Wednesday, June 08, 2005

India faces outsourcing labor shortage

India is beginning to see a shortage of properly skilled labor in its back-office outsourcing industry, and could fall short by a quarter million workers in four years, officials have said.
"The problem is not with the quantity, but with the quality," Rajeeva Ratna Shah, a top official of the federal Planning Commission, which directs India's economic strategy, said during an outsourcing conference in the southern city of Bangalore, the center of India's high-tech industry.
Only a fraction of the three million graduates produced by India each year are ready to be employed in the outsourcing industry, with others needing several months of training, Shah said.
Scores of Western firms farm out office functions such as telemarketing, handling customer calls, payroll accounting and credit card processing to countries such as India, where wages are low and skilled professionals are abundant.
India employs 348,000 people in such back-office outsourcing functions alone and adds 150,000 jobs each year. The industry earned US$5.2 billion in the fiscal year that ended in March.
Most people who apply for back-office jobs lack communication skills, knowledge of international practices and advanced computing skills, said Kiran Karnik, president of the National Association of Software and Services Companies, India's technology trade body.
"Companies are able to select only eight or nine people out of 100 who apply and that's pretty low selection ratio," Karnik said.
India has long touted the abundance of its work force as the main attraction for companies looking to shift work to cheaper locations.
"In my estimate, only a third of the pool has the right skills to be absorbed into the industry right away," he said.
Nasscom has begun a plan to work with Indian universities to improve skills needed for the outsourcing industry, he said.