Human capital on the move

May 4, 2012

The magnetic pull of skilled professionals and students from developing to developed markets is giving way to a more multipolar world, where countries increasingly compete for talent.

By Gerri Chanel

People have been moving in search of better opportunities since the dawn of humanity. Back then, hunters migrated to stalk bigger herds. Today, it is intellectual capital on the move. Just a few years ago, talented engineers or scientists from such countries as India or China would make their way to countries such as the UK or the US. Now those individuals are increasingly returning to their country of origin after obtaining education and experience – a phenomenon sometimes called “reverse brain drain.” Of course, one country’s brain drain is another’s gain, presenting challenges and opportunities for the countries – and companies – on both shores.

China, India – and beyond

Hai gui is the Mandarin term for sea turtle, a creature that is born on land, but grows up in the ocean before returning. It is also the informal term for the ever-growing number of Chinese graduates and professionals abroad who are increasingly returning home. China is not alone in this phenomenon: according to a 2011 study by recruitment consulting firm Kelly Services, an estimated 300,000 Indian professionals now working overseas are expected to return to India by 2015. Elsewhere, skilled expat workers from African countries such as Nigeria, Kenya, Ghana and Angola are also returning in notable numbers to their countries of origin, not least due to a slowdown in many richer economies.

Joseph Pagop Noupoue, Ernst & Young’s Managing Partner for Cameroon, is one example. He recently relocated back to Africa after being educated and working in France for 23 years, and is far from alone. “We are receiving applications from so many young and talented Africans who are ready to make the trip back and bring their contribution to the development of the continent,” he says.

Another notable trend is the movement of skilled workers within Europe due to varying economic conditions, says Michael Liley of Ernst & Young’s Human Capital practice in London and former Global HR Director of Ernst & Young. Spain, Italy and Greece now host a generation of highly-educated people in their mid-20s to mid-30s who cannot find good work. “So EU countries that are doing better economically, like Germany, have had quite a significant intake of qualified talent from those other countries,” he says.

In addition, various talent consultancies arguing that within several decades, many vacancies for senior roles in countries such as India will be filled not only by returning Indians, but also by Americans and Europeans seeking better prospects.

Push and pull

“The labor market is a major driver of talent migration,” says David Rooney, Executive Director of Global Mobility in Ernst & Young’s Human Capital practice, but he notes that it is only one of many factors, often categorized as either “push” or “pull.” Push factors might include lack of career or salary growth, or immigration policies that discourage permanent residence after training. “Pull factors,” he says, “may include higher wages or opportunity for career advancement, but there are others.

According to a 2011 study sponsored by the Kaufmann Foundation in the US, which interviewed Indian and Chinese professionals who had been educated in America about their reasons for returning home, the top three factors were economic opportunities, access to local markets and family ties.

For highly skilled scientists and technology workers, there are other factors. According to a 2008 OECD publication, The Global Competition for Talent: Mobility of the Highly Skilled, these workers also seek better research funding and research infrastructure, the opportunity to work with “star” scientists and more freedom to debate.

Government programs and policies

Governments across the world continue to create a wide repertoire of programs to help draw highly skilled expats home. China’s list alone is huge. To encourage students to return, the Government there has set up educational bureaux in its embassies and consulates as well as several thousand student associations. Universities and government-funded research organizations actively recruit returnees. One initiative, The Thousand Talents Program, offers incentives to top researchers to come home, including a one-time, tax-free cash allowance of ¥1 million (US$159,000), and a residency permit in whichever city they choose, among other benefits. Some cities have created “enterprise incubators” for returnees.

The United Arab Emirates has made its expat workers aware of employment opportunities back home by creating an online platform called Return2Home. The initiative targets Emirati jobseekers in the US, UK, Canada, India and South East Asia, as well as employers seeking non-resident Emiratis with international experience and expertise.

With many skilled expats being increasingly “pulled” home, the countries currently hosting these expats have an equally large stake in encouraging them to stay. According to Liley, “How well a country integrates its talent will have a high impact on whether that talent comes to consider the host society home. For example,” he says, “countries such as Sweden and other Nordic countries have provided language training for numerous years, which is the key to connecting with the local population and integrating into the society.

In some cases, immigration policies create barriers to workers who might otherwise wish to stay in a host country. For example, the US is experiencing an exodus of skilled foreign workers, particularly in crucial fields of science, technology, engineering and mathematics. “Many of these people are leaving simply because they cannot get permanent visas to stay in the US after their student or training visas expire,” says Rooney.

Another approach is to ease immigration policies that prevent needed talent from entering. Like the US, the UK faces shortages of skilled workers, particularly in certain sectors. The British Business Secretary Vince Cable stated in 2011 that the UK’s aerospace industry faces a serious, chronic shortage of engineers; he believes certain immigration caps are partly to blame.

Governments can also change immigration rules to make it easier for expats to return. In Canada, a pilot program was launched in 2011 to encourage Canadian expats in certain sectors facing significant shortages, such as health care and academic research, to return home by easing immigration restrictions on non-Canadian spouses.

Talent at stake

“Companies need to focus on the opportunities they create for employees,” says Michael Dickmann, Professor of International HRM at the UK’s Cranfield School of Management. “This goes far beyond monetary issues. I believe it is about the very clear development of employees and the way companies manage their talent. We consistently see that, in the range of drivers for people who work globally, these are the strongest.”

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