Hiring slows for Indian IT services and call centers

India's IT services and call center industry is likely to hire tens of thousands fewer workers for the Indian fiscal year running from April 2008 through March 2009.

The industry is likely to only hire about 200,000 people rather than a projected 276,000, said Ganesh Natarajan, chairman of the National Association of Software and Service Companies (Nasscom) on Tuesday.

The revised figure represents a significant decrease from the 250,000 new hires recorded for the prior fiscal year.

The slow down in new hiring by the industry reflects lower revenue growth forecasts during the fiscal year because of the global economic crisis, Natarajan said.

New hiring will also slow on account of higher staff utilization by outsourcers, who have also reduced the "bench" of staff kept on standby for any sudden increase in client requirements, Natarajan added.

The new staff will be hired by the country's software services businesses as well as call centers and business process outsourcing operations. The 200,000 figure includes hires by both Indian outsourcing companies and services subsidiaries of multinational companies.

In July, Nasscom forecasted a growth rate between 21 to 24 percent for the current fiscal year for software and services revenue, both from the domestic and export markets. This forecast contrasts with 28% revenue growth for the previous fiscal year.

Nasscom plans to review its revenue growth targets next month. By that time, there will be an indication of the industry's performance in the last quarter of the year, Natarajan said.

The economic crisis is getting worse, however, and the slow down is likely to last 12 to 15 months, he added. New application development is expected to be affected the most, Natarajan said.

Smaller companies looking for funding have been the most affected by the tight credit market as the large outsourcing companies have lots of cash on their balance sheets, according to Natarajan.

Larger companies are expanding their facilities and increasing staff in the expectation of revenue growth, even if that growth is slower than in previous years, Natarajan said.

The IDG News Service is a Network World affiliate.