(FORTUNE Magazine) – STUDENTS AT THE INDIAN INSTITUTES of Technology like to refer to Harvard as their safety school. Roughly 140,000 people have graduated from the seven IIT campuses since the first was established by Prime Minister Jawaharlal Nehru in 1950, and around 40,000 of them have come to the U.S. By some counts, they've created 150,000 jobs and $80 billion in market value. They are the founders of tech giants like Sun Microsystems and Cirrus Logic and a huge swath of the software outsourcing industry. Beyond tech, the former heads of McKinsey and US Airways and the current chief economist of the IMF are also IIT men. They are so ubiquitous that Scott Adams even added Asok, a brainiac IIT grad, to his Dilbert comic strip.

No wonder the hottest ticket on the rubber-chicken circuit the weekend before Memorial Day was the second-ever meeting of the IITs' U.S.-based alumni. Held at a Marriott in Bethesda, Md., it brought out 2,000 grads and a clutch of A-list keynoters. Dipping their nan into bottomless trays of saag paneer were Jack Welch, Harvard president Larry Summers, and New York Times globalization columnist Tom Friedman. Then there was the gaggle of capital-area politicians who had come to pay their respects and to promote their business districts. The states of Virginia and Maryland both saw fit to declare May IIT-Indian-American Heritage Month, and 55 U.S. Representatives lined up to co-sponsor House Resolution 227 honoring "the economic innovation attributable to graduates of the Indian Institutes of Technology."

Despite all those fawning Americans, however, there was a growing sense among attendees that the U.S. is losing its edge--to India. "For the first time, our smartest people do not want to come here," said Bharat Desai, CEO of Syntel, a $200 million Nasdaq-listed software contractor. "And our best guys want to move back. It's more intellectually stimulating. There's a positive energy around growth." Following his keynote address on Friday night, Arun Shourie, India's former Minister of Disinvestment, noted that one-third of the employees at GE's John F. Welch Technology Center in Bangalore had moved back to India from the States. "A lot of people at places like Microsoft and GE are shifting back to work in their companies' Indian offices," said Gautam Tambay, a 2003 grad who works at a bank in Richmond. (Of course, tightened U.S. visa requirements since 9/11 have made it harder for foreigners to study and work here, a fact that tech industry CEOs are lobbying to change.) All this is no doubt reassuring to Indian taxpayers, who foot the bills for the IITs and have been justifiably upset about losing the brightest students to the U.S. in the past. This time around, however, the brain drain is working to their advantage. -- Oliver Ryan