You should look up Sridhar Vembu's posts on anti-credentialism. In fact he prefers hiring kids out of highschool and teaching them programming rather than hiring engineers (let alone engineers from the IIT).

I love the IITs. Of the 5 enlightened professors I met in India, 3 were at an IIT. I had some of my best times at events at IITs. But using those as a filter is stupid and as you point out, in the case of those who brag about having gone to an IIT, its invariably counterproductive in my experience.