases.24 First, the company must be granted approval for the expatriate post; then the individual must be approved by receiving a “reference visa” from the Malaysian Embassy in the expatriate’s home country, then approval from the Immigration Department. More details can be found at www.pemudah.gov.my/guidebook.pdf. Companies in different sectors must apply for approval for expatriate posts through the respective government authority: manufacturing and manufacturing-related companies apply through MIDA; companies with “Multimedia Super Corridor” status through the Multimedia Development Corporation; banking and insurance companies through the central bank (Bank Negara Malaysia); securities brokers through the Securities Commission; biotechnology companies through Biotech Corp; and companies in other sectors through the Expatriate Committee. Each authority has its own set of requirements and decisions are made on a case-by-case basis.25 Manufacturing companies with foreign paid-up capital of at least US$2 million receive automatic approval for up to ten expatriate posts. Manufacturing companies with paid-up capital of US $200,000 to US$2 million will receive automatic approval for up to five expatriate posts. Manufacturing-related companies in

120   Country study: Malaysia sub-sectors targeted by the government for development are given priority. These include regional establishments (operational headquarters, international procurement centers, regional distribution centers); support services (integrated logistics services, integrated market support services, central utility facilities, cold chain facilities); research and development; software development; hotel and tourism projects; technical and vocational training; some environment-related services; and film or video production. Except for manufacturing companies with automatic allowances, generally, a firm wishing to employ expatriate personnel must demonstrate that there is a shortage of qualified Malaysian candidates for that position and that a Malaysian citizen is being trained. In practice, this is difficult for firms to document. Work visas are issued for a period of two years, with possible but not guaranteed renewals for up to a maximum of 10 years. The uncertainty of whether investors will be permitted to remain in the country after their businesses become profitable remains a significant barrier to foreign direct investment. No individual is permitted to remain in Malaysia on a work visa beyond ten years. Malaysia’s freeze on permanent resident visas remains in place,26 however, it has launched the “Malaysia, My Second Home” program that provides long-term resident visas for well-off expatriates. In this context, the government has made some progress in simplifying and expediting permit approvals for some categories of foreign personnel. In 2007, it established four additional immigration units intended to expedite visa approvals for expatriates, and the Pemudah Committee developed a guidebook clarifying the various procedures and requirements. Processing times have been shortened considerably. Although the government announced in September 2006 that it would begin to permit professionally-qualified spouses of expatriates to work beginning in 2007, this decision has not been implemented. As of 2007, dependent children of expatriate women employed in Malaysia on legitimate work visas usually have been given two-year dependent pass visas, but their expatriate husbands are not given the same dependent pass visas. Expatriate husbands are issued the standard “social visit pass” and are required to leave Malaysia and return at regular intervals. Department of Immigration officials responded to concerns about this policy by indicating that it was a “cultural issue” in Malaysia, and that “men should be in the workplace and women should be at home.” In 2007, the validity of the threemonth social visit pass was increased to six months.27 Arguably, most foreign professionals view Malaysia only as a transit point because their ultimate aim is to land a job in a more developed country such as the United States.28 Non-uniform governmental policies on recruitment of foreign talent is a growing concern because of Malaysia’s drive to be a KBE. For example, in the mid-1990s, then Law Minister Syed Hamid Albar said that foreign lawyers should be allowed to practice in Malaysia.29 This would enable and encourage foreign and local lawyers to exchange ideas that would benefit Malaysia. Minister Albar added that, local lawyers should not fear being overshadowed by their foreign counterparts or face stiff competition from them when they practiced in Malaysia. Malaysia needed the expertise of foreign lawyers because of offshore

Country study: Malaysia   121 projects and the myriad of foreign interests that are involved. This is in contrast to the view regarding the demand for air traffic controllers (ATC). In the mid-1990s, despite the shortage of ATCs, the Civil Aviation sector did not view recruiting foreign ATCs as the answer although it took five years to train an ATC. The Civil Aviation sector believed that offering locals better pay scales, lowering of minimum qualifications and offering scholarships would be a better alternative.30 The biotechnology sector also had a different view of foreign talent. In 2005, the Malaysian Biotechnology Corporation (MBC) was looking for the best brains to develop the biotechnology sector. Apart from attracting Malaysian talent working overseas, the MBC also looked into ways to attract foreign talent. MBC Chairman Dr. Ahmad Zaharuddin Idrus said, “We don’t have to be over-nationalistic in this matter, though we will love to see Malaysian coming back. At the same time, we will love to work with the best brains (local or foreign).”31 It is acknowledged that Malaysia also suffers from an outflow of its best talent or “brain drain.” The government stepped up incentives to reverse the brain drain. In 1995, a “brain gain” scheme was introduced but failed to expand Malaysia’s talent pool for science and technology professionals.32 The scheme was a temporary measure aimed at enabling tertiary institutions and think-tanks to fill shortages in specific areas. The program was suspended in 1997 because of the economic crisis but reactivated in 2001. Several reasons accounted for the scheme’s failure to attract talent and they included a lack of focus in areas of science and technology that were not prioritized, the salaries and incentives offered, though attractive by Malaysian standards, were not lucrative enough to attract top talent from abroad.33 A lengthy administrative process hindered many researchers from applying. The tertiary institutions involved were reluctant to hire high-earning professionals because the disparities in pay scales would cause anxiety among its staff. The scheme had concentrated on applicants from China, India, Pakistan, Russia and the Commonwealth of Independent States (CIS). The revised scheme targeted Malaysians residing overseas and foreign professionals in science and technology trained in areas where locals were absent.34 In 2001, under the provisions of the budget, there was a drive to attract overseas-based Malaysian professionals and skilled workers in strategic areas such as IT. Three major incentives to attract overseas Malaysians included: tax exemption for income remitted into Malaysia within two years, all personal items including two cars brought into the country to be tax exempt, all spouses and children who are not Malaysian citizens will be granted permanent residency within six months upon arrival.35 Some 400 applications were received from the tens of thousands of Malaysian professionals working abroad.36 Unfortunately, the 20 Malaysian professionals attracted back by the scheme, all of them left Malaysia again by 2000. This indicated that apart from attraction, there were also retention problems related to talent in Malaysia. This could be due to the differences in work culture, lack of research and development facilities, lack of capacity, initiatives and better salary packages overseas. Recruitment agencies commented that Malaysian professionals are still attracted to work overseas because of better pay and the perception of a better working environment and

122   Country study: Malaysia lifestyle.37 In 2004, of more than 10,000 Malaysian professionals working abroad, only 15 have applied to return to Malaysia.38 In 2007, it was estimated that 140,000 Malaysian professionals had emigrated and this doubled to more than 300,000 in 2008. The Malaysian Employers Federation commented that 785,000 Malaysians are working overseas but unofficial figures number more than 1 million. More than 40 percent of Malaysians working overseas are in Singapore, including those who commute daily across the border.39 In 2007, a recruitment agency official in Malaysia commented that overseas Malaysian talent does return for a variety of reasons such as social and cultural. These returning Malaysians are bringing back their knowledge and expertise with them and they do have a Malaysian Returning program.40 However, the outflow of talent is much greater and some are not coming back or are returning just to retire. He agreed that retention is a problem but there is not a lot that can be done to prevent this. The talent flows mainly to Hong Kong and Singapore. If the Malaysians are good enough, they will try and secure employment in the Englishspeaking countries like Canada and Australia. The salaries in Malaysia will always be a problem because the overseas Malaysians will keep on comparing the Ringgit to the Singapore dollar and pound sterling. If their skills are in demand overseas, the Malaysians will make their fortune overseas and then return to Malaysia to buy a house and a car. In 2009, Penang state which is often dubbed Malaysia’s Silicon Valley lost a US$3 billion investment in the IT sector because the state could not guarantee a supply of 1000 experienced and electrical and electronic engineers.41 Penang is the base for microchip makes such as Intel and Advanced micro devices. Intel alone employs about 5000 engineers. The state attracted FDI worth RM10.2 billion (US$3 billion) in 2008 compared to the national total of RM46 billion. The Penang Skills Development Centre trains about 100 electrical and electronic engineers each year for Penang-based companies. Why the continuing brain drain? The main reason is lack of competitiveness. The executive director of the Malaysian Employers Federation, Shamsuddin Bardan, said that in the US a senior engineer would earn RM30,000 (US$8824) per month compared to RM20,000 (US$5882) in Malaysia. Moreover, according to the executive director of the American Malaysian Chamber of Commerce, Fui K. Soong, the Malaysian tax structure is much higher than its competitors overseas and this might contribute to the brain drain.42 The Malaysian income tax for earnings more than RM10,000 (US$2941) per month is pegged at 27 percent. Figure 5.2 and 5.3 show the Indian enclaves in the state of Penang, Malaysia.

High-technology corridors The Malaysian government has developed a land area about 15 km in width and 40km in length as the Multimedia Super Corridor (MSC).43 The MSC is between Kuala Lumpur and Sepang and included Putra Jaya (the administrative capital) and the Kuala Lumpur International Airport (KLIA). The MSC project was aimed at attracting multimedia companies dealing in high technology to locate their

Country study: Malaysia   123

Figure 5.2  Indian enclave in Penang State in Malaysia.

Figure 5.3  Indian shops in Penang.

operations in Malaysia and establish their base as a regional center to channel services to other countries in the region. While the idea of an MSC pegged to a designated land area was economically practical because it would have been costly to develop an IT network for the whole country, geographically limiting the MSC to one specific location would not have included the island of Penang. Penang is the site of many high-tech industries,

124   Country study: Malaysia especially computer chip design and manufacture, and was established before the MSC was mooted.44 In this context, companies located in the high-tech parks could be granted MSC status similar to those at Putra Jaya. In 2006, the software industry in Penang was accredited with MSC status.45 When the Malaysian MSC was mooted for development by then Prime Minister Mahathir Mohamed, he had welcomed the involvement of India in a big way.46 India could provide Malaysia with access to its large pool of skilled technical manpower, world-class quality processes and global linkages. This had the potential to be a strategic partnership to benefit both countries.47 Foreign companies investing in the MSC would receive a range of tax and regulatory exemptions in exchange for a commitment to transfer technology. Many corporations, such as BMW and HSBC, are using the MSC to outsource their call centers and backroom operations.48 While the pay for IT graduates depended on their area of expertise, IT graduates in Malaysia are generally paid 20 to 30 percent more than graduates in other fields. In 2001, fresh graduates with computer skills could be paid about RM2800.49 However, despite the relatively higher pay, there is a shortage of IT skills that was exacerbated by staff poaching among IT firms. The average rate of staff turnover is between 10 to 18 percent.50 The lack of intellectual capital in the IT industry is related to a variety of indigenous problems including the government policy of promoting Bumiputeras.51 This policy has often impacted adversely on the minority Chinese and Indian communities. This has led to a revision of governmental policies; as of 2002, new applicants for admission to universities were to be based on merit and not ethnicity.52 However, it would take time to build a competent pool of IT graduates and there would be shortage of local IT talent. Due to the skills shortage, employers have to recruit from overseas and India is a main supplier because its IT workers are trained in English. Eminent IT personalities such as Narayanan Murthy, chairman and co-founder of the well-known Indian software company Infosys and a member of the MSC’s International Advisory Panel, were invited by the government to help nurture the fledgling MSC.53 However, the bureaucracy has since come in for scathing criticism for hindering Infosys’ bid to invest in the MSC. Murthy recounted the problems Infosys had faced such as the limited movement of IT specialists to Malaysia. He added that the red tape in Malaysia when it comes to acquiring work permits for knowledge workers is “numbing.”54 Despite Malaysia’s concern about preventing the entry of illegal immigrants, Murthy advised that the government and its agencies should be aware that skilled workers were essential to any IT company. This view was reinforced by a senior official from an American IT company in Malaysia. The American official said: If my bosses knew how hard it is for us to get permits from the Immigration Department, there is a good chance that we would look elsewhere. Singapore and Ireland are so far ahead when it comes to clearing the red tape.55 The Chairman of the Consortium of Indian Industries in Malaysia, Umang Sharma commented that despite the visa issue being constantly raised at various

Country study: Malaysia   125 forums, it was still a major problem. Sharma added that, “Business visas are not issued immediately, which poses difficulties for many foreigners, especially those in the IT sector. How can foreigners be attracted to Malaysia when getting a work permit, even by multinational corporations, takes almost a year?”56 The MSC project requires more ICT specialists and knowledge workers than the Multimedia University (MMU) can produce and the MMU is not well enough established to attract top regional talent. Other universities that have MSC status are also able to produce ICT graduates but despite all this, there is expected to be a shortfall of ICT workers in Malaysia.57 Another main concern apart from numbers is the quality of these ICT graduates. The issue of human capital is linked to indigenous concerns such as the government policy of promoting Bumiputeras. In 2001, the isolation and desolation of the MSC and the pressing need to create a people-friendly business environment were highlighted. Journalists at the time wrote about difficulties of procuring lunches and the lunacy of moving high-tech workers to a place with no restaurants or social life. Mr Gartner of Gartner Consultancy summed it up by saying, “Talent generally goes with lifestyle ... Australia gets a lot of the high-tech companies. Singapore is winning over Hong Kong. Why? Great Lifestyle.”58 The problem of quality IT education persists in 2008. The economic advisor to Malaysia’s Opposition Democratic Action Party (DAP), said there was an urgent need to improve the quality of IT education provided by Malaysian universities and colleges. This could be achieved by boosting entry requirements, employing better qualified lecturers and setting higher passing standards.59 Rachael Phang of IDC consultancy firm said that insufficient or untrained manpower that is unable to exploit available technologies will stifle the goals of the MSC to create world class IT companies.60 She added that the government needs to work with foreign companies and the private sector in areas where it lacks sufficient resources. A senior recruitment manager provided his assessment on the MSC and IT sector. With an MSC status, a company would be allowed to recruit skilled IT workers overseas and their employment pass process seems to be quicker. However, the majority of IT activity in the MSC is back office operations or call centers. There is a lack of leading edge development firms. The English language factor is a big advantage for Malaysia but the inability of IT workers to move from company to company is a problem. IT workers that are retrenched or unsatisfied with their jobs have to exit Malaysia for at least six months before they are able to enter Malaysia again. Six months is a long time and usually they will look elsewhere for employment.61 An HR manager from a Malaysian firm defended the six months “cooling off” period because too much “jumping” or churn had happened in the IT industry.62 The software industry in Penang also faced problems related to the quality of local IT talent. The tertiary institutions offering IT courses were generic in nature and did not cater to specific skill sets needed in the IT industry.63 One of the key differentiating characteristics of knowledge workers from other skilled workers is the importance of continual upgrading of skills to keep abreast of technological changes.64 Tertiary institutions were not interacting with industry to keep abreast

126   Country study: Malaysia of technological advancement and the changing skill set requirements. Moreover, even if the tertiary institutes are aware of industry needs, they do not have the resources to constantly update their IT equipment and teaching resources. The student pool enrolled in IT courses have poor proficiency in the English language, are unable to grasp programming logic and to apply theoretical knowledge. Students are also not being pro-active and are reluctant to ask questions when unsure of the contents of the lessons.65 The result is that IT graduates are poorly trained and the companies that hire them would have to spend money, time and effort in their retraining.66 The MDEC internship program is one means of retraining IT graduates for the job market. However, in the short run, a number of IT companies in Penang were looking towards hiring foreign staff.

Attracting talent As late as the 1990s, the Malaysian public was skeptical about the need for foreign talent. The Malaysian public tended to blame foreigners for crime and other social ills. The “round-up” of foreigners is a popular measure in Malaysia because they are often labeled as non-tax paying but placing a burden on areas like education and health care.67 Moreover, the curb on foreign talent also prevents an outflow of foreign currency and reduces the budget deficit. The shortage of professionals has also enabled foreigners to work in Malaysia illegally. In 1997, it was estimated that some 70,000 foreign professionals were working illegally in Malaysia.68 For the first time, a “crack down” on foreign professionals was implemented. Foreign firms were compelled to hire foreign professionals illegally because of the difficulties of obtaining work permits.69 Malaysian relations with India came under severe strain as a result of a “round-up” which ensnared 270 Indian IT professionals on 9 March 2003, living at the Palm Court condominium at Brickfields.70 These Indian IT professionals were working for companies registered in the MSC. One of the IT professionals reportedly said, “We have come here at the invitation of Malaysian companies, but we don’t feel safe any more.”71 The Indian High Commission in Malaysia immediately intervened to prevent the alleged abuse of the IT professionals by the authorities and secured the release of most of them from detention.72 Directly after the incident, some 30 to 40 Indian IT professionals left Malaysia.73 The Indian government expressed its concern to its Malaysian counterpart and warned that it would review bilateral and technological cooperation if there was further harassment of Indian IT professionals.74 India took a strong stand regarding this mistreatment of its IT professionals and reassessed its bilateral economic ties with Malaysia such as the abeyance of further air traffic rights to Malaysian Airlines.75 This led to Malaysia apologizing formally over the incident and acknowledging the contribution of Indian foreign talent in Malaysia. Then Malaysian Foreign Minister Syed Hamid Albar said, “We know the contributions of Indian IT personnel in our country and we continue to want them to come to this country.”76 Figures 5.4 and 5.5 show the Indian enclave at Brickfields in Kuala Lumpur.

Country study: Malaysia   127

Figure 5.4  Indian enclave Brickfields in Kuala Lumpur.

Figure 5.5  Indian grocers at Brickfields.

In the Budget speech in 2008, the government announced a range of initiatives to encourage foreign professionals and skilled workers to come to Malaysia. These include faster work permit approval, introduction of a new visa category for business travelers and multiple entries for Chinese and Indian nationals.77 The government believed that this would complement its existing policies of encouraging foreign property ownership. In the 1990s, the government realized their

128   Country study: Malaysia Table 5.3  Yearly average salaries of selected professionals in Malaysia, in RM, 2008 Human resources manager

Software engineer/ developer programmer

Senior software engineer, developer/ programmer

Project Mechanical Lecturer / Account manager IT engineer speaker executive

RM 60,911 35,315

58,377

91,580

42,576

43,511

29,524

US$ 18,075 10,479

17,323

27,175

12,634

12,911

8,761

Source: PayScale website, http//www.payscale.com/research/MY/Country, accessed 17 September 2008.

need to attract foreign professionals. Then deputy secretary general of the Malaysian Foreign Ministry, Dato’ C Ghazli Sheikh said, “What we need are foreign professionals.”78 The Cabinet Committee on Foreign Workers also simplified the approval process for the influx of professional, scientists and academicians.79 Previously, companies applying to employ foreign talent had to submit a letter to the Immigration Department stating the nature of the job, the reason for hiring a foreigner and the experience of the foreign talent. In addition, a letter of recommendation from the relevant government agencies should also accompany the application. From May 1997, authorities and agencies responsible for managing certain sectors of the economy were given the authority to approve work permits for foreign professionals. The Immigration Department will then issue the relevant documents.80 The public sector had also expedited the process to employ foreign professionals such as doctors and engineers. Table 5.3 illustrates the yearly average salaries of selected professionals in Malaysia in 2008. The highest salaries are paid to the project managers. The following sections contain interviews conducted with Indian companies, Malaysian companies, Indian professionals and personnel from an Indian school in Kuala Lumpur.

Non-IT professionals Banker, Kuala Lumpur, 2 July 2007 The interviewee is a senior banker working for an Indian bank. The banker arrived in Malaysia on 20 June 2006 and considers himself to be fortunate enough to be posted overseas because it’s a once in a lifetime opportunity. When he first joined the Indian bank, job security was the most important thing until death or retirement. He had no choice but to join the bank, but if he had a choice, he would have moved to the US. Did he choose to be posted to Malaysia? He was initially assigned to Uganda but a last-minute change occurred and he was posted to Malaysia. He now feels very fortunate to be posted to Malaysia and feels it is even better than the US because Malaysia is a very peaceful, satisfying and complacent country. Why did the Indian bank establish an office in Kuala Lumpur? His Indian bank opened an office in KL in August 2004 because the bilateral trade between

Country study: Malaysia   129 Indian and Malaysia was growing at a rapid pace but the trade balance was more favorable for Malaysia. However, the bank had its own constraints working here because it’s only a representative office and cannot do active banking. A lot of Malaysian companies are opening offices in India, especially new companies like Sunway and Glomac. Most of the Indian cities are growing beyond their limits and now they are growing around the periphery because the diameter, the circumference is being increased. The Malaysian companies are creating a niche in the financial sector and most of the companies are asking the bank for intelligence reports. India is looked upon as a potential emerging market. How does he view bilateral relations developing between India and Malaysia? He said two issues are critical, first, the conclusion of Free Trade Agreements (FTAs) with Asian countries. Second, Malaysia will then go for CECA with India because Singapore has already signed a CECA with India and India is pressing to conclude another CECA with Malaysia. He added the CECA should not only be limited to the trading sector but should extend to the services sector as well. For example, banking and labor issues should be taken care by CECA. What are his views on the influx of Indian professionals to Malaysia? The unskilled Indian labor coming to seek employment in Malaysia were facing a lot of problems and politics is playing the same role here as it is playing everywhere else. Indian professionals are heading for the IT sector and the oil and gas sectors. When he attends conferences, he advises Malaysian companies that whatever they are manufacturing, they should have quality and gain a foothold in the Indian market. This is because the made in China goods may be relatively cheaper than most other goods, which is attractive to the Indian population on low level income, but they are shoddy in terms of quality. For example, made in China batteries are one rupee and Indian batteries like Eveready sell for 6 rupees. China is also producing branded and higher end goods. The banker thought that there was a huge requirement for human talent now in Malaysia, especially at the more senior levels. However, foreign talent would prefer to work in Singapore or Hong Kong, especially if they are in the banking sector. However, when there is no choice, they will opt for the next best option which is Malaysia. It is forecast that good talented people will be required in Malaysia on an urgent basis, they want good capital, they want human capital from other countries. How does India view Malaysia? The banker is the secretary of one of the organizations in Malaysia known as the Consortium of Indian Industries in Malaysia. That organization was formed in 2005 and has 40 Indian companies as its members. In total, there are 90 to 100 Indian companies in Malaysia. There are 68 Indian companies in the IT sector but IT companies are only for show purposes and rely on body shopping to lower their costs. The main Indian IT companies like Satyam and Wipro have established a presence in Malaysia. The IT training company Aptech has also started their training base in Malaysia and are training locals. Most of the CEOs who are from India have been in Malaysia for more than 10 years. The Consortium of Indian Industry is not able to stop the flow of illegal workers because most of the recruits are coming through agents. However, if the foreign professional or worker is entering

130   Country study: Malaysia Malaysia through proper channels, it is very safe. MDEC is also trying to boost the supply of IT human capital. In 2007, Satyam Computer System recruited 200 IT professionals from India. The Infosys Foundation has also trained Malaysians for the IT sector in India. The Malaysian economy has its own strengths and is attractive to Indian companies and professionals. What are his future plans? He realizes that competition in the banking competition will become fiercer. One of the big Indian banking giants, the ICICI Bank has established a presence in Malaysia. ICICI Bank has really expanded and is investing in automation. In terms of human capital, the average age of an employee in his bank is 51 but at their competitors like ICICI Bank, it is 25 to 26, indicating a younger and more energetic staff pool. He feels that his bank, having grown in a secure environment, has become complacent. Since 2001, changes are happening in the banking sector. There are fewer trade unions and no job security. He is likely to return to India after his current overseas stint in Malaysia. Would he relocate to Singapore? The decision is not up to him but in the hands of his bank, but Singapore would be a higher profile posting compared to Malaysia. He has been to Singapore twice in October and December 2006. What were his impressions of Singapore? He couldn’t resist going a second time because he liked Singapore very much. He said, “Singapore is very transparent and strict on law and order. It is very safe and a lady can travel at midnight without problems. Security is the big difference in Malaysia because that is not available in Malaysia.”81 His youngest daughter is now staying with him, and he and his wife never allow her to go anywhere alone. They will always accompany her. She is transported to and from school in a van. Their mindset of fear for their daughter is created when they read about crimes in the papers. Singapore might not be an option because the cost of living is very high and high savings might not be possible. His friends told him not to convert while staying in Singapore. In contrast, the cost of living is much lower than in Malaysia and the lifestyle is slower and more patient than in Singapore. Engineer, director, Kuala Lumpur, 3 December 2007 The interviewee is an engineer and director of a state-owned Indian company and has been in Malaysia since 2003. He is from Delhi, married and has a family. The company normally posts its staff overseas for three to five years and he will soon hand over his responsibilities to his successor. Although the company does not have that many overseas offices, the overseas centers are managed by their Delhi office. The company establishes its overseas office to carry out their projects and have been undertaking projects in Malaysia. The rail sector is not fully developed in Malaysia and the firm is competing in this sector. In contrast, the Malaysian companies are in India to bid for roadwork projects. The firm has also undertaken work in Indonesia, as well as Afghanistan, Mozambique and Sharjah. In Malaysia, the expertise for rail development is available locally and they work with local companies.

Country study: Malaysia   131 How did he end up in Malaysia? Malaysia was his first foreign assignment. He was apprehensive about moving to Malaysia because in 2003, not much was known about Malaysia in India. Only in mid-2000 did more Indians travel to Malaysia. He is comfortable in Malaysia and is generally well received as an expatriate. However, he came on his own and his family is back in India. His family visits him twice a year in Malaysia. Why did he choose to leave his family in India? When he came in 2003, there were no schools in Kuala Lumpur that taught the Indian syllabus, so he decided that his family should remain in India. His company is a member of the Consortium of Indian Companies in Malaysia. In the time he has spent in Malaysia, he is aware that bilateral trade between India and Malaysia has grown. His experience in Malaysia has also given value add to his CV because he has learnt from the systems in Malaysia. What are the standards like in Malaysia? Maybe at the individual level an engineer from an Indian college could have the edge over the local engineer but as a corporate structure, as a group, as a team, they are much better than India. They work better in a team but at the grassroots level, mathematical skills are a problem. What about social networking? He did not learn Bahasa Malaysia and speaking English with the younger generation in Malaysia is a problem. He is not a member of any organization because he could not find a Punjabi association but there are numerous Indian associations in Kuala Lumpur. His social network consists of his personal friends. Living in Brickfields, his main interactions are with expatriate Indians. What about during festivities? Being from Delhi, he realized that most of the Indian expatriates are from the South of India. However, Bollywood may be changing this. On Sundays he goes to gatherings at the Lakshmi Narayan Mandhir. What are his future plans? Malaysia appears more dynamic than India and feels like a regional hub. Singapore appears more clinical but Malaysia is more humane. He has been to the US but thinks Malaysia is a better location because you have available European facilities at Asian prices. Compared to Singapore and its higher prices, Malaysia is a bigger country with more affordable living. Before arriving in Malaysia, he did not expect Malaysia to have such a good infrastructure. He will happily return to India after doing his overseas stint. Malaysia feels like a second home to him now. Businessman, Kuala Lumpur, 6 December 2007 The interviewee had a degree in commerce, from Kerala but studied and worked in Hyderabad. Most Indian professionals are living in Penang, Johor Bahru (JB), and Kuala Lumpur (KL). In which sectors are they the most numerous? In KL, those in the IT field are in the thousands. The IT industry in Malaysia is run by Indians. Malaysia may have the infrastructure but not the talent, therefore, you have to bring the expertise from other countries but this is becoming harder because India is booming economically. “My job is really challenging because I am the finance director.” He said when he started on the job it was a mess because there was no back office management. The chairman was too busy to handle things in KL because he was alternating between Malaysia and the Middle East.

132   Country study: Malaysia 2006 was a bad year for the company because a major client went bankrupt and the company had just invested in an IT training institute. “Initially, everything was fine and we acquired the expertise from India but the Malaysian authorities did not accept our curriculum so the project was aborted.” The company paid a whole year’s salaries to the IT guys without any return profits. In which economic sectors are foreign expatriates hired most abundantly? For foreigners, opportunities are here only in the technical fields. There is no shortage of accountants or financial graduates so the Malaysian authorities don’t issue employment passes (EPs) for the financial and banking sectors. In another sector, in JB, one project is starting and they are looking for oil and gas engineers. Engineers, even if you could get them, they wouldn’t be keen to work here because the starting salaries are only RM4000–5000 (US$1186–1483) per month and some are even offering only RM2500 (US$742) per candidate. The companies in Malaysia are not realistic in trying to attract talent from India. If they engage a consulting firm in India, the Indian firm also needs to have a full-page advert to attract candidates. In Malaysia, a company would have to spend about RM50000 just to advertise to attract quality candidates. Moreover, Indian talent, especially in IT, was not motivated to move overseas because of the booming IT sector. The wages in the IT sector have increased rapidly while the other sectors have wages of rupees 5000–10000 (US$119–238) per month. Besides recruitment from overseas, the Malaysian government has started training but there are regulations in place to hire locals as professionals first then foreigners, but the companies are facing problems because of the attitude of the people. In Malaysia, the working hours are 9 a.m. to 5 p.m. However, IT-related companies work on project tasks and have to meet a deadline. The task has to be completed before the deadline but Malaysian workers are used to the 9–5 working hours and would even start to pack up their things by 4.30 p.m. This is why the main advantages of hiring from India is their ability to work beyond 9–5. India is a very competitive market, you have to work 18 hours to get employed. This is one area in which Malaysians are lacking and they are also fond of reporting sick and submitting medical certificates. A lot of organizations are suffering because of this 9–5 work culture. Government also supports locals in terms of entrepreneurship and numerous small and medium companies are facing problems in their operations, that is why they are recruiting foreigners. There is a lot of potential in Malaysia but the problem is the work attitude. What about the MSC? The government has declared that it is taking off, but I don’t feel that it is taking off. They are giving foreign visas, tax relief but there are some restrictions ... you cannot force companies to set up there. Some of the other problems raised with the MSC include the high rentals. Rental is not feasible and it is more cost effective to locate in KL than Cyber Jaya. Moreover, the MSC is 20–30 kilometers away from the city. Could you give a profile of your company? His employer has one company in IT, the rest is in manufacturing, restaurants, magazines and publications with a total manpower of around 120 personnel. The company business is mainly in Malaysia and the Middle East. The chairman of the company is a Muslim. Indians do not face problems adjusting to KL when compared to Singapore. He feels that KL is more tolerant

Country study: Malaysia   133 and not as restricted as in Singapore. Areas like Brickfields are mostly inhabited by Indians and I feel like I am in India, you don’t feel you are in a foreign country. Most of the Indian professionals in Malaysia are working in the IT sector with salaries of RM3000–3500 (US$890–1039) per month, depending upon negotiation. Usually they stay for two years but most people are not working for the same company as mentioned in their visa because the company may recruit you but you don’t work for that company. The person will work for another company. This is illegal but it is happening. But it is happening for the sake of money. For example, my company has a capitalization value of RM10 million (US$3 million) and my quota for foreign workers is more, therefore, I’ll sell my ten visas to the people. Take the money, work very well wherever I like. Where else do you hire from? No hiring from recruitment agency. We take people from among our personal friends and most hires are semi-skilled factory workers. Others are recruiting through recruitment agencies like big companies but small companies hire through personal contacts and word of mouth. Would you settle down in Malaysia? Ultimately we will go back to our own country. Malaysia is not like Singapore because it does not give citizenship. No matter how much you earn here, or invest here, it will always be a foreign country. That is one major disadvantage for Indians, wherever we go, we look for Indians. We restrict ourselves to Indian friends. There are differences between local Indian cuisine and worship but we try not to differentiate. Most Indian people here (Malaysians) are in between because they cannot be traditional and they cannot be modern. What about social networking? He said his network is mainly among the South Indian community, such as those from Hyderabad, Tamil Nadu, Andhra Pradesh, and Karnataka. A Telugu association has already been established by the local Indians and he did join them because he did not have much leisure time but he keeps long hours in the office from 8 a.m. to 10–11 p.m. at night. He said the Indians will also work at weekends. However, when they have free time they will be “roaming” around in Palm Court. He tries to avoid this, for example, he plays cricket, but there is no team in KL to play with his team. He commented, the Indian High Commission is not very active in KL and does not seem to be doing much for the Indian expatriate community. What about bilateral trade between India and Malaysia? No one is interested in trade efforts and the Malaysian and Indian Chambers of Commerce and Industry (MICCI) is not providing proper assistance because they don’t have a proper network. The process is quite ad hoc with likeminded people getting together to undertake business deals. However, Indian companies are also looking to investments and business opportunities in Malaysia. Could he describe his lifestyle? Wife never gets lonely because there are other Indian families living in the same condominium. The Global Indian International School is also close by. Do you celebrate the Indian festivals? They celebrate Diwali but not that extensively. Typically, the families at the condo get together and invite each other to their respective homes but the festivities is not even 5 percent of the enjoyment experienced back in India. I am a Hindu and participate in the local Hindu festivals by going to the temple and coming back. The local Tamilians are fanatic about Murugan, Andhra and other gods. What about visits

134   Country study: Malaysia to temples? Near to his apartment there are three or four temples. People in Malaysia feel that they are losing their identity. For example, Thaipusam Festival is very grand to show their identity, I do not know how much they believe in it. I watch cable television. Sun TV, only some channels are available. Pubs and restaurants, however, nowadays, Chinese are also taking a liking to Indian pubs. Most Indian pubs are in Bangsar and the KLCC area. Mostly bachelors come to KL. Most Indian bachelors set up together and live together. The Indian bachelors spend their money and send some money back to their parents. Savings are high here compared to Singapore. For example, in shared accommodation, an individual’s share is only RM200 (US$59) per month. The budget on food doesn’t cost more than RM200 (US$59) per month and the food supplier will even come to us weekly. Per month, for RM300 (US$89) you can live comfortably. How do you rate Singapore compared to Malaysia? He has been to Singapore but there is no freedom in Singapore. For example, when in Malaysia you can drive at 120–160 km because the speed cameras are not working properly. However, Singapore is a systems-driven country and if you are caught speeding, the summons will be given to you. The cost of living is very expensive there. In Malaysia, he pays RM1400 (US$415) for his two-bedroom apartment which is fully furnished. What about leisure activities? Weekends mostly, we don’t go anywhere. When his wife first came to Malaysia, we covered everywhere, JB, Langkawi, Penang. Apart from KL, there is nothing new. I like living here because I feel I am still living in my own country. In terms of proximity to India, it is only three and a half hours by air and he is still able to see his parents. How often does he travel back to India? He returns to India about 4 to 5 times a year. Does the Bumiputera policy affect your company? He said, the company director has to be Malay, he may invest RM100,000 (US$29,674) but the Malays hold the major share. It is not an incentive for foreign investment. He said, “Why should I put my money on somebody else’s name and the bank loans and perks all go to the Malays first?” He finds the Malays in general are not as industrious as the Indians and Chinese. The Indians can go to Malaysia and Singapore, the Middle East, where we can go without restrictions. I don’t want to work in the UK and the US. However, his friends in the IT sector still want to work in the US. Middle East people will work only because of the weather. Maybe I would like to go to Singapore. The standard of living is good. There is no discrimination between the races. As a tourist, I will go to US but I have strong Indian national links. People going to the US are thinking of going for two or three years, earn some money and return to India. Among some modern families it does not matter where you go but for traditional families it matters.

