Booming Indian economy making offshoring less attractive

2006

The attractions of shunting your "customer care" teams off to India have begun to wane for many multi-nationals as the country's recruitment market has turned red hot.

The major challenge facing multi-national looking to offshore in India is no longer recruiting the right people, but keeping talented workers as the country's economy continues to expand, according to consultants Watson Wyatt.

Bob Charles, head of employee benefits consulting in Asia-Pacific at Watson Wyatt, said: "The market has moved on and companies are being forced to review their strategy for reducing the cost of employee turnover."

Many companies have been confronted with the surprise cost of high staff turnover which has to a degree offset the cost savings they had been hoping for from offshoring.

"Retaining quality people is a chief executive issue in India, not purely an issue for HR," added Charles.

"In the past companies have strived to retain staff with competitive pay and developing a social and attractive work environment, but increasingly that isn't enough.

"Employees are looking to work for organisations which they perceive to be professional in their business operations on the basis that experience with a quality employer is the best form of training," he added.

HR in India has tended to focus most on benchmarking base pay to try to avoid losing staff to higher paying competitors, said Watson Wyatt.

But increasingly employers are recognising that this alone cannot ensure low turnover – indeed, not all employers can pay above market rates.

What companies therefore needed to do was focus more attention on performance related pay, incentive plans and retirement benefits, it added.

"There has never been a greater need for HR professionals in India," concluded Charles.

"Offering competitive salaries is important but not the whole story. Employers have been overly cautious in not wishing to develop talent for competitors.

"It is a Catch-22. If companies do not invest in the career development of their people then employees will move on quickly anyway," he said.