Global fears shackle India's outsourcing job-hoppers

Posted at 08/06/12 5:30 PM

NEW DELHI - The normally high employee turnover rate in India's job-hopping outsourcing sector has fallen sharply as a weak global economy hits the flagship industry, a study showed on Monday.

While still elevated compared with other industries, the turnover rate tumbled to 15-20 percent in the last six months of 2011, according to business lobby ASSOCHAM, down from 55-60 percent in the same year-earlier period.

"Employees are wary of switching jobs due to apprehensions about the economic slowdown," said D.S. Rawat, secretary general of the Associated Chambers of Commerce and Industry of India (ASSOCHAM), which prepared the report.

When the global outlook was brighter, workers in the IT and back-office process outsourcing sector were jumping from job to job in search of fatter pay cheques and better benefits, driving up corporate costs.

But now "a high employee retention rate can been seen almost across all levels", Rawat said, with workers adopting a "wait-and-watch policy".

The decline comes as the main US and European customers of India's outsourcing sector struggle with low economic growth.

US and European firms are spending around 40 percent less on new projects than in the past as clients hold back on spending, industry heavyweight HCL Technologies has warned.

The National Association of Software and Services Companies (NASSCOM) projects the outsourcing sector will grow by 11-14 percent this year -- still a robust rate but half the pace the industry posted in the past decade.

US and other foreign firms, drawn by India's English-speaking workforce and lower labour costs, have farmed out a wide range of jobs from answering bank client calls to processing insurance claims and equity analysis.

But the $69 billion industry now is under severe pressure, not only from a weaker global economy but also stronger competition from rivals in Southeast Asia, Eastern Europe and Latin America.

The outsourcing sector, which propelled a technology revolution in India, now employs at least 2.5 million people, according to NASSCOM.

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