According to a survey, domestic companies do better than IT talent from returnees

India’s highly competitive startup ecosystem is showing that homegrown entrepreneurs may outperform returning diaspora founders over the long run, challenging the widely held belief that overseas experience leads to better startup success.

A new study by University of California, Berkeley professor AnnaLee Saxenian and tech entrepreneur and academic Vivek Wadhwa found that domestic founders are now delivering stronger commercial outcomes than professionals returning from the US and other countries. The study analysed 596 Indian high-tech startups set up between 2016 and 2023, comparing metrics such as longevity, number of employees, valuation and revenue.

The researchers discovered that while returnee founders often find it easier to raise seed and early-stage funding due to their global networks, this advantage fades over time. Startups led by local entrepreneurs tend to perform better in the long run, thanks to their deeper understanding of India’s market and ability to quickly adapt products to local needs. The authors described this trend as the “returnee paradox”.

For years, experts believed that professionals returning from abroad would drive innovation in countries like India and China. However, the new findings suggest that India has built strong entrepreneurial talent domestically. Saxenian said she had expected returnees to dominate, as they might have a decade ago, but local founders are now thriving because of their ground-level knowledge and market insight.

While China has actively used state-backed programmes to attract diaspora talent with incentives and funding, India’s startup ecosystem appears to have evolved differently. Wadhwa noted that returnees were once seen as having an edge, but the data showed local entrepreneurs often outperforming them.

The study, published by the Observer Research Foundation, also involved researchers from the Indian Institute of Science and Bengaluru-based startup KrutiBimb. The authors said the findings highlight that India can now innovate independently without relying heavily on overseas talent, marking a new phase in the country’s technology and startup growth.