Residents of the South Indian city of Bangalore, once an orderly enclave of colonial-era buildings and well tended gardens, have started wearing earplugs to dampen noise from the maelstrom on their chaotic streets. It is the noise of growth boosted in part by the return of many of India’s technologists whose departure to the West was once bemoaned as brain drain.

Call centres, software and engineering companies and some of the world’s most advanced research centres prosper on the capital – both human and monetary – of Indian emigres recently returned from abroad with foreign passports, foreign bank accounts and families sometimes more Western than Indian.

Bangalore’s frenzy is emblematic of the reverse brain drain – or reverse diaspora – that helped propel India onto the world stage in ways that were unimaginable just a few decades ago. While Indians still go abroad to work and study – there are a record 80,000 Asian Indian students now enrolled in US universities – a new class of Indian expatriates, fluent in the ways of the West, energises India. By several estimates, between 50,000 and 60,000 information-technology professionals alone have returned to India from overseas since 2003, most to the suburbs of New Delhi, Hyderabad and especially Bangalore, the nexus of what Indians call their “brain gain”.

At Bangalore’s new international airport, packed airliners arrive from London, Paris, Frankfurt and Singapore bearing Indians with degrees from the world’s top universities and plans to reconnect to Mother India. Some were recruited at job fairs in cities across the US, home to 2.32 million people of Indian origin. And most say they return to India for attractive pay packages that offer a comfortable standard of living comparable with life in the US along with greater opportunities of advancement. Others want to be closer to aging parents.

But Bangalore, home to more than 1,000 IT firms and 10,000 US dollar-millionaires, may price itself out of the market. While India’s technology and outsourced-services industries continue to boom, earning an expected $52 billion (Dh191bn) in the 2007-2008 fiscal year, wage inflation in Bangalore runs at up to 50 per cent a year, making it only marginally less expensive for sophisticated tech work than doing business in California.

As a result, some global brand names shifted operations to cheaper Indian cities such as Chennai, Kolkata and Hyderabad, where the costs of doing business are as much as 30 per cent less. A few companies are looking beyond India altogether, betting on lower-wage countries such as Vietnam and the the Philippines. If Bangalore is losing some of its lustre, it still remains the world’s fourth largest technology hub and claims to have the fastest-growing wealth base in the Asia-Pacific basin. And for many Americans, this means Bangalore is both a threat and opportunity: a threat because it now boasts at least 160,000 technology workers compared with about 175,000 in Silicon Valley. Moreover, much of this talent, especially at the middle and top levels, has been transplanted from the San Francisco Bay area to India.

Bangalore also represents an opportunity for US companies to tap into India’s prodigious brainpower and entrepreneurial spirit. From Bangalore, Americans and citizens of other developed countries are having their tax returns prepared, CAT scans and MRIs read, mortgages analysed, lawsuits researched, airline reservations confirmed and computer glitches unsnarled – thanks to broadband connections that make the city as close as the shop next door.

As Bangalore moves further up the technology ladder, it has ambitions to challenge places such as Silicon Valley and the Research Triangle at Raleigh-Durham, North Carolina, as a world centre for innovation. Microsoft plans to spend $1.7m in India over the next several years and has opened a research centre there. IBM, Oracle, Cisco Systems, Intel and Hewlett-Packard also have campuses and research centres in Bangalore.

The corporate headquarters of Infosys Technologies, India’s second-largest outsourcing firm, is tucked away in a section of Bangalore called Electronics City. The view inside the Infosys campus is buoyant with double-digit profit margins, revenues in billions of dollars, and plans to hire thousands of employees worldwide over the next few years.

Typical of those young Indians moving Infosys into the top ranks of global companies is Smita Agrawal, a savvy marketing manager who has worked in Tokyo, Minneapolis, Los Angeles and Little Rock, Arkansas. Preferring Western business attire to saris, she nevertheless finds India to her liking. “After-office hours is where you lose out in the US,” she says. “There’s a cultural gap in America and you just don’t have the face-to-face interaction with Americans that we have here in India.” Confessing that, “Bangalore and its messiness take some getting use to,” Agrawal nevertheless sees India as a place to enhance her career.

Peers at companies from Yahoo! to start-ups that only the digital cognoscenti would recognise, agree that being part of the reverse diaspora has its satisfactions, both professional and cultural. In Bangalore and other major Indian cities, there’s no shortage of luxury shopping malls and housing developments to lure home expatriates. At Palm Meadows, one of the gated communities in Bangalore where the computer-savvy elite live, it would be hard to find an Indian passport holder, aside from maids and gardeners because most residents are citizens of the US and the UK, or dual nationals.

Ajay Kela, COO of software development fim Symphony Services, looks around his neighbourhood of four-bedroom Spanish-style villas and says he made his decision in a day to pull up roots in Foster City, California, and return to India. “India is an efficient location for software design and besides, the middle-class is exploding here.” But the move back to India hasn’t been problem-free, with grinding commutes over potholed roads, a yawning gap between educated and poor, and a mind-numbing conformity that inhibits the creative outside-of-the-box thinking associated with Palo Alto or Raleigh-Durham. “There is raw talent in India,” says Sridhar Ranganathan, a former Yahoo! executive and MD of Blue Vector India in Bangalore. “But how to polish that talent is India’s dilemma and my challenge.”