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Global meltdown: Worry signs

The financial turmoil in the US will force many companies to cut jobs they outsource to countries like India.

business Updated: Sep 18, 2008 00:36 IST
HT Correspondent

What’s common between the ubiquitous call centre cabs and some of the world’s financial behemoths? The answer: both might be running out of gas.

When US investment bank Lehman Brothers declared its bankruptcy on Monday, within hours some 300 jobs at its Mumbai back office were gone.

That might just be the beginning.

Industry officials and experts say more layoffs will follow as the latest financial turmoil in the US forces many of its companies to cut back on jobs they outsource to countries like India. More so, because banking and financial services account for nearly 50 per cent of the money India makes from outsourcing orders.

The impact on BPO and back-office operations is one of the many fallouts that would come India’s way, given the rapid growth in its economic linkages with the world’s largest economy over the past decade.

Also, what happens to the US economy, which accounts for a quarter of the global GDP, is critical as the way the Americans spend, save and invest has a bearing on the rest of the world.

Prime Minister Manmohan Singh said our economy would grow 8 per cent this year despite global woes, but experts believe the road ahead will only get bumpier.

The first signs have surfaced in the falling markets and a weakening rupee.

The Sensex has shed nearly 1,700 points, or 11 per cent, in the past 10 days since it became apparent that Lehman and Merrill Lynch could go bankrupt.