IT professionals IT company, Kuala Lumpur, 5 December 2007 The Malaysian IT company is a software solutions provider whose domain of expertise is insurance and they develop programs for insurance companies such

Country study: Malaysia   135 as the Hong Leong Insurance and banks like the HSBC. The IT company also has some customers in the Middle East. The interviewee was an HR executive and she said that when the company was established, they employed 60 Indian IT professionals from India and in 2007 they had halved that. Why did the company reduce the number of Indian IT professionals? First, the company has exhausted the supply of IT professionals from India. Second, wages cost has become a big issue and most IT professionals don’t want to work in Malaysia. The US has always been the preferred destination for Indian IT professionals, after that they would choose Europe and then the Middle East, where tax incentives are good. Regionally, the Indian IT professionals would prefer Singapore to Malaysia. Some of them work in Malaysia for a few years and then move on to the US where it’s easier to obtain a Green Card after working in Malaysia. Moreover, there are more opportunities in India because a lot of IT companies have established operations or back offices in India. How competitive are Malaysian IT workers? She commented that Malaysians are not that competitive because they can easily obtain another job. The Indian IT professional would be technically better because of “how they are taught in school, they are technically very sound, eagerness to learn, their learning curve is very steep.”82 The Indian IT graduates would then work overseas for three to four years, build up some savings and return to India. How does your company recruit IT professionals? The company advertises on the internet and most of their IT professionals are aware of vacant IT positions on-line. Some of their IT workers were recommended by their friends, in rare cases. In some cases, the IT professionals are already in Malaysia at the end of their contracts and the company hires them. What is your recruitment process? For technical positions the company will provide a list of technical questions for candidates to answer and give them a time line. Thereafter, there is a technical and HR interview over the phone. After the HR interview, the company will start an induction program to familiarize successful candidates with the products of the company. Is this recruitment process “foolproof”? No, there have been instances when the interviewers have said that this might not be the person I interviewed. What comes after the successful application? The process of verifying the recruits’ certificates then begins before the company applies to immigration for a work permit. What are the requirements by immigration authorities? In order for the work permits to be accepted, the Department of Immigration requires a minimum of two years work experience but this also benefits the company because they value experience. The company also hires a lot of systems analysts and project managers. The HR executive commented that MDEC has always been reasonable to the company and they hire these IT specialists a few at a time and never as many as 10 or 20. She believes that Malaysia needs a lot more talented human capital and experienced people. The company does not discriminate where the employees are from and their pay packages are transparent. What if you are forced to hire fresh graduates from overseas? In this case, the company uses its International Internship Program. The internships range from 9 to 18 months and are pitched at Western universities for undergraduates wanting

136   Country study: Malaysia to acquire Asian experience. In 2007, the company had two interns, one from the Czech Republic and one from Germany. The two interns have the option of joining the company once they have completed their studies. The company values its internship program because it is aiming for the European market. The company also needs to diversify its sources of overseas talent pool because one of the main sources, India, is doing very well and the company has lost a number of Indian IT professionals. Moreover, the Indian IT professionals came to work for the company as singles, but once they are married they are likely to return to India. To mitigate this trend, the company now recruits from a variety of places. Apart from locals and India, the company also recruits from other Asian countries like the Philippines. The companies also hire Bumiputera Malays who number 10 to 15 in about 100-strong technical staff. For government projects there must be a component of Bumiputera employees. The locals would take 12 months to learn a new skill whereas an expatriate might take only six months. What is the level of expertise of local graduates? She believes that in Malaysia there has always been a good pool of foreign lecturers teaching IT. Moreover, there are other programs are in place for intermediate learners. For example there is the Human Resource Development Council (HRDC). HRDC will partner IT companies like Cosmopoint and Aptech to train IT graduates. Specifically, they will train graduates who are unable to get jobs within six months. Into the program, at the third or fourth month of training they will invite the public sector to conduct interviews on the campus. The company has been involved in this campus recruitment since 2005. They found that the students in this program are better trained. For example, if they are Java programmers they will know how to write Java software and the company will give them a six months internship because they are very qualified. How do you accommodate the Indian IT professionals? The company sources accommodation for newly arriving employees in guesthouses which are apartments with three and four rooms each. Fortunately for the company the personnel they are hiring at that point of time are singles. In most cases they are male employees and as they become more familiar with Kuala Lumpur, they are advised on alternative housing based on their needs. The company will then assist the employees in negotiating their rental leases with their landlords in order to prevent them from being duped, because they might not know the house rental regulations. In terms of costs, the average housing rental in Kuala Lumpur could be cheaper than the metro cities in India. The public transport system in Malaysia is also better compared to India. What about employees with families? Those with families want to stay near Brickfields, the “little India” of Kuala Lumpur. This is to provide their wives with things to do while they are out at work. There is also the GIIS School near to Brickfields which provides Indian expatriates with schooling in the Indian education system for their children. The company encourages its employees to gain higher certification and would even pay for their courses but with the condition that they sit for the exams. What is the level of interaction between employees? The employees still stay in cliques with their own countrymen. The Indians will stick together, the

Country study: Malaysia   137 Filipinos will stick together. It also depends on the project team. If the project team is mixed, they will mix with one another but if it is mainly Indian expatriates than they will remain in a clique among themselves. To enhance staff interaction, they do celebrate the major festivals in the office. For example, during Ponggal (the harvest festival), the company allows the Indian expatriate staff to put out the pots and the light. Usually the Indian expatriate staff would make sweets and share them with everyone in the office. When it came to Christmas, the Filipinos staff will do the decorations. The expatriate staff might then be able learn the difference between Chinese, Malay and Indian cuisine at the different staff functions. For example, they were really happy with Roti Jala and curry. IT professional, Kuala Lumpur, 6 December 2007 The interviewee is an IT engineer and worked with Satyam Computers. He is from the southernmost tip of India, from a town called Nagar Coil, which is near Kanya Kumari. He graduated as a Bachelor of Engineering in Computer Science in 1990 and started working for ABC International in 1990 in Delhi. Thereafter he worked for Satyam Computers in India until 2004, when Satyam established a branch in Malaysia. Why did he move to Malaysia? It was an opportunity and the “fit” was right, furthermore, he wanted to explore working in other countries. How did he know about Malaysia? He did not enquire much because some of his friends were already here. The assignment was short term in nature but then it became long term and he has already completed three years in Malaysia. Did he benefit from the posting in Malaysia? Yes, he is a permanent employee and not a contract employee and this is a transfer. He can be in Malaysia as long as the immigration rules allow. On comparison with India, the lifestyle in Malaysia is better with very good infrastructure and less pollution. How did find his relocation to Malaysia? His company has been supportive in his relocation and helped him with accommodation, visas and finding placements in schools for his children. When he first came to live in Malaysia, he was staying in an area called Ampang, which was full of expatriates from other countries because it was near to various embassies. He found it pleasant because of the mixture of various cultures. However, he did not have to deal with this daily because he went to work but his wife is a housewife and found it lonely in the area. There were teething problems initially such as finding a school but anyone will face these problems when relocating. His daughter had first enrolled in the Singapore International School and the syllabus was good but his long-term plan was to return to India. Therefore, he transferred his daughter to the GIIS, which follows the Indian syllabus. He does not know whether his daughter will obtain a good degree in Malaysia. With GIIS Indian qualifications, he could place her in a good college in India. Thereafter, when his daughter moved to a new school, the family wanted to move to a house nearer to the school. The GIIS is in an area within Brickfields, the “Little India” of Kuala Lumpur. His wife is more comfortable in Brickfields because there are a lot of the Indians living in the community and it is like a “mini-India” or Chennai. Describe his social interaction with local

138   Country study: Malaysia Indians. His interaction with local Indians had been pleasant and they have helped him find a house and purchase a car. In his condominium, he has personal contact with several Malaysians as well as Indian expatriates. Malaysians are very cool people. Moreover, he and his family are non-vegetarians and there is Indian food everywhere so they are comfortable. During festivals, he and his local and expatriate Indian friends celebrate together. He is a religious person and has seen Thaipusam which is a grand festival in Malaysia. He said, “Especially when my daughter is growing up, you can get distracted by so many things. I can reach India in three hours or four hours. In an emergency I can reach India easily.” Social networking with former college mates? He keeps in touch with college mates through email and they exchange a lot of information. He returns to India once a year with his family because significant members of his family are still there. How often does he communicate with family in India? He speaks to his mother every week. They subscribes to Sun TV and the other Indian channels on cable TV. What about the internet? There are many Indian newspapers on the Internet and they keep updated on what is happening in India. He said, “I can read whatever they are reading. I don’t feel like I am away.” Have he and his family traveled around the region? He said, “KL is mainly for shopping … yes we have traveled, not just Malaysia but nearby countries. Bangkok, Singapore, Hong Kong.” Is he likely to move to another company? He said, if there is growth opportunity, he will definitely make the move to Singapore, but he was not actively looking but might try “something” in the near future. However, even if he does stay on with his present company, they have offices in 56 countries and he could be posted to one of them. Would he return to India? Now that India is booming, he is considering going back to India. However, he would not leave this decision too late because if he goes back to India after 15 years, he will be disadvantaged financially. This is because, the annual increment in Malaysia is 3-4 percent but in India it is 10 times that at 30–40 percent. He said, in India, “If they offer me a 3 percent salary hike, I walk out to another company with a 30 percent hike.” He is seriously considering moving back to India after his assignment because he wants to be in a growing economy. Future plans? The United States seems to be his preferred destination but he’d rather not work in the US because the culture is very different. In Malaysia, the Indian community has kept their culture intact and it’s preserved. However, in India, most fresh graduates would aim to move overseas to the US. What about Southeast Asia? He does not think Southeast Asian countries would feature prominently in the minds of the fresh graduates. Should they have to choose work in Southeast Asia, Singapore would be their first priority. The “cream” or best of the IT industry is still in the US and it will remain an attractive destination because of the exchange rates. He confided that some of his classmates have become US citizens. In his case, he did not receive an opportunity, otherwise he would have migrated and settled in the US. If he had moved to the US, he would have become a project manager after working for 15 to 17 years. Now the focus is on the booming Indian economy where you could become a project manager

Country study: Malaysia   139 in five to six years. In contrast, in Malaysia, there are key projects but it does not have the critical human manpower resources. He believes the US economy works like Malaysia where the job scope is rather repetitive. He has been to the US and witnessed this himself where they do the same kind of projects for 10 to 15 years. What are your views on the Malaysian work ethic in the IT sector? He feels that they are self-contented and happy with what they are receiving for their salaries. The lack of ambition and enthusiasm for career advancement is a concern. In this context, his mindset differs from his Malaysian counterparts because he has to be constantly challenged and move on to the next level in career development. The irony is that if his Malaysian counterparts were competitive and had his own sets of skills, then his company would not have relocated him to Malaysia. Moreover, in terms of knowledge transfer, he is rather disheartened because none of his Malaysian colleagues wants to learn his sets of skills. With the projects that he had worked on with his Malaysian colleagues, he can’t understand why they don’t learn the skills that he has and undertake the same projects on their own. In fact, the same Malaysian colleagues that undertook the projects with him are not keen to do the same project again. This attitude is very different from that in India where an Indian would look for opportunities to learn and every two years they would look for a change. He commented, that for his Malaysian peers, they like to undertake the same tasks repeatedly and when they become more adapt at the task, they finish the job faster and have more time to relax. Although his Malaysian colleagues realize that he has a valuable set of skills to impart, they are unwilling to learn from him and don’t want to leave their comfort zone. How does the IT sector differ in India? When there is an IT job opportunity in India, the employers prefer to look for a BEng or MCS (Master of Computer Applications). If the applicants don’t have a degree in that area, then they are not considered. The recruiters will then look for fresh graduates, then after that training and then place them in a job. In Malaysia, this seldom occurs. In Malaysia, because of the shortage of IT talent, even an applicant with a Bachelor of Commerce degree was considered for an IT job. There is not enough training in IT in Malaysia even though IT work is a cash-making machine. The Malaysian parents prefer to enroll their daughters in nursing and other vocations instead of IT. His own work involves a large project which none of his Malaysian counterparts are even considering. He tried to convince his Malaysian colleagues to join him and pursue added certifications. He told his Malaysian team that they would work together and he would mentor them through the process but before he could register them for the examinations, they had all withdrawn. He was demotivated but carried on to sign up for the examinations and for two months he got up daily at 5 a.m. to study. He also studied during the weekends and his family was deprived of his time but in the end he was happy to gain the certification and his market value in IT. What about retaining foreign talent in Malaysia? The best talent will not want to stay here because there is no flexibility moving between companies for new challenges, and their skills will not be properly utilized in Malaysia. For example,

140   Country study: Malaysia in the civil aviation industry, his Malaysian colleagues do possess the set of skills that are critical to that industry, but they are not prepared to utilize these skills to acquire a better job. He believes some of his Malaysian colleagues could even compete in the US but they appear reluctant to meet that challenge. A major shift in mindset has to occur. For example, when there is a meeting, no questions are raised. When there is an opportunity to question your manager, they won’t do it and instead will write and put all the questions in a box. In India, they have no trouble asking their managers. In Malaysia, his colleagues are more self-contented and often asked what they were going to achieve by asking questions. Nonetheless, he still believes that foreign companies prefer to invest in Malaysia because of the good infrastructure in Malaysia at lower prices. Companies will also post their Indian personnel to run their operations but, on their own, the Indian expatriate might not opt for Malaysia. What is the cost of living in Malaysia compared to India? If he directly converts his rent in relation to India, it is very expensive but even India is not getting any cheaper. The cost of living in Malaysia is reasonable. What about Singapore? He has visited Singapore but it was expensive for him because of the currency conversion. The salaries in Singapore are also different and if he were to return to India, he would be able to save the same. However, in Singapore you can obtain a Permanent Residency (PR) very easily, compared to Malaysia. Moreover, the Malaysian authorities do not differentiate between different job categories for Indians. The Malaysian authorities viewed everyone coming from India as laborers but there are many Indians like him who are professionals. The government should not treat professional Indians like unskilled labor. He feels there have been times when the Indian professionals have been unfairly treated. Even when they have a gold card credit card and expatriate card, that will not be enough. How can you expect them to carry their passport with them all the time, what if you lose the passport? This is why they are issued with work permits but the work permit appears to be redundant if the job categories are not differentiated. In this regard, they will prefer to choose Singapore. His long-term plan is to start his own business or he might undertake an MBA in India where the costs are reasonable but he has not yet decided. IT engineer, Kuala Lumpur, 2 July 2007 The interviewee is from Bangalore and has been in Malaysia since 2004. He used to work for the government services in India. Then he met a director of one of the MNCs in Cyber Jaya in Bangalore and they had a discussion. The MNC had a small team in Malaysia as well as a vendor and they wanted to hire someone who could act as a go-between the vendor and their team in Malaysia. They were looking for someone who had financial skills to manage their internal team in Malaysia and he was recruited. His wife used to work back in India but is now a housewife in Malaysia. They have a daughter, 8 years old and a son who is 3 years old. How did he find out about Malaysia? He did have some friends working in Malaysia and did his own research. Malaysia is not far from India unlike the US or the UK and the culture is similar to that in India.

Country study: Malaysia   141 What are his views on the process of relocation to Malaysia? He said, he always had plans “in the pipeline” to work overseas and before working in Malaysia he had worked in the US for seven months. When he went to the US, he was already married but did not take his family with him. He finds the culture in Southeast Asia closer to Indian culture, with emphasis on family interaction. In terms of accommodation, it was not a problem because there are a lot of Indian expatriates in the KL Central and Brickfields areas, and he does not even feels that he is out of India. Although staying in the KL Central area is relatively more expensive, it was beneficial for networking for his family. It was not an issue for him because he is working and comes back in the evening, but he needs to keep his wife and kids occupied. What about education for his children? He did some research on education before relocating to Malaysia and inquired among his friends. He realized that there were plenty of international schools in Kuala Lumpur such as the British and Canadian private schools. After about a week in Malaysia, he enrolled his daughter in the Singapore International School but he realized that there was too much stress on his daughter. Then the GIIS opened a branch in KL and it was suitable for parents who were looking for a good school where teachers could tell the children more about their culture. The extracurricular activities also reinforced this Indian culture, and they have activities like yoga. There was talk about Delhi Public School establishing a branch in KL but this did not materialize. He said there was some initial apprehension among the parents from other international schools but after one or two terms now they have all transferred their kids to GIIS. What are his social networking patterns? In terms of social networking, he realizes that expatriate professionals tend to network with other expatriates in Malaysia because they may have similar personal and professional experiences. Does he interact with local Indians? He has some experience with local Indians at work and used to mingle with them to find out their concerns. Why don’t the Indian expatriates and local Indians interact more frequently? The expatriates come from a different background altogether and most were educated in India and have a technology-related and not a business background. Therefore, he believes local Indians may not be as talented or as educated as Indian expatriates. This is precisely the reason why the Indian expatriates are moving to Malaysia to assume high level jobs because “if the locals were capable, the expats would not have the chance.” What are the reasons for this disparity? He commented that; historically, the local Indians do not come from an educated background. They were brought to Malaysia by the British and they formed the lower rungs of society by working in the oil palm plantations and mines. However, life seems to be improving for them gradually with a few getting educated in the technology field, medicine and other professional qualifications. He expects the local Indians to keep on improving and do much better in future. He discovered that Malaysians spend a lot of their time shopping or dining and they will get together at their friends’ places for social activities. The Indian expatriates also have their various associations such as the Kannada and Telegu

142   Country study: Malaysia Associations. They have their own cultural activities in these associations and through expatriate friends you find out about the association. Why were these various Indian expatriate organizations formed? He remembered vaguely that these associations were formed by Indian expatriates and they have one or two annual events. They have also formed online news groups on Yahoo and other on-line forums. Whenever some dignitaries are visiting the region, they will also be taken to KL and details of these events are circulated. They also plan special events once or twice a year. These associations are not officially registered and some of the senior expat members here actively participate and contribute. The membership is targeted towards dynamic individuals and they are the ones who run the programs. For these associations about 100 families are registered, therefore, for the events about 400 to 500 people are invited, including staff from the Indian High Commission. The associations also celebrate the main festivals and smaller events are organized within their respective condominiums. The events would include the cooking of sweets and “kitty parties” among the housewives. These events are mainly attended by Indian expatriates and very few locals have joined in. Does he maintain contact with his college mates from India? He still keeps in touch with his college mates and they are all spread across India, the UK and the US. They discuss numerous issues on-line such as employment opportunities, political and social issues. Does he keep track of news in India? He keeps updated with news events on India by reading on-line newspapers. There is no shortage of information on India and you can stay connected to what is happening wherever you are located. For example, he knows what is happening in Bangalore or Mumbai. Email is another convenient way of keeping in touch with friends. He will also call India once or twice a week. In Malaysia, he has to deal with a multiracial population who are majority Malays. He finds them to be a very friendly people. In dealing with the Chinese, it’s rather different because they are more business-oriented compared to Indians or Malays. He finds it is pretty easy to practice Hinduism in Malaysia because there is tolerance for all religions. There are numerous temples in Malaysia and you can pray whenever you want. Festival celebrations are sometimes unique in Malaysia like Thaipusam, which was a new word for him. Back in India, the Tamil population refers to the festival by a different name and likewise in Bangalore but the practices are more or less the same. He realized there is a huge following for Thaipusam in Malaysia and they congregate at the Batu Caves in huge numbers. Normally, the expatriate Indians would do their puja or worship at home. Sometimes they might visit temples or the Batu Caves but he would not carry the Kavadi. He is amazed at how local Indians respect their origins because most of them haven’t even visited India. The local Indians’ level of knowledge about India is quite extensive. What about networking in the region? He has visited Singapore five or six times and realizes that in Singapore you need to have a bigger network. He finds that to be in KL for two or three years is okay, because there are a lot of places to see here. He found the first two or three years exciting but once he had visited these places, there is nothing much except the routine dining and shopping. He has been to several places like the Cameron Highlands, Genting, and Frasers Hill.

Country study: Malaysia   143 The technology industry has a lot of potential in KL but for IT work, the serious players are the US and India. There are numerous MNCs in Malaysia and the numbers of graduates in the technological fields were increasing. Singapore has traditionally focused on trading and manufacturing activities, but in Southeast Asia, especially in IT, they are picking up really fast. Singapore is now leading the IT race, followed by Malaysia and the Philippines. In Thailand, it seems the Indians are concentrating on the automotive and pharmaceutical sectors. In the Philippines, they have a “huge chunk” of IT professionals, so there is not much potential for Indians in the IT sector. What about potential problems like the Palm Court incident? He heard about the various visa problems. He recalled, around that time there was some tension but it was taken care of by the government. After that incident, for two or three months, the movement of Indian nationals to Malaysia came to a standstill. He believes that the blame lies on both sides, but it did not discourage him from applying to move to Malaysia. What are his future plans? He feels he has benefitted from interacting with the different ethnic groups in Malaysia. He said, “I benefited in Malaysia in terms of interacting with different nationals by understanding their various social concerns.” He believes that there are a lot of lessons that India can learn from Malaysia, such as how to improve its infrastructure. In terms of career development, he is likely to be in the same industry but may seek a move to Singapore, the US, or back to India. India is booming economically, and he does not mind moving back to India. His wife has adjusted well in being away from India and even though she had a better social life in India, she is not out of place in Malaysia. She does help out on a part-time basis at the GIIS as a teacher. Their next destination would have to factor the main issues of his career, lifestyle and education for his children. Most of the Indian expatriate parents expect some level of integration with the Indian system. Most likely, all will want to relocate their families back to India by the time the children reach plus 2 or 10 years of age. Being an Indian will help them integrate back into the Indian system. He said the process of moving has already started because he is moving onto another job, but that is the life of IT and technology professionals. Professionals in other sectors also face similar situations, such as in the oil and gas sector, where people move from country to country. He feels there are several opportunities and the next destination is likely to be the US or Singapore. Singapore appears to be the more likely option because of its proximity to India and the availability of a good Indian education. The US is very different in terms of work culture but they are more professional. He said, “We are not inferior to them in any way in terms of technology. The only thing is that they have better infrastructure and workmen’s support. They are able to take decisions quickly. Asians don’t have that luxury. The majority of Asian countries have that problem. India and China have vast talent but have constraints in terms of population and education, and healthcare.” He is also ready to explore opportunities in India because it would be more challenging for his career because once you have reached a particular position, you want to move on. He is also proud that economically India is rising.

144   Country study: Malaysia IT worker, Kuala Lumpur, 7 July 2007 The interviewee is IT specialist who works for a Malaysian IT firm. He is from the southern Indian state of Andhra Pradesh and completed a Master of Science in IT before he came to Malaysia in 2003. He has always wanted to work overseas but did not plan specifically to work in Malaysia. His wife is with him. When he first came to Malaysia, his friend helped him by recommending him to a recruitment agent. He paid Rupees 60,000–70,000 (US$14291667) upfront to the agent which at the time amounted to RM 3000 (US$882). The agent had promised him a placement in a job and an employment pass. However, when he arrived in Malaysia, he was on a social visit pass and there was no job waiting for him. The agent accommodated him at the YMCA for a long time then moved him to Jalan Ipoh. He explained that the recruitment agents treated him and others very badly and even tricked the village laborers from India by saying that Malaysia is a temperate country and made them purchase jackets. He managed to get his money back from his agent with the help of his Malaysian friends and believes that he is very fortunate because many of his fellows lost all their money to their agents. Does he network socially? He now lives in Brickfields with his wife and is quite settled in Malaysia but he misses his parents and larger family in India. His wife likes living in Brickfields because there are many Indians and Telegu-speaking people in the area. He was a vegetarian but disliked the vegetarian food in Malaysia because most of it appeared half-cooked, so he decided to be a non-vegetarian. His social activities with his wife include going to the shopping malls and the surrounding areas in Kuala Lumpur. He is not religious and visits the temples only when he needs spiritual help. He is not interested in joining the Andhra Association because when he was in need, they did not help him. Does he celebrate Indian festivities? They do celebrate Indian festivals like Diwali and Ponggol but the festivities in Malaysia were rather different compared to India. They return to India once a year and he calls India daily. His wife uses the computer to maintain contact with her parents and to keep updated on news about Andhra Pradesh. He also keeps in touch with his college friends through phone calls and the internet. Some of his college mates are in the US and some are still in India and they talk about various things. Would he return to India? He knows that India is booming but he prefers to live overseas and is looking towards Singapore and the United States for his career development. Most IT professionals would be interested in moving to the US. In terms of IT standards, India has higher benchmarks compared to Malaysia. When he first came to Malaysia, he was excited as he was able to learn new things in his job but not any longer. The strengths in Malaysia’s IT sector seem to be coding and programming. India is much more competitive and you need to keep updated, but in Malaysia life is much easier and there is less competition. Moreover, it is very difficult to obtain a permanent residency in Malaysia, unlike the case in Singapore. His main aim in moving overseas was savings. The cost of living in Malaysia is more expensive compared to India. His average expenses on food and transportation is about RM 400 (US$119) every month. The potential for savings is quite high and he remits money back to his parents every month.

Country study: Malaysia   145 Future plans? His experience in Malaysia is very valuable because he would be able to secure a high paying job of about 80,000–100,000 rupees (US$1786– 2223) per month with his overseas experience. He does not mind staying in Malaysia because when he was in trouble, it was his Malaysian friends who helped him. He feels that Malaysia values the IT professionals from India because of their expertise and higher competence in IT skills. He is considering Singapore because of its strict regulations and lack of cheating cases by recruiters. In 2008, he will move to Singapore if there is a good job offer. IT specialist, Kuala Lumpur, 4 July 2007 The interviewee is a single Muslim and comes from Southern Indian state of Andhra Pradesh with a degree in commerce but he is working in the IT sector for a Malaysian company. Before venturing to Malaysia, he spoke to a friend about the accountancy opportunities because of his commerce qualifications. He was told accountancy opportunities were good in Malaysia but discovered that the IT jobs were better paying. With no real experience in IT, he came to Malaysia because it was easier to get an IT placement compared to India and Singapore. There are not many standards for IT work in Malaysia and even the IT companies do not insist on qualifications in IT. He had no knowledge of computers before coming out to work in Malaysia. He finds some employers are unscrupulous because they do not register their employees and fail to ensure that they have the requisite employment passes. He has been in Malaysia since 2004 but was forced to go through a recruitment agency because he does not have the experience to apply directly for jobs with companies. The recruiters charged between RM 4000–5000 (US$1176–1471) to bring employees to Malaysia and will obtain a multiple entry permit for them. He suspects that 15–20 percent of all Indian professionals do not have the required employment pass. They sought help from the Indian High Commission staff but have to pay between RM 300 to 4000 (US$89–1187) to enlist their help. He is now on a social visit pass because his employment pass has expired. He is now looking for a new employer and confident that he will find a new job. The employers in Malaysia are only interested in the final output and there are no standards unlike in India. However, the MNCs will have and follow standards. He is confident of learning on the job and picking up new IT skills in Malaysia. Furthermore, he has a network of friends with more IT training that he can call on or assistance if he encounters problems on the job. The project manager will also explain to the IT team leaders the job specifications and they in return will guide their team. What was his motivation in moving overseas? His motivation in moving overseas was savings and he spends about RM200 (US$59) a month on food so he is able to save. He calls India twice or three times a week and returns once every year. The locals get paid about RM2500 (US$742) but an IT professional from India can get paid RM4000 (US$1187). Employers find that the expatriates work harder than the locals. His previous employer, who is Indian, owes him two months’ salary.

146   Country study: Malaysia How does he keep updated about news on India? He is able to keep updated on developments in India on the internet. He is motivated to keep updated on developments in India. He is the only one among his family members to work overseas and this is a source of pride for his parents. Does he interact with local Indians? He is able to speak Telegu and Tamil but has no time to socialize with Malaysians. Although he is a Muslim, he finds communicating with Malaysian Muslims problematic because they don’t speak Tamil and he does not speak Malay. During Ramadan he will break his fast with his other Indian friends who are fasting. He simply has no time to socialize with locals because he has to learn new things on his job every day. Are there still problems regarding immigration issues? Yes, bribes are being offered to the authorities to resolve immigration problems. He commented that the usual rate for resolving problems was RM20–30 (US$6–9) for simple cases and as high as RM600 (US$178) for more complicated cases. What are his future plans? If he gets married, he will relocate his wife to Malaysia as well. He intends to return to India and then he will try for a job placement in Singapore but it will be hard without a Malaysian visa. Before applying for positions in India or Singapore, he knows he has to upgrade his skills. Would he move to the US or Europe? He has no idea about the employment scene or opportunities in the US or Europe. It is likely he will retire and settle down in India because his parents and friends are there. Moreover, he does not feel the need to socialize with the locals because he has his own network of friends who inform him of employment opportunities and other development.

Conclusion This chapter has examined the movement of Indian expatriate professionals against the social and historical backdrop of settled Indians in Malaysia. The problem of economic disparity among the local Indians has become a politicized issue. The expatriate Indian professionals are challenging the norms and perceptions of “Indianness” in the transformation of Malaysia into a KBE and the need to recruit foreign talent. Malaysia is not short of its own graduates but does suffer from a brain drain to Western countries, Hong Kong and Singapore. The domestic concerns over the ability of Malaysian graduates to secure employment after graduation are also highly politicized. The Malaysian graduates are completing their tertiary education without the corporate or industry skills required by companies in the private sector. This issue is being addressed by authorities. However, the interviews also reveal that Malaysia is not recruiting the best talent from India because of aggressive competition from elsewhere. The talent from India in Malaysia seems to be relocated by companies themselves with connections in India, especially in the IT sector. The MNCs based in Malaysia are another recruiter of talented individuals from India. The inability of foreign talent to circulate in the Malaysian economy and the reluctance of Malaysians to interact with the counterparts from India to improve their skill sets are other major obstacles if Malaysia wants to progress towards becoming a KBE.

6 Country study

Singapore

Introduction The city-state of Singapore has some 4.99 million inhabitants, including 1.25 million non-residents.1 Singapore is not only deficit in natural resources but also suffers from a low birth rate which has made the nation of migrants dependent on foreign human capital. In order for Singapore to sustain its economic growth, the government has to attract foreign workers and talent. However, in times of economic contraction such as during the Asian financial crisis of 1998 and the global financial crisis of 2008, to keep attracting foreign talent for employment purposes when local Singaporeans are losing theirs has become a more politically sensitive strategy. Senior Minister (SM) Goh Chok Tong explained that Singapore’s talent strategy rested upon three simultaneous thrusts: (1) heavy and lifelong investment in developing local talent; (2) building a distinctive global city to attract and retain talent; and (3) transforming Singapore into a “cool and funky” place for creative and entrepreneurial talent to reside and establish their base.2 The aim of this chapter will be to examine the social and economic impact of Indian professionals in Singapore. This chapter will also examine the shortage of talented skilled workers and professionals in Singapore and the policy mechanisms that have been implemented to attract foreign talent. Despite the 2008 global financial crisis, Singapore continues to attract foreign talent, including those from India. However, the influx of foreign talent taking up highly paid corporate and technical employment can raise objections from the locals.3 This is more likely in a recession, for example, certain segments such as technical and maintenance staff felt the impact of retrenchment due to costcutting measures by companies. However, these jobs might not be populated by foreigners because recruitment agencies in India have seen a reverse movement back of talent to India.4 Reportedly, figures also suggest that more foreigners were settling down in Singapore and this would impact on the employment market. In 2007, 17,334 immigrants took up Singapore citizenship and this increased to 20,500 in 2008. The number of permanent residents (PRs) also increased from 63,627 in 2007 to 79,200 in 2008.5 In 2009, the global financial crisis had an impact on the number of PRs, which declined to 59,500 and the citizenships also declined to 19,900 from 20,500 in 2008.6 Deputy Minister Wong Kan Seng has emphasized that Singapore needs approximately 20,000 new citizens yearly to

148   Country study: Singapore

Figure 6.1  Singapore’s Little India at Serangoon Road.

keep its citizen core.7 The government’s aim to lure foreign talent is driven by its ambition to strengthen innovation, have more cutting-edge research, niche marketing and techno-capitalism to ensure Singapore’s long-term economic success.8 In this context, the government will not bow down to calls from certain local quarters to repatriate foreign talent because this will have an adverse impact on businesses and foreign investors which might see them relocating out of Singapore.9 Figure 6.1 shows Singapore’s “Little India” at Serangoon Road. Singapore, as one of the more advanced economies in the Southeast Asian region, is trying to develop a base for a knowledge-based economy (KBE) and needs to attract highly skilled and professional human capital. Does Singapore have the capacity to do so? In 2006, Singapore had a population of 3.1 million citizens, 440,000 permanent residents and 798,000 foreigners on long-term stay passes.10 In 2008, the Ministry of Manpower (MOM) reported that the employment of foreign workers stood at 900,800 which reflected an increase of 144,000 over the previous year. In 2009, MOM reported that the number of foreign workers had declined to 856,000.11 Proportionately, foreign workers represented one in every three of the 2.73 million workers in Singapore. Singapore’s dependency on foreign labor has been evident since its industrialization wave in the 1960s. At that time, Singapore was heavily dependent on its traditional source of foreign labor from Malaysia and then it leveraged on non-traditional sources such as Indonesia, the Philippines and India.12 However, during the 1960s phase of its economic development, it required unskilled or semi-skilled workers for low wage employment categories. Moreover, the problem of a small population base was made more acute by declining birth rates due to its previous “two child” policy which encouraged Singaporean couples to have no more than two children.

Country study: Singapore   149

Figure 6.2  Mustafa Centre.

