India's outsourcing jobs boom set to soar

By Ed Lane

NEW DELHI - India's outsourcing industry is growing quickly in a flourishing economy despite threats from developed countries to halt job flight to the developing world but millions of young workers just do not have the skills to join the boom.

There are an estimated 300,000 mainly young people working in India's roughly five-year-old outsourcing industry, which is set to grow 40% in 2005 and hit revenues of 5.1 billion dollars, according to an industry study.

A study by the National Association of Software and Service Companies (Nasscom), an industry lobby group, projects business process outsourcing — shifting jobs from countries like the United States or Britain to countries like India - could quadruple to 1.2 million jobs by 2008 and bring in revenues of 21 to 24 billion dollars.

But for all the boom times for educated English-speaking youngsters, the majority of younger people, easily more than 200 million, are outside the loop, says Raman Roy, chairman and managing director at Wipro Spectramind, a leading outsourcing firm in India with 13,000 employees.

"Out of every 100 we interview, we hire 10 or 11. At our seven locations last month, we had 18,000 people interviewed and hired 1,500," Roy said.

"That means 16,500 did not get a job with us," he said.

Workers in the outsourcing industry are in an elite category, earning in one month as much as India's average annual per capita income of around 450 dollars.

"The good news on outsourcing is that in the next few years 3% of the workforce could be employed in outsourcing or related fields," said Marrizo Bussi, deputy director of the International Labour Organisation in New Delhi.

"But these are highly-educated people with degrees like MBAs who are actually under-employed. Then there are those that take any work available and have no social net. That number is staggering."

India's new Congress Party-led government, with support from communist parties, came to office in May pledging 100 days of guaranteed employment and help to the country's farmers and day labourers.

With 80% of all jobs and a quarter of gross domestic product related to agriculture, the attention is warranted, Bussi said.

However, Roy of Wipro Spectramind, said the government's pledge may not address the tougher issue of creating a workforce that can compete for higher-end jobs when 32% of the population is illiterate or lacks an education.

India forecasts a 6.0-6.5% growth rate, considered respectable by many countries, but which still lags behind China which recently forecast growth of some 9.0% for 2004. China attracts 50 billion dollars a year in foreign direct investment, compared to less than five billion dollars for India.

Roy said the country's policy-makers have to understand the requirements of competition with countries like China and get the workforce ready to pitch for new kinds of jobs.

"The ability to cross that threshold is the biggest challenge for us as a country and a company. How do we meet that challenge? I could hire 3,000 people now if they met our needs," he added.

Roy said the company has to step in to train people to use many skills, including understanding how credit cards are used and US accounting standards.

"Our biggest expense is on training," Roy said. "I like to say the young of India are a huge repository of uncut diamonds that need to be polished. The responsibility is on us but we also need to upgrade the education system," he said.

AFP .