Imported From India

What is America's most valuable import from India? It may very well be brainpower.

Hundreds of thousands of well-educated Indians have come to the U.S. in recent decades - many to work in the computer and software industries.

The best and brainiest among them seem to share a common credential: They're graduates of the Indian Institute of Technology, better known as IIT.

IIT has seven campuses throughout the country, and as we discovered when we traveled there last year, its students consider themselves the luckiest people in India. Correspondent Lesley Stahl reports on this story which first aired March 2, 2003.

IIT is dedicated to producing world-class chemical, electrical and computer engineers with a curriculum that may be the most rigorous in the world.

Just outside the campus gates, the slums, congestion and chaos of Bombay are overwhelming.

But inside, it's quiet and uncrowded and, by Indian standards, very well equipped. Getting here is the fervent dream of nearly every student.

With a population of over a billion people in India, competition to get into
the IITs is ferocious. Last year, 178,000 high school seniors took the entrance exam called the JEE. Just over 3,500 were accepted, or less than two percent.

Compare that with Harvard, which accepts about 10 percent of its applicants.

"The IITs probably are the hardest school in the world to get into, to the best of my knowledge," says Vinod Khosla, who got into IIT about 30 years ago.

After graduating, Khosla came to the U.S., co-founded Sun Microsystems and became one of Silicon Valley's most important venture capitalists. He's one of thousands of IIT graduates who have made it big in the U.S.

"Microsoft, Intel, PCs, Sun Microsystems -- you name it, I can't imagine a major area where Indian IIT engineers haven't played a leading role," says Khosla.

"And, of course, the American consumer and the American business in the end is the beneficiary of that."

It isn't just high tech. The head of the giant consulting firm McKinsey & Company is an IIT grad. So is the vice chairman of Citigroup and the former CEO of US Airways. Fortune 500 headhunters are always on the lookout for that IIT degree.

"They are favored over almost anybody else. If you're a WASP walking in for a job, you wouldn't have as much pre-assigned credibility as you do if you're an engineer from IIT," says Khosla.

Ninety percent of IIT students are male, and the young men we met in Bombay know they're hot commodities.

Plus, the American companies love the kids from IIT. And the students view it as a ticket to another way of life.

Em Rahm, one of India's leading journalists, says that because the stakes are so high, a kid starts preparing early.

"By 10, you know whether you've made it--you're made for it or not," he says.

But just standing out in school won't be enough. At about 16, students enroll in a prep class where they're drilled for the IIT entrance exam. There are even pre-dawn tutoring classes – before they go to school.

"I normally stay up all night and study for my exams," says one student.

After years of preparation, students reach the day they and their families believe will make or break the future finally arrives.

"On the day of the exam, my dad, my mom and my younger brother -- they all accompanied me to the center," says one student. "I said, 'OK, now you
can leave. I'll come home on my own.' But I was literally amazed when I came back out of the center and see my parents and brother still waiting for me outside the center."

After six hours of testing, there's an excruciating month-long wait for the results.

Results are posted on the Web. And after 10 days, students receive a letter. Top rankers get their photographs in the paper.

But the ranking isn't just an ego trip. The top kids get to choose which campus they want and which major.

"It's a big deal in India, it is," says Narayana Murthy, founder of the huge software company Infosys. He's known as the Bill Gates of India.

"It's very easy to lose hope in this country. It's very easy to set your aspirations low in this country. But amidst all this, this competition
among high-quality students, this institution of IIT, sets your aspirations much higher."

Murthy's own son, who wanted to do computer science at IIT, couldn't get in. He went to Cornell, instead. Imagine a kid from India using an Ivy League university as a safety school. That's how smart these guys are.

"I do know cases where students who couldn't get into computer science at IITs, they have gotten scholarship at MIT, at Princeton, at Caltech," says Murthy.

"When I finished IIT Delhi and went to Carnegie Mellon for my
master's, I thought I was cruising all the way through Carnegie Mellon
because it was so easy, relative to the education I had gotten at IIT Delhi," says Khosla.

And unlike so many other institutions in India, they all know they're here because they deserve to be here.

"There is no corruption. It's a pure meritocracy," says Murthy.

IIT may also be one of the best educational bargains in the world. It costs a family just about $700 a year for room, board and tuition. That's less than 20 percent of the true cost since the Indian government subsidizes all the rest.

While some IIT grads stay and have helped build India's flourishing high-tech sector, almost two-thirds--up to 2,000 people--leave every year, most for the U.S.

"Some people would say you're subsidizing factories, which produce
largely for the higher end of the American employment market," says Rahm.

"You don't have to be crudely nationalistic to raise this question. There's a need here. There's a demand here, and these guys are simply not
available."

How many of them ever come back?

"Very small percentage, but my view is that we also have to work harder here to make it attractive for them to come back," says Murthy.

And Murthy is doing his part. His software company, Infosys, hires about 150 IIT graduates every year to stay and work in India. He says the brain-drain doesn't worry him.

"Some of these people who have reached the higher echelons in the corporate world in the U.S., you know, they have persuaded their corporations to start operations in India, whether it's Texas Instruments, whether it's General Electric, whether it's Citibank," says Murthy.

"I have no question that India now is benefiting significantly from the cycling of knowledge, the back and forth, no question about it," says Khosla.

And individual IIT grads are sending lots of money back home, too, but the U.S. still gets the better end of the bargain.

"How many jobs have entrepreneurs, Indian entrepreneurs, in Silicon Valley created over the last 15, 20 years? Hundreds of thousands, I would
guess," says Khosla.

"For America to be able to pick off this human capital, these well-trained engineers with great minds, it's a great deal."