Figure 6.2 shows the iconic Mustafa Centre at Little India which is a favorite shopping haunt for Indian tourists and expatriates. As Singapore’s economy matured and the costs of production increased, the labor-intensive and low-wage industries started to relocate overseas to neighboring economies as the state began the drive towards more value-added employment. In this regard, the transformation of Singapore into a knowledge-based economy essentially depended on the state’s ability to attract the required talented human capital. The key attractions for foreign human capital would be workplace and living environments, and these factors were likely to have an influence on the creativity output of talented human capital. Joel Kotkin, in examining the variables which dictated the success of different locations, suggests that “quality of life” was a key factor in the location decisions of skilled workers in hightechnology firms.13

Quest for foreign talent As of 1977, Singapore’s total fertility rate has fallen below replacement level.14 In 2005, there were 35,000 births, falling short of the 60,000 births needed each year to sustain the economy. In 2006, total fertility had fallen to 1.24 and Deputy Prime Minister Wong Kan Seng, who was also Chairman of the Population Committee, was concerned and commented, “We have to top up our population and workforce with migrants.”15 The quest for foreign talent became more acute as Singapore’s regional competitors started to realize their potential and moved into economic sectors that Singapore had been dominating such as airports and seaports.16 Deputy Prime Minister Wong added that to counter the growing

150   Country study: Singapore

Figure 6.3  Indian expatriates shopping at the Mustafa Centre.

economic threat, “We should encourage those who can contribute to settle down here ... this is the way to enlarge the economic pie.”17 How does foreign talent contribute to the Singapore economy? According to Minister Mentor (MM) Lee Kuan Yew, there are three categories of foreign talent in Singapore and they contribute to the economy in different ways. The first category constitutes foreign talent that could assist in the creation of new enterprises and expand existing enterprises into regional and global companies, such as the Neptune Orient Lines.18 These would include entrepreneurs and experienced individuals who could be captains of industry. The second category are the professionals and skilled workers who help attract foreign investments in large projects such as wafer fabrication plants that require scores of skilled workers to work 24 hours a day, seven days a week. The third category is the foreign workers who undertake jobs unpopular with locals such as in the construction, marine, ship building and conservancy services.19 Although all three categories of foreign talent and labor are important, the first two categories were more valuable in terms of enlarging the economy. Figures 6.3 and 6.4 show Indian expatriates shopping at the Mustafa Centre and Indian calling card vendors along Syed Alwi Street in front of the Mustafa Centre.

Visas/work permits The requirements to be considered for an Employment Pass in Singapore for foreigners include a fixed monthly income of at least SG$2500 (US$1786), and possessing acceptable degrees, professional qualifications, or specialist skills. The educational certifications and qualifications are assessed according to global and institutional rankings by independent accreditation boards, a hiring history by top

Country study: Singapore   151

Figure 6.4  Indian calling card vendors outside the Mustafa Centre.

companies in Singapore, the validation by Human Resource (HR) consultants in listed countries, employment outcome of the institution’s graduates and the institution’s enrollment standards. Foreign professionals and executives applying to work in Singapore are grouped under three categories for an employment pass (EP). The three EPs are labeled P1, P2 and Q1. The P1 pass is for applicants such as professionals, managers and executive specialists who earn more than SG$7,000 (US$5,000) per month. The P2 pass is for applicants earning a salary of more than SG$3500 up to SG$7000 (US$2500–5000). The Q1 passes are for applicants earning more than SG$2500 (US$1786) per month and who possess recognized qualifications.20 In addition, for Q1 applicants, other factors such as skills and years of experience may be taken into consideration. EP applications could be made online or manually. For approved applications, the online In-Principle Approval (IPA) letter will specify the documents to be submitted at the Ministry of Manpower (MOM). For EP applications, the applicant must be sponsored by a well-established Singapore-registered company and the form must be endorsed with the company’s stamp or seal and signed by the authorized officer of that company. The application should also include copies of the applicant’s education certifications and past employment testimonials. EP holders must apply for a new pass whenever they change employers. However, there is no need to cancel the existing pass before doing so and each application will be made based on the merits of the case. Companies may also request an EP holder be transferred from one business entity to another when there is a change of business entity, such as a conversion from a sole proprietor to a private limited company. Other factors include company restructuring, takeover by another company, merger of companies and transfer between subsidiaries and associates.21 In terms of India as

152   Country study: Singapore

Figure 6.5  Various Indian restaurants.

a foreign talent, in early 2010, the Singapore Minister for Community Development, Youth and Sports Vivian Balakrishnan commented that there are some 200,000 Indian expatriates working in Singapore and 4000 Indian companies.22 Figures 6.5 and 6.6 show Indian restaurants in Little India.

Destination Singapore Singapore official, Chennai, 12 December 2006 We interviewed a senior official who was trained in an NIIT in India. As a bachelor, he wanted to move overseas to the US through Singapore. He managed to find a job in Singapore and married an Indian expatriate and settled down in Singapore. However, 90 percent of the Indian cohort who came with him to Singapore had migrated to other countries. How did he and his wife feel about living in Singapore? He said that Singapore is a place that gave him all the comforts and security. In terms of communication and cultural issues, there were no issues. He did receive job offers in the United States and Australia but he was not interested in moving there. If he did make a career choice, he would rather move back to India. Discussions with the senior official in charge of attracting human capital said that, when comparing China and India, the former was seen to be a “known territory” compared to India, which was initially not taken seriously.23 When then Prime Minister Goh Chok Tong recognized India as the next Asian giant and fanned Indian fever, the bureaucrats in Singapore had a “reality check.” He believes that in the long run, India will be an emerging economic power but not without risks and he said, “You can’t sit on the fence and watch and wait.”24 While the major bulk of the trade with Singapore was with Europe and the US,

Country study: Singapore   153

Figure 6.6  Vegetarian Indian restaurant.

nonetheless, Singapore has become India’s fifth largest trading partner. However, because of India’s size and growing opportunities, Indian professionals are reluctant to come to Singapore. Typically, Indian professionals would ask themselves, What are my future plans? What is my future growth? Singapore is seen only as a “stepping stone” and in this regard Singapore should have a boundary-less approach. For Singapore to be competitive in the international market place, it “would have to develop a blueprint whereby you bring Singapore to the world.” For example, “Ten years ago Singaporeans would not even want to go to China. It is an evolutionary process. It will take time.”25 What is India’s value proposition for Singapore in terms of a source for human capital? The most sought-after graduates of the IIT/IIM are “beyond Singapore’s reach. We should look beyond these institutions which we should groom and keep loyal.” Is there interagency cooperation to recruit foreign talent for Singapore? The Singapore Tourism Board (STB) manages the Singapore Visitor Centre in Chennai and attracts the foreign talent while Contact Singapore will process those keen to work in Singapore. He cautioned that the process of attracting talent will take time in India and a lot of time is required to understand India. Is the Singapore brand influential in attracting semi-finished human capital? Yes, he does receive requests from universities in India to connect them with the National University of Singapore (NUS) and Nanyang Technological University (NTU). On a larger scale, the movement of Indian professionals to Singapore should be placed in the context of Singapore’s economic progress. A lot of foreign professionals, including those from India coming to Singapore, are attracted by the multinational companies (MNCs) located in Singapore. Singapore is a base for more than 7000 MNCs. The senior official said, “If they [Indian professionals]

154   Country study: Singapore are young or in mid-level management, they are most likely to be transient in nature, viewing Singapore as a ‘stepping stone’ towards building their career.”26 The length of time that they spend in Singapore would translate to “how much we can soak in the Singapore phase of life.” Some NRIs were extremely successful and they want to return to India and begin their own “start-ups” but not everyone wants to have a start-up. Therefore, large numbers remain in Europe, especially the UK, which retains a very large proportion of skilled and semi-skilled professionals from India. For example, Singapore might receive NRI talent who wanted to return to India to raise their kids in an Asian cultural environment but were unable to adjust back to the lifestyle in India. Therefore, it might be easier to cull talent from the Indian diaspora rather than India itself. In this regard, the numbers are very large but there are different “pockets” of these talents and Singapore has to connect to the Indian diaspora network. Local versus foreign The policy-makers in Singapore approached the issue of attracting and hiring foreign talent in relation to their desire for MNCs to maintain their presence and regional operations in Singapore. At the height of the Asian financial crisis in 1998, then Minister for Manpower David Lim commented: Our goal is that talents who come to Singapore should raise our standards. We scrutinize their educational qualifications and prior work experience. We look at the contributions they have made to the previous employers. It is not a free-for-all approach, but a carefully considered and scrutinized approach. But at the same time, we do not want to make it difficult for the right talents to flow into Singapore, nor for companies to hire the best talents they can find. To do that would defeat the policy of welcoming talents.27 Singapore is unique as an employment destination because it does not insist that an employer tries to hire a local first before engaging a foreigner.28 Even in an economic downturn, Singapore continues to hire foreign talent. David Lim argues that foreign talent does not take away local jobs but rather fills critical positions so that other jobs would not be lost. In the early 1990s, there were at least 40,000 foreign professionals working in Singapore.29 Chinese nationals, Malaysians, and South Asian, including Indians, were the main professionals recruited by the Economic and Development Board (EDB) for companies in Singapore. In the late 1990s, the South Asian professionals comprised about 50 percent of the total foreign talent.30 In 2006, of the 176,000 new jobs created, half were filled by foreign workers and talent.31 In 2007, of the 236,000 jobs created, 144,500 were filled by foreigners. In early 2001, MM Lee remarked that if scores of foreign talent were to leave, Singapore’s economic growth would be reduced by 20 percent.32 This was amply demonstrated during the economic slowdown and rising unemployment caused by 9/11 and the SARS outbreak in 2003. Singapore’s aviation and tourism industry in particular were adversely affected but Singapore continued its policy of

Country study: Singapore   155 attracting more foreign professionals and skilled workers.33 In a policy statement at the opening of Singapore’s new parliament building in 2002, then Manpower Ministry Minister Lee Boon Yang said, “There is a global competition for talent.”34 In 2002, when Singapore was affected as part of the global economic slowdown, it decided to redefine its strategies to develop businesses. However, then Deputy Prime Minister Dr. Tony Tan still emphasized that investment in human capital would continue through supplementing local universities. In this context, 11 top universities such as MIT, Stanford, INSEAD, and Johns Hopkins were given permission to establish campuses and programs in Singapore.35 Singapore has continued with its policy of attracting foreign talent for its banks, semi-conductor firms, engineering firms and science laboratories.36 In 2003, MM Lee said that Singapore’s foreign talent policy would not change because it would undermine Singapore’s ability to grow and expand economically.37 What are the main factors that could influence the capability of a city or region to grow economically? Richard Florida pointed out that the creativity output of a place depends on the 3Ts, which are technology, talent and tolerance.38 The Singapore government has placed the task of establishing an effective system of foreign manpower management with the Ministry of Manpower (MOM). In April 1998, the Foreign Manpower Employment Division was established under MOM to provide overall coordination and strategic direction to help employers meet foreign manpower needs and to effectively manage the foreign workforce in Singapore. In order to attract Singaporeans based overseas and foreign talent to Singapore, Contact Singapore was established as an information and resource centre. Contact Singapore provides a wide and comprehensive range of information on employment opportunities available in Singapore. To a certain extent, Singapore’s pragmatic attitude for continued economic growth and development has seen previous policies overturned, for example, such as hosting activities catering for the gay community and visitors like Asia’s biggest gay festival at the beach resort of Sentosa in August 2004.39 This “Pink Dollar” event was more than simply a revenue earner because to a large extent it also signified an important shift in the position of the state which acknowledges that creative talent, whether local or foreign, included those who are gay as well. In 2003, the Singapore government also changed its position on hiring homosexuals in the Civil Service. Then Prime Minister Goh Chok Tong said, “In the past, if we know you’re gay, we would not employ you, but we just changed this quietly.”40 Increasingly, every year, Singapore has been losing about 1000 of its top talent according to MM Lee Kuan Yew. Most of these Singaporean talents are moving to the United States and other developed English-speaking countries. In addition, Singaporeans are also heading to fast expanding emerging economies like China and Hong Kong.41 MM Lee has regularly called this loss of talent Singapore’s Achilles’ heel.42 To compensate for this loss of local talent, Singapore has attracted many professionals from China and India.43 However, MM Lee also acknowledged as the living standards in these developing countries improve, it will become harder to attract talent from these countries. Singapore is alert to any global changes that might affect its plan to attract foreign talent. For example,

156   Country study: Singapore when President Obama allowed federal funding for embryonic stem cell research, this set off alarm bells in Singapore because it might cause an exodus of life science talent to the US.44 However, the foreign scientists in Singapore working in life sciences commented that they had moved here because of the infrastructure and strong government support.45 The Chairman of Singapore’s leading science organization Lim Chuan Poh of A*Star said, “We will redouble our efforts to maintain our edge in this area, and continue to work towards widening our science hub when the opportunity arises.”46 The 2008 global economic crisis that has spiked unemployment figures in Singapore is likely to raise the debate about local and foreign talent. For example, in 2007, the tourism industry headed by the Singapore Tourism Board (STB) and the Singapore government announced plans to spend more than SG$360 million (US$257 million) to train 74,000 Singaporeans for tourism jobs.47 This Tourism Talent plan was implemented to prepare Singaporeans with relevant skills for an estimated 20,000 job opportunities when the two integrated resorts opened in Singapore in 2010. However, when the global economic crisis hit in 2008, tourism numbers in Singapore fell drastically and with that also fell tourism revenues for sectors such as hospitality and leisure.48 The integrated resorts and accompanying theme parks managed by Resorts World and Universal Studios started advertising for job opportunities in 2008 and had created a local versus foreign talent debate. It was reported in the Philippines that President Gloria Arroyo and her delegation had visited Singapore and had a meeting with Resorts World to secure employment for Filipinos. It was reported in the Philippines’ press that 5000 jobs had been secured for Filipinos. This caused uproar among Singaporeans and compelled Resorts World to produce a statement clarifying the issue and to say that they are committed to hiring Singaporeans first, particularly in the economic recession.49 This episode indicates that in severe economic conditions, the issue of hiring foreign talent will become more sensitive. During 2008 to 2009, Singapore was adversely affected by the global economic crisis and its unemployment rate rose to 3.2 percent of total employment in the first quarter of 2009. While the Singapore government accepted that it has to develop the capabilities of its people, PM Lee commented that, “Our future lies in being a leading global city for talent and our own talent as well as top talent from around the world.”50 He added, “We have to say, foreigners come, Singaporeans first, but we are going to make this place prosper with all the help we can get and then we will have a bright future.”51 In order to assist the long-term growth of the economy, the government established an Economic Strategies Committee (ESC), whose aim will be to develop new and creative ways to expand the economy. PM Lee outlined five economic strategies to expand the economy and developing human and knowledge capital is among them.52 The Comprehensive Economic Cooperation Agreement (CECA) Singapore’s pursuit of free trade agreements (FTAs) coupled with greater economic liberalization has seen the mobility of human capital become a key issue

Country study: Singapore   157 in negotiations, such as that with India under the Comprehensive Economic Cooperation Agreement (CECA). The CECA between Singapore and India came into effect in June 2005 and a chapter is devoted exclusively to the movement of natural persons. The Singapore government and authorities have increasingly recognized that research institutions in India provide critical expertise which they would like to access. Under the CECA, five categories of professionals from India would be allowed to practice in Singapore without additional qualification tests.53 These five categories are: architects, chartered accountants, nurses, dentists and other healthcare professionals. For example, the National Cancer Centre Singapore (NCCS) has signed a Memorandum of Understanding (MOU) with the Rajiv Gandhi Centre for Biotechnology and the Regional Cancer Centre, both based in Thiruvananthapuram, India.54 Singapore’s economic development strategy was directed towards the attraction of multinational companies being based here. As the cost of wages in Singapore increased over time, Singapore has encouraged MNCs to locate their overseas headquarters (OHQs) for the region here by providing fiscal and other incentives. This would enable Singapore to remain attractive to MNCs and decrease the numbers of jobs lost overseas, as well as moving employment up the value chain. As MNCs choose to have their OHQs in Singapore, they will also look towards retaining the upper-end jobs here with higher pay in order to justify their presence in Singapore. The presence of some 7000 MNCs of various sizes also indicates the employment opportunities available in Singapore. Singapore’s key growth areas such as finance, corporate and maritime sectors have experienced a transformation towards a more global outlook. Linked to Singapore’s regionalization policy that started in the early 1990s of building an external economic wing for the domestic economy, economic activities have seen a rise in cross-border trade. While Singapore companies do venture overseas, the main drawback is the increasing outflow of talented Singaporeans overseas. With increasing transboundary business, certain professions such as lawyers are hoping to capitalize on Singapore’s aim to be a regional center for arbitration by liberalizing the law sector. The Minister for Law, K. Shanmugam explained that Singapore’s law sector was not only keeping abreast of changes in business trends that have gone global but also the need to attract foreign talent to Singapore’s legal services.55 As of 2007, in the finance sector, MM Lee Kuan Yew thought that Singapore has managed to attract numerous professionals. Financial institutions have relocated their senior executives and regional headquarters to Singapore in order to manage the wealth flowing from the Gulf States, the US, the EU and Japan.56 Enlarging the economic pie The MNCs based in Singapore recognize the talent available in India and have been recruiting from there for decades. At least since the 1990s, firms in Singapore have recruited Indian engineers, computer specialists, managers and professionals. The government has endorsed Indian talent by recruiting them as well. In 1990, 22

158   Country study: Singapore Indian IT professionals were recruited by the National Computer Board (NCB), 18 worked under the Civil Service Computerisation Programme while the rest were hired by the Information Technology Institute, the research and development arm of the NCB.57 State institutions such as the MOM have introduced several initiatives to facilitate the employment of foreign talent. For example, applying for or cancelling employment passes (EP) can be processed on-line. By early 2000, the Singapore government realized that its assembly line manufacturing sector had come under threat from lower cost countries in the region. Therefore, the government established scientific research as one of the pillars to drive the new economy for the future and exited from the increasingly competitive electronics sector. For example, the government has established Biopolis, a multi-million dollar scientific hub and through BioOne Capital Pte Ltd it manages US$700 million in funds to invest in biomedical business ventures.58 Scientists from all over the world, including Asia, are relocating to the Biopolis because of the attractive salaries, funding for research, expatriate-friendly environment and relatively liberal rules on cuttingedge areas like stem cell research. In 2007, the Minister for Trade and Industry Lim Hng Khiang stated, “Our focus is to create better jobs for Singaporeans and better opportunities to attract global talent.”59 Foreign talent is an important ingredient for the Singapore economy. Senior Minister Goh commented that the Economic Review Committee (ERC) tasked with restructuring, upgrading and transforming the Singapore economy had recommended reducing taxes, reducing business costs, flexible wages, investing in more R&D, and revamping the education system. SM Goh added that Singapore wants to attract foreign talent while retaining their own. Talent is needed in the public and private sectors, in the arts and social sectors, in government institutions, NGOs and the private sector.60 Prime Minister Lee Hsien Loong said that Singapore must keep its business environment open to foreign talent because the country needs a critical mass for innovation and enterprise. He added, “To establish Singapore as an entrepreneurial hub, people with the talent, passion and commitment to build their own businesses must be attracted to come here, start businesses here and grow big while remaining rooted here.”61 A non-partisan research group called the Information, Technology and Innovation Foundation (ITIF) has placed Singapore top of its ranking for innovation and the United States in sixth place,62 as shown in Table 6.1. Singapore scored 73.4 percent, while the US scored 63.9 percent. The study used 16 indicators grouped under six categories, namely, Human Capital, Innovation Capacity, Entrepreneurship, Information Technology, Economic Policy and Economic Performance.63 In terms of government spending on R&D, Singapore came second after Sweden.64 Furthermore, in the area of entrepreneurship and new firms being created, Singapore ranked second after South Korea.65 Cultural capital The Ministry of Trade and Industry (MTI) envisions the remaking of Singapore as a creative economy but it needs to have a sustained and strong investment in

Country study: Singapore   159 Table 6.1 Overall score for countries’ competitiveness and innovation, 2009 Rank

Country

Overall score,2009

 1

Singapore

73.4

 2

Sweden

71.0

 3

Luxembourg

66.2

 4

Denmark

64.5

 5

South Korea

64.2

 6

US

63.9

 7

Finland

59.6

 8

UK

59.2

 9

Japan

59.0

10

North American Free Trade Area (NAFTA)

58.6

Source: European-American Business Council and ITIF, “The Atlantic Century, Benchmarking EU and U.S. Innovation and Competitiveness,” February 2009, p. 2.

its cultural capital. One of the key aims is to develop creative clusters comprising of enterprises and individuals that have the potential to become key engines of economic growth. Established in 2007, the Economic Review Committee (ERC), under the purview of the MTI, has identified creative industries along with healthcare and education as the three new promising services area for growth.66 Senior Minister Goh commented that the ERC had managed to draft a comprehensive structure to upgrade and transform the Singapore economy. The government had accepted most of the ERC’s recommendations such as reducing corporate and personal income taxes, reduced business costs, increased flexibility of wages and invested more in R&D.67 Academics such as Richard Florida68 have argued that enhancing a city’s cultural capital would enable better recruitment of foreign talent. In Singapore’s context, the definition of cultural capital is “the accumulated sum of our nation’s creative capacity and our emotional and social bonds to the country and communities and our deep knowledge of economy, society and world affairs.”69 Creative people are defined as individuals who have “cultural capital inside,” these are people who have deep consciousness of the importance of culture and creativity and deploy it to their full advantage in the New Economy.70 PM Lee has stated that Singapore not only has to create economic opportunities but also opportunities for people to develop their potential and express their human spirit.71 Senior Minister Goh commented that while attending the Gala Dinner for Merrill Lynch’s inaugural “Pan Asia Rising Stars Conference,” in 2007 in

160   Country study: Singapore Singapore, several foreign bankers and executives had mentioned they were excited and surprised by the “buzz” in Singapore. He added that they were not only referring to the buzz of the financial industry, the integrated resorts but also the glitz of the nightlife, the arts, culture and the restaurant scene.72 He also pointed out that despite the rising costs, MNCs are not deterred from establishing their presence in Singapore.73 However, according to the Economist Intelligence Unit (EIU), Singapore has risen in the ranking for the world’s most expensive cities: from 15th position in 2008, it has climbed to 10th position. This will have an impact on the calculations by foreign talent to work and live in Singapore.74 Specifically, will this have an impact on foreign talent from India? The rising cost of living may not negatively impact Singapore’s attraction to talent from India because, according to consultancy firm Mercer, the Indian cities of Delhi and Mumbai are among the world’s ten costliest locations for rental and purchase of property.75 Working to Singapore’s advantage is that foreign talent, including those from India, are increasingly renting public housing, namely Housing and Development Board (HDB) flats. These flats are near many amenities and often located within a short distance of the rail network (Mass Rapid Transit) and public bus stops. Moreover, consultancy firm PricewaterhouseCoopers, in a survey of 105 Singapore-based firms in 2008, commented that these firms considered Singapore the easiest place to localize foreign talent.76 Some of the firms surveyed included Temasek Holdings, CapitaLand, Neptune Orient Lines, and Keppel Corporation. In this context, localization means the process of changing an expatriate remuneration package to that which is similar for locals.77 In some cases this means a “local-plus” term with the removal of benefits for education and housing that expatriates may receive. The rising cost of living in Singapore might also be offset with the strengthening Singapore dollar that enables foreign talent to remit more savings back to their home countries.78 Generally, Singapore’s attraction to foreign talent rests upon its excellent infrastructure, air connectivity to most parts of the world and the strong Singapore dollar. Other factors would include Singapore’s relative security, Englishspeaking environment, ease of acquiring employment pass and tax incentives. Under the Overseas Talent Recruitment Scheme, tax deductions are allowed for the relocation and recruitment expenses incurred in the hiring of top foreign talent,79 and this scheme will be implemented until 30 September 2013.80 Another is the Not-Ordinarily Resident Scheme (NOR) designed to grant favorable tax concessions to senior executives.81 In January 2007, a new Personalised Employment Pass (PEP) scheme was introduced to attract and retain foreign talent more effectively. Unlike the employment passes (EPs), the PEPs are not tied to a specific employer and enable the foreign talent to switch jobs without applying for a new employment pass. The PEP also allows the holder to remain in Singapore in-between jobs to evaluate new employment opportunities for up to six months. The PEP is non-renewable and valid for five years but candidates must meet specific requirements before the PEP is approved. This initiative was designed to retain EP caliber holders who otherwise would have to leave Singapore. This is in contrast to Malaysia where foreign talent has to leave the

Country study: Singapore   161 country upon terminating their employment. Another scheme called the Employment Pass Eligibility Certificate allows skilled foreigners to remain in Singapore for up to one year to look for a job. Foreign talent could also start a legally registered entrepreneurial business and apply for the EntrePass that allows them to stay in Singapore for up to two years and this can be renewed. Minister of State for Trade and Industry and Minister-in-Charge of Entrepreneurship Lee Yi Shyan commented that these are talent attraction programs.82 Departing local talent Senior Minister Goh Chok Tong has pointed out that Singapore is “leaking talent, not just ordinary talent, but its best and finest.”83 He added that, “This is a very big problem for us because if we lose the top 0.5 percent from the next generation, Singapore will have a much lower peak.”84 Singapore is losing 1000 of its “best and brightest” every year to overseas mainly English-speaking developed economies. It was reported that 22 percent of total Singapore employers are concerned about Singaporean talent leaving overseas. Where are Singaporean talents heading overseas? Singaporeans are heading to China to assume jobs such as financial controller or to Macau as hotel managers.85 The Executive Director of the Singapore National Employers’ Federation, Koh Juan Kiat said that Singapore employers are “most concerned about people who are hard to replace. They could have expert knowledge about a computer or system, or critical engineering skills that the company spent years to build up,”86 and about 41 percent of local employers thought that the government and businesses are not doing enough to slow the outward talent flow.87 Prime Minister Lee Hsien Loong remarked that Singapore must accept the outflow of top talent as a reality but cautioned that unlike large countries like China and India which can sustain a large outflow of top talent and still be able to retain a “central core, the risk of being depleted of top talent is faster for smaller countries like Singapore.”88 While the government has welcomed foreign talent and by and large has more inflow than outflow, PM Lee highlighted another concern regarding national identity. The government has acknowledged that the global knowledgebased economy is without borders. PM Lee remarked that, “Globalisation and the knowledge economy have created a single worldwide market for talent. In every field, the most able people are in demand worldwide, and are also highly mobile.”89 The question remains whether the government should do more to foster and groom local talent or open the “doors wider” for foreign talent. Does Indian talent leave Singapore after working and living in Singapore? Despite Singapore’s excellent infrastructure and conscious decision to enable expatriates to settle here without hassles, expatriates, including those from India, have left. For example, in late 2008, it was reported that a software developer of Indian origin named Muthu, having spent five years in Singapore, decided to return to India for good. In 2006, Muthu planned to buy a flat in Singapore and relocate his family to Singapore. The main problem was the then boom in property process which made resale HDB flats so expensive as to be out of his price

162   Country study: Singapore range.90 Unable to relocate his family here and with India’s economy booming at the time, Muthu decided to return to India. Reportedly, Muthu was able to expect with his expertise and experience a salary equivalent to those in Singapore if not better. In addition, his salary stretches further in India and he is able to afford more comforts in life. The Singapore government realizes that when the global economy recovers, foreign talent is a critical factor to further expand the Singapore economy. Education Minister Ng Eng Hen said, “Top on the to-do list is to develop new technologies and intellectual property, which will make the Republic a draw for the best scientists and for talent from multinational companies.”91 To retain talent, Minister Ng believes that Singapore has to afford a safe, clean and comfortable environment. He gave the example that top professionals are relocating out of Hong Kong because of the air quality. Therefore, Minister Ng stressed that, “For Singapore, clean air, pure water, safe streets are must-haves.”92 Even when economic opportunities are booming in India, the infrastructure and amenities might not be able to accommodate all the returning NRIs. Some of them could actually straddle both India and Singapore. For example, Indranil Sen left Singapore in 2008 after spending eight years here. He is now the managing director of an express transportation company in Mumbai. He said, “Professionally, there are opportunities to look forward to. But personally, it isn’t always easy making the move.”93 Sen spends close to two hours every day commuting to work in Mumbai. He was also unable to get a suitable school placement for his younger daughter in a good school in Mumbai, therefore, his family decided to remain in Singapore. Sen hopes to return to Singapore in the long run. The political leaders in Singapore such as MM Lee Kuan Yew have also acknowledged that many foreign talent use Singapore as a “stepping stone” to developed Western countries such as the US.94 A recruitment agent commented that they choose Singapore because they know Singapore is very stringent in its selection criteria and offers them exposure to the global economy. After a few years here, these foreign talents are exposed to a lot of information, the corporate culture of MNCs, good infrastructure and amenities similar to Western developed economies. Concurring, Rajesh Srivastava of Rabo Bank commented that he found the punctuality, efficiency, amenities and service in Singapore excellent for his business dealings.95 Companies located in Western developed economies also find it easier to recruit in Singapore because their own immigration authorities also have the view that if Singapore has allowed these talented people in, then they must be of value and are “safe.” Safety is a key feature and selling point for Singapore to Indian professionals and entrepreneurs. For example, journalist Sobha Menon praised Singapore for its safety after walking alone in the streets at 1.30 a.m., something he would not do in most other cities.96 Sense of rootedness Some foreign talent and entrepreneurs have decided to settle permanently in Singapore. For example, Rohet Tolani of the Tolani Group relocated his family to

Country study: Singapore   163 Singapore from India in 2004. Founded in the 1950s, the Tolani Goup is a huge shipping company and Rohet is vice-chairman of the shipping empire and head of its Singapore business.97 The Tolani Group started out in the construction industry and branched out in the 1960s and 1970s into river transportation. In the 1980s, it divested its other assets and focused on dry bulk carriers. The Tolani Group owns 10 ships, four in Singapore and six in India. The government has established the Integration and Naturalisation Council to integrate new immigrants into their communities and since 2007 about 700 grassroots leaders have been appointed Integration and Naturalisation Champions (INCs).98 The INCs’ task is to meet new immigrants and help them settle in Singapore. The following section contains interviews with recruitment agencies and Indian professionals in Singapore.

Recruitment agencies Recruitment agent A, Singapore, 3 April 2006 What was the impetus for Indian professionals working in Singapore? During the “Dot.com boom” in the 1990s, Indian IT professionals were coming into Singapore to computerize governmental systems in Singapore and to prevent problems ahead of Year 2000 and the Y2K problem. On average, any week there could be easily 1000 to 2000 Indian professionals coming into Singapore. There were a lot of projects and there was great scope for selection, and Indian IT professionals were considered prime working candidates because they were seen as adaptable and workaholics. Many were granted a 14-day visa to come in and then seek employment. The trend started changing in the early 2000 when the interest in Singapore by the Indian professionals started to decline and they began using Singapore as a “stepping stone” to third countries in the developed world. He estimated that of the Indian professionals placed by his company in Singapore in the 1990s more than 50 percent have moved onto more favored destinations such as Australia, Europe, and the United States. He said, “The Australian employment market is attractive and because it is less complicated when applying through Singapore.” Why are Indian professionals not staying in Singapore? Although Indian professionals apply for permanent residency, it is no real big advantage for them and if given a better opportunity they are highly likely to move on from Singapore. However, he feels that in 2006, a lot of Indian professionals, especially in the technical sectors, are not being allowed to enter for no reasonable explanation, even though they may be of higher caliber than locals. But there are also many Indians who are returning to India because the pay packages in India are becoming more attractive and Indian professionals are more hesitant to come to Singapore. In Singapore, the average monthly pay package of SG$3000–4000 (US$2143–2857) is no longer attractive considering the high cost of living. That amount of money goes further in India and the United States and even Malaysia is considered more lucrative. In Malaysia, there are more projects and they feel that the cost of living there allows them to afford a better life.

