In early April, Infosys Technologies, an Indian outsourcing firm, had a party to celebrate reaching $1 billion in annual revenue. It gathered nearly 10,000 employees under a tent on its Bangalore campus and plied them with food and entertainment.

The company also distributed some $23 million in bonuses. “And we’re doing a lot of other things to retain employees,” said Stephen R. Pratt, chief executive of the Infosys consulting arm in the United States.

Infosys is hardly the only Indian company making a serious effort to attract and keep employees. Overall, according to a recent survey by Hewitt Associates, the consulting group, wages in the country’s major outsourcing sectors have been rising by close to 15 percent a year.

The reason is increased competition for labor, thanks in large part to the rush of American companies to outsource work offshore. In fact, the competition has become so fierce that typical Indian operations in business processing –– including call centers and offices handling payroll, accounting and human-resources fu-nctions –– can expