In dealing with a range of consumer problems, from internet connections to directory inquiries, Paula in Plymouth has already often been superseded by Deepak in Delhi. Now, financial services firms are taking advantage of India’s low wages and high-calibre staff.

IT programming is an example. Deutsche Bank, Lehman Brothers and Accenture already use India-based programmers. Standard Chartered Bank employs back office staff there.

More operations functions, such as equity settlements and even complex derivatives transactions, could move to India, with research jobs. As banks seek to cut costs, India’s increasing appeal is bad news for workers in London and New York.

Graduate trainees may well be among the casualties. A New York-based managing director in a leading investment bank says the work done by many trainee analysts is formulaic and could easily be shifted overseas.

He says: “College kids don’t enjoy working all night on things like the comparative statistical analysis of three companies within the clothing sector. This could be done in India. The cost savings would be immense.” Graduate recruitment, which has fallen in response to the downturn, could drop even further as a result.

Through its Scope International subsidiary, Standard Chartered employs 1,700 people in Chennai – formerly Madras – to carry out back-office work, and plans to nearly double that number in the next few years. The bank uses its Indian office for tasks ranging from custody to foreign exchange settlements and some derivatives transactions.

Mike Grime, head of group operations at Standard Chartered, says he has been inundated with inquiries from other banks interested in following its example, or in outsourcing their own operations to Scope. The bank has not decided whether to take on third-party contracts. However, Grime says it is inevitable that more operational roles will shift to the subcontinent, as there is almost no limit to the complexity of tasks that can be undertaken there.

He says: “Companies think they are going to India just because of the cost advantages, but the fact is that the workforce is absolutely superb. Every one of our employees in Chennai is at least a graduate.”

Along with Citibank and Lehman Brothers, Standard Chartered is one of several banks that hires high-flying graduates of the Indian School of Business (ISB) in Hyderabad. The school runs a one-year MBA course for “future business leaders”. An ISB spokesman says almost all its 159 students are likely to work in India when they graduate.

Students at the ISB are of a high standard. The average GMAT score is 690, comparable to the 700 achieved by students at the Wharton School in Pennsylvania, with which the ISB has a partnership.

As well as its MBAs, the calibre and size of India’s graduate population appeals to Western employers. Every year, hundreds of thousands of students complete degrees at Indian universities. This gives high-paying international employers the pick of a large crop – the average age at Standard Chartered Bank’s Indian operation is a youthful 26.

OfficeTiger, a Chennai company that provides desktop publishing and research services to investment banks, received more than 25,000 applications for around 100 jobs last year. Randy Altschuler, a former investment banker at Deutsche Bank and joint founder of OfficeTiger, says Indian employees are every bit as competent as graduate analysts in the West.

Altschuler says: “These are the kind of people who would be professionals, but instead they are assisting the professionals. In India you get a much higher standard of person doing assistant work.”

Joe Thomas, an operations specialist at Wheat, the recruitment firm, says: “London as a centre for operations people is going to shrink. People have already looked at Scotland and Prague, but India is the best bet.”

Trevor Foster-Black, managing director of Coalition Development, a UK company that provides information on banking employees to recruiters, uses researchers in India to structure data.
He says: “It would be very difficult to find such high calibre people to do similar work in London.”
The time difference also works to India’s advantage. Foster-Black says: “They begin at 4am our time and everything’s finished by the time we arrive.”

Altschuler says banking staff in Western financial centres need not be concerned about losing their jobs. Instead, they should be pleased that the roles remaining in the West will be of higher calibre. He says: “People in New York and London will be working in higher-end areas. There will be more need for people with higher education – employees are going to have to get smart.”

Grime agrees that operational positions in London will become more demanding and complex. He says: “The old paper-processing jobs will disappear, replaced by relationship roles based on talking to customers and liaising between the central office and the overseas hub.

“The boundaries between the middle and back office will blur and operations staff will have much more satisfying jobs than in the past.”