Troubles never end! And If the ITeS industry did not have enough of them already, labour shortage has reared its ugly head yet again — this time bringing along with it a major threat to India’s low cost advantage.

The first major impact of skilled workforce shortage was on staff costs that have already increased this year by 35% against a growth of only 25%.

This in turn can easily erode the competitiveness that India enjoys in the area of labour costs — now a big concern for the industry. Over the last two years staff costs have gradually grown by 10% and 15%, respectively.

“Availability of skilled workforce has become tougher today than say two-three years back. This has lead to higher lead times and definitely higher costs per hire,” says Dibyendu Das, consulting partner, BPO practice, QAI.

The need for qualified employees will reach one million by 2009 with an expected shortfall of 260,000 workers, says Gartner. This could severely affect quality and security also.

(Source: The Economic Times)