164   Country study: Singapore When Singapore started computerizing its governmental organizations and institutions, many were keen to hire fresh grads on a six-month basis since “new brooms sweep efficiently.” When the hard work was done, they are then keen on hiring the ethnic group they are comfortable with. The Muslims are facing similar bias. Indians themselves also feel that they are not being appreciated, since they put in the ideas and hard work and then they are not credited when it come to recognition. He also feels that MOM is not consistent in its practices and is not properly informed about hiring the right people. He does not understand why those who are qualified in rare expertise are not being granted work visas when ordinary young adults who spent time at KTV lounges are being given work visas. Recruitment agency B, Singapore, 8 February 2006 The director of recruitment agency B came from Chennai in 2000. He has a training institute and recruitment agency in India. How does his agency source for human capital in India? He said placements are made in India itself and approximately 8 to 12 placements are made a month. The agency receives three or four fresh recruits every month but about 10 to 12 other recruits have shifted from other projects. The highest number of placements has been 40 a month but that was to fulfill a special requirement from a client (a statutory board in Singapore). Is Singapore a “stepping stone” for Indian professionals? He agrees that Singapore is a stepping stone for Indians because it is seen as a global gateway. Getting a visa and work permit in Singapore is much easier than in Europe and the US. Moreover, life in the US or Europe is much more affordable with a better standard of living and more freedom. He said living in the US was still seen as the ideal goal by Indian talent. His agency’s main source of income is recruitment for the IT sector because the biomedical industry did not take off .The agency has links with the EDB, NUS /Bioinformatics Institute /A*Star and Tan Tock Seng Hospital for research staff. However, he feels that the US is still the “Mecca” for scientific research in terms of database and infrastructure. What are the normal lengths of contracts? His agency usually arranges for one-year contracts. Most likely these one-year contracts will be renewed. The selection of recruits is done by viewing the applications on the company’s job portals. There are about 10 to 15 new candidates listing on the job portals every day from searches conducted on the internet. The company’s own database has some 35,000 biodatas and 80 percent are relevant for placements in Singapore. He has a combination of Malaysian and Singaporean candidates. His agency also has “tie ups” with firms like HP/Wipro. Charges of the firm are about 15 percent of the annual gross salary, and usually there is a one month probationary period. The expatriates in Singapore can easily draw up to $3500 a month. Which categories of work permits does the firm usually apply for? His agency applies mainly for P2 and Q1 passes, sometimes S passes. This is based not only on salary but also qualifications. Awarding passes is done on a case-by-case basis and Indians are very particular in terms of prestige attached to the kind of pass they receive. It is very common to see both in a couple employed in Singapore

Country study: Singapore   165 and common to have both in a couple working on a salary of SG$4000–5000 (US$2857–3571) a month. In 2006, his agency was not making such a healthy profit because there was a slowdown in the arrival of IT professionals in Singapore. Salaries in Singapore are now comparable to India. Moreover, opportunities in India are good in terms of job promotions and companies offer good perks in India. Furthermore, employees get opportunities for overseas postings for a couple of months and then return to India. What are the main issues that he finds in recruiting talent to Singapore? He replied, there is more exposure to technology in India, there is offsite rotation in the job assignment. There are web groups on the internet such as Easylink, Yahoo groups, Post ads and the network is global. What about retraining? He believes that the technology upgrading is post-dated in Singapore and the major retraining occurs when professionals return to India. Companies in Singapore do not train IT professionals and IT training in Singapore is not being done in a major way. Indian companies like Infosys, Wipro and Satyam are big employers of Indian IT professionals and Singapore is not recruiting as aggressively as the abovementioned firms. India and the capacity of its expanding market are a different ball game. Indian companies are giving attractive benefits to their employees, for example, interest-free loans for car and home purchases. Recruitment to Singapore is dependent on the business model of the firm coming into Singapore. For example, in Wipro’s case, some of their employees came from India, the others were sought from recruitment agencies and recruitment agency A has recruited 70 to 80 people for Wipro on short-term contracts. The recruitment agent explained, Indian expatriates coming out now are doing so not for training but for overseas experience, as it is valued. Is there a reverse flow of NRIs back to India? Yes, there is a reverse flow of NRIs back to India. The reverse flow of NRIs to India is led by the 35-plus age group in middle management. Why are NRIs returning to India? He replied, the main reason being that the growth rate in India is very high. He estimated that at least 2 percent of Indian professionals who had come to Singapore are returning to India. What about lifestyle and consumption patterns in India? The middle classes are beginning to get the comforts and consumer items in India which were previously associated with overseas employment. Moreover, the middle level management enjoys three to four months of overseas assignments by companies based in India. Where do the Indian expatriates live in Singapore? The arriving Indian expatriates will have contacts here before arriving in Singapore. These contacts would have given them ample information as to where and how to set up a home in locations like Simei, Tampines, Ang Mo Kio, Yishun, and Boon Lay. There are also Indian associations that have been formed for networking purposes, for example, the Andhra Community and the Tamil Nadu Community. Recruitment agent C, Singapore, 5 November 2008 Recruitment agent C was born in India but moved to the UK in his teens and both his parents are medical doctors. His father is from Andhra Pradesh and Maharashtra,

166   Country study: Singapore while his mother is from Pune. He is married with two children. His wife is of Indian origin but has connections with Kenya and was born in the UK. His wife first went to India when she was a teenager. Why did he choose to settle down in Singapore? He came to Singapore in July 2006 from Hong Kong. He had a dual degree from Sheffield University in Business Studies and Japanese Studies and wanted to differentiate his CV away from the European languages. Sheffield University had given him a foundation course in Japanese and he had to study in Tokyo and Osaka. Upon graduation, he moved to Japan and started work in Tokyo and landed a job as a website developer for Japanese MNCs. Then he ventured into a recruitment company and was offered a job with them. He started at the bottom as a sales executive, senior executive and now he places CEOs for client companies. Was his career trajectory planned or ad hoc? He explained while he was with the Tokyo company, he was involved with MNCs like TNP worldwide and monster.com, the world’s largest recruitment portal. Then TNP moved him to London for one year and then to Hong Kong where he managed Northeast Asia’s largest technology recruitment for the company. In 2003, the SARs epidemic occurred and he ended up closing and downsizing firms instead which was depressing. Then he left TNP and moved to a boutique firm at the top end of the line for recruitment and started their Asia-Pacific office which became his first foray in cross-border talent search in Hong Kong. He worked for them for two years but had a disagreement with the chairman. By then he was already married and had a baby girl. He realized Hong Kong has high pollution levels and is not environmentally friendly, therefore, he relocated his family to Singapore. Describe his social network in Singapore. He is fortunate to have a mixture of expatriate, Indians and other locals in his network. They are of Indian origin but they are British so they socialize with local Indians, Indian expatriates, Singaporean Indians, Chinese, Malays, British, and Americans. Do local and Indian expatriates interact? He has noticed that expatriate communities tend to cluster among themselves apart from certain occasions. He believes that Indian communities are the least ghetto-forming and most willing to interact with other expatriates. However, the new cadre of proper expatriates (short stint of one to two years) has emerged and psychologically the effort required to make local friends is not worth it because of their short stay in Singapore. They feel that it is better to make friends with other expatriates that they might meet in other overseas locations. Is there an emerging class of Global Indians? He believes that the Indian population and Chinese population are global but the difference is that the Indians have merged into the local population better than the Chinese. More Indians have gravitated to senior positions because they are able to deal with the local population. How long will he reside in Singapore? He has bought a house here and will be here for three years at least and has taken up PR. He commented that Singapore has an easy lifestyle, low taxation, great infrastructure, and easy access to China, India, and Japan. In terms of distance from India, it was also easy for their parents to visit them and the proximity is an added advantage for their friends and extended family as well. Comparing Singapore and Hong Kong? When he was

Country study: Singapore   167 living in Hong Kong, he did visit Singapore but felt he wanted to get back to Hong Kong. But now Singapore has F1, IR, the dining experience is a broader scope of dining, Singapore is doing the best that it can under the circumstances. However, the authorities should not tax cars so much. Singapore is also good for schooling and making more land available for development. In terms of strengths, Singapore has great location, better proximity to India, China, Japan, ASEAN, and Australia. You can get across into Malaysia. Low taxation, great government, low crime, good education, government aligned to business and economic interests. Is the government too intrusive in the economy? Not really, because an involved government with a Sovereign Wealth Fund (SWF) is better as seen by how they faced the global financial crisis, and Singapore was “ahead of the curve.” He thought that no other country would match Singapore in Southeast Asia. If given a choice, where would he prefer to live? He would probably go back to Hong Kong or Japan (because of historical reasons). Singapore lacks the liberal arts environment and is lacking in theatres. London has a lot more choice and the performing artists would gravitate either to London or New York. India was an option and he made a reconnaissance trip to Mumbai after Hong Kong. But he found it difficult to live in India because he travels frequently overseas. In Singapore, it is very safe and reliable. In Hong Kong there was concern over organized crime and syndicates. What is his identity? He is a British Hindu who is of Indian origin and “the least pious individual, he loves a steak but he is not an orthodox Hindu.” He believes that identity is associated with geography and not a form of worship. Bengalis are vegetarians and eat fish while the Maharashtrians eat beef. The extent of his piety is that he has a Ganesha idol on his desk and before he moved into his house, he placed a Ganesha in the house and did a puja (religious ceremony). How does he follow news about India? He keeps in touch with the updates in India. In the economic scene, he keeps tabs on the various companies especially its personnel. Communal politics is “dirty.” In India, it’s a vivid lesson of the vices of democracy. India is an example of how things could go wrong. For example, the Dharavi slums in Mumbai are filled with illegal Bangladeshi immigrants living there and number about 1.7 million. They vote and that is a big vote bank. Many politicians have tried to remove them but are unable to do so via democratic means. The slum dwellers have been used by politicians for their own self-interest. India inherited a British system but this system may not be suitable for India. Things will change with gradual wealth creation. It will take a long time, as long as 20 to 50 years. What are the emerging recruitment trends? He explained that corporate India has grown, domestic demand has increased and this has increased the aspirations of Indian companies to move overseas. So this influences the movement trends of professionals? Yes, for example, his company is kept on a retainer for several Indian companies and he works for them as a consultant when Indian companies need to find a CEO for China, or Asia, or their own CEO in India. What are the problems in dealing with Indian firms? He explained Indian companies are “hands on” and when an Indian company needs a new CEO, they will insist on

168   Country study: Singapore being engaged in the recruitment process and might interfere with his firm’s procedures and operations. For example, a large Indian cellular operator who is domestic based was inefficient and losing subscribers. They came to him with the request to find a new CEO. He started with their need to find a new CEO but they told him to look at the other Indian telecoms companies. He advised them not to because they should look beyond India’s borders. This is because all the Indian telecoms companies think alike and know about the Indian market. They should instead find an overseas telecom expert, whether NRI or not, to run the business. He found them an American Caucasian living in Japan who was working for a big British telecoms company and when he was recruited, he managed to win back their subscriber base within 10 months (targets that were set two and a half years ago) and exceeded the company’s target by 20 percent because he built efficiency and increased their cash flow. When they recruited the new CEO, the Indian telecoms company was valued at US$1.7 billion but the valuation is now US$3.4 billion. The recruiter’s finder’s fee was US$250,000 for this client. In another example, an Indian electronics manufacturer has also hired a Korean as their CEO. Why? This is because the Japanese and Korean are good at electronics manufacturing and managed to hire the Korean from a smaller company. Consultant, Singapore, 24 January 2008 The interviewee is a vegetarian, divorced. He was educated and started work in India in marketing and sales until 1985. In 1985, he moved to Hong Kong to find a new job and career and stayed there for seven years and after that he came to Singapore. Why did he leave Hong Kong? He was still an Indian citizen and was unsure about Hong Kong’s status. He also explored opportunities in Singapore before 1997, i.e. before the Asian financial crisis. He has worked in the UK and East Africa and was offered a position in Dubai. He visits Dubai often but does not like the way the Dubai authorities and locals treat foreigners. He has also traveled to various places like Iran, Egypt, Turkey, and other parts of the Middle East. In the Middle East, the locals and foreigners are separated and Dubai has no soul but lots of wealth. Does he have an American dream? He had lived in the UK for three years with his dad and had been to the US by the time he was 15. What does he specialize in as a consultant? His job entails marketing and finance. Is he a Singapore PR? He was given PR very quickly in 1992 and was even pre-approved for PR. In 2000, he gave up his Indian passport to be a Singaporean. Why? It is not for ease of travel but because he had made up his mind to put down his roots here and it’s appealing for his young family. What went through his mind as he took up Singapore citizenship? He felt, was he being disloyal to India, and a leap into the unknown. He is proud of his Singaporean identity but he is no less an Indian. He has close family in India and keeps track of things in India. He is comfortable about the dual identity. He has a Singaporean identity and an Indian identity. When asked, he used to hesitate but now he says he is from Singapore. He follows the India–Pak spats and he roots for India.

Country study: Singapore   169 Singapore has recognized that for people like him, relations will remain with other countries but that does not mean that he is disloyal to Singapore. Is his son serving in the Singaporean National Service (NS)? Yes, and he is inclined towards NS because when he was growing up in India in the 1960s to 1970s, he used to be upset when communities in India were abusive about India’s nationhood. He also feels upset when NRIs are abusive to those Indians back in India. This showed a lack of respect and loyalty to the nation. However, now in India there is a growing pride about India and a positive change. Young people and identity, they do not know who they are apart from the fact that they are their parents’ kids. It is easy to mimic the West. He has told his kids to be proud of being Indian, to believe in God and to be an Asian. It is important to have that “anchor,” when facing adversity, it is important to have an identity. He believes Singapore is a good place for kids to grow up, he has a daughter and a son. What about proximity to India? His parents lived in Mysore and now they frequently visit him. His kids are pre-university level. His son would like to stay in Singapore and his daughter would like to go to Australia. When he returns to India, he could settle in very quickly into the local ways. He said children have different aspirations and at 31 years age he was going to put his “roots” in Singapore. His kids are happy about their Singaporean identity and association. He no longer thinks of a single place to live and could envisage multiple residences like in India and Singapore. What about his family back in India? His priority is his parents. His parents are able to live independently and Singapore is convenient for them. Not easy to do so in the UK. Singapore is different from Hong Kong and is better in the long term because he feels like a foreigner in Hong Kong but feels like a local in Singapore. He embraces his Indian identity and enjoys the multicultural element. This is not as evident in most countries that have a clear divide like in the UK. His contemporaries have done better than him but he never felt inferior, most of his cousins are in the US. The world has shrunk for his kids but for him it was a huge mental leap at their age. Ease of travel, the internet age now. Is he a Global Indian? Not sure, however, he has left India to root himself in Singapore but he has a dual identity. He suggested that when in India he is an Indian, but when in Singapore, he behaves like a local. Do local Indians and expatriate Indians interact with each other? He said there is a divide between the expatriate and local Indians. The expatriate Indians only socialize among themselves. The expatriate husbands are usually senior executives and doing very well and live in the elite circle. Among the locals there is also a distinction between the southern and northern Indians. There seems to be a greater tie between the northerner Indian and India. The southern Indians have completely left India. He locates himself in both the local and expatriate scene. He lives in a HDB flat, has friends of different ethnic backgrounds. His business and social contacts are from Singapore and India. What are his views on the local cuisine? He was introduced to Chinese cuisine in Hong Kong. The Chinese food in India is different and spicy. The food in Hong Kong was virtually tasteless. Now he refuses to eat Chinese food in India. How does he localize? He has also compartmentalized himself and even enjoys durians. Has no hassle wearing shorts and slippers and drinks beer, tea, etc. He

170   Country study: Singapore can’t eat all the food at the food court because he is vegetarian but has no hesitation in mingling with people. Socially, large numbers of Indian expatriates are snobs in the way they talk about the locals and their unwillingness to integrate. The local Indians are disassociated from being Indian but he has no problems with them embracing Singapore but their forefathers came from India. There are specific Indian communities and he had dealt with them when in the UK and Kenya; they are smaller now, used to be huge. He has felt for a long time that many of the local Indians are “whiners” because he believes that they should compete and the Indian communities in Singapore and Malaysia have not done enough for themselves. He believed that Indians in other parts of the world like Africa have “come up” by working hard. He feels that the Indians in Singapore and Malaysia have not been able to do this and come across as “losers.” In particular, the South Indians in Malaysia and Singapore have not done well. Yes, there are lawyers and doctors, but they are in the minority. The Indians here accept their lot in life too easily. It is different from the Indians back in India who are very ambitious. In Hong Kong, yes, there are some Indians and Sikhs but they speak Cantonese. In general, the Indians working and living there are expatriates. What are his views on democracy in India? Singapore is not a democracy but has the elements of a democracy. It is nice to say India is a democracy but he grew up in a country with very poor role models. He believes that India could not afford to be a democracy, yet he is not ready for it to be turned into a military dictatorship. He feels that there are good people in India but the people who are poor role models tend to overshadow the goodness. He would rather see good education, infrastructure and greater availability of drinking water in India. India has thrived despite the chaos and has reached where they are despite the chaos. Is the China model applicable to India? He has greater faith in India than in China in the future. The one-child policy will be a huge problem but he has been impressed by its development when visiting China. With India booming, did he regret leaving? No, he has no regrets in leaving India. When he was in Hong Kong and during his early years in Singapore, the thought of going back to India never arose. When he decided to sink roots in Singapore, he also decided to have a foot in India. India will always be a part of his life as he goes forward. For most expatriate Indians, Singapore is a stepping stone to the West. Senior audit manager, Singapore, 24 April 2009 The interviewee has recently become a Permanent Resident (PR) in Singapore and is the youngest in his Punjabi family. He graduated in 1995 as a chartered accountant and worked in India for five years after graduating while looking for international experience. When KPMG placed a job advertisement, he was lucky to be selected. He came from New Delhi and has been living in Singapore for eight years. He is in the audit profession. Married, but has no children and his spouse is working for a bank. Why did he choose to settle down in Singapore? He found that Singapore is a good place to settle down and adjustment was not a

Country study: Singapore   171 problem because there are a lot of Indians here. There is no racial discrimination or language barriers and it is quite an open society. What about culinary issues? He has no problems dining in Singapore despite being a vegetarian because the vegetarian food has improved. Infrastructure and facilities are not a problem. Singapore is also convenient in terms of proximity because when he misses his larger family, he is able to return at least once or twice a year. He used to return twice or three times a year to India. How does he keep in touch with the developments in India? He keeps in touch with the general news in India such as the NDTV, CNN on a daily basis and also uses the internet to update on sports events and results. Did he investigate Singapore before relocating? Yes, before coming to Singapore, he got in touch with a cousin in Singapore and the cousin said, come to Singapore. His career has progressed well in Singapore. Will you stay in Singapore? His short-term future will stay in Singapore. Recently he bought a flat in Singapore. Is he religious? Once a month he goes to temple. Describe his social network. Initially he had overseas nationals as friends, for example, a Canadian and Scottish friend but broadly Indian expatriates are his social circle. Does he interact with local Indians? He does interact with office colleagues, especially at lunch time. At weekends, he is quite an outdoor person and plays tennis at his condominium, and cricket with the Singapore cricket league at Kallang. He also keeps in touch with one or two of his college mates. His college mates have gone to the US as they did an MBA, he met some in Singapore and some as office colleagues in India and kept in touch. What are the things Singapore can improve on to attract more foreign talent? The government does not have as much focus in terms of benefits and job preferences for expatriates as the locals. He said, “The Singapore government needs us but does not want us.” In a recession, the expatriates get retrenched first. Regarding medical facilities, the locals receive more benefit. However, overall, Singapore does take care of all, locals and expatriates. Nonetheless, he has not closed an option to be a Singaporean. What about other options? Australia and Hong Kong are other options. However, Australia has high taxation, the lifestyle in Hong Kong is not easy and like Japan, there will be language issues. Will he resettle in India? To resettle in India eventually, he is not sure. How is his career developing? He has career satisfaction and development, which was equally important, besides the salary package and allowances. There are plenty of opportunities in India opening up now, but compared to Singapore, Singapore is better organized, has a better infrastructure, but Indians maybe able to solve things better. He found Singapore to be systems oriented. There is a lack of the “Buzz factor” in Singapore and it is hard to govern and change people’s attitude or mindset. How does he deal with locals such as the colloquial lah? He found that the senior Singaporeans, like the uncles and aunties, try to respond (second guess) to him without listening properly and he has experienced this many times. In terms of action, Singaporeans have a “Kiasu” mentality, they are in a rush, which seems to be their conditioning, “before things are complete they react first.”

172   Country study: Singapore What are the things he misses about India? He replied, definitely the festivals because in Singapore the atmosphere is not the same and there are limitations to celebrating festivals in Singapore. For example, during Deepavali, you can’t have fire crackers which are the norm for Indian festivals and culture. Does he contribute to the local organizations? He does contribute to SINDA, but so far has not contributed to local grassroots but has done a grassroots project for his company because they had adopted five charities and staff gave volunteer time, one business day with the underprivileged. For example, they would paint their houses or take them out. Although beneficial, this may not be enough in terms of actions to help the needy. The expatriate community has created a change in the perception of the newly arrived Indian talent but expectations have also changed. What is the perception of the Indian expatriates in general among the locals? He thinks that the Indian “newcomers” are not as patient to achieve rewards and are seen as “pushy,” arrogant and snobbish by the locals. When he first came to Singapore, he was more patient to gain a promotion or level of salary, now people are becoming job hoppers and rise in career, one setback and it’s enough for them to pack up, he has seen two or three such cases, if they face pressure and can’t cope, they will move jobs or quit Singapore altogether. In India, the social community factor is important to sustain oneself even if without a job, in Singapore it would be hard to survive without a job. Financial sales assistant, Singapore, 12 March 2009 The interviewees’ parents came to Singapore in 1997. She is a vegetarian and undertook her Junior College (JC) schooling in Singapore. She has been a Singapore citizen since 2008 and her brother is also Singapore citizen but her parents are still Indian citizens. Her family is from Gujarat. She said, in general, education was very competitive in Gujarat and India. She complained that it was not possible to gain entry to good universities in India because it is very competitive. She studied at Tampines JC and it was difficult to get into JC without a scholarship. She said for Indian citizens, it was more usual for them to gain entry as SIA–NOL scholars. She came from small town in Gujarat and Mumbai was the first big city she had been to. How does she relate to Singapore? She feels the Asian culture in Singapore but it also feels like a developed country. She likes the safety factor, in general, people were quite friendly. Did she find it difficult to adjust to life in Singapore? She admitted it was hard to socialize when she first came here but the students in JC and teachers were very helpful, therefore, she did not feel alienated. Her classmates helped her, especially with food. She said Malay food was quite similar to Indian food. Her father started work in the chemical industry then moved onto manufacturing, as a project manager in software before moving into solar energy as a start-up entrepreneur. Her brother is studying engineering at NTU. Overall, her extended family in Singapore had moved here about 20 years ago when Singapore were promoting the semi-conductor industry, when her cousin was managing a German firm in India from Singapore. Had she applied for a PR? Yes, she got a PR after

Country study: Singapore   173 three years because it used to be stricter to gain PR. Now, the Singapore government is also quite liberal about granting citizenship especially to well-accepted professionals in the banking sector. How often does she visit India? She visits Gujarat every two years. Had she encountered any negative experiences in Singapore? Personally, she did not but her brother had had some during secondary school. He was teased because of his accent but the teachers have been very helpful. The culture in Singapore is more liberal in terms of clothing and lifestyle but people are more reserved compared to India, she needs to take the first step before they will communicate. How would she describe her social network? Her close network of friends consists of one Singapore Indian, one Chinese Indian and one Indian from India (close friends since JC). Overall, she found it hard to relate to the Indian Indians because of the progress in India and now culturally she is Indian but in terms of lifestyle very Singaporean. She missed Singapore when she went back to Gujarat. Would she work in India? She would find it hard to work in India, her friends working in India loved the challenge but she preferred to live in Singapore. The Singapore work system is very multicultural, easy to fit in, in India, people would take you for granted and it would take some time to get your point across. In India, the environment is very male chauvinist and she admitted she would not have gotten this far in her job if she was in India. Here in Singapore the bosses were very encouraging, in India probably she would receive very condescending remarks, especially from male colleagues. Moreover, in India there are a lot of city cliques like those from Mumbai, Delhi or Kolkatta. What about her experience of university life? She was considered part of the SIA scholars group, they felt they were Indian but when the “new Indians” came they realized they were more Singaporean than India. She said the new Indians that were “Fresh off the Boat” would need about one to two years to familiarize themselves. At university, for the project groups, the “Indian Indians” rebelled when they had to work with other non-Indians or local Indians. What about the interaction between local Indians and Indian Indians? Indian Indians found their own network and comfort zone. For example, the Indian festivals at university became an Indians from India event. She was part of the Diwali committee but very few locals and international students attended the event. She added that local Indians were trying to “reach out” but Indian Indians or expatriate Indians were very happy to be within their cliques. Moreover, Indian Indians also try to establish their own clubs. Is the local Indians and Indian Indians “divide” closing? Not really, the majority of Indian Indians came from Cosmo, a big city culture. The local Indians are mainly Tamils and have a different idea about India. India Indians form the 10 percent of the top students and are very competitive even in sports. In contrast, Singapore’s “best and brightest” have all gone overseas, she considers herself in the next 20 percent of ranked students. India Indians often perceive themselves as superior, are used to talking and dominating discussions, local students feel intimidated and marginalized during debates. What about her involvement in the Society of Indian Scholars (SOIS)? She was part of the SOIS network at university. When she first came to Singapore

174   Country study: Singapore she was more accepted by the non-Indian Singaporeans. The local Gujarati community in Singapore are third and fourth generation of traders and although they were very connected to India, they did not realize that India has also progressed. She finds it hard to relate to India when she travels back to see her extended family in India. What are her career plans? She is going to the Carnegie Mellon University in the US to enroll in the MBA degree. She thinks the Singapore education helped her in this regard because it provided her with global exposure. However, she said that living in Singapore, she felt too protected and comfortable, therefore, it was time for her to move out. She wants to experience different things and come back to Singapore but not to return to India. Will her family return to India? She said her father had a job opportunity in Madras but her mother prefers to stay in Singapore. Would she like to live and work in India? She said that she will not get the same opportunity or support in India as she had in Singapore. For example, in Singapore, it is very normal for married women with children to work. What are her marriage plans? She is engaged to an Indian Indian (childhood friend) now living in the US. Their parents are mutual friends and they had gone to college together. What about proximity to India? Singapore’s close distance to India is an advantage. In terms of career options, Singapore has numerous MNCs and there are good career opportunities. Is there a return flow of NRIs back to India? She knew of Indian Indians who wanted to be here for only a short while but have stayed on for 10 to 15 years and their kids have grown up here, so they are familiar with the lifestyle here. What is her identity? She feels connected to India with the internet and so forth. Her brother because of his NS experience has become a typical Singaporean. He was 12 years old when he came to Singapore and has been “Singaporeanized.” She said NS is a big factor among the Indian expatriates and knows one Indian family who prevented their son from becoming PR. Their son faced limited education and employment opportunities and had to return to India. Her own brother after serving NS, was average in his studies but was able to study at a local university and better able to understand Singaporeans. He feels Indian PRs are very attached to their Indian passports. However, as a PR, he is not betraying India because there is nothing to lose to becoming Singapore citizens because they are eligible for the PIO card. She added, Indian PRs also complain about India and two of her own friends from India have become citizens here. She does not have as many Tamil or Indian friends because she did not keep in touch with them. At university she had more Chinese friends. Does she feel there is a North and South divide? Yes, there is a divide because the Northerners are from business families. Among the local Gujarati Indians, a sizeable percentage of the third generation has managed to qualify for university. She feels that the Indian Tamils from India are more connected to Indian Indians than local Indians. She also observes that at Indian festivals, NUS has a higher Tamil population than NTU or SMU. What about her religious practices such as visit to temples? She goes to South Indian temples and her social life revolves around friends, family, movies and dinners. What are her views on Indian politics? She does follow Indian news at a general level because she is in financial trading and undertakes trading of Asian

Country study: Singapore   175 currencies. She is happy that Manmohan Singh has been reelected as PM and expected that the Congress Party would win but did not follow it up closely. She also follows Gujarat politics and thinks that Narendra Modi is the modern-day “Hitler.” However, Gujarat has managed to adopt a Singaporean lifestyle, good infrastructure, overall, Modi has improved Gujarat’s infrastructure but has marginalized certain communities. Lawyer, Singapore, 28 November 2006 The interviewee graduated from Law School in Delhi. She is married but has no children. She works as a Legal Counsel on the South Asian Desk for a local Singapore law firm. She first came to Singapore in 2004. Her husband is also lawyer but specializing in R&D and corporate governance. They live in Melville Park because they were attracted by the many Indian expatriates staying in that condominium and found it comforting to hear Hindi being spoken and music when she returns from work. Her husband has a Masters in Law and she has been accepted for Masters in Law at a local university. She was “head-hunted” by the Singapore law firm to work in Singapore. They had no intention of working overseas but it is very tough to start a law practice in India. Law is not a popular choice of study like Business Management or Engineering. She graduated with a BA in Commerce before pursuing her Law degree. It is not the usual track for a graduate in Business Studies who usually go on to do an MBA. She can’t practice like local lawyers because of restrictions in terms of Law degrees but hopes that changes might be forthcoming due to the free trade agreement or CECA signed between Singapore and India. She chose to specialize in Indian Law. There are about 10 other Indian lawyers employed like her that she knows of in Singapore. They have been here for the past two to five years when companies started showing an interest in knowing more about the Indian market. Local companies are not keen to invest in India because they have difficulty finding people, including Indian Singaporeans to work in India, because of family, schooling and the work environment among other things. Singapore companies are also concerned about various laws to do with licensing, taxation, equity, etc. even though Singapore law companies could undertake the process of due diligence for them. She has no plans to stay permanently or take up PR or citizenship in Singapore and would like to go back some day to India. She admits the US and Europe would be more attractive places to work rather than Singapore and Singapore could be a mere stepping stone. Singapore is an easy place to live, especially getting around and relocating. The place works and there is a system in place unlike in India. Singapore is a safe place but the newspapers are full of adverts unlike the newspapers in India. The lawyers here are unlike in India. Indian lawyers are motivated by different things beyond law, such as political and social activism. Singapore is also near to India. Is she a member of any Indian organizations? She is not a member of any Indian associations but did attend the Khalsa Holi Festival and the Gujarati Association event because she is half Punjabi and Gujarati. She was surprised to learn about

176   Country study: Singapore the history of various Indian ethnic groups in Singapore. Her impression and that of her family and relatives was that the Indians who are Singaporeans and came here years ago were not the elite Indians who had migrated. Assistant manager, IT advisory, 24 May 2009 The interviewee is a Muslim and graduated from university in India in 1996 and was in India until 2001. He was from Hyderabad, married with two children and used to live in Saudi Arabia with his parents and siblings. He has a large extended family in Saudi Arabia and India. His family had lived in Libya, Saudi Arabia, and then back to India. He has also worked in the Middle East before coming to Singapore in 2002. His parents are from Hyderabad with links to Yemen. His two siblings are one brother and sister (younger than him). His siblings were also educated in tertiary education in India. His brother is an engineer, his sister enrolled in medical college, all had a university education in Hyderabad. Thereafter, they moved and worked in Saudi Arabia. When he last visited India in 2008, he was surprised to see massive changes in India. He added, in terms of lifestyle, he could obtain a similar lifestyle as in Singapore. However, the development in India is not uniform development; people live in “silos.” He came to study at NUS but was working for a Saudi firm as vice-president project development and traveled extensively in East Asia and Australia. He had visited Singapore several times, and knew East Asia was developing fast. He knew that the opportunities would come in East Asia and he had to choose between Hong Kong and Singapore. He came to Singapore with his wife. His wife is an engineer and worked with IBM. She has a background in semi-conductors and Singapore provided opportunities for her as well. Then she joined NTU for her Masters and he enrolled for an MBA in a Singapore university, they received partial funding from his Saudi employer but did not receive a scholarship from Singapore. They had a child and his wife left her studies after one term to return to work. He completed his MBA and joined a consulting firm and his wife also finished her studies and joined an MNC. He maintains close links with previous Saudi employer and was supposed to undertake projects with them but things took a downturn in 2007. He was offered a choice: to go back to work for the Saudi firm or he could continue what he wanted to do. He had strong links with the President of the company. Going back to Saudi was not an option so he decided to stay in Singapore. Why Singapore and not Hong Kong? He said the intention was to establish a presence for the Saudi business in Hong Kong to tap into the China market. He thought that in terms of living conditions and the social scene, Hong Kong was tough because of the linguistic and cultural barriers. In Singapore, language is not an issue, his decision was based on the quality of his family life and social issues but his wife preferred Singapore. How does he keep up to date with Indian news? He keeps in touch with Hyderabad and Indian news in general. He is in close touch with several close friends in India. How often does he visit India? He visited India three times in the past few years but his parents are in Riyadh, so he prefers to go back to Riyadh.

Country study: Singapore   177 His mother has spent some more time in Hyderabad so he might visit India more. His campus life revolved around hostels, where life was good, living with other students from different races. In 2006, the local work environment was challenging but he was happy to see Halal restaurants, Malay and Chinese food was different, there were Indian restaurants. In the work environment he wanted to choose an MNC because during his internship, there is a cultural issue with local companies. Lucky for him that KPMG chose him. The first six months were challenging. He wanted to move on to other things but realized that things were improving. After six to seven months, he started to enjoy work, so from 2007 till now. The cultural challenge, the local and Chinese companies are different from MNCs. The locals are hard working but the definition of hard work is different from in India. Those Indians outside are hard working but not compared to locals. Cultural issues are not as open, not as willing to share. What are the differences from the Saudi company where he spent 10 years in Saudi Arabia? In Saudi Arabia, the expatriates are many, there are large numbers from South Asia. Interaction with Saudis? They were more honest, forward and blunt. You don’t have to second guess people. The locals in Singapore are more diplomatic, hidden and cautious. His firm has different nationalities working for them and he tries to lunch with different colleagues, Indian Indians, Singaporean Chinese, European colleagues. He tries to be more friendly with Singaporeans. What about his social network? Some MBA university mates are still here, they meet at weekends, go to movies. He has about 12 to 15 friends from India, most are working for good companies, have established themselves. Do Singaporean Indians and expatriate Indians mix? Expat Indians are professionals, reasonably established from good educational backgrounds, local Indians have not made great progress in the financial sector, the professional world. Some local Indians are professionals he met at NUS but in general they have not made an impact on the corporate world. Singaporean Indians are as alien as Singaporeans at large. Does he socialize with the local Indian communities in Singapore? There are several here such as the Gujaratis and Sindhis who live well here, strong community bonding but they are different from the Tamils. He has good Gujarati and Sindhi friends and they have lavish parties. His wife has just resigned her job because they are expecting their second child. Her office colleagues were mostly Singaporean. She has her own network and good rapport with other Indian Indian students with families at NUS campus, some young Indian Faculty members as well. She still maintains this network, they go to movies and socialize with them. What are his future plans in Singapore? He is very comfortable in Singapore, he became a PR, and is now applying for his wife and child. The environment is amenable here, he also spent time in Europe and did not think they could be part of that world. He went to North America and realized the family closeness not there, he would like to stay in Singapore in the near future, Singapore is the best option. Long-term future plans? He could move back to India or work in the Middle East. What about his son and National Service (NS)? Well that is 14 years from

178   Country study: Singapore now so he has a long time to decide. He might be happy to let him serve because he might spend his longest years here in Singapore. Settling back in India? Not easy because has been away for so long. His father tried four times to work in India at different times, but could not adjust and had to go back to the Middle East because the lifestyle is not the same. What about living in gated communities in India? Many are living in enclaves or “silos.” He could probably afford to live in these if he was to return because wages are comparable between India and Singapore, so he could obtain a better living standard. Moreover, similar things could be found across the globe. In terms of education and housing, it is also similar with just a change of currency. For example, living in public housing in Singapore was the same as living in condos in Hyderabad. His last salary offered was between SG$50,000–60,000 per year which is a high amount in India. He has experience now and metro cities like Hyderabad have IT Parks. In the gated communities there is a good working and living environment as in Silicon Valley, but the reality is different outside the gates. The main concern is for his children and raising their kids in India. What are his reservations about India? He is concerned about religion and the communal factor in India. There are always divisive issues like language differences and caste issues. In the early 1990s, India was relatively peaceful but this started changing in the late 1990s. Since 9/11, the issue of terrorism has also placed Muslims under the spotlight in India and they are facing increased discrimination. He repeated his grave concerns for their kids in this difficult environment. Generally, as a whole, his extended family is looking forward to reuniting back to India. His father has started to “wind down” his career and his siblings are in India. He might join them in an extended family back in India because he grew up like this and had a similar life in Saudi so this is his eventual dream in India. However, Singapore is a much better place to bring up kids until university education at least. Singapore is friendlier for young couples to raise their kids. Is he involved in grassroots activities? He goes to prayers in different mosques. He volunteers community service at his company and prays at a mosque near to the office. He led a club at campus called the CSI, they participated in CCC grassroots events and he has volunteered for a Muslim organization’s “halfway house” project. He found that grassroots work here is more fairly organized than in most other countries. Indian work experience versus Singapore work experience? There is a limitation to growth in Singapore because not everyone can be the CEO. The economy is small enough to accommodate fast pace growth, but he misses the quality of life and work, the family life balance is a concern. He was concerned about spending too much time at work. Productivity does not increase by spending longer hours at work and he can’t rationalize this. He feels pressured and compelled to put in longer hours because of the work environment, because everyone even his colleagues is doing this. The first week at his job he used to leave on time at 5.30 p.m., but then his boss had a talk with him about this. He was asked about his family issues because his other colleagues were staying until 7 p.m. He was informed by his boss that if he continued going home at 5.30 p.m., then his colleagues might feel demoralized, therefore, long hours is an issue. He is at work

Country study: Singapore   179 from 8.30 a.m. to 5.30 p.m. In India, the hours can be long but they are flexi hours and he used to go to work at 4 p.m. but stay till midnight because they work towards deliverables. What about networking? Opportunities for networking are better in India because Singapore has limited opportunities to interact. In Singapore, the local bosses are not comfortable discussing criticism, unlike the case in India. In India, they are more open.

