Saturday, January 19, 2008

US loans crisis Spreads its tentacles : Jobs in India face heat

Ripples of the sub-prime credit shakeout in the US have hit the Indian shoreline, thanks to America's offshore link with India, where knowledge workers do research and data processing for Wall Street firms over telecom links, much like call centre employees. Lehman Brothers, a US-based financial service giant that is also an underwriter of mortgages, hurt by sub-prime losses of $3.

5 billion (Rs 13,772.5 crore), is shutting down its mortgage capital division in India.

The company says the 100-strong workforce will not be laid off, however; they will only be shifted to other divisions such as finance and operations. "We don't expect any net impact on our employment in India.

Some job displacements will be there and they will be moved to different departments," Lehman Brothers said in reply to an emailed query. The fourth largest bank in the US recently shut offices in California, New Jersey and Florida, resulting in 1,300 lost jobs.

It also laid off 2,450 workers by shutting its sub-prime mortgage unit. Its division that gave loans to those with better credit profiles, Aurora Loan Services LLC, was trimmed.

India is now the back office of the world's financial majors. About 30% of their back-end operations are outsourced here, either through their own captive units or through partner companies.

This offshoring trend is a cash cow, but it also makes jobs here vulnerable to global economic jitters. About 5,000 employees are estimated to be working from India for Wall Street firms.

They include both high-end research analysts and low-end staff who do data-processing work. Since last May, global banks have lost $100 billion (Rs 4 lakh crore) to bad sub-prime loans.

Their difficulties are beginning to tell on decisions related to their operations. And the impact appears to have begun to hit India.

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