Following steep declines over the past several years, the number of international students applying to graduate schools in the U.S. has started to pick up -- good news for employers in search of highly skilled labor.

A new report by the Washington-based Council of Graduate Schools showed an 11% increase for all international graduate applications for fall 2006 compared to fall 2005. The gains follow a two-year decline of 32%.

Applications from India and China showed significant gains -- 23% and 21%, respectively.

The fields of engineering (17%) and life sciences (16%) saw the largest increases in the past year, after declines in applications in 2004 and 2005. Physical and social sciences also posted gains.

"This is a hopeful signal that the trend of downturns will reverse," said Heath Brown, director of research and policy analysis at the council. "International students play such a large part of graduate education in the U.S."

According to Brown, 17% of all graduate students enrolled in American colleges and universities are international students. In the field of engineering, only half of all graduate students are from the U.S.

Despite this year's increase, however, the overall pool of international applicants is still down 23% from 2003.

Brown points to three factors that have resulted in the decline in international applicants: changes in post-9/11 visa policy that resulted in processing delays, increasingly negative perceptions of the U.S. abroad, and enhanced global competition in higher education.

"The U.S. is the beneficiary of [international] grad students who complete their program and end up working and living here," Brown said. "I think if in the future we are unable to attract sufficient numbers of international students, we will have to redouble our efforts to attract domestic students to graduate education."

Recognizing the drop in applicants and growing competition from institutions abroad, U.S. schools have turned to information technology to make the application process easier. Many programs now use online applications and and send e-mail acceptance letters. Schools have also created call centers to field questions from foreign applicants, as well as hiring more staff members to recruit international talent.

At the federal level, immigration and policy changes are underway to entice international students back to the U.S. Students applying for high-tech fields, like nuclear physics, are subject to a Visa Mantis security check. Since 9/11, there have been significant delays in making the Mantis checks.

The Rice-Chertoff Border Security Initiative, which was unveiled in mid-January, seeks to make the system more open yet still secure, in hopes of encouraging spurring international applications. The long delays in processing the Visa Mantis checks have been reduced to an average of 10 days. The number of years the Mantis clearance allows has increased from one year to four.