Conclusion The local versus foreign debate especially during the global financial crisis or in a recession will be a politically charged issue. Foreign workers and talent have taken more than half of all the new jobs created at least since 2006 in Singapore. Political leaders in Singapore are aware and concerned that at least 1000 of Singapore best and brightest talent are leaving every year. While efforts have been made to attract local talent back to Singapore through agencies like Contact Singapore, at any given time there are about 150,000 to 200,000 Singaporeans working overseas. Singaporean are heading to work in developed English-speaking countries, Hong Kong and emerging economies like China. The state policy seems focused on attracting foreign talent and appears unbalanced because it does not place equal emphasis on retaining local talent. The need to attract foreign talent is highlighted repeatedly by the policy-makers but steps to address the loss of 1000 of the best and brightest Singaporean annually is not adequately addressed. Recruitment agencies and Indian foreign talent in Singapore have admitted that they are using Singapore as a stepping stone because, having worked in Singapore, they will stand a better chance of working in developed Western economies. Moreover, with the expansion of the Indian economy, it will be harder to attract Indian talent because they will enjoy better benefits and pay in India compared to Singapore. Even providing PR to Indian foreign talent is also no guarantee that they will stay in Singapore. Most seem to apply for PR to overcome the hassles at immigration and to live in HDB housing and have better schooling opportunities for their children. If this trend continues, in the long term, Singapore will be a nation of migrants without a sense of rootedness and as can be seen, the majority of foreign talent from India will not sink their roots in Singapore and will return to India as the Indian economy develops.

7 Country study

Thailand

Introduction: Thai Indians Thailand began its transformation into a newly industrializing economy (NIE) with the first National Economic Development Plan (NEDP) in 1961. The focus of the NEDP was to improve infrastructure and undertake a structural transformation of the economy. The process of transformation included an agricultural-led export policy, import substitution, state-owned enterprises and export-oriented industrialization. Towards the 1980s, Thailand, for the first time achieved double digit economic growth and continued to chalk an average growth of 8.6 percent per annum until the first half of the 1990s. Thailand then began to transform itself from a resource-based to a capital and knowledge-based economy.1 Foreign investments were encouraged as a means to propel economic growth and provide employment opportunities. However, employment created by new foreign investments also created a demand for workers with skills that were lacking in Thailand. To solve the shortage of special skills, the government could develop the skills locally but this would take time, so they decided to temporarily import professionals and specialists and allow the entry of permanent immigrants with these special skills. The temporary entry of foreign professionals or specialists was the most appropriate alternative. Therefore, for operations promoted by the Board of Investment (BOI) from 1990 to 2002, some 1175 to 2642 foreign professionals with special skills were recruited. One of the sources of the growing numbers of temporary foreign professionals is India. However, Thailand also has thousands of settled Indians in its community. The aim of this chapter is to examine the social and economic impact of Indian expatriates in Thailand and their interaction with the local Indian community. In Thailand, the Indian population was mainly concentrated in the cities like Chiang Mai, Chiang Rai and especially the capital Bangkok. The settled Indian population in Thailand is estimated to be between 80,000 and 90,000 as of 2006.2 Estimates for the Non-Resident Indian (NRI) population is around 85,000– 100,000.3 This consists of mainly second generation Indians but some are third and fourth generation, predominantly Punjabis and to a lesser extent, South Indians, Sindhis, and Gorabpuris. The Punjabi Sikh are estimated to be 40,000 in number and the Punjabi-Non-Sikh are approximately 20,000.4 The majority of the

Country study: Thailand   181 Thai Indians are persons of Indian origin (PIO) and some are non-resident Indians (NRIs). Most of the PIOs in Thailand have obtained Thai citizenship but an increasing number of them have been sending their children to India to study. There are also a sizeable number of South Indians in Thailand.5 Reportedly, the first group of Indians in Thailand seemed to be South Indian traders and settlers who landed in the South of Thailand.6 The larger movements of Indians to Thailand were from the nineteenth century onwards. However, they did not relocate directly from India but came from Singapore and Penang (then British colonies). These Indians were mainly Tamils from South India and consisted mainly of Hindus but some Muslims as well. When British companies were granted projects for development in Thailand, they invariably brought a coterie of Indians to staff various posts.7 One distinct group, the Sikhs, first came to Thailand in the early 1900s and went into real estate, textiles and the hospitality industry. They managed to own their own hotels and restaurants. Some Sikhs came from Penang to Phuket and a Gurudwara was built in Phuket in 1916. The next large waves of Sikhs came in the 1950s and 1960s and managed to gain Thai citizenship and they are very rich. Most of the Sikhs are from the Gorakphur region. The next large group of Indians was the Sindhis and they too were involved in trading and wholesale business. They established offices either in Bang Rak or Phahurat districts in Bangkok. The later group of Sindhis who came in the 1980s and 1990s mostly did not manage to gain Thai citizenship. Some of early Indians who came to Thailand joined the Indian National Army (INA) when India gained independence, as they were not keen to return to India and settled down in Thailand. Unlike the Sikhs, the INA Indians mingled with the local Thai and Indian population and today they are mixture of Gorakhpur’s Indians and Thais. However, they maintained the values of Indian culture and tradition but they speak Hindi with a different tone. Later groups of Indians migrated to Thailand after the partition of India in 1947 into India and Pakistan. Large numbers of nonMuslim Indians who chose not to remain in Pakistan after partition moved to Thailand as they had relatives or friends there. These Indians were either Hindus or Sikhs and established their businesses in Chiang Mai and Bangkok.8 Some of the settled Indians also had two wives, one in India and one in Thailand. For example, some of the Indian Muslims like the Bohras from Bombay and Ahmedabad seldom brought their wives with them and married Thai women. Subsequently their children became Thai citizens. The other NRIs who are professionals came to Thailand with the Aditya Birla and Indorama groups in the 1970s when India was still a closed economy and had many licensing and permit regulations. While the Indians in Thailand try to preserve their tradition and culture, increasing globalization may be a threat. Increasingly, Indian parents are sending their children to the US in order to keep up with the latest technology. In the past, Indian parents used to send their children back to India for their tertiary education so that they could learn and familiarize themselves with their culture. Upon their return, the Indian children who were sent to the US tended to behave more freely and this conflicts with the parents’ expectations.9 The newer generations of Thai

182   Country study: Thailand Indians care less about customs and traditions. With more opportunities, larger numbers are leaving the family businesses and venturing out on their own.10 Nonetheless, others have also decided to carry on with the family business and even tried to expand the business to compete in the age of globalization. Several organizations were established to enhance bilateral and trade links between India and Thailand. The India-Thai Chamber of Commerce was founded in 1927. The Thai chapter of the World Punjabi Organization was established by Punjabis to help the poor.11 To promote greater knowledge about Indian culture, Thammasat University established the India Studies Centre in 1993. In addition, a Sanskrit Studies Centre was set up at Silpakorn University in 1977. Its main purpose is to teach the Sanskrit language, literature and ancient inscriptions. In 2000, the Thailand Indian Internal Security Council (TIISC) was established to promote business and welfare activities among Thai and Indians.12 In 2003, the Thai-India Cultural and Economic Cooperation Association (TICECA) was formed to provide greater understanding about various aspects of India. Reportedly Indians in Thailand are influential in the economy but they prefer to keep a low profile out of modesty or for fear of being taxed too much. The businesses owned by Indians could be categorized under 17 main areas. They are: chemicals, textiles, machineries, import-export, electronics and computers, hotels and restaurants, real estate and housing, jewelry, travel and tour agencies, tailoring, car dealers, ready-made garments, souvenirs and handicrafts, printers and publishers, insurance, transport and freight, and conglomerate groups of companies.13 As of 2007, according to a well-known radio personality in Thailand, she has encountered numerous young Indian expatriates who have relocated and are working in Thailand. As a result, Bollywood movies have become very popular and they are usually screened in cineplexes at Emporium, Central World, or Central Rama 3. The movie screenings are twice to three times daily from Friday to Sunday. If the movie proves to be very popular and does really well on the opening week, it will be screened for an extra day or an additional weekend.14 In the performing arts area, entertainers from the Bollywood industry have performed in big concerts. The consumption patterns of the expatriate Indians and Indian community have influenced certain service sectors such as gems and jewelry. Annually, the Gem and Jewelry Exhibition is organized in Bangkok and is specifically catered for the many Indians in the industry. The Indian expatriate and settled Indians also celebrate the major festivals together such as Diwali and Navratri. In this context, each specific Indian community has their own association. For example, the Punjabi-Sikh association is affiliated with the Gurudwara at Phaorat and the Gorabpuris association is affiliated with the Vishnu Temple.15 For expatriate Indians, the educational choice has widened for primary and secondary (high school) level with the establishment of the Global Indian International School (GIIS) and Thai Sikh International School. Education in India or Indian schools enable students to keep in touch with their cultural identity and to learn English, which appears lacking in Thai mainstream schools. Another 10,000 to 15,000 Indians are professionals and skilled workers who have moved to the capital Bangkok in search of employment. Among the Indian diaspora, the

Country study: Thailand   183 Sikhs are the most prosperous community and are involved mainly in the textile sector. The Tamil Muslims and the Bohras are engaged in the trade of precious stones and high value technology goods. The Indian professionals from Gorakhpur in Uttar Pradesh are involved in IT and other high-skilled jobs. Indian companies such as the Birla Industries established operations in Thailand in the early 1970s while the Indorama group has been in Thailand since the 1990s. These companies have been joined more recently by Thai Baroda Industries limited and the Tata group of companies. Tata Steel is investing US$175 million in Thailand’s largest producer Millennium Steel of the Siam Cement Group, and will construct the first mini-blast furnace in Thailand.16 Thailand has launched a “Look West” policy to develop relations with South Asian countries especially India.17 Bilateral trade relations between India and Thailand have shown a steady increase. In late 2007, the bilateral trade between India and Thailand stood at US$4 billion. It has steadily increased from US$400 million in 1992, US$1 billion in 2000, US$2 billion in 2004 and US$3 billion in 2006.18 In 2000, Thai investments approved in India stood at US$0.1 million and this increased to US$0.3 million in 2001. In 2007, Thai investments in India stood at US$830 million. In relation to economic growth and development, the Indians are a small but important part of the Thai business community. Thai Indians contribute in several key sectors of the economy including tourism, textiles, huge manufacturing projects and human resource development. India is the thirteenth largest investor in Thailand and is involved in a wide variety of sectors like chemicals, pharmaceuticals, textiles, nylon, tyre cord, real estate, rayon fibers, steel wires and rods and paper-grade pulp.19 As of 2007, there were approximately 33 Indian joint ventures in Thailand such as the Rayon Group, Usha Martin Industries, Ranbaxy Laboratories, and Lupin Chemicals.20 India and Thailand signed an air services agreement in 2006. Since then, there have been more than 100 flights a week between both countries and nearly half a million Indians visited Thailand and over 33,000 Thais traveled to India in 2006.21 In the economic downturn of 2008, the Thai government decided to postpone registration of thousands of foreign workers in a move to keep jobs open for Thai nationals.22 The Bank of Thailand has forecast that up to 1.4 million Thai nationals or 3.7 percent of the working population could be unemployed.

Visas and work permits What are the criteria for foreign expatriates to work in Thailand? In order to work in Thailand, a foreigner needs a work permit but before he can be issued with a work permit, he must have a non-immigrant visa. A non-immigrant visa can be applied for outside Thailand by providing the following documents. The applicant must be offered a job and the company requests that the applicant be given a non-immigrant visa so that the company may apply for a work permit for him. The cost of a single entry non-immigrant visa is 2000 baht while that of a multiple entry costs 5000 baht. The required documents for a work permit are: two

184   Country study: Thailand color copies of the applicant’s picture, non-immigrant visa, copy of passport, copy of degree and résumé, doctor’s certificate, 3000–5000 baht depending on length of work permit. The employer has to submit tax and legal documents about the nature of their business.23 Once the work permit has been approved, it is collected from the Labour Department in the Huay Kwang area but you have to bring along your passport and sign a document acknowledging receipt. The work permit only enables the applicant to work at the noted company and location. In the event of a change of employers or place of work, a new work permit has to be applied for. In the event of termination of employment or resignation, the applicant must return their work permit within 10 days to the Labour Department. To apply for another work permit at a different company, a well-written recommendation is required from the last employer. The work permit expires when the visa does. Therefore, the nonimmigrant visa has to be renewed before the work permit can be renewed. If the work permit expires before the papers for renewal are submitted, the work permit is invalidated and a new work permit has to be applied for. It is advisable to return from a visa renewal trip before the work permit expires. If the applicant cannot leave before the expiry of the work permit, it is advisable to submit the completed work permit form together with the actual work permit and 500 baht to the Labour Department. In this context, the work permit will be extended according to the new visa.24 Could a foreigner apply for a resident permit? Yes, provided the applicant has the following criteria: a foreign national must have a non-immigrant visa and was granted a one-year extension to prove that the applicant has stayed in Thailand for at least three consecutive years. A foreign applicant who is over 14 years old will be subjected to a criminal record check.25 The applicant must reveal private information regarding their income, assets, educational standing, family status and the applicant must be able to understand and speak the Thai language. The categories for application are based on investment, employment and humanitarian reasons. For humanitarian reasons, one of the spouses could be a Thai national. In the case of investment applications, the respective applicants have to invest at least 10 million baht in Thailand, and it must be of national interest to the economy and this must be certified with a letter issued by the commercial bank in Thailand.

Foreign workforce in Thailand Thailand is thought to host nearly 2 million foreign migrant workers, mainly toiling in low-paid jobs in factories, on farms, construction sites, and fishing boats: the so-called “three Ds,” for “dirty, dangerous or degrading.” These are the jobs many Thais are unwilling to do.26 Most foreign workers live in highly concentrated areas like Mae Sot, a town on the Burmese border that has become the center of the Thai garment industry, and Samut Sakhon, 28km southwest of Bangkok and a hub of the labor-intensive seafood processing industry. While precise figures on the numbers of migrant workers in Thailand are not available,

Country study: Thailand   185 the overwhelming majority – an estimated 90 percent – are from neighboring Myanmar. There are two types of foreign workers in Thailand: white-collar workers, that is, professionals and technicians, and laborers.27 Some of the foreign professionals and technicians have lived in Thailand for a long time. Others are recent arrivals who work for multinational corporations (MNCs) or large enterprises. Many arrived when the economy was booming, between the mid-1980s and mid-1990s. The size of the semi-permanent foreign white-collar workforce has remained at around 140,000. The number of new arrivals rose from 17,881 in 1988 to 30,186 by 1991. This trend reflects the economic development and structural change that took place in Thailand in the 1980s and 1990s. The annual growth rate in the value of Thailand’s manufacturing exports was 25 percent in 1991. For the manufacturing exports of middle and high technology, the rate was nearly 40 percent, while that of labor-intensive commodities was 12 percent. As a result, in 1993, the share of the middle and high-technology commodities in the total value of manufacturing exports at 37.4 percent exceeded that of the labor-intensive commodities at 34.5 percent. These developments created a strong demand for skilled workers and professionals. Given that it takes time to upgrade the level of education and training of a labor force, it is not surprising that Thailand began to experience a serious manpower shortage at higher skill levels. The situation was particularly acute in the fields of scientific and industrial research and development, and in business management. Economic development and structural change in Thailand have also attracted huge numbers of foreign workers from neighboring countries, mainly Myanmar, Cambodia, and Laos. These three countries are far behind Thailand in their economic development. Demographically, they all reveal a high potential for labor out-migration. The foreign workers, some of whom are refugees, initially scattered along the border and then spread into the interior of the kingdom. The bestknown place for foreign workers is Changwat Ranong on the Burmese border. Most of them work in agriculture, construction, cottage industries, small manufacturing, and personal services. A majority of them entered Thailand illegally and remain in Thailand without legalizing their status. The population of undocumented foreign workers is believed to be quite large, estimated at 200,000 to 300,000 in the early 1990s to 1 million in 1996 before the Asian financial crisis of 1997. The International Labour Organization reported that the financial crisis reduced the number of foreign workers in Thailand by 460,000 in the second half of 1998. Table 7.1 shows the total number of foreign employees in newly established companies promoted by the Board of Investment (BOI) of Thailand. In 1992, the Thai authorities started to implement the “Illegal Migrant Worker Registration” scheme. This law came in very useful during the 1997 economic crisis when the government wanted to retain more jobs for Thai workers who had been made redundant. However, skilled workers were permitted entry.28 The 1997 economic crisis was also accompanied by the rise of aggregate demands for skilled workers. The government responded by easing the restrictions on foreign labor recruitment of highly skilled workers.29 In 2001, the total number of foreign workers

186   Country study: Thailand Table 7.1 Total number of foreign employees in newly established BOI-promoted operations, 1990–2002 Venture 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Thaiowned

72

Foreign- 420 owned

67

135

282 275 606 436

261

941

287 312

276 234

510 265 259 857

768

977

726 1123 1057 935

Joint 1635 808 941 venture Total

93

127

756 635 439 1242 1323 1554 991 1207 1256 694

2127 1151 1310 1548 1175 1304 2535 2352 3472 2004 2642 2406 1756

Source: Gorawut Numnak, “Development and structural diversification of the Thai economy: the cause of labour immigration”.

employed under the temporary and investment promotion categories numbered 59,978. Of these 59,978 foreign workers, 5555 were from India.30 Living expenses We asked Indian expatriates living in Bangkok about their approximate living costs per month. They replied that to survive in Bangkok, they would need to earn at least 40,000 Baht (US$1143) per month for a single person in order to be able to remit money back to India. If single, and if they received a salary of 100,000 baht (US$2857) per month, they would be very comfortable. The Indian expatriates said that accommodation was the largest expense for them. Renting a condominium could cost as much as 50,000 baht (US$1429) in the central business district of Sukhamvit. Alternatively, a two-storey house could be rented for 15,000 baht (US$468) in the suburbs but bigger houses would still cost 50,000 baht (US$1429). Single rooms cost between 3000 to 8000 bhat (US$91–242) with air conditioning and 1500 to 2500 bhat (US$45–76) for non-air-conditioned rooms. Electricity charges would range from 200 to 6000 bhat (US$6–182) and water usage about 800 bhat (US$24). Eating out for a single person could cost about 1500 bhat (US$45) per month but cooking at home could cost between 4000 and 10,000 bhat (US$121–303) per month so it is more economical to eat out. Only with families would cooking and eating at home become economical. With the same salaries, Indian expatriates would have a better lifestyle than Thailand but the pay would also be lower in India. Social networking How do expatriate Indians source information on Thailand? Most will depend on the social networks and the internet. The internet offers various contact points to inform incoming Indian travelers, tourists or those wanting to work in Thailand. One of the main websites is ThaiIndian at http://www.thaindian.com/, where various amenities pertinent to the Indian community and useful web links are listed.

Country study: Thailand   187 However, there are several other useful websites such as Thailand Guide for the Indian Traveler at http://thailandguide.in/ offering general basic information such as visas, work permits, places to see of Indian interest. Other websites such as Chalo Thailand at http://www.chalothailand.com/, recommend specific travel and guide books to inform Indians about visiting or working in Thailand. Other websites and forums, chat groups such as Yahoo’s India forum at http://in.answers. yahoo.com/question/index?qid=20080516081232AAGhgA1, enable users to provide specific answers to questions relating to employment such as, could an Indian with a degree in dentistry work as a dentist in Thailand? Others like Thailand.QA. com at http://www.thailandqa.com/forum/showthread.php?t=21908 offer an avenue for Indians working in Thailand to solicit domestic assistance to help them settle in India such as looking for someone who could cook Indian cuisine.

Expatriate Indians Indian school principal, Bangkok, 26 September 2007 We visited a school that caters mostly for Indian expatriates which follows the Indian curriculum. The school is located on the outskirts of Bangkok and we managed to interview its principal, school administrator and some of its teachers. The school’s principal arrived in Bangkok in June 2007 from the city of Ahmedabad. She has 19 years of teaching experience in leading an Indian school owned by DLF [a famous building company in India]. How did she relocate to Thailand? She had applied to join the school because she wanted a new challenge. She has heard of Thailand and especially about Bangkok. There are a lot of similarities between India and Thailand. For example, Buddhism is the national religion in Thailand but originated in India. Of Thai culture she said, “Their namaskar, their sawadika is swagatam in India.” Indians bow before their elders and so do the Thais. She will be taking a three to four day course on Thai culture run by the Thai government to understand Thai culture better. However, her husband is not with her in Thailand, so she will be staying on her own. How is she adjusting to life in Thailand? She has made some friends and acquaintances but the Thai language is a main barrier. Has she interacted with the local Indian community? She knows there is the settled Indian group and then there is the mobile group of Indians. There are Indian associations as well like the Hindi Parichshit and Indian Women’s Association (IWA). She attended the 60th anniversary of Thai Indian culture at the Indian Embassy and was put up by the IWA. How were the school’s staff recruited? Some of them are local Indians and some are from India. The applicants were short-listed and then interviewed by tele-conferencing. The school also has assessments once every three months and the teachers are also assessed. In the case of new teachers, their classes are supervised initially and a one-to-one feedback after that is given to decide if the teacher needs “hand holding,” training or is not capable of being a teacher at all. In terms of intake of students, they are expecting more in admissions and the main drawback was that the school started late in July, therefore, parents have already been

188   Country study: Thailand given admissions in other schools. Some Indian expatriate children are enrolled in other schools such as Thai Sikh. Profile of parents What was the profile of the pupils’ parents? The parents of the children at the Indian school were categorized in two very distinct groups. They are either in businesses such as jewelry and gems or they are professionals.31 The parents from the business community are the Gujaratis, Jains, and the Sindhis. They have been in Thailand for at least a generation but quite a number of them also came to Thailand in 1991 and 1992. Although the Thai Indian community has been in Thailand for generations, the school did not have students whose parents have been here for three or four generations. How did the businessmen parents settle in Thailand? They had their business set up in India and they found out that gem and jewelry is a big market in Thailand, especially Bangkok, so they ventured here. They sent their sons to assess what profits could be earned and when they managed to establish their bases here, they settled in Thailand. What about the parents from the professional group? The parents from the professional group are either IT professionals or in engineering. They were mainly employed by the Birla group or the Indorama group which also happens to be the main source for the student population. Normally, the students from professional parents will be at her school for three to five years. The more mobile group of parents was the professionals who are relocated to Thailand by their respective companies such as the Birla group. They are usually here for a few years on assignment and want an Indian education system for their children so that they can continue in the Indian education system when they are posted back to India. The parents who are professionals are mostly from the north of India like Delhi and Rajasthan, with a few from south India like the Bangalore area. The more settled Indian parents with their own businesses are looking to the school to provide their children with cultural values which they would miss out if they stay longer in Thailand. The parents are also attracted to her school because it is at the middle level in terms of fee strata because they receive value for money and their children can continue with the education system back in India if they are relocated back or if they have to enter tertiary education. Some of the students who are Thai Indians are from mixed parentage. School teachers In discussions with three of its female teachers who have been in Thailand for between three and five years, some of the key points are mentioned below. Teacher A said that her husband got an opportunity as an Indian chef at the Grand Sheraton and the whole family moved here. However, before they relocated, they inquired about Bangkok and Thailand from friends and relatives who had lived there.32 She added that the opportunity was not usual because mainly IT engineers are recruited from India. Her colleagues Teacher B and C said that it was very

Country study: Thailand   189 easy to relocate in Thailand. They felt safe and comfortable because there is a large existing Indian community. The settled Indian community consisted of Gujeratis, Sindhis, Punjabis and Maharashtrans. Teacher C said that language was initially a problem but she took a few classes just to know basic Thai. This is important because when they go out to the market and need to bargain. It took Teacher C 20 classes to learn survival Thai. However, apart from interacting in the marketplace, the teachers confided that generally they don’t interact with Thais and similarly the local Thais are not keen to interact with the expatriate Indians. Among the local Thai Indians, they do interact with the local Thais but prefer not to mix with the Indian expatriates. The Thai Indians have their own cliques and it is very difficult to penetrate them. But there are exceptions on occasions like weddings and festivals. Teacher A said there is some socializing between the local and expatriates at the only Gurdwara at Phaorat on Sundays. When it comes to marriage, the Thai Indians look within themselves and neither do they want to send their daughters to India. Even if it is an expat boy, they will make the expat boys stay on in Thailand. Teacher A says, when they go to a Thai restaurant and there are Thai Indians, when you walk in, they will snigger and only talk in Thai which has become their mother tongue. They prefer Thai maids so that their children can learn the language. They only eat Indian food once in a while. However, for education, they go back to Simla and Darjeeling for education in India because Thai schooling and its public education system are not on par with India’s and international schooling is very exorbitant. For the moment their children are studying in English in international schools but they will send them back to India for tertiary education if they stay longer in Thailand. Teacher A and B stay in the same residential compound and building where there are 25 Indian expatriate families. Teacher B said their festivals’ celebrations, especially Diwali, are even better than India Thai people are very soft and polite but they don’t like Indians from within. They know Indians have bad habits of bargaining and are very stingy. But they will never show this to us openly. They prefer Caucasians known locally as “Farangs.” According to Teacher C, some of the early Thai Indian settlers were money lenders and the local perception was that they have drained Thais of their wealth. In contrast, the Farangs have built highways and shopping malls in Thailand and are considered an asset. There are many organizations like the Vishnu Indians and the Arya Samaj, and these are patronized by Thai Indians and Indians but they don’t get the time to be involved in activities in these associations. They celebrate all the big festivals in the building such as Lorhi and Ponggal. To prepare for these festivals they had all the Indian ingredients used in cooking delivered to their homes. Teacher B said her daughters are losing out on Hindi. She either calls or “sms” back to family in India daily. She confided that her husband is the only son and they need to keep up to date with developments in India. They have all the Indian channels on cable TV and it’s only four hours from India to Bangkok by plane. Teacher C is not interested in moving to the United States because her life is comfortable in Thailand. She added that countries in Europe and Australia are not friendly to

190   Country study: Thailand Indians. Her main complaint is that there is no news channel in English in Thailand so they are unable to keep up to date with what is happening in Thailand. The teachers were wearing blouses and pants and shared that no member of staff wears Salwar Kameez here at the school. They said that they purchase their Indian outfits from India once yearly. The teachers have been traveling around Thailand, to places such as Pattaya, Phuket, Krabi, and Koh Sa Mui. Secretary General, N, Bangkok, 28 September 2007 The interviewee is an Indian expatriate engineer, who holds the position of secretary general for a telecommunications organization but has lived in Thailand for decades. Did the early Indian migrants come from the provinces of Punjab or Gorukphur? The Punjab migration started in the nineteenth century when the British fought wars in India, for example, the Sepoy Mutiny in 1857. Before then, the Muslim rulers were in charge but the British wanted to change the governance of India. Punjabi traders were encouraged to migrate overseas. Many came to Thailand but did not know about Thailand and they were more familiar with Singapore. The early Punjabis were grain traders and had migrated to Singapore and Thailand. They also worked as money lenders. There was a close relationship between the money lenders and the grain traders. Some came in World War I. At partition, many Indians left Pakistan, many left for Delhi or went overseas like the Punjabis. Who were the Gorakpuris? Initially, they were a group of 100 priests who came from Gorakpur. They came with very little money but were accepted in Thailand. The Gujaratis, Sindhis, and Marwaris after partition have moved overseas, they specialize in certain commodities like grain; they have also come from third countries like Myanmar or Singapore. Thailand has a good service sector and has its own markets. There are about 5000 professional NRIs who settled in Bangkok in early 2007. Most of them are employed by Indian companies that are limited by quota. The various Thai and Indian joint ventures have not “taken off.” What are the approximate numbers for temporary migration? There are some 90,000–100,000 NRIs in Bangkok but many have Thai passports. The Indian passport holders number about 25,000 to 30,000. What is the latest trend among the NRIs? The increasing recruitment by MNCs and Thai manufacturers is quite good and they have their own niche market that also recruits Indian engineers, joint venture companies also recruit, the service industry too. What is your perception of Thai Indians? The Thai Indians do not wish to upset the balance of politics but are quite influential. Their business interest is their priority and they have assimilated well and speak Thai. They have good partnerships in business and know who to “deal with” to prosper. Most Thai Indians are Thai and don’t speak Hindi. They marry among the other Thai Indians. A large group came from Pakistan after partition. Do the Thai Indians and Indian expatriates mix? Thai Indians don’t mix with new NRIs coming in. The Thai Indians prefer Thai dishes and speak in Thai. What attracts an Indian professional to Thailand? An Indian professional will get several offers in India before he

Country study: Thailand   191 ventures to Thailand. Indians in India have a good impression of Thailand. What are the key attractions of Thailand to Indians? Thailand has close proximity to India. Indians also feel cultural similarities with the Thais in terms of Hinduism and Buddhism. Indian engineer, Bangkok, 24 September 2007 The interviewee is a biochemical engineer with a well-known Indian company that manufactures chemicals for animal feed. He has been living in Bangkok since 2003. He also has an MBA and has been in the region on job placement such as in Malaysia with his company. His wife is from Delhi and works for a French company in the sports retail sector. His plan to work in Thailand was not intentional because most Indian expatriates would think of Singapore when relocating to work in Southeast Asia. His experiences in Bangkok have been more pleasant because he was alone on his previous posting to Malaysia (Johor Baru) and he was living in a golf resort. He got married six months after being relocated to Bangkok. He feels that life in Bangkok is easier than in India and if an expatriate can get through the first year, then by the second year he will be reluctant to leave. The main difficulty here is the language and food. It’s not important to speak perfect Thai but you need to know a little to get on with the daily transactions such as talking to the taxi driver or the shop keeper. His wife learnt Thai because she has to interact with her clients. He said that reading and writing Thai are difficult despite the majority of Thai characters being Sanskrit. The engineer feels that people in India don’t know about Bangkok and are more familiar with Singapore. When he asked for a transfer from Malaysia, he did not think about Thailand and his manager asked him to relocate to Bangkok. He was hesitant because he did not have enough knowledge about Bangkok but his Human Resource (HR) manager encouraged him to take the posting. He now realizes that the “exit options” for Indian professionals are limited in Thailand. The mobility factor is not there and once you are employed by a particular company, it is difficult to switch to another company. This is unlike the case in India where he will have three four options but in Thailand he would probably have to wait for at least a year into the job before seeking a transfer to another company. Moreover, there is no assurance of moving onto a better job. In Thailand, the government of Thailand does not let foreigners enter with very basic skills and you have to demonstrate that you have more specialized skills in the IT sector. The salary packages are complicated because there are different minimum salaries for different nationalities. Also, there are some labor laws which protect the Thai worker. For example, in some cases, the company needs to have the same number of Thai and foreign workers. In some cases, companies are not allowed to hire an Indian professional for less that 35,000 baht (US$1060) and this would encourage them to hire a Thai instead. There are still Indian professionals from India moving to Thailand but they generally have some knowledge and exposure to Thailand. He acknowledges that the pace of life is slower in Bangkok than in India and he won’t be able to network with the very learned and successful Thais. He

192   Country study: Thailand accepts that his social network is small, between ten to fifteen people, and you won’t be able to learn very much new skills. He is in touch with only a few NRIs and very few Thai Indians. Does racism exist in Bangkok? Yes, he feels that subtle levels of racism do exist and the Thais would talk about the Indians in quiet whispers. The locals make jokes about the Indians but since you can’t understand what they are saying, you accept it and ignorance is bliss. For example, the common stereotypes about Indians are that they are smelly, talk and shout a lot, and are very stingy with money. He believes that racism is everywhere and that it would take a long time for the Thais and Indian expatriates to understand one another. Therefore, the best thing for an Indian expatriate to do would be to ignore the racist remarks and just get on with his work. However, as more Indian professionals are coming to Thailand, perceptions about Indians are changing in Thailand. The local Indians live for the present moment and would spend all their money. In contrast, the NRIs want to save money for the future. However, in 1997 during the Asian financial crisis, a lot of companies went bankrupt and were shut down. Only the Indian company Aditya Birla did not retrench any worker and the Thais understood what it meant to be Indian. What about social networking? Networking is a challenge especially with the Thai Indians because there are very different communities. For example, there is the Gujarati Marwari community in business. Sikhs belong to a different community so the dynamics of their community is different and they are married into each other. Go through Thai Indian websites, there are several organizations listed. So the Indian expatriates can interact within those associations. For example, there is the India Thai Business forum and another is India Thai Chamber of Commerce. This provides an opportunity for the Indian expatriates to interact with the local Thais in a professional setting. The Thai Indians have their parents and own families in Bangkok. Unlike the Indian expatriates, they return to India as a PIO and need visas, while the expatriates return as citizens. What the NRIs know in Thailand is just the “tip of the iceberg” because they live secluded lives and don’t have time for other activities because of work commitments. The engineer repeatedly said that life in Bangkok is comfortable. However, he also qualified this by saying that there are now more opportunities in India and even the salaries in India are becoming more comparable with those in Thailand. He still feels that Thailand has a better living environment because of its better infrastructure. He added, even if you are earning US$80,000, you still have to put up with the bad roads, inadequate street lighting and electricity supply shortages in India. Moreover, he feels more secure and safe in Bangkok than in India because he is able to walk to most places ever after midnight in Bangkok. Theft and robbery are virtually unheard of in Thailand. In India, he would have to spend an exorbitant sum of money to stay in a nice apartment in a nice locality. Would he settle permanently in Thailand with his family? He replied, it is difficult to acquire Thai citizenship and foreigners work here on work permit basis. He was interested in acquiring permanent residency in Thailand two years ago but changed his mind. He is not sure whether he and his family will remain in

Country study: Thailand   193 Thailand but he feels that if he wants to return to India, he should do it soon because he has to get used to the different working environment again. Indian expatriates from different parts of India will see different aspects of their experiences in Bangkok. For example, if an Indian expatriate from Gorakhphur came to Bangkok, he is likely to like Bangkok and stay on because he has not lived in Mumbai or Delhi, or the other metro cities in India. Mechanical engineer, Bangkok, 28 September 2007 The interviewee was a mechanical engineer who has been in Bangkok for 14 years. Why did he relocate to Thailand? He first came on holiday to Thailand, liked it and stayed. Initially he had stayed with a friend. He was in the IT business dealing with software, he then moved into marketing of textiles and now he is working in the garments industry. How did he manage to change employment? He went to see a friend and was offered a job, so he stayed. He now speaks Thai but language was not a problem initially because he spoke English but when he entered marketing he dealt with Chinese and Thai so he had to pick up some Thai. Thai is not difficult because it is based on Sanskrit text. What are his views of Thai Indians? He replied, Thai Indians are only 20 percent Indian and 80 percent Thai, especially if they are the second or third generations. The Thai Indians don’t feel comfortable going to India or dealing with Indian companies unless they are based in Thailand. In 2005, some Thai Indian companies did want to establish ventures but when they went there, they were cheated and could not get started so they came back and abandoned the idea. He confirmed that Thai Indians were from the Punjab and Gorukphur provinces in India. Which economic sectors are recruiting Indian professionals? In Thailand, various sectors were recruiting Indian IT professionals such as manufacturing, investments, and technical sectors. The newly arriving NRIs like coming to Thailand and people from big companies like Tata have also started venturing into Thailand. Initially they had a problem with the language (a big barrier), food is an issue if they are vegetarians. However, if they manage to survive the initial three to four months in Thailand, they will not go back because the lifestyle is too good and convenient in terms of banks, shopping and other amenities. He himself found it hard to go back to India. What about networking opportunities? The Thai Indians have their own network and the NRIs have their own network. He meets Indo Thais and various other associations on a monthly basis. Most of the Indians are concentrated in the Sukhumvit area because it’s a central location. The Sikhs are in Takra and Sibhan kek districts. How does he maintain links to India? Initially he used to go back once a year, when he came over it was just letters, no internet and it was expensive to call. He still maintains strong links with India and his parents are here from Hyderabad. He asked his parents to come over and stay with them. He does not take part in Thai domestic politics. He gets all the TV channels, and keeps track of Indian news. Has he considered permanent residency or citizenship? Thai citizenship is now more expensive, Baht 400,000, has to be here five years and one’s salary has to

194   Country study: Thailand be at least 1500 bhat (US$45) per month to apply for a Green Card, then citizenship. He is now on a work permit and will apply for citizenship. Would he consider living in other countries? He thought about Singapore but the business he is in, is not available in Singapore. Indian companies are buying into textile mills to operate or to take the equipment to India. He did think about the US but when he came to Thailand, he liked the environment, the people are mild and the lifestyle is fabulous. After staying here, he thinks like a Thai and start to trust people but you can’t do this in India. There are good people in India but they are in the minority, the majority, 80 percent, are crooks. Most of the Thai Indians especially the Sikh community get cheated in India. How are his children coping with their schooling? In terms of schooling, the GIIS was an option but the people who have children there are not happy because the teachers were not “up to the mark,” furthermore, the facilities and distance were too far. He believes the Thai Sik International School is better than GIIS. What is the future plan for his children? He would prefer his children to be integrated into Thai society and Thai universities because some Thai universities are good. What is his weekend rountine? He has dinner with his family then does some shopping. His wife is also working in the same international school as their kids, but she is in administration. He and his family also join the various Indian organizations to celebrate festivities. He added, associations like the Indian Women’s Club (IWA) have organized their own functions. What about holidays? He has traveled extensively with his family in the region. Has he also traveled extensively to India? He replied, India has more things to do and see but it’s not travel friendly. But in Thailand it is more convenient and there are more facilities. He added, in India, the problem starts as soon as you land at the airport, but not in Thailand, the “airport in India looks more like a railway station than an airport.” What are the local Thai impressions of the Indian community? The Thais have a good impression of the Indians. But the Indian tourists are creating problems and are a nuisance because they like to bargain and offer an unreasonable price. He explained the Thais are not used to bargaining. Has he faced any discrimination? No, since he’s been here, the locals have been more polite and when he spoke Thai, the locals moved closer to him. How do the locals perceive India? The local Thai only know India in terms of yoga and “Bollywood.” The Thais only get the general news on India which normally portrays the negative aspects of India. What are his future plans? He would like to retire in Thailand and most NRIs that he knows have retired here. The military coup and local politics are not an issue for them and they even took pictures with the army in tanks. Thailand is not a growing economy and manufacturers are shifting to Vietnam, Laos, India but the life is comfortable. Furthermore, Bangkok is also safe and secure and you can go out at night. Indian expatriate couple, Bangkok, 29 September 2007 We interviewed an Indian expatriate couple living in Bangkok. When they first got married, they came to Bangkok in 2005. What was the main motivation for

Country study: Thailand   195 their relocation to Bangkok? The wife wanted to enroll in a PhD program but did not want to leave her husband. Her husband was approached by a Thai company and was interviewed and selected and it was his first job overseas. How did they source information about Thailand before settling here? They had friends living here and were informed that there are Indians and aspects of Indian culture in Thailand like Mumbai. They are from Rajasthan but he studied in Bombay for three years. His expertise is in finance, he is middle management and a chartered accountant. Good lifestyle in Bangkok. Could they describe their social network? Their social network comprises mainly Indian expatriates but they have some Thai friends and they do socialize at weekends. Their social friends are mainly in finance from her husband’s workplace. They are in marketing, finance, teaching in international school. What about interacting with Thai Indians? No, they don’t know nor interact with local Thai Indians. They network with other NRIs. Thai Indians “stick to themselves” and they live in certain areas. Could they describe their adjustment to Thailand? For her, the language was a problem initially and sometimes still is but it is easier than in India in terms of jobs. Indian management style is tough, especially in Indian companies. Describe the Thai working culture. He is in middle management. The Thai work culture is more results-oriented and productive; overall, the approach is soft compared to India. In contrast, she had worked for two years in international marketing as an import manager. Main difference from India? Is gender an issue? Women have a strong influence in Thailand and it is more liberal than in India. There are only two Indian professionals including him in his company of 150 people. It’s a very cosmopolitan environment. What is the approximate number of Indian expatriates in the finance sector? They replied, the Indian expatriates are in the hundreds. Their weekend activities? Consisted of shopping, movies and meeting some friends. Which movies? They watched both Bollywood and Hollywood movies. Do Bollywood movies have a strong following in Thailand? They said the Bollywood culture only affects the Indians in Thailand not the locals. How do they communicate with the local Thai? They communicate in broken English with the Thais. What is their impression of the Thais? Generally they are good people, friendly, different from the Indians. They are family-based and respect their elders. Have they encountered any racism? No, thus far, the main problem is the language. Do they interact with the local Indians? Professional Indians who are non-resident Indians (NRIs) are more into the professional circles not the Thai Indians. What are their future plans up to 2012? They have no idea what their future plans are but are very comfortable in Thailand. It is better than what they had imagined it. They have a good life in Thailand. They prefer here to moving elsewhere even the US or Australia. To move, they will have to think of the sacrifices they have to make to return to India. What is good about Thailand? The working environment and culture are better and there is more exposure compared to India. Is India more competitive? Yes, there is more competition for scarce resources. What about the rate of job turnover? The work culture is relaxed but they are responsible in completing their tasks and very

196   Country study: Thailand professional. Are they thinking about applying for permanent residency in Thailand? Not at this point of time (2007). The language requirement is a problem and they have to meet certain requirements. How often do they return to India? They would return to India twice every six months. They like Bangkok which is in close proximity to India. They stay in touch with family through the internet and phone calls. How do they keep track of news of India? Most websites have news on India. They are happy with the safety and security issue despite the government protests. It is safer than Indian cities like Delhi. How do you keep updated on India? They have Hindi channels. They cook and celebrate the festivals. They stay in the Sukhumvit area but there is only one other Indian family in the condo. They celebrate festivities with friends but they are not part of the organizations like the IWA – no time. They did attend an Indian Embassy function but are not members of any Indian associations. For Diwali and other festivals, they do need to be members of associations to attend. Consultant and a radio personality, Bangkok, 28 September 2007 We interviewed both a radio personality and a business consultant who are both part Indian. She is the radio personality and DJ and is a mixture of Indian and Chinese (father Indian and mother Chinese). She underwent her schooling in Bangkok but has lived in the United States for a few years. She is now working as a radio presenter and does a lot of work on the Indian community in Thailand. What is the objective of her radio show? She said the aim is to try and showcase the Indian lifestyle in Bangkok to the radio station’s listeners globally. There is a huge gap of understanding between Thais and the Indians and it is hard to bridge this gap because Thais have a very stereotypical view about Indians. The main stereotypes about Indians are negative. She commented that people like herself and her consultant friend (human resource consultant) try to be a bridge to both worlds because they are Thai and part Indian. She commented that the Indian community in Thailand is very “cliquish.” They will normally mingle within their own Indian communities, like the Gujaratis will mix with other Gujaratis and the Punjabis will do likewise. She said the common thinking is “Oh, this is me, and I am going to hang out with my people.” Thai Indians How do the locals categorize the Indians? The consultant said the locals categorize the Indians into three different levels. The first level and lowest level are the “Babus” who sell the peanuts on the streets. The second level is the businessmen who range from owning tailor shops to the most elite, the “big shots” who own restaurants and hotels. These successful entrepreneurs are in a league of their own. The third group is the professionals who have been coming in large numbers since early 2000 after 9/11. The radio DJ said the educated Indian professionals are educated abroad and instead of working in Europe or the US, they come to

Country study: Thailand   197 Bangkok. The Indian professionals in Bangkok tend to believe that if they go back to India, there are so many others doing what they are doing. In this regard, they will be more prominent in Bangkok than in India (less competition for opportunities in Bangkok).33 The DJ said, “There is another group, the go-between Inter and Thai. Because we [she and the consultant] speak Thai like a Thai, but you would find it difficult to work for a Thai company.” The consultant added, The ones who sell nuts or roti (bread), the Thais don’t go near them. They have nice roti but Thais watch out for the hygiene. The ones who do suits and textiles, the Thais look on them as alright but they are still not “Thai Thai.” The ones who run the hotels and big businesses, it doesn’t matter if the Thais like them or not because they have relations with the people who run the country. And these guys, they have very strong links into the establishment, which many Thais don’t even have a clue about. They have succeeded in their businesses. They always stay behind. The whole concept of having a dharma façade, the Indians who are pulling the shots sit in the background.34 The radio DJ explained that the Thai Indians are very different from Indians from other parts of the world. She would classify them as being Indian when it suits them. Thai Indians are generally conservative and they are very particular about marriage. For example, they believe in marrying young and delivering babies as soon as possible. She said half of all her Indian friends are already married. It is normally an arranged marriage because the parents would know each other and they would marry as close to their social group or class as possible. For example, a Namdhari will never marry a Sikh and will only marry another Namdhari.35 Apart from arranged marriages, the Thai Indians act as non-Indians, otherwise they are very non-Indian and they speak Thai. Ironically, she feels that she has enriched her identity as an Indian by living in the US. While in the US, she learnt Hindi, Indian dancing and singing. Unlike in Singapore, where there are dance and singing performances by the local Indians, in Bangkok there is hardly anything. If there are Indians who are singing and performing Indian songs and dance, they are likely to be Indian expatriates.36 Do the expatriates and Thai Indians interact with each other? She believes the Indian expatriates will stay for a while (a few years) and then move to a third country “because it is one step up from their hometowns in India.”37 However, she feels that apart from their short stay in Bangkok, the Indian expatriates will not be able to influence Thai Indians in any way. This is because the Thai Indians have their own social space and it normally revolves around their homes, work and the shopping malls. The Thai Indians are not thinking on the same wavelength as the Indian expatriates. Usually, the Indian expatriates think about career development, accumulating savings and entrepreneurship. In contrast, the Thai Indians think about more mundane things like personal deportment and having children. She added; “They don’t think on the same level. Indians think development, career, and prosperity.”38

198   Country study: Thailand The consultant said, “These Thai Indians speak Thai and they know how to work the system. They see the NRIs and say ‘Good luck, boys.’ They don’t see them as a threat because they are just in a different league. When they want to be Thai, they just become Thai and not Indian.” The most recent large flow of Indian professionals started coming to Bangkok after 2000 because it became harder for them to acquire Green Cards in the United States so they shifted their attention to alternative countries like Thailand. A large number of them come from Mumbai and Delhi. The non-technical professionals are into sales, marketing and banking while the technical professionals are into management, IT and technical support. How are Indians influencing lifestyle and consumption patterns in Bangkok? The radio DJ tries to cover India-related events for her radio show. She added, DJs from Mumbai are coming to Thailand to perform because “Bollywood” movies and dancing are increasing in popularity in Thailand. There is a more general acceptance of Indian lifestyle and culture even among the other foreigners in Thailand. The Thai Indians send their children for tertiary education back to India but after that they become more Thai in outlook, even though they are schooled in India. How did that happen? The DJ said, “It’s very much up to you. When I left India, I said I am going to learn Hindi and get good at it. If I lived in India for ten years and came back not knowing Hindi, I would be really ashamed of myself ... but I don’t think they feel that way. Thais are more ready to accept Thai Indians than Indians because of the language.” Is the perception of Indians changing with the arrival of “brainy Indians”? The DJ replied, “I think so. I would have never heard that about five years ago but a lot of my Thai friends are saying that maybe we should go to India for an education, they seem really smart.” What about the effect of Bollywood and Indian fashion? The DJ replied, there are Bollywood dance classes and in the gyms in Thailand they actually teach Bollywood dance classes. Indian songs and Punjabi songs have come into mainstream Indian music because locals have observed how Punjabi DJs from the UK combine Punjabi and English. She said the locals like the fusion music trend, especially after Dhoom and Tata Young [a famous Thai singer], “sang that Dhoom song … oh my God. They just said, wow, Bollywood, yeah. After that people have been asking about Bollywood music and where you can get them.” Moreover, the older generation Thais used to watch Hindi movies like Sholay and Haathi mere Saathi, and used to love them. Do Thais dislike Indians in general? The consultant said, “When you think Qeck! But this determines if a project fails or not. Number one thing is mien – They stink. And that will influence your business. As a follow on comment … it is because of the condiments they use that make them stink.” The consultant added, “Indians I talk to say that Thailand stinks. It is all in perception and what you have been programmed with. Maybe they have never even seen a Qeck but they are programmed to think they stink.” He said even famous Indian companies like Tata gave out toiletry baskets to everyone in their company. They are told: “Wash every day. You wear deodorant. Wash your shirts every day. You go in for hygiene.” He recalled some CEOs had suggested a night out among their colleagues and then one suggested an Indian restaurant. He added, “You just see Thai

Country study: Thailand   199 faces go white with that. They just won’t go. They find it [Indian food] heavy and not like Thai. They have a term called ‘lien’ – it is oily and leaves a film in your mouth. Chinese food is also lien.”39 We observed that there seem to be numerous sushi (Japanese) restaurants in Bangkok, is this because it is superior or something to emulate? The consultant replied, the Japanese food is healthier. Thais are always body conscious. They love Japanese Manga comics. What about Japanese pop culture seeping into Thailand? On the deeper side, Thais like the fact that Japan is a developed nation and that when you go to Japan, you speak Japanese. They are at the top of the pack and still keep their identity. How do the Indian expatriates adjust to the Thai environment? The consultant replied, “New Indians … when I work with them, I tell them you’ve got the qualifications but come in and look at how the Thai Indians have worked the system and their networking.” He advised the new NRIs that they are not going to change the system. “No matter how right you think you are or how wrong you think the system is: it boils down to see how much money you are going to lose.” How does an Indian professional do business in Thailand? The consultant said: I was called in by a big software company. They have a big multi-million dollar project with a Thai agency. This guy, the head of the project is Indian. Within one hour, he nearly lost the project, his Thai team just didn’t like him asserting his authority. It works in India but not here. His boss, also an Indian, decided to call me in. I worked with him for three days. My verdict was to assess if he stays here or goes home … in the end he stayed because he had a good attitude, but no matter how good he was with what he did in India, he did absolutely nothing here. The consultant added that the Thai Indians run a lot in the country but they know how to run the system. How do the Thais view their environment and the Indians’ role in that? The consultant said, “Kring Chai,” then, Picture this, when human beings are born unto the world, they are born with many arms. Your voice, your manners, your looks ... When you touch a snail, it retracts, Kring and chai is emotional heart. The ultimate in Thai aspiration is to kring all those arms so that their birth does not have any impact on anyone else. Most Thais are not worried about losing their job. They don’t work for themselves. They work for the country. They don’t care about losing the job. Not like in India. He added; “If you fire a Thai, they will take a whole chunk of the organization with them.” What make the Indian expatriates so brash? The consultant replied, “I didn’t say the local Indians are not [brash]. It’s just that they have worked the system. They

200   Country study: Thailand know how to control people to get their job done.” Unfortunately for the India expatriates, they are on an ego and power trip like in India, they show that: “I’m the man, you do this now.” The consultant cautioned, “You tell the Thai that, they say get out of my country.” However, he added, that Indians tend to manage better in Singapore, “pushy and brash as they are, but in the corporate world they are doing OK.” The consultant said incredulously: “Indians. Even if there is nothing to argue about, you’ll just come up with an alternative point. It’s fun … it doesn’t mean you’ve lost a relationship over it. But in Thailand you have lost a relationship over it.” We said we have seen car labels here that say “I love Farangs,” what’s this phenomenon about? The consultant said, “It is business. It is business because they [the locals] don’t speak English and don’t pick up white passengers. In Thai society you have Thais and then you have “Inter” [mixed race like him].” He added, the Thais, they speak Thai, they might be Chinese Thai but they speak Thai, however, among the Inter group, they might grow up overseas or go to international schools. With Thais, you have Chinese Thais or you have Thai Thais. The local Indians have learnt to control both sides. They have businesses with the Thai Thai families but they have their children interweaved into the Inter circle. They [local Indians] are a quiet (unseen) circle. Where does the Indian professional stand in this societal network in Thailand? The consultant said, the Indian expatriate professionals work for Indian firms, international companies (MNCs), or they start up their own company. The DJ said, “But things are changing. Like you find Indian restaurants that want to cater to Thais. Like ‘Indus’ restaurant. Half the restaurant is full of Thai. They have different segments, the club, the bar … they like fusion like the Bhangra music and dance.” The consultant added, “They also have the whole yoga movement. I teach Sanskrit to yoga instructors … there is this Thai actress who instructs yoga and studying Sanskrit. If you take Indians away from the Indian culture, they love it. They love Indian music, India dance.” However, for Thai people in general, they don’t prefer interaction with Indians. For example, it is fine to wear Indian clothes but not to interact with the Indian shopkeeper. How do you look upon intermarriage? The DJ replied, “Depends on whose side. It is definitely not acceptable on the Indian side.” She added, “My family is not in the Indian circle because we don’t want the ‘baggage.’ We just don’t have the time. My family friends are so into ‘what if that family talks bad about me?’ It came from my grandfather who was open about the fact that my father wanted to marry a Chinese chick.” These Indians who are coming in now, have you spoken enough to them to know if they like it here? The DJ replied, “I think they notice the difference in the Indians here.” It will always be a reserved reception and I think they won’t choose to be here long term, because when Indians move from India they want to at least have an Indian surrounding. She replied, it becomes more unstable when the Indian surrounding is not going to accept them. She added; “If I had a choice to stay elsewhere I would. I do a lot of Indian things and no one does these things here.” Do you know any Indians who have permanent residency? The consultant replied, “I know two. These guys are really mellow, accepting kind of guys.”

Country study: Thailand   201

Conclusion While the Thai government has legislation in place to protect the employment of locals, since 2007, the Thai government has eased restrictions on the hire of highly skilled foreign workers. With the entry of foreign multinational companies in Thailand, more Indian professionals are being employed as well as by Thai companies in manufacturing, information technology and the financial sectors. While the average Thai may only be familiar with India in terms of Buddhism and yoga, Bollywood movies and songs have become very popular with the mainstream entertainment industry. Indian expatriate families have more choice in education for their children with the establishment of the Global Indian International School (GIIS) in Thailand. The expatriate Indians are mainly in two categories and are either in the gems and jewelry trade or are professionals. Most of the Indian expatriates find the language a main problem after their relocation to Thailand but acquire basic Thai to communicate in their environment. Indian expatriates do encounter some racism especially when it comes to bargaining for goods because Thais are culturally not used to bargaining. Moreover, the Thais have a negative impression of Thai Indians whom they perceive to be unscrupulous and trying to make large profits at the expense of other Thais. However, for the Indian expatriates, some are considering taking up permanent residency and citizenship especially those who have stayed more than five years in Thailand. The newer Indian expatriates also admit that they have a good lifestyle in Bangkok and more than what they could dream of in India. The close proximity of Thailand to India was an added attraction for the Indian expatriates. The Indian expatriates commented that the working environment is also better in Thailand compared to India. The Thais are more professional in their work ethics. The Thai Indian and expatriate Indians do not socialize generally but they do interact in selected setting like trade meetings. The Thai Indians consider themselves more Thai than Indian. The Thai Indians will intermarry among their own community and families will find potential spouses as close to their own class, status and caste for their children.

8 Conclusion

Increasing economic globalization has accelerated the process of cross-border human capital mobility. The phenomenon of transnationalism is manifested by transborder communities and individuals who have affiliations with more than one country. With the decrease of executive talent in developed economies and coupled with low fertility levels, the trend towards attracting foreign human capital will increase. India has become one of the main global sources of human capital because of its English-speaking graduates and its reputation for quality graduates from branded tertiary institutions such as the IIMs and the IITs. The emergence of India as the other Asian economic giant besides China has attracted multinational companies to relocate to India to leverage on its human capital. However, despite the presence of MNCs and more employment opportunities, Indian human capital is still moving out of India. A growing trend has also seen the recruitment of foreign talent for employment in India especially in the booming information technology enabled services (ITES) sector. Human capital from India usually relocates to the English-speaking developed countries such as Australia, Britain, and the United States, but increasing numbers are also heading towards the Middle East, the Gulf States, and Africa. A growing destination with the implementation of India’s Look East Policy (LEP) is East Asia and Southeast Asia. Indian companies had established operations in Southeast Asia since the 1970s but with the 1991 economic reforms and liberalization, more Indian companies are exploring opportunities from China to Singapore. It is likely that the India–ASEAN FTA to be signed in 2010 will further accelerate the movement of Indian professionals to the ASEAN region. The book has examined four economies in Southeast Asia that were most affected by the movement of Indian professionals and have the most economic interaction with India. Furthermore, the four ASEAN members namely, Indonesia, Malaysia, Singapore and Thailand, also have significant numbers of settled ethnic Indians among their own population, reflecting a historical social and cultural connection with the Indian subcontinent. Despite India booming economically with improving salary packages and lifestyles, the picture is that human capital is still moving overseas. Presumably the global financial crisis of late 2008 to 2009 had an impact on the employment trends in India which might trigger a greater outflow of human capital. However, the global financial crisis had relatively

Conclusion   203 minimal impact on the employment outlook in India and the Indian economy is projected to grow by between 7 to 8 percent by the end of 2010. The vagaries of the global economic environment did not severely affect India because of India’s own domestic needs for human capital, the increasing employment opportunities because of the MNCs establishing operations in India, and the expansion of Indian companies. In 2007 and 2008, before the global financial crisis, employers in India were facing difficulties in recruiting quality graduates because of shortages and the huge increase in salaries. The manufacturing sector was losing out to the better paying services sector, especially the IT industry, insurance and financial sectors. The rate of attrition also ranged from 11 to more than 30 percent. However, there is reduced motivation for Indian talent to work overseas because employment opportunities are improving in India especially with the entry of foreign MNCs. This indicates that there is an increase of Indian talent circulating in the Indian economy. Gender disparity among Indian professionals was decreasing because more women are working and being employed in various companies in more senior positions. Companies used a variety of strategies to recruit, including campus recruitment talks, advertising and their own databases. The talent crunch in India has also been alleviated by the returning flow of NRIs, even from the developed countries. Some companies in India reported receiving from 10 to 30 résumés daily enquiring about available employment vacancies. The salary increases experienced range from a low of 40 percent to more than 100 percent. With greater mobility, Indian talent was moving to various states and was attracted to areas that offer greater employment opportunities. Indian talent was reluctant to leave India because they can enjoy a good lifestyle and salaries in India. However, why is there a continued outflow of human capital from India? The continued outflow of human capital is mainly due to the polarization of the tertiary education system in India. At one end of the spectrum, the elite colleges like the IITs and IIMs are producing a limited number of quality graduates and postgraduates. At the other end of the spectrum are the numerous private colleges that produce graduates who lack skills in demand by the corporate sector. In this regard, the graduates from elite colleges can earn on average US$300 daily while those from the inferior private colleges could earn as little as US$2 per day. The US$2 per day graduates are then inclined to move overseas for employment for better salaries, savings, experience and better certification. The shortage of quality graduates is forcing company to provide in-house training for their recruits. Some companies prefer to train their hires from lesserknown colleges because they will be more loyal to the firm after training than graduates from brand tertiary institutions. The BPO ITES sector is expanding rapidly but other sectors like retail are also taking off. The shortage of senior staff is also ameliorated by the recruitment of foreign talent. India is a huge emerging market to attract foreign talent and MNCs also relocate their staff overseas to India as well as circulate their staff hires from India to overseas subsidiaries. In this context, there is less need for Indian talent to move overseas because they are likely to be posted for overseas assignments by their companies.

204   Conclusion The mergers and acquisitions (M&A) policy of Indian companies to acquire the critical technical expertise, patent, or domain knowledge of foreign companies also enables their Indian talent to be posted overseas. Indian companies implementing an M&A strategy to expand overseas will post their own Indian talent to oversee or learn from the acquired foreign firm to ensure a seamless merger with their parent Indian company. Some sectors, like the oil and gas sector, have seen less labor churn or turnover for several reasons. The oil and gas sector is still largely controlled by the state and is being liberalized gradually to allow the entry of foreign companies. While the salaries may not be as high as the IT and financial sectors, professionals in this industry acknowledge that this sector is likely to take off, given the increasing importance of the energy sector in India. What about the Indian human capital flow to Southeast Asia? The ICT, financial and manufacturing sectors are the most affected by the inflow of human capital from India among the four economies studied. The recent influx of Indian professionals is variously defined as the “New Indians,” “Indian Indians,” or Global Indians in the four economies to distinguish them from the settled or local Indians. Singapore has even categorized the New Indians as Orchard Road Indians, to reflect their presence along Singapore’s premier and swankiest road for shopping. The Global Indians had relocated to Southeast Asia for various reasons but the main reasons seems to be better employment prospects, better employment opportunities, better infrastructure and facilities and the proximity to India. The main drawbacks have been getting used to the language of the host country besides English, a level of racism, and getting used to the work and social environments. It is noticeable that most Indian professionals who have young children are likely to return to India after their contract ends. Although some have expressed a desire to retire in their host country especially Indonesia, the majority are likely to return to India. Of the four economies examined, Singapore appears the most welcoming and easiest to relocate to for Indian transnationals. However, Singapore’s policymakers and political leaders are facing increasing concerns from Singaporeans who question the need to recruit foreign talent such as those from India, especially during an economic downturn or recession. The most popular destinations for outflow Indian talent are the Gulf, the West African states, and the US. The Indian market is very competitive and the IT sector is increasing wages across the board. Recruitment companies are looking throughout India for talent and not depending only on metro cities. Tier II and tier III cities as well as smaller towns with reputable educational institutions are becoming future recruitment areas. Chapter 4 on Indonesia stated that ethnic Indians had settled there in colonial times and Indian companies had already ventured into Indonesia in the 1970s like the Birlas to escape the restrictive economic policies then pervasive in India. The settled Indians, numbering about 50,000, had worked in the plantations and also opened businesses. For example, the Sindhis were in textiles, sports, and luxury goods. Local Indonesians have a good impression of settled Indians and know about Indian epics like the Mahabrata and Ramayana. More recently, Bollywood movies and Hindi songs are very popular in Indonesia. Due to the positive image

Conclusion   205 of the settled Indians, Indonesians are very welcoming of Indian expatriates. The expatriate Indians who are mainly professionals started to come in large numbers in the 1980s and number about 10,000. With the increasing economic links between Indonesia and India, it is expected that more Indian companies and professionals will venture to Indonesia. Indian energy companies are exploring fuel resources in Indonesia such as coal mines. However, settled Indians and expatriate Indians do not interact in general because each group has their own associations and socialize among themselves. The expatriate Indians seemed quite intimated by the wealth of the settled Indians, especially the Sindhis who speak Bahasa Indonesia and have assimilated themselves well into Indonesian society. Moreover, the expatriate Indians are usually professionals and interact in different work environments to the settled Indians. Generally, the expatriate Indians who have been in Indonesia for more than five years are very comfortable with a good lifestyle and would tend to stay longer. Some professional Indian expatriates have also established their own businesses such as consultancy firms and restaurants. While the majority will retire in Indonesia, they are likely to maintain their Indian citizenship. Malaysia has the largest number of ethnic Indians (1.7 million), mainly Tamils, among its population of 27 million. Historical and colonial linkages have placed thousands of Indian workers in the plantations of British Malaya. However, the majority of settled Indians were not able to move up the social ladder and economic progress has marginalized the plantation economy in Malaysia. The incoming expatriate Indian professionals working in Malaysia are challenging the traditional image of Indians in Malaysia. There are about 10,000 Indian professionals working for Indian companies, MNCs, or indigenous companies in Malaysia and they are located mainly in Johor Bahru, Kuala Lumpur, or Penang. Despite the state’s intent on developing local talent, Malaysia’s push to be a knowledge-based economy (KBE) means the need to attract foreign talent such as those from India. The inability of Malaysian tertiary institutions to produce enough quality graduates to sustain the drive towards a KBE suggests that more foreign talent will be required. The immigration policies in Malaysia may also need to be streamlined to work in tandem with the needs of the corporate sector to achieve Malaysia’s KBE ambition. Indian expatriates are generally satisfied with their lifestyle in Malaysia because of the good infrastructure and relatively lower living costs and more freedom compared to neighboring Singapore. However, the expatriate Indians do not generally interact with the local Indians. Most of the Indian expatriates use their work experience in Malaysia as a stepping stone to work in Singapore or a developed Western economy like the US. The Indian professionals, especially those in the IT industry, are likely to return to India because they are able to obtain relatively better salaries and better increments than in Malaysia. In this regard, their children are schooled in GIIS Kuala Lumpur so that they can continue with the Indian education system when they are back in India. Due to the lower cost of living in Malaysia, the potential to save is high for Indian expatriates. The lack of competition from the locals suggests that Indian expatriates are likely to be in demand for their expertise and skills in the foreseeable future.

206   Conclusion With low fertility levels and an outflow of its “best and brightest” talent, the Singapore government has explicitly stated its stand on the need to attract foreign talent to have a critical mass and depth of talent for innovation and R&D. Singapore’s continued economic expansion depends on it being able to leverage human capital as it transforms into a knowledge-based economy. Singapore’s political leaders have even categorized foreign talent into three main categories and how they contribute to economic growth. Despite the global financial crisis and its unemployment rate rising to 3.2 percent, Singapore continues to attract foreign talent, but it is a politically sensitive issue. With its good infrastructure, security, proximity to India, low tax rates, historical and social links to India, Singapore seems an ideal place to attract human capital from India. Even with Indian booming, Singapore is positioning itself as an alternative for the NRIs who have returned to India but are unable to adjust and are looking for overseas employment. Furthermore, Singapore has the trappings of a westernized society with Asian values and this appeals to human capital from India who have worked overseas as well. The Singapore-India FTA commonly referred to as the Comprehensive Economic Cooperation Agreement (CECA) has also opened more employment opportunities for human capital from India in Singapore. The cultural capital that Singapore has in terms of temples, shops, music and dance studios that cater to ethnic Indians would also be attractive to Indian professionals from India. Despite its attractions for human capital from India, the most recent wave of Indian professionals (from 2000) has started viewing Singapore as only a “stepping stone” towards better employment in Western developed economies or as exposure to gain better salary packages when they return to India. In general, the new wave of Indian professionals, known as Orchard Road Indians, are seen to be arrogant and socialize only in their elite expatriate circles. However, the Indian professionals who had come to Singapore at the Junior College (JC) level for schooling and taken up scholarships at local tertiary institutions are more likely to stay in Singapore and take up Permanent Residency (PR) status. In Thailand, the locals do not have a good impression of the local Indian community and the settled Indians (mainly Punjabis and Hindis) keep away from the expatriate Indians. The locals view the expatriate Indians as intelligent and Thai companies have started to recruit human capital from India. However, for the expatriate Indians to function and live in Thailand, they will have to learn Thai, be less aggressive in their approach and play down certain traits like “bargaining” when purchasing goods. The Indian expatriates will not shy away from publicity but the settled Indians do not crave the limelight and would rather work quietly “behind the scenes.” In terms of costs and style of living, Indian expatriates could aspire to have the “good life” in Thailand. Certain aspects of Indian music and “Bollywood” have moved into the mainstream of Thai society. It is hard for foreign expatriates, including those from India, to obtain permanent residency in Thailand. In terms of social networking, the Indian expatriates have a network of friends, college mates and extended families that they stay in touch with to exchange or

Conclusion   207 circulate information about employment opportunities, promotion prospects and news. Often before relocating to any of the four countries mentioned in Southeast Asia, the Indian professionals contact their friends and or relatives living in that country. Due to the large numbers of Indian professionals working in the four host countries, these professionals will interact among themselves and not socialize with the local Indian community. This has created social issues since the settled Indian communities view the tendency of expatriate Indians to keep to themselves as an act of differentiation and alienation on the part of expatriate Indians. Expatriate Indians are considered class-conscious and are believed to have a superiority and inferiority complex, according to class and time of arrival. This has caused “layers” within the Indian communities and further complicates their ethnic identity. These acts of differentiation have also raised issues concerning the assimilation processes of the new immigrants and the adverse effects on Southeast Asian state national identities and consciousness. Ironically, the settled Indians as part of societies in the host countries felt that their forefathers had helped in the nationbuilding process and state identity formation. Moreover, the forefathers of the settled Indians had also contributed to the development and modernization of their countries such as infrastructure and state facilities like schools and hospitals. The expatriate Indians are attracted to the four host nations because of the infrastructure, amenities and lifestyles available that were put in place by generations of settled locals, including settled Indians. The expatriate Indians are reaping the benefits of the host countries’ development but at the same time not committing or “rooting” themselves and even relocate elsewhere before their sons enter national service in Singapore if they had taken up PR status. Indian expatriates also retain their Indian passports even when they have been granted PR and often give the reason that the host countries examined like Singapore do not accept dual citizenship. There are enclaves of settled Indian communities in all four economies. The Indian enclaves in Indonesia are in the Pasar Baru area while, in Thailand, the settled Indians are in the Pahurat and sections of Sukhumvit. In Singapore, its Little India is along Serangoon Road and in Malaysia (Kuala Lumpur), the settled Indians are in the Brick fields, Lebuh Ampang, Sentul, and Masjid India areas. These Indian ethnic enclaves are a draw to the Indian expatriates who frequent these areas to visit the temples, grocery shopping and patronize the various restaurants. However, the local and expatriate Indians do not normally interact because each group has their own associations and social networks. However, the two groups will only meet during pujas (prayers) at temples or during festivities. The temples and festivities could be considered common spaces for interaction. Settled Indian communities have their respective associations and ethnic gatherings. Similarly, the expatriate Indians have their own associations like the India Club and Indian Women’s Association. The Indian transnationals could be classified as Global Indians with crossborder links between India and the host countries. The Indian government, through the Ministry of Indians Overseas, has arranged to network with their

208   Conclusion NRIs through events like the Parvasi Bharatiya Divas (PBD). Singapore has even arranged a mini- PBD to develop the NRI network between Singapore and India. The NRIs are not only sources of remittances for India but have also influenced the perceptions of their host nations about India. The MNCs in a globalized world facilitate the circulation of Global Indians as manifested by the skills and expertise required by their HR departments. The HR departments have to facilitate the movement of Indian human capital by resolving visa problems, relocation concerns about housing, education, and culinary needs. The recruitment agencies and the MNCs also look into the social adjustment for Indian human capital, their spouses and children. Hence, the Indian expatriates in Southeast Asia exemplify the current era of globalization and transnationalism, leaving behind the era of postcolonialism, nation-states, citizenships, and national identities.

Notes

1 Introduction   1 Stephen Castles, “Comparing the experience of five major emigration countries,” International Migration Institute, Working Paper 7, 2007, p. 4.   2 Ibid., p. 6.   3 Ibid., p. 8.   4 Louis Meijering and Bettina van Hoven, “Imagining difference: the experiences of ‘transnational’ Indian IT professionals in Germany,” Area, 2003, pp. 174–182, at p. 175.   5 Prerna K. Mishra, “India to play a key role in global recruitment,” Hindustan Times, 18 December 2002.   6 According to the CIA World Factbook, 18 December 2008: The total fertility rate (TFR) is a more direct measure of the level of fertility than the crude birth rate, since it refers to births per woman. This indicator shows the potential for population change in the country. A rate of two children per woman is considered the replacement rate for a population, resulting in relative stability in terms of total numbers. Rates above two children indicate populations growing in size and whose median age is declining. Higher rates may also indicate difficulties for families, in some situations, to feed and educate their children and for women to enter the labor force. Rates below two children indicate populations decreasing in size and growing older. Global fertility rates are in general decline and this trend is most pronounced in industrialized countries, especially Western Europe, where populations are projected to decline dramatically over the next 50 years.   7 Editorial notebook, “India Rising”, The Boston Globe, 26 February 2006.   8 Department of Elementary Education and Literacy, Department of Secondary and Higher Education, Ministry of Human Resource Development, Government of India, Annual Report, 2005–06, p. 215.   9 Manjeet Kripalani, Pete Engardio and Leah Nathans Spiro, “India’s whiz kids,” BusinessWeek, 12 July 1998. 10 Maggie Shiels, “Asian exodus from Silicon Valley,” BBC News, 17 April 2001. 11 Manjeet Kripalani, “The good life in a Bombay call center,” BusinessWeek, 3 February 2003. 12 “India corners 16% of global software pie,” The Economic Times, 16 October 2004. 13 Manjeet Kripalani, “For India’s tech grads, there’s no place like home,” BusinessWeek, 3 February 2003. 14 “International mobility of the highly skilled,” OECD Proceedings, 2002, p. 14.

210   Notes 15 Ibid., p. 72. 16 Biao, Xiang, “Indian information technology professionals’ world system,” in Brenda S.A. Yeoh and Katie Willis (eds) State/Nation/Transnation: Perspectives on Transnationalism in the Asia-Pacific, London: Routledge, 2004. 17 George J. Borjas, The Economic Benefits from Immigration, Cambridge, MA: National Bureau of Economic Research, 1994. 18 Devesh Kapur, Give Us Your Best and Brightest: The Global Hunt for Talent and Its Impact on the Developing World, Washington, D.C.: Center for Global Development, 2005, Binod Khadria, ‘Shifting paradigms of globalization: the twenty-first century transition towards generics in skilled migration from India’, International Migration, 39(5), 2001, Salim Lakha, ‘The internationalisation of Indian computer professionals’, South Asia, XV(2), 1992. 19 Report of the High Level Committee on Indian Diaspora, 2001. 20 Arasaratnam Sinnappah Indians in Malaysia and Singapore, Kuala Lumpur: Oxford University Press, 1979; Rajeshwary Ampalavanar, Politics and the Indian Community in West Malaysia and Singapore, 1945–1957, London: University of London, 1978; Tai Yong, Tan and Andrew Major, “India and Indians in the making of Singapore,” in Yong Mun Cheong and V.V. Bhanoji Rao (eds) Singapore-India Relations: A Primer, Singapore: Singapore University Press, 1995; I.J. Bahadur Singh, Indians in Southeast Asia, New Delhi: Sterling Publishers Private Limited, 1982, and K. Kesavapany, A. Mani and P. Ramasamy (eds), Rising India and Indian Communities in East Asia, Singapore: ISEAS, 2008. 21 Arunajeet Kaur, “Singapore’s New Indians: attracting Indian foreign talent to Singapore,” in K. Kesavapany, et al. Rising India and Indian Communities in East Asia, p. 620. 22 Ibid., p. 625. 23 Straits Times, April 1990 and 1992, Singapore. 24 The metro cities or A1 cities like Bangalore, Chennai, Delhi, Kolkatta and Delhi are considered tier I cities and key administrative, financial, economic centers in India. The smaller or secondary cities are defined as tier II and III cities. Tier II cities could include Ahmedabad, Hyderabad and Pune among others. Tier III cities could include Surat, Chandigarh, Nagpur, Vadodara, Visakhapatnam and Jaipur. As tier I cities become saturated with investments, business demands and cost of development and real estate increase, the flow will be diverted to tier II and tier III cities. 25 Nina Glick Schiller, Linda Basch and Cristina Szanton Blanc, “From immigrant to transmigrant: theorizing transnational migration,” Anthropological Quarterly, 68(1), January 1995, pp. 48–63, at p. 48. 26 Meijering and van Hoven, “Imagining difference,” p. 175. 27 Glick Schiller et al., “From immigrant to transmigrant,” p. 48. 28 Steven Vertovec, “Conceiving and researching transnationalism,” Ethnic and Racial Studies, 22(2), March 1999, pp. 448–461, at p. 448. 29 Thomas Faist, “Transnationalization in international migration: implications for the study of citizenship and culture,” Ethnic and Racial Studies, 2(2), March 2000: 189– 122, at p. 191. 30 Ibid., p.191. 31 Steven Vertovec, “Conceiving and researching transnationalism,” pp. 458–459. 32 Alejandro Portes, Luis E. Guarnizo and Patricia Landolt, “The study of transnationalism: pitfalls and promise of an emergent research field,” Ethnic and Racial Studies, 22(2), March 1999: 217–237, at p. 221. 33 Ibid., p. 223.

Notes   211 34 Chain migration describes the way an initial migration would be followed by others in the same family or community. Stephen Castles, “The factors that make and unmake migration policies,” International Migration Review, 38(3), Fall 2004: 852–884, at p. 858. 35 Ibid., p. 859. 36 Portes et al., “The study of transnationalism,” p. 221. 37 Ibid., p. 465. 38 Ibid., p. 465. 39 Ibid., p. 467. 40 According to the Ministry of Overseas Indian website, the Ministry was headed by a Minister of State (Independent Charge) until recently. Shri Ravi Vayalar is the new Minister of Overseas Indian Affairs. On the administrative side, a Secretary to the Government of India heads the Ministry. Presently, the Ministry is organized into three functional Divisions and three functional Units. Of the three Divisions, two are headed by Joint Secretaries. They are the Diaspora Services Division and the Financial Services Division. The Protector General of Emigrants (PGoE) heads the Overseas Employment Services Division. The Social Services Unit and the Management Services Unit are staffed by officers of the rank of Deputy Secretary. The Information Services Unit is headed by Senior Technical Director (NIC). 41 Ministry of Overseas Indian Affairs, Annual Report 2006–07, p. 6. 42 The World Bank, “‘Brain drain’ and the global mobility of high-skilled talent,” The World Bank, Prem Notes, Number 123, September 2008, p. 3. 43 Our Bureau, “TiE, IIT Bombay alumni body to organize Innovations ‘07,” Business Line, 18 October 2006. 44 Manuel Castells, The Information Age: Economy, Society and Culture, Vol. One: The Rise of the Network Society, Malden, MA: Blackwell Publishers, 1996. 45 Manuel Castells, “Informationalism, networks, and the network society: a theoretical blueprint,” in Manuel Castells (ed.) The Network Society, Cheltenham: Edward Elgar, 2004, p. 3. 46 According to Castells, “Informationalism, networks, and the network society,” pp. 5–6: Flexibility means that networks can reconfigure according to changing environments, keeping their goals while changing their components. They go around blocking points in communication channels to find new connections. Scalability - they can expand or shrink in size with little disruption. Survivability – because they have no centre, and can operate in a whole range of configurations, networks can resist attacks on their nodes and codes because the codes of the network are contained in multiple nodes that can reproduce the instructions and find new ways to perform. 47 Meijering and Hoven, “Imagining difference,” p. 176. 48 Ibid., p. 176. 49 Manuel Castells, End of Millennium, 2nd edn, Malden, MA: Blackwell Publishers, 2000, pp. 213–215. 50 Demetrious G. Papademetriou, Madeline Sumption and Will Somerville, Migration and the Economic Downturn: What to Expect in the European Union, Migration Policy Institute, January 2009. 51 Mira Kamdar, “Reverse exodus: high-tech Indian immigrants returning home,” San Jose Mercury News, 13 May 2007 and Robert Weisman, “High-tech talent flows back to India: those who helped fuel US boom may spur brain drain,” The Boston Globe, 8 August 2005.

212   Notes 52 Saritha Rai, “For Indian diaspora, no place like home,” International Herald Tribune, 25 December 2005. 53 Kamdar, “Reverse exodus.” 54 “International mobility of the highly skilled,” OECD Proceedings, 2002, p. 93. 55 Rai, “For Indian diaspora, no place like home.” 56 Ibid. 57 Chanchal Pal Chauhan, “NRIs’ return to India puts Auto R&D in top gear,” Business Times, India, 9 May 2007. 58 Kristin Collins, “Immigrants follow ambitions back to India,” China, The News Observer, 3 March 2009. 59 Ishani Duttagupta, “Homing in,” Economic Times, 18 March 2007. 60 Ibid. 61 “Evolution of Global Indian,” Economic Times, 22 February 2007. 62 Ishani Duttagupta, “Movers & shakers,” Economic Times, 13 January 2007. 63 Ibid. 64 D. Murali, B. Baskar and C. Ramesh, “Start viewing global diaspora as a brain bank,” Business Times, India, 30 May 2007. 65 Pranay Gupte, “Making India’s case,” Forbes Magazine, 27 November 2006. 66 In 2008, India topped the global remittances flow, Times of India, 24 July 2009. 67 The World Bank, “India receives world’s largest remittance flows,” website, accessed 24 July 2008. 68 Ibid. 69 Steve Raymer, “Dubai’s Kerala connection,” Yale Global, 12 July 2005. 70 Shefali Rekhi, “Desert bloom,” Straits Times, 7 July 2007. 71 Phil Mercer, “Australian welcome for Indian migrants,” BBC News, 11 September 2006. 72 “International mobility of the highly skilled,” OECD Proceedings, 2002, p. 93. 73 Stephen Castles, “Comparing the experience of five major emigration countries,” International Migration Institute, Working Paper 7, 2007, p. 17. 74 James S. Coleman, “Social capital in the creation of human capital,” in Rob Cross, Andrew Parker and Lisa Sasson (eds) Networks in the Knowledge Economy, Oxford: Oxford University Press, 2003, p. 63.

2 India: source country for human capital   1 “India economic summit closes with warning of falling growth, but no crisis,’” World Economic Forum Press Release, December 2008.   2 Ibid.   3 “Rate cut by Indian central bank,” BBC News, 21 April 2009.   4 Ashok Handoo, “India shining as economic growth records 6.7%,” 23 June 2009, available at: http://www.commodityonline.com/news/India-Shining-as-economic-growthrecords-67-18918-3-1.html, accessed 17 November 2009.   5 “A time for caution with the Indian job market: new report examines,” Business Wire, 25 September 2008.   6 Email interview with Recruitment Agent in Chennai, 20 May 2009.   7 Rekhi, “Returnees fire up innovation and research.”

Notes   213   8 India@Risk 2008, “A global risk network and Confederation of Indian Industry briefing,” World Economic Forum, 2008.   9 “Creaking, groaning,” The Economist, 11 December 2008. 10 Ibid. 11 Deloitte, Global Economic Outlook 2008, A Deloitte Research Study, p.8 12 Rekhi, “Returnees fire up innovation and research.” 13 Ibid. 14 Faizal bin Yahya, Economic Cooperation between India and Singapore, London: Routledge, 2008. 15 Interviewee, Chennai, India, 16 December 2006. 16 Ibid. 17 Ibid. 18 Interviewee, Kuala Lumpur, Malaysia, 2 July 2007. 19 Piyasiri Wickramasekara, “Policy responses to skilled migration: retention, return and circulation,” in Perspectives on Labour Migration, 5E, Social Protection Sector, International Programme, International Labour Office, Geneva, 7–8 November 2002, p. 13 20 Deepak Gupta, Talent Wars: The Return of the NRI, Delhi: Korn/Ferry International, 2008. 21 First Anniversary Issue, Pravasi Bharatiya, Volume 1, Issue 1, January 2007. 22 “A deepening engagement,” Pravasi Bharatiya, Volume 1, Issue 10, November 2008. 23 India@Risk 2008, “A global risk network and Confederation of Indian Industry briefing,” World Economic Forum, 2008. 24 Deloitte, Global Economic Outlook 2008, a Deloitte Research Study, p. 8. 25 Anand Giridharadhas, “A college education without job prospects,” The New York Times, 30 November 2006. 26 Ibid. 27 Ibid. 28 Interviewee, IIT Madras, Chennai, 18 December 2006. 29 Ibid. 30 Interviewee, Indian Institute of Management, Lucknow Noida Campus, 5 January 2007. 31 Ibid. 32 Recruitment agent, Chennai, India, 16 December 2006. 33 Ibid. 34 Ibid. 35 Recruitment agent, Delhi, India, 4 January 2007. 36 Recruitment agent, Mumbai, India, 27 December 2006. 37 Ibid. 38 Recruitment agent, Chennai, India, 18 December 2006. 39 Ibid. 40 Ibid. 41 Ibid. 42 Ibid. 43 Ibid. 44 Ibid. 45 Recruitment agent, Delhi, India, 29 December 2006. 46 Ibid.

214   Notes 3 The employment market in India   1 Robert J. Grossman, “HR’s rising star in India,” HR Magazine, September 2006.   2 Hot Spot, “Managing human capital in India,” 23 July 2008, available at: http://www. mercer.com/referencecontent.htmidcontent=1314215, 2 September 2009.   3 Grossman, “HR’s rising star in India,” available at: http://findarticles.com/p/articles/ mi_m3495/is_9_51/ai_n26993519/, accessed 7 January 2009.   4 “Human capital insight,” Country Updates, India, July 2009, Watson Wyatt Worldwide, available at: http://www.watsonwyatt.com/asia-pacific/pubs/HCI/June-2009/6_2009_ Country_Updates.asp, accessed 12 October 2009.   5 Net employment is the figure derived by taking the percentage of employers anticipating total employment to increase and subtracting from this, the percentage expecting to see a decrease in employment at their location in the next quarter.   6 Manpower Employment Outlook Survey, India, Third Quarter.   7 F.C. Kohli, IT Revolution in India: An Assessment Report. Rupa, 2005.   8 “Intellectual capital – India’s hidden wealth?” The Hindu, 27 March 2006.   9 India Inc. is used to describe the large business houses in India which act independently. 4 Country study: Indonesia   1 A. Mani, “Indians in Jakarta,” in K.S. Sandhu and A. Mani (eds), Indian Communities in Southeast Asia, Singapore: ISEAS, 1993, p. 100.   2 K. Sital, “Indians in Indonesia,” available at: IndoIndians.com.   3 A. Mani, “Indians in North Sumatra, Indian communities in Southeast Asia,” in K.S. Sandhu and A. Mani (eds), Indian Communities in Southeast Asia, Singapore: ISEAS, 1993, p. 48.   4 Ibid.   5 A. Mani, “Indians in Jakarta in Indian communities in Southeast Asia,” in K.S. Sandhu and A. Mani (eds), Indian Communities in Southeast Asia, Singapore: ISEAS, 1993, p. 118.   6 Ibid.   7 Ibid.   8 Embassy of India in Jakarta website: http://www.eoijkt.org/content.php?sid=186.   9 Febiola Desy Unidjaja, “Government to target illegal aliens,” The Jakarta Post, 3 August 2004. 10 Interviewee, Jakarta, Indonesia, 18 December 2008. 11 Interviewee, Jakarta, Indonesia, 16 December 2008. 12 Interviewee, Jakarta, Indonesia, 19 December 2008. 13 Sindhi Directory, Indonesia, 2006/2007. 14 Interviewees, Jakarta, Indonesia, 20 December 2008. 15 Adianto P. Simamora, “India diaspora,” Jakarta Post, 18 February 2009. 16 Interviewee, Jakarta, Indonesia, 20 December 2008. 17 Ibid. 18 “India-Indonesian trade,” Ministry of Commerce, Indian Government, 8 August 2005. 19 A. Mani, “Indians in a rapidly transforming Indonesia,” in K. Kesavapany, A. Mani and P. Ramasamy (eds), Rising India and Indian Communities in East Asia, Singapore: ISEAS, 2008, p. 236.

Notes   215 20 Ibid. 21 Adianto P. Simamora, “India diaspora,” Jakarta Post, 18 February 2009. 22 Interviewee, Jakarta, Indonesia, 20 December 2008. 23 Interviewee, Jakarta, Indonesia, 22 December 2008. 24 Interviewee, Jakarta, Indonesia, 16 December 2008. 25 Bill Guerin, “Texmaco, IBRA and the battle over debt,” Asia Times, 19 April 2003, available at: http://atimes.com, accessed 18 June 2009. 26 Ibid. 27 “Texmaco Group grapples with alleged loan scam,” The Jakarta Post, 12 June 1997. 28 “BNI agrees to keep Texmaco’s head above water,” The Jakarta Post, 15 April 2003. 29 Interviewee, Jakarta, Indonesia, 19 December 2008. 30 Interviewee, Jakarta, 20 December 2008. 31 Interviewee, Jakarta, Indonesia, 19 December 2008. 32 Interviewee, Jakarta, Indonesia, 16 December 2008. 33 Interviewee, Jakarta, Indonesia, 17 December 2008. 34 “Indonesia offers visa-on-arrival for Indians,” available at: http://www.rediff.com, 15 June 2005. 35 IKTA Work Permit for Foreign Person (IKTA), available at: http://www.lombokglobal. biz/work_permit.htm 36 Requirements for Expatriate Work and Stay Permit, available at: http://www.expat.or.id/ business/expatstayrequirements.html. Pacific Bridge, Inc. Asian HR eNewsletter, “Indonesia: Work Permit Process Simplified for Expatriates,” Volume 6, Number 5 (June 12, 2006). 37 Interviewee, Jakarta, Indonesia, 19 December 2008. 38 Poonam Sagar, “A friendship between nations,” The Jakarta Post, 16 March 2009. 39 Ibid. 40 India Club Jakarta Directory 2007. 41 “Polaris Chief Arun Jain detained in Indonesia,” Press Trust of India, 16 December 2002. 42 “Indian PM may discuss Polaris case with Megawati,” The Jakarta Post, 18 December 2002. 43 “Polaris CMD forcibly detained in Jakarta,” Economic Times, 17 December 2002. 44 Shalini Singh, “It could be a mistake: Indonesia,” Economic Times, 18 December 2002. 45 “India takes up Polaris CMD Jain’s arrest with Indonesia,” Economic Times, 17 December 2002. 46 “Polaris will do no business with Indonesia for 1 year,” Economic Times, 27 December 2002. 47 “India Software Inc treads cautiously after Indonesian incident,” Express Computer, 6 January 2003. 48 Ibid. 5 Country study: Malaysia   1 P.S. Suryanarayana, “A significant visit,” frontline, Vol. 22, Issue 1, 1–14 January 2005.   2 “Malaysian Minister denies ban of Indian workers,” CNN News, 9 January 2008.   3 S. Nagarajan, “Indians in Malaysia: Towards Vision 2020,” in K. Kesavapany, A. Mani and P. Ramasamy (eds), Rising India and Indian Communities in East Asia, Singapore: ISEAS, 2007, p. 378.

216   Notes   4 Baradan Kuppusamy, “Malaysia’s minority Indians drift,” Asia Times, 19 October 2005.   5 “A hitherto quiescent minority loses faith in the social contract: Indian Mutiny,” The Economist, 24 January 2008.   6 Ibid.   7 Suryanarayana, “A significant visit.”   8 U.S. Department of State, 2005 Investment Climate Statement – Malaysia, Washington, DC: US Government Printer.   9 Rupinder Singh, “Getting and keeping top talent,” New Straits Times, 15 June 2007, p. 1. 10 “New policy for foreign workers in the works, Bernama,” The Malaysian National News Agency, 10 September 2004. 11 “India, Malaysia mull pact on economic co-operation,” Business Line, 27 November 2007. 12 Interviewee, Kuala Lumpur, Malaysia, 2 July 2007. 13 Ibid. 14 Federal Publications, Foreign Labor Trends: Malaysia, Ithaca, NY: Cornell University ILR School, 2002. 15 Bureau of International Labor Affairs, Report on Foreign Labor Trends – Malaysia, Washington, DC: United States Department of Labor, 4 February 2009. 16 Vijayakumari Kanapathy, International Migration and Labour Market Developments in Asia: Fine-Tuning the Policy and Institutional Framework for Managing Cross-Border Labour Flows, Malaysia Country Report, Institute of Strategic & International Studies, 2006, p. 9, available at: http://www.ilo.co.jp/foreign/event_s/ event/documents/2006sopemi/countryreport.pdf, accessed 5 September 2009. 17 Ibid, p.11. 18 Mohd Radzi Sheikh Ahmad, Minister of Home Affairs Malaysia, “International migration and development – a Malaysian perspective,” paper presented at International Symposium on International Migration and Development, Turin, Italy, 28–30 June 2006. 19 “Malaysia to cut 500 000 foreign workers by 2009: report,” Associated Freedom Press, 20 January 2008. 20 Dr. Jamaludin Mohd Jarjis, “Transformation into a knowledge-based economy: the Malaysian experience,” paper presented at conference on Going Global: The Challenges for Knowledge-Based Economies, Helsinki, Finland, 21–22 September 2006, p. 7. 21 Ibid, p. 7. 22 Ames Gross and John Minot, Malaysia HR Update – 2007, October 2007, available at: http://www.pacificbridge.com/publication.asp?id=99. 23 Immigration Department of Malaysia website, http://www.imi.gov.my/eng/perkhidmatan/im_PegawaiDagang.asp. 24 Ibid. 25 Ibid. 26 Expat Tips Malaysia, http://www.malaysia.alloexpat.com/malaysia_immigration/work_ permit_malaysia.php. 27 Malaysia: 2008 Investment Climate Statement: Malaysia Openness to Foreign Investment, available at: http://www.state.gov/e/eeb/ifd/2008/101777.htm. 28 A. Shukor Rahman, “Efforts to reverse the brain drain,” Computimes, Malaysia, 26 February 2001. 29 Malaysia “likely to pave way for foreign lawyers’,” Straits Times, 26 July 1994. 30 “Department hit by shortage of air traffic controllers,” Straits Times, 26 August 1994.

Notes   217 31 Sharifah Kasim, “MBC aims to woo top biotech talent,” Computimes, Malaysia, 2 May 2005. 32 Suzieana Uda Nagu, “Synergy in new brain-gain plan,” New Straits Times – Management Times, 28 December 2003. 33 Ibid. 34 Ibid. 35 Shukor Rahman, “Efforts to reverse the brain drain,” CompuTimes Malysia. 36 Reme Ahmad, “KL honorary citizens idea to woo talent,” Straits Times, 11 October 2002. 37 Shukor Rahman, “Efforts to reverse the brain drain.” 38 “Only one in 15 professionals wants to return,” New Straits Times, 12 July 2004. 39 Rejal Arbee, “The Malays are leaving too,” Straits Times, 8 March 2010. 40 Recruitment Agent, Kuala Lumpur, 4 July 2007. 41 Hazlin Hassan, “Brain-drain debate after Penang loses $4b deal,” Straits Times, 10 November 2009. 42 Ibid. 43 “Achieving holistic development,” New Straits Times, 28 October 1995, p. 17. 44 Toby E. Huff, “Malaysia’s Multimedia Super Corridor and its first crisis of confidence,” Asian Journal of Social Science, 30(2), (2002): 248–270, at p. 256. 45 “The software industry in Penang,” Penang Economic Monthly, 8(4), April 2006: 1. 46 Vikram Khanna, “Multimedia Corridor: India state to work with M’sia,” Business Times, 17–18 May 1997. 47 Malaysia, India should become digital neighbours,” The Star, 16 May 2001. 48 U.S. Department of State, 2005 Investment Climate Statement – Malaysia, available at: http://www.state.gov/eleeb/ifd/2008/101777.htm, accessed 12 August 2009. 49 Hamisah Hamid, “Weak US economy eases labour shortage in IT,” Business Times, Malaysia, 23 April 2001. 50 Ibid. 51 Defined as indigenous, natives and people of Malay origin. 52 Huff, “Malaysia’s Multimedia Super Corridor and its first crisis of confidence,” p. 255. 53 Ashraf Abdullah, “Infosys’ Murthy a CEO in a hurry,” New Straits Times, 26 January 2001. 54 Ooi Sue Hwei, “Untangling the red tape,” Malaysian Business, 1 January 2007. 55 Ibid. 56 Ibid. 57 Huff, “Malaysia’s Multimedia Super Corridor and its first crisis of confidence,” p. 254. 58 Thomas Fuller, “Asia’s Silicone Valleys, after the bubble burst,” International Herald Tribune, 30 April 2001. 59 Edwin Yap, “Malaysia vows to drive ICT goals,” ZDNetAsia, 13 March 2008. 60 Ibid.http://www.zdnetasia.com/news/business/printfriendly.htm?AT=6203892539000003c. 61 Recruitment Agent, Malaysia, KL, 4 July 2007. 62 Interviewee, Kuala Lumpur, 5 July 2007. 63 “The software industry in Penang,” p. 4. 64 Norzanah Mat Nor and Abdul Kadir Rosline, “Managing knowledge workers in a knowledge-based economy: the changing role of human resource management in the MSC Status Companies, Malaysia,” unpublished report, July 2005.

218   Notes 65 “The software industry in Penang,” p. 4. 66 Ibid. 67 “Malaysia, Singapore, Thailand,” Migration News, 12(2), April 2005. 68 Brendan Pereira, “Illegal foreign professionals now the target of crackdown,” Straits Times, 10 March 1997. 69 Ibid. 70 “IT professionals enraged over arrest of Indians in Malaysia,” Indo-Asian News service, 10 March 2003. 71 Indrajit Basu, “India’s software pros face global ire,” Asia Times, 13 March 2003. 72 “Malaysian cops harass Indians,” The Economic Times, 10 March 2003. 73 C.S. Kuppuswamy, “Malaysia: The nightmare of Indian IT professionals – An update,” South Asia Analysis Group, Paper No. 643, 27 March 2003. 74 “India warns Malaysia against further harassment of its IT men,” India Express, 14 March 2003. 75 Mahesh Prasad, “Further traffic rights to Malaysia Airlines kept in abeyance,” Malaysia Economic News, 22 April 2003. 76 “Malaysia regrets souring ties with India, wants to resume relations,” Deutsche PresseAgentur, 19 March 2003. 77 Risen Jayaseelan, “Special focus: new projects to keep profits up,” The Edge, Malaysia, 31 December 2007. 78 “Malaysia to hire less foreign workers,” ANTARA, The Indonesian National News Agency, 14 August 2007. 79 Mustapha Kamil, “Work permits: panel simplifies process,” New Straits Times, 6 May 1997, p. 21. 80 Esther Tan, “Several agencies allowed to approve work permits,” New Straits Times, 6 May 1997, p. 2. 81 Banker, Kuala Lumpur, 2 July 2007. 82 HR manager, IT company, Kuala Lumpur, 5 July 2007. 6 Country study: Singapore   1 Speech by Lee Yi Shan, Minister for Trade and Industry and Minister-in-Charge of Entrepreneurship, Entrepreneurs Organization University’s Think Big Conference, 5 November 2008, “Singapore and Singapore population of 4.99m is older, female and more likely living alone,” Channel News Asia, 28 September 2009.   2 Chuang Peck Ming, “Tough balance between growth, foreign talent,” Business Times, 25 October 2008.   3 Megawati Wijaya, “Singapore hangs out jobs-vacant sign,” Asia Times, 21 August 2008.   4 Email interview with recruitment agent, Chennai, India, 20 May 2009.   5 Melissa Sim, “PRs active in grassroots work,” Straits Times, 9 March 2009.   6 “The population conundrum,” excerpts from the Deputy Minister’s speech in parliament, Today, 5 March 2010, p. 36.   7 Ibid., p. 37.   8 Megawati Wijaya, “Singapore hangs out jobs-vacant sign,” Asia Times, 21 August 2008.   9 Esther Ng, “‘No’ to sending foreigners back,” Today, 23 February 2009. 10 Chua Mui Hoong and Aaron Low, “Sweet and sour points in immigrants debate,” Straits Times, 26 August 2006.

Notes   219 11 Gan Ling Kai and Zaihan Mohamed Yusof, “Red light,” The New Paper, Singapore, 21 February 2010, p. 8. 12 Hoong and Low, “Sweet and sour points in immigrants debate.” 13 Joel Kotkin, The New Geography, New York: Random House, 2000, pp. 6-7. 14 “Twenty-five years of below replacement fertility: implications for Singapore,” Department of Statistics, 1 April 2002. 15 Peh Shing Huei, “Foreign talent critical to S’pore: DPM,” Sunday Times, 6 August 2006. 16 Ibid 17 Peh Shing Huei, “Foreign Talent critical to S’pore: DPM.” 18 Ibid. 19 Peh Shing Huei, “Foreign talent: see whole picture, says MM,” Straits Times, 7 September 2006. 20 Ministry of Manpower website; URL: 21 Ibid 22 Ravi Vellor, “Singapore seeks level playing field,” Straits Times, 10 January 2010. 23 Interviewee, Chennai, India, 12 December 2006. 24 Interviewee, Chennai, India, 12 December 2006. 25 Interviewee, Chennai, India, 12 December 2006. 26 Interviewee, Chennai, India, 12 December 2006. 27 Cherian George, “Manpower dilemma in an economic slowdown,” Straits Times, 6 September 1998. 28 Ibid. 29 Charles Chow, “A healthy correction in the offing?” Business Times, 23 July 1992. 30 “EDB recruited professionals from 3 main sources abroad,” Straits Times, 7 January 1994. 31 Pang Eng Fong, “Making migrant labour work across Asia,” Straits Times, 8 June 2007. 32 “Foreign talent boosted GDP by 20% in last decade: SM Lee,” Straits Times, 30 October 2001. 33 “Singapore to pursue policy on foreign talent despite unemployment,” Agence France Presse, 28 March 2002. 34 Ibid. 35 Address by Dr. Tony Tan, Deputy Prime Minister of Singapore, Federation of Indian Chambers of Commerce and Industry (FICCI), New Delhi, India, 28 October 2004. 36 Ibid. 37 “Foreign talent policy here to stay: SM,” Business Times, 22 October 2003. 38 Richard Florida, The Flight of the Creative Class, New York: HarperCollins, 2005, pp. 37–41. 39 Connie Levett, “Singapore – the new mecca for Asia’s pink dollar,” The Age, 14 August 2004. 40 Wayne Arnold, “Quietly, Singapore lifts its ban on hiring gays,” International Herald Tribune, 5 July 2003. 41 Chua Peck Ming, “Talent hunt,” Business Times, 25 February 2008. 42 Clarissa Oon, “S’pore loses 1,000 top talents yearly: MM Lee,” Straits Times, 13 February 2008. 43 Ibid. 44 Liaw Wy-Cin and Jalelah Abu Baker, “No exodus of talent likely to US,” Straits Times, 12 March 2009.

220   Notes 45 Ibid. 46 Ibid. 47 Goh Chin Lian, “Big push to train 74,000 S’poreans for tourism jobs,” Straits Times, 26 October 2007. 48 Lim Wei Chean, “Tourism dips for 5th straight month,” Straits Times, 27 November 2008. 49 Lim Wei Chean, “Uproar over reports of IR jobs going to foreigners,” Straits Times, 14 April 2009. 50 Sue-Ann Chia, “Panel to prepare for long-term growth,” Straits Times, 28 May 2009. 51 Ibid. 52 Ibid. 53 Amiti Sen, “Welcome to Singapore,” Economic Times, 28 July 2006. 54 NCCS Press Release, 29 May 2006, Singapore. 55 Minister for Law, K. Shanmugam, “Opening Remarks for the Qualifying Law Practice Licenses Press Conference”, 5 December 2008, Singapore. 56 MM Lee Kuan Yew, “Transforming S’pore to stay ahead,” Business Times, 9 July 2007. 57 Salil Tripathi, “S’pore companies recognize pool of talent from India,” Business Times, 8 June 1992. 58 “Singapore plans future in Science,” Taipei Times, 25 August 2005. 59 Minister of Trade and Industry Lim Hng Khiang’s reply to Parliament Questions on Singapore Economy, 27 August 2007. 60 Speech by Mr. Goh Chok Tong, Senior Minister, Singapore International Chamber of Commerce (SICC), 170th Anniversary Dinner, 25 May 2007, Singapore. 61 “PM – Self-made foreign talent keep us sharp,” Straits Times, 21 February 2009. 62 Matthew Thompson, “S’pore tops global innovation rankings,” Straits Times, 26 February 2009. 63 European-American Business Council and ITIF, “The Atlantic Century, Benchmarking EU and U.S. Innovation and Competitiveness,” February 2009, p. 3. 64 Ibid, p. 15. 65 Ibid, p. 16. 66 “Economic Contributions of Singapore’s Creative Industries,” Economic Survey of Singapore, First Quarter 2003, p. 65. 67 Speech by Mr. Goh Chok Tong, Senior Minister, Singapore International Chamber of Commerce’s 170th Anniversary Dinner, 25 May 2007, Singapore. 68 “The Atlantic Century,” p. 16. 69 Investing in Singapore’s Cultural Capital, report by Ministry of Trade and Industry, Singapore, March 2002. 70 Ibid. 71 “Accept outflow of talents as a reality: PM,” Straits Times, 11 April 2008. 72 Speech by Mr. Goh Chok Tong, Senior Minister, Singapore International Chamber of Commerce’s 170th Anniversary Dinner, 25 May 2007, Singapore. 73 Bryan Lee, “Rising costs not deterring MNCs from Singapore, says SM Goh,” Straits Times, 7 July 2007. 74 Robin Chan, “Costliest cities, S’pore’s ranking up,” Straits Times, 11 March 2009. 75 “Bureau, Mumbai, New Delhi among costliest cities for expatriate rentals,” Business Line, 4 April 2009. 76 Jaime Lee and Chow Penn Nee, “Singapore firms ahead in keeping foreign talent on local terms: PwC,” Business Times, 17 October 2008. 77 Ibid. 78 Chan, “Costliest cities.”

Notes   221 79 Asian Trade Bulletin, March 2008. 80 Singapore Budget 2008. 81 CFA Institute, Volume 1(2), June 2008. 82 Speech by Minister of State for Trade and Industry and Minister-in-Charge of Entrepreneurship Lee Yi Shyan, Entrepreneurs’ Organization University’s Think Big Conference, 5 November 2008, Singapore. 83 “Singapore is leaking talent: SM Goh,” Straits Times, 15 March 2007. 84 Ibid. 85 “Talent outflow worries 1 in 5 employers here,” Straits Times, 26 June 2008. 86 Ibid. 87 Ibid. 88 “Accept outflow of talents as a reality: PM,” Straits Times, 11 April 2008. 89 Ibid. 90 Zafar Anjum, “The return of the native: India’s reverse brain drain,” MIS Asia, 13 October 2008. 91 Yen Feng, “Some must-haves for S’pore to woo and retain talent,” Straits Times, 12 March 2009. 92 Ibid. 93 Shefali Rekhi, “Returnees fire up innovation and research,” Straits Times, 25 April 2009. 94 Li Xueying, “Thank you, Mr Lee, say new immigrants,” Straits Times, 13 April 2009. 95 Rajesh Srivastava, “Melting pot of work and leisure,” The Economic Times, 5 February 2006. 96 Sobha Menon, “Spas, surprises and Sentosa,” The Economic Times, 5 February 2006. 97 Robin Chan, “S’pore shipping magnate offers grants to unis,” Straits Times, 28 April 2009. 98 Melissa Sim, “PRs active in grassroots work,” Straits Times, 9 March 2009. 7 Country study: Thailand   1 Gorawut Numnak, “Development and structural diversification of the Thai economy: The cause of labour immigration,” pp. 2–4.   2 “Indians in Thailand are safe says MEA,” The Financial Express, 21 September 2006.   3 Interview with Indo.Thai web manager in Bangkok, 27 August 2007.   4 Information on the Indian community in Thailand by Sonia Boonchanasukit of www. RadioBangkok.net, September 2007.   5 Interview with Sonia Boonchanasukit of www.RadioBangkok.net, 28 August 2007.   6 Srisurang Poolthupya, “Indians in Thailand,” in K. Kesavapany, A. Mani and P. Ramasamy (eds), Rising India and Indian Communities in East Asia, Singapore: ISEAS, 2007, p. 672.   7 Ibid., p. 672.   8 Ibid., p. 675.   9 Ibid., p. 683. 10 Ibid., p. 683. 11 Ibid., p. 677. 12 Ibid., p. 677. 13 Ibid., p. 679. 14 Interviewee, Bangkok, Thailand, 28 August 2007. 15 Interviewee, Bangkok, Thailand, 28 August 2007.

222   Notes 16 “Indians in Thailand are safe says MEA,” The Financial Express, 21 September 2006. 17 Yogendra Singh, India Thailand Relations, IPCS Special Report, No. 46, July 2007. 18 “Thailand–India trade set to cross US $ 4 billion,” Bernama News, 15 August 2007. 19 Singh, India Thailand Relations. 20 Ibid. 21 “Thailand–India trade set to cross US $ 4 billion,” Bernama News, 15 August 2007. 22 “Thai gov’t suspends foreign workers’ registration,” People’s Daily, 30 January 2009. 23 Business-in-Asia.com, available at: http://www.business-in-asia.com/th_workpermit. html. 24 Thailand.guru.com, Work Permit in Thailand, available at: http://www.thailandguru. com/work-permit-thailand.html. 25 Integritylegal.com, available at: http://www.integrity-legal.com/company-thailand/thaiwork-permit.html. 26 “THAILAND: Migrant workers unprotected and uninformed,” IRIN News, 20 March 2009, available at: http://www.plusnews.org/Report.aspx?ReportId=75261. 27 Ching-lung Tsay, “Labor migration and regional changes in East Asia: outflows of Thai workers to Taiwan,” Southeast Asian Studies, 40(3), December 2002: 372–392, p. 380. 28 Gorawut Numnak, “Development and structural diversification of the Thai economy: the cause of labour immigration.” 29 Ibid. 30 International Labour Migration Statistics. 31 Interviewee, Bangkok, Thailand, 26 September 2007. 32 Interviewees, Bangkok, Thailand, 26 September 2007. 33 Interviewees, Bangkok, Thailand, 28 August 2007. 34 Interviewees, Bangkok, Thailand, 28 August 2007. 35 Interviewee, Bangkok, Thailand, 28 August 2007. 36 Interviewee, Bangkok, Thailand, 28 August 2007. 37 Interviewee, Bangkok, Thailand, 28 August 2007. 38 Interviewee, Bangkok, Thailand, 28 August 2007. 39 Interviewee, Bangkok, Thailand, 28 August 2007.

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Interviews 2006 Interview, Chennai, India, 12 December 2006. Interview, Chennai, India, 12 December 2006. Interview, Chennai, India, 12 December 2006. Interview, Chennai, India, 12 December 2006. Interview, Chennai, India, 16 December 2006. Recruitment Agent, Chennai, India, 16 December 2006. Interviews, IIT Madras, Chennai, 18 December 2006. Recruitment Agent, Chennai, India, 18 December 2006. Recruitment Agent, Mumbai, India, 27 December 2006. Recruitment Agent, Delhi, India, 29 December 2006.

2007 Recruitment Agent, Delhi, India, 4 January 2007. Interview, Indian Institute of Management, Lucknow Noida Campus, 5 January 2007. Interview, Kuala Lumpur, Malaysia, 2 July 2007. Interview, Kuala Lumpur, Malaysia, 2 July 2007. Interview Recruitment agent, Kuala Lumpur, 4 July 2007. Interview, Kuala Lumpur, 5 July 2007.

Bibliography   231 Interview, HR Manager, IT company, Kuala Lumpur, 5 July 2007. Interview with Indo.Thai web manager in Bangkok, 27 August 2007. Interview, Bangkok, Thailand, 28 August 2007. Interview, Bangkok, Thailand, 26 September 2007. Interview, Bangkok, Thailand, 26 September 2007.

2008 Interview, Jakarta, Indonesia, 16 December 2008. Interview, Jakarta, Indonesia, 17 December 2008. Interview, Jakarta, Indonesia, 18 December 2008. Interview, Jakarta, Indonesia, 19 December 2008. Interview, Jakarta, Indonesia, 19 December 2008. Interview, Jakarta, Indonesia, 20 December 2008. Interview, Jakarta, Indonesia, 20 December 2008. Interview, Jakarta, Indonesia, 22 December 2008.

2009 Email interview with Recruitment agent in Chennai, India, 20 May 2009.

Index

A*Star 156, 164 ABC International 137 Aditya Birla group 6, 110, 181, 192 Africa: job placements 32, 33; remuneration packages 34–5; salaries 36 agriculture 88 air traffic controllers (ATCs): in Malaysia 121 Albar, Syed Hamid 116, 120, 126 American Malaysian Chamber of Commerce 122 Ampang 137 Andhra Association (Kuala Lumpur) 144 Andhra Community (Singapore) 165 Andhra Pradesh: engineering graduates 19, 64; tertiary institutions 48 Aptech 129, 136 Arroyo, Gloria 156 ASEAN region: free trade agreement with 15, 202; ICT clusters 4; see also Southeast Asian region Asian Development Bank 109 Asian financial crisis (1998) 10; Indonesia 92, 97, 102, 107; Singapore 154; Thailand 185, 192 Association of Southeast Asian Nations see ASEAN Australia: employment market 163; Indian migrants to 14 Aziz, Dato’ Seri Rafidah 115–16 “B class” talent 58 Badawi, Abdullah 115 Bakrie Group 93, 101 Balakrishnan, Vivian 152 Balikpapan 107 Bandung 90, 91 Bangalore 2, 105, 140; IT hub 18, 41, 44; jobs competition 19

Bangkok: Indian expatriate experiences 187–201; Indian population 180, 181 Bank Artha Graha 96–7 Bank BNI 93 Bank of India 92 Bank Negara Malaysia 118, 119 banking sector 38; attrition 68–9, 70; salaries 70 Bardan, Shamsuddin 122 Barisan National Party (BN) 114 Batu Caves 142 Beijing: attractiveness 46 “benching” 44 Beverage, Food and Service (BFS) sector 30; attrition 41, 48; job rejection rates 41 Bharat Petroleum 81 Bill Gates Foundation 45 Biopolis 158 biotechnology sector 121 Birla Group 92, 183, 188 Block M 108 BMW 124 Board of Investment (BOI) 180, 185–6 Bollywood movies 182, 195, 198 Bombay Merchants Association 91 BPKM 95 BPO see business process outsourcing brain drain: from Malaysia 121; reverse 20, 41 branded goods 54 bribery 85 Brickfields 116–17, 126–7, 131, 136, 137, 141, 144, 207 Bumiputeras: promotion policy 124, 125, 134, 136 business process outsourcing (BPO) 29, 203; attrition 40; salaries 42 business requirement assurance 60

Index   233 “C class” talent 58 C Dot 102 call centers 2, 43–4, 124, 125 Cambodia 185 career prospects: importance 29–30 Carnegie Mellon University 174 caste quotas 26 CAT examination 26 CECAs see Comprehensive Economic Cooperation Agreements chain migration 8 Changwat Ranong 185 Chennai: employment opportunities 40–1; lifestyle 41–2; manufacturing hub 44; salaries 59–60, 61, 64 Chennai employers 55–64; conglomerate 55–7; consultancy company 63–4; Indian IT company 60–3; South Korean MNC 57–60 Chiang Mai 180, 181 Chiang Rai 180 childcare support 62 China: attractiveness 46; business development model 85; competition with India 77–8; development 170; population 1; salaries 51, 53 CII see Confederation of Indian Industries Civil Aviation sector 121 Civil Service Computerisation Programme 158 climate change effects 81 coaching 65 coal 93 Coimbatore 44 communication skills: lack of 62 company sponsorship 95 compensation packages 65 Comprehensive Economic Cooperation Agreements (CECA) 4, 129, 156–7, 175, 206 Confederation of Indian Industries (CII) 93, 107 Congress Party 175 Consortium of Indian Industries in Malaysia 129, 131 construction sector 37, 42; attrition 72–3, 87, 88; opportunities 72; trends 86 consumer demand 69 Contact Singapore 153, 155 corporate responsibility 77 Cosmo 173 Cosmopoint 136 creativity: India 109; Indonesia 109

cultural capital 158–61 Cyber Jaya 132, 140 dance classes 112 death: compensation in case of 74 Deepavali 172 Delhi: law and order 40 Delhi Public School 141 Democratic Action Party (DAP) 125 dependent pass visas 120 Dhoom 198 differentiation: acts of 207 discrimination: in India 178; in Indonesia 99 Diwali 100, 111, 133, 144, 173, 182, 189 DLF 187 “dollar salary” 34–5 domestic help: Indonesia 112 Dubai: cost of living 45–6; NRIs wishing to return 36 East Asia: attractiveness 78 East India: net employment 53–4 Economic Association of Indonesia and India (ECAII) 91, 93, 107 Economic and Development Board (EDB) 154, 164 Economic Planning Unit (EPU) 116 Economic Review Committee (ERC) 158, 159 Economic Strategies Committee (ESC) 156 Economist Intelligence Unit (EIU) 160 education: competitiveness in India 172; investment in 67; overseas 62–3, 81 employee stock options 84 Employment Pass Eligibility Certificate 161 employment passes (EPs): Malaysia 119, 132, 145; Singapore 150–1, 158, 160 enclaves: of settled Indian communities 207 EntrePass 161 entrepreneurial spirit 47 expatriates (non-Indian): recruitment in India 67, 74–5, 76, 79, 88 Exxon Mobil: Singapore 34, 35, 36 Far East: employment demand 39 Farangs 189 fertility rates 1, 209 Festival of India 93

234   Index financial institutions: back offices in India 46 financial services sector: attrition 68–9, 76; salaries 76, 84; scale in India 68 flexitime 74 foreign experience: value 30 Foreign Manpower Employment Division 155 forex 69 free trade agreements (FTAs) 15, 156, 175, 202, 206 Fullbright Fellowship program 25 Gandhi Memorial School (GMS) 91, 98, 105, 107, 112 Gandhi Seva Loka 96 Ganesha Restaurant (Jakarta) 103, 104, 112 garments industry 184, 193 Gartner Consultancy 125 gated communities 20, 178 Gem and Jewelry Exhibition 182 gender disparity 203 global economic crisis 17–19, 51, 147, 156, 202–3 Global Indian International School (GIIS): Bangkok 16, 182, 194; Kuala Lumpur 133, 136, 137, 141, 143 Global Indians 7, 12, 47, 87–8, 204, 207–8; examples 13; views from Indonesia 109; views from Singapore 166, 169 globalization 2, 7, 202 Goh Chok Tong 147, 152, 155, 158, 159–60, 161 Gorabpuris association (Thailand) 182 Gorakhpur 181, 183, 190 Graduate Training Scheme II 117 Grand Sheraton hotel (Bangkok) 188 Greenpeace 45 Gujarat: education 172; lifestyle 175 Gujarati Association (Singapore) 175 Gujaratis: in Indonesia 90–1, 98; in Singapore 174 Gulf States: in-demand sectors 31; Indian migrants to 14; labor attrition 18; see also Middle East Hazira Terminal 83 “head-hunting” 58 Hindi Parichshit 187 Hindraf 115 Hindustan Petroleum Corporation 92 Hong Kong: crime 167; relocation out of 162, 166, 168

House of Tata 85 Housing and Development Board (HDB) 160, 161, 169 HR practices: India vs. West 77 HSBC 124 Human Resource Development Council (HRDC) 136 Human Resource Development Fund (HRDF) 117 Hyderabad: IT hub 18, 41, 178 Hyundai 57–60 IBM 80, 176 ICICI Bank 103, 130 Idrus, Dr. Ahmad Zaharuddin 121 IIMs see Indian Institutes of Management IITs see Indian Institutes of Technology IKTA 95 “Illegal Migrant Worker Registration” scheme 186 IM Exchange 83 immigration: issues 12–13, 146 In-Principle Approval (IPA) letter 151 India: air service agreement with Thailand 183; bilateral trade with Indonesia 92, 93; bilateral trade with Malaysia 129, 131, 133; bilateral trade with Singapore 153; bilateral trade with Thailand 182, 183; business development model 85; competition with China 77–8; consumption 51, 57, 71–2, 76, 82, 85; democracy 85, 86, 104, 170; economic growth 17, 18–19, 66; employment market 50–89 (Chennai employers 55–64; Mumbai employers 64–88; regional trends 53–5); fertility rate 1; GDP growth 17; human capital spending 22; illiteracy rates 50; infrastructure 83, 84; labor force 17–18; lifestyle trends 44, 71, 83; net employment 51; population 1; recruitment agencies see recruitment agencies; religious discrimination 178; remittances to 13–14; salaries 20, 22, 51, 53 (by industry 23); workforce 50; see also South India India Club (Jakarta) 91, 96, 98, 100, 101, 107–8, 111 India Inc. 69 “India Rising” 3, 4, 86, 99 India Studies Centre 182 India-Thai Business forum 192 India-Thai Chamber of Commerce 182, 192

Index   235 Indian Committee (Indonesia) 93 Indian Cultural Centre (Jakarta) 112 Indian diaspora 10 Indian Institutes of Management (IIMs) 26–7; alumni involvement 26–7, 47; caste quotas 26; caste reservation policies 20; entrance examinations 24; faculty recruitment 27; graduate recruitment process 27; graduate salaries 47; ranking 38 Indian Institutes of Technology (IITs) 2, 23–6; alumni involvement 25, 47; caste quotas 26; caste reservation policies 20; faculty recruitment 26; graduate recruitment process 24; graduate salaries 47; Mumbai 54; selection process 23; team spirit 25 Indian National Army (INA) 181 Indian Oil Corporation 78 Indian Women’s Association (IWA): Indonesia 101, 104, 113; Thailand 187, 194 Indo Bharat Rayon 92 Indonesia 90–113, 204–5; attractiveness 46; bilateral trade with India 92, 93; business practices 101–2, 104, 106; crime 104; discrimination 99; economic downturn 96–7; education 105, 106, 110, 111; governance 108; Indian ethnic communities 90–1; Indian expatriate experiences see Indonesia interviews; Indian social/cultural impact 96; Islamicization 98–9, 102, 111; IT education centers 92; law 107; lifestyle 108, 111, 112; minerals 93; newspapers 109; riots 110; salaries 51, 53; security 108; service culture 99; work permits/ visas 94–5 Indonesia interviews 97–113; consultant and spouse 102–5; dance instructor 111–13; financial consultant 109–11; Indian MNC executive 97–9; insurance broker 99–102; senior engineer 105–7; senior human resource manager 107–9; systems engineer 107–9 Indorama 91, 108, 181, 183, 188 induction processes/programs 75, 79, 135 Information Technology Institute 158 informational capitalism 9 Infosys 82, 124, 165 Infosys Foundation 130 infrastructure development: opportunities 72, 88 Insead 71

insurance sector 38, 69 Integration and Naturalisation Champions (INCs) 163 Intel Corporation 80, 122 International Internship Program 135 internship programs 135–6 IPO advisory business 110 Ircon 92 Islamicization: in Indonesia 98–9, 102, 111 IT-enabled services (ITES) sector 2; prestige 64; salaries 42–3 IT sector: attrition 40, 43, 60; “benching” 44; Malaysia 124–6, 131; salaries 42, 56, 59, 61; Singapore 164–5; training 165 Jain, Arun 96–7 Jaipur 99, 102 Jakarta: expatriate Indians in 91; Festival of India 93; Indian enclaves 93; Indian expatriate experiences 97–113 Jakarta International School 100, 110 Jalan Ipoh 144 Jalan Palateha 108 Jalan Pasar Baru 91 Java 90, 91 JNICC 96 Job Fairs 20 Jodhpur 102 Johor Bahru 131, 191 JP Morgan 85–6 Kalimantan 91–2, 93 Kallang 171 Kannada Associations 106, 141–2 Karnataka: engineering graduates 64; tertiary institutions 48 Karti Prima Coal (KTC) 93 Kelapa Gading 96 Kemang 96, 108 Khalsa Holi Festival 175 KITAP 95 KITAS card 95 knowledge economies 3, 161 Knowledge Process Outsourcing (KPOs) 85 Koh Juan Kiat 161 Kotak Mahindra Bank 85 KPMG 102, 170, 177, 178 Kuala Lumpur: Central area 141; Indian associations 131; Indian expatriate experiences 128–46; see also Brickfields Kuala Lumpur International Airport (KLIA) 122

236   Index labor attrition: India 29, 50–1 Labour Department 184 land prices 60 Laos 185 law and order 40 lawyers: in Malaysia 120; in Singapore 157, 175 layoffs 51 Lebuh Ampang 207 Lee Boon Yang 155 Lee Hsien Loong (Prime Minister) 156, 158, 159, 161 Lee Kuan Yew (Minister Mentor) 150, 154, 155, 157, 162 Lee Yi Shyan 161 life sciences 156 lifestyle: changes in 35, 48; as selling point 37 Lim Chuan Poh 156 Lim, David 154 Lim Hng Khiang 158 “local salaries” 34 Look East Policy (LEP) 15, 202 “Look West” policy 183 Lorhi 189 M Tech program 54 Madura 90 Mae Sot 184 Maheshwari, Dr. Prakesh 101 Malaysia 114–46, 205; air traffic controllers (ATCs) 121; attracting talent 126–8; attractiveness 46; bilateral trade with India 129, 131, 133; brain drain 121; “brain gain” scheme 121; Cabinet Committee on Foreign Workers 128; cost of living 134, 136, 140, 163; crime 115; education 137, 141; “foreign expatriate” definition 119; foreign workers 115–16, 117–18; foreigner “round-ups” 126; graduate retraining 117, 136; high-technology corridors 122–6; Immigration Department 118–19, 120, 124, 128, 135; Indian Diaspora 116; Indian expatriate experiences see Malaysia interviews; IT sector 124–6, 131; lawyers 120; lifestyle 130; multinational corporations (MNCs) 143, 145; people of Indian origin in 114; public transport 136; recruitment services 118; repatriation 116, 117; salaries 53, 124, 128, 132, 145; security 130; talent

retention 139–40; tax structure 122; underclass mentality 114; unemployment 116; visas/work permits 119–22, 124–5, 127; work culture 132, 139; working expatriates 118–19 Malaysia interviews 128–46; banker 128–30; businessman 131–4; engineer/ director 130–1; IT company 134–7; IT engineer 140–3; IT professional 137–40; IT specialist 145–6; IT worker 144–5 Malaysian Biotechnology Corporation (MBC) 121 Malaysian Employers Federation 122 Malaysian and Indian Chambers of Commerce and Industry (MICCI) 133 Malaysian Indian Congress Party (MIC) 114 Malaysian Returning program 122 Malhotra, Rajiv 97 Manchester University 110 manganese 93 Manpower Ministry (Indonesia) 95 manufacturing sector: attrition 29, 45, 74; competition from IT sector 56; salaries 42–3, 56 Masjid India 207 MDEC 126, 130, 135 Medan 90, 91, 93 medical insurance 74 Mediclaim 72 Melville Park 175 mentoring 65 Mercer 160 mergers and acquisitions (M&A) policy 204 Merrill Lynch 160 microelectronics engineers 54 Middle East: Indian migrants to 14, 32–3, 34; see also Gulf States Migration Policy Institute (MPI) 10 Millennium Steel 183 Ministry of Manpower (MOM) (Singapore) 148, 151, 155, 164 Ministry of Overseas Indian Affairs (MOIA) 8, 207–8; establishment 14, 22 Ministry of Trade and Industry (MTI) 158 Mittal, Lakshmi 92 Mittal Steel 92 MNCs see multinational corporations mobility: trends 31–2 Modi, Narendra 175 Mohamed, Mahathir 124 monster.com 166

Index   237 Motorola 59 MSC see Multimedia Super Corridor Multimedia Super Corridor (MSC) 5, 6, 122–6, 132 Multimedia University (MMU) 125 multinational corporations (MNCs): and circulation of Global Indians 208; hiring in India 48, 77; impact on Indian companies 77; and Indian way of working 41; in Malaysia 143, 145; in Singapore 153, 157, 160, 177; talent retention 48; in Thailand 185 Mumbai: Dharavi slums 167; lifestyle 71, 77; real estate prices 70, 71, 84, 85; salaries 65; traffic congestion 70 Mumbai employers 64–88; bankers 67–9, 70–2, 84–5; development company 86–8; engineer turned banker 85–6; financial services company 75–8; Indian conglomerates 64–7; infrastructure development 72–3; investment manager 69–70; manufacturing company 73–5; oil and gas companies 78–84 Murthy, Narayanan 124 Mustafa Centre 149, 150, 151 My Bar (Jakarta) 108 Myanmar 185 Nagar Coil 137 Nasscom 97 Nath, Kamal 92 National Cancer Centre Singapore (NCCS) 157 National Computer Board (NCB) 158 National Economic Development Plan (NEDP) 180 National Institutes of Information Technology (NIITs) 26, 104, 152 National University of Singapore (NUS) 153, 164, 174, 176, 177 Navratri 182 Neptune Orient Lines 150 network society 9 networks 7, 8; globalizing 9; in recruitment 65 “New Indians” 5, 204 Ng Eng Hen 162 NGOs: employment in 44–5, 46, 48 nickel 93 NIITs see National Institutes of Information Technology Ninth Malaysia Plan 118 non-governmental organizations see NGOs

non-resident Indians see NRIs North India: attrition 59; net employment 53–4 Not-Ordinarily Resident Scheme 160 NRIs (non-resident Indians): consumption patterns 62; differences from Indians in India 80; positive/negative impact 10–11; return to India (assimilation programs 87; banking sector 68; factors driving 21–2, 63, 73, 80; impact 12, 63, 82; numbers wishing to 35, 60, 77; trends 36, 62, 67, 75, 87) NUS see National University of Singapore Obama, Barack 156 oil and gas sector 78–84, 204; attrition 79, 82; challenges 82; salaries 79; trends 81 Oman: allowances 36 online news groups 142 Orchard Road Indians 204, 206 Overseas Indian Workers Welfare Fund 14 overseas recruitment: percentages 38 Overseas Talent Recruitment Scheme 160 Pahurat 207 Palm Court incident 97, 126, 143 Pasar Baru 93–4, 96, 98, 101, 104, 111, 207 Pemudah Committee 120 Penang 122, 131, 181; Indian enclaves 123; software industry 125 Penang Skills Development Centre 122 Permanent Residency (PR) 140 Personalised Employment Passes (PEPs) 160 petrochemical sector: challenges 79 Petronas 34, 36, 37, 115 Phang, Rachael 125 Philippines: and employment on Singapore 156; salaries 51, 53 Phuket 181 Pitroda, Sam 102 Placement Week 24–5 plastic manufacturing 55 Pluit 104 poaching 32, 37, 76, 84 Polaris 96–7 polymer tubes 73 polymers 55 Ponggal 137, 144, 189 Population Committee (Singapore) 149

238   Index Port of Singapore Authority 56 Pravasi Bharatiya Divas (PBD) 22, 208 PricewaterhouseCoopers 160 printing sector 75 Proctor and Gamble 73, 74 Punjabi-Sikh association (Thailand) 182 Punjabis: in Indonesia 90; in Thailand 180, 190 push pull factors 4 Putra Jaya 122, 124 Qatar: NRIs wishing to return 36 R&D: centers in India 31 Rabo Bank 162 racism 192 Radha Swamy Sat Sangh 91 rail sector 130 Rajiv Gandhi Centre for Biotechnology 157 Ramadan 146 Rathore, Nalin 101, 107 recommendation fees 75 recruitment agencies: candidate recruitment 36, 46; hiring strategies 37, 43; “holding” fees 36; interviews 28–41, 41–9 recruitment freeze 51 recruitment strategies: Chennai 56, 58, 60; Kuala Lumpur 135; Mumbai 65, 73, 75, 88; Singapore 164 reference visa 119 refining sector 82 Regional Cancer Centre (Thiruvananthapuram) 157 Reliance 82, 85 religious practice: in Indonesia 104, 112; in Malaysia 131, 133–4, 138, 142; in Singapore 174; in Thailand 182, 189 Reserve Bank of India (RBI) 17 Resorts World 156 retail sector: attrition 37; skilled worker numbers 66 RPTKA 95 rupee: strength against dollar 38 Sai Mandhir 91 Standard Chartered Bank 71, 86 State Bank of India 92 Samut Sakhon 184 Sanskrit Studies Centre 182 SARS outbreak (2003) 94, 154, 166 Satyam Computers 129, 130, 137, 165 Saudi Arabia 176, 177

scientific research 158 seafood processing industry 184 security: Indonesia 108; Malaysia 130; Singapore 130, 160, 162, 172, 175; Thailand 192, 194 selection tests 60, 61–2 Sen, Indranil 162 Sentosa 155 Sentul 207 Sepoy Mutiny 190 Serangoon Road 148, 207 service sector 191 severe acute respiratory syndrome (SARS) epidemic 10 Shanghai: attractiveness 46 Shanmugam, K. 157 Shanti Mandir 91 Sharma, Umang 124–5 Sheffield University 166 Sheikh, Dato’ C Ghazli 128 Shell 83 Shiv Shankar School 57 shopping malls 57, 58, 77 Siam Cement Group 183 Sikhs: in Indonesia 90–1; in Thailand 180–1, 182–3 Silicon Plateau 2 Silpakorn University 182 Sind province 90 SINDA 172 Sindhis: in Indonesia 90, 91, 100, 101, 103–4, 106, 112–13; in Thailand 181 Singapore 147–79, 206; attractiveness 30, 33, 40, 46, 206; bilateral trade with India 153; birth rates 147, 148, 149; business hub 106; citizenships 147, 168; computerization 164, 165; cost of living 134, 160, 163; cultural capital 158–61; economic development 148; economic pie enlargement 157–8; education system 56, 167, 172; ethnic Indians in 80; foreign talent strategy 147, 148, 149–50, 154, 158; foreign worker numbers 148, 154; gay community 155; Indian expatriate experiences see Singapore interviews; industry sectors 44; innovation 158, 159; IT sector 164–5; knowledge-based economy (KBE) 148, 149; law sector 157, 175; lifestyle 166, 173; local talent loss 155, 161–2; multinational corporations (MNCs) 153, 157, 160, 177; National Service (NS) 169, 174, 177–8; non-resident Indians 5,

Index   239 154; NRIs returning to India 165, 174; permanent resident (PR) numbers 147, 148; population 147; quality of life 149; relocations to Thailand 181; rootedness 162–3; salaries 53, 163, 165; security 130, 160, 162, 172, 175; “Southern” strategy 19; as “stepping stone” 153–4, 162, 163, 164, 170, 175; tourism 156; unemployment rates 156; universities 155, 173; views of Chennai employers 55, 56–7, 63–4; views of Indians in Kuala Lumpur 130, 134, 140, 143, 144–5; views of Mumbai employers 71, 80–1; visas/work permits 150–2, 164; water treatment companies 83; working ways 71, 177, 178–9 Singapore Arbitration Centre 97 Singapore International School (Kuala Lumpur) 137, 141 Singapore interviews: assistant manager (IT advisory) 176–9; consultant 168–70; financial sales assistant 172–5; lawyer 175–6; recruitment agents 163–4, 164–5, 165–8; senior audit manager 170–2; Singapore official (Chennai) 152–4 Singapore National Employers’ Federation 161 Singapore Tourism Board (STB) 153, 156 Singapore Visitor Centre (Chennai) 153 Singh, Manmohan 175 Sinivasan, Marimutu 93 Skills Development Fund (SDF) 117 social capital 14 social networking: Indonesia 98, 100–1, 103, 106, 108–9, 111; Malaysia 131, 133, 138, 141–2, 144; Singapore 166, 169–70, 171, 173, 177; Thailand 186–7, 189, 192, 193, 195 social visit pass 120, 145 social welfare 67 Society of Indian Scholars (SOIS) 173–4 Soong, Fui K. 122 South India 19–20; attrition 59, 65; educational institutions 43, 64; net employment 53–4; see also Andhra Pradesh; Karnataka; Tamil Nadu South India Club (Jakarta) 101 South Jakarta International School 110 Southeast Asian region 4–6; attractiveness 36; positive/negative impact of NRIs 10–11; strategies to place job seekers in 38; see also ASEAN region

Sovereign Wealth Fund (SWF) 167 Srivastava, Rajesh 162 stem cell research 156, 158 stock exchange training 75 Suharto, President 110 Sukhumvit area 193, 196, 207 Sulawesi 90 sulfur 93 Sumatra 90, 91 Sun TV 134, 138 Sundaraman, Mr. 101, 107 Sunter 96, 101, 111 Surabaya 91; expatriate Indians in 91 TA01 recommendation 95 talent flows 20–2, 203 Tamil Nadu: educational institutions 43, 48; engineering graduates 19, 64; IT sector 41; Job Fairs 20; MNCs in 59; talent pools 31 Tamil Nadu Community (Singapore) 165 Tampines Junior College (JC) 172 Tan, Dr. Tony 155 Tan Tock Seng Hospital 164 Tangerang 104 Tanjung Priok 91 Tata Consultancy Services 54 Tata Engineers 85 Tata group 183 Tata Steel 183 taxi drivers: Jakarta 106 telecommunications sector: training 66 Telugu Associations 106, 133, 141–2 Texmaco 6, 92–3, 101, 106, 107, 108, 110, 111 textile sector 183, 193–4 textile shops 93–4 Thai Baroda Industries 183 Thai-India Cultural and Economic Cooperation Association (TICECA) 182 Thai Sikh International School 182, 194 Thailand 180–201, 206; air service agreement with India 183; attractiveness 46, 191; bilateral trade with India 182, 183; businesses owned by Indians 182; categorization of Indians 196–7; citizenship 193–4; convenience 69; cost of living 186; culture 187; economic growth 180, 185; education 182, 187–90; foreign workforce 184–7; ICT companies 5; Indian expatriate experiences see

240   Index Thailand interviews; Indian joint ventures 183; Indian population 180–1; Indians in 180–3; Japanese influence 199; knowledge-based economy (KBE) 180; labor laws 191; lifestyle 198; “Look West” policy 183; manufacturing exports 185; marriage 197, 200; multinational corporations (MNCs) 185; newly industrializing economy (NIE) 180; salaries 53; security 192, 194; unemployment 183; visas/work permits 183–4; websites for Indian travelers 186–7; working culture 195, 199 Thailand Indian Internal Security Council (TIISC) 182 Thailand interviews 186–200; consultant and radio personality 196–201; Indian engineer 191–3; Indian expatriate couple 194–6; Indian school principal 187–8; mechanical engineer 193–4; school teachers 188–90; Secretary General 190–1 Thaipusam 138, 142 Thammasat University 182 The Indus Entrepreneurs (TiE) 9 Thiruvananthapuram 157 “three Ds” 184 Tier I cities 5, 210; employment opportunities 50 Tier II cities 5, 210; attrition 50; company relocations to 50; recruitment from 43–4, 45, 48 Tier III cities 210; recruitment from 47 TNP 166 Tolani, Rohet 162–3 Tolani Group 162–3 total fertility rate (TFR) 1, 209 Tourism Talent plan 156 trade chambers 84 trade fairs 107 training: “in-house” 59, 66, 74, 82, 203; IT graduates 136; soft skills 56; university links 67 transnational communities 1 transnational social spaces 7

transnationalism 6, 202; definition 6; from above 8; from below 8; theorizing 6–9 TVS group 105, 106 two-wheelers: markets 105 UAE: attractiveness 45, 67–8; NRIs wishing to return 36 UK: attractiveness 63 Unilever 39 United States: attractiveness 63, 64, 138; cost of living 47; Green Cards 135, 198; Indian migrants to 38; Indians returning from 11–12, 42; IT sector opportunities 30; population 1 Universal Studios 156 UTI bank 70 vegetarian food: Indonesia 98, 100, 109 Vellu, Samy 114 visas: Indonesia 94–5; Malaysia 119–22, 124–5, 127; Singapore 150–2; Thailand 183–4 visit pass 119 wafer fabrication plants 150 Waru East Java 92 water treatment companies 83 web groups 165 welders 66 West Africa: in-demand sectors 31 West India: net employment 53–4 Wipro 129, 165 Women’s International Club (Jakarta) 113 Wong Kan Seng 147–8, 149 work permits 12–13; Indonesia 94–5; Malaysia 119–22, 125, 127; Singapore 150–2, 164; Thailand 183–4 World Bank 109 World Punjabi Organization 182 worship see religious practice yoga classes 112 Yogyakarta 107 Young, Tata 198 Zurich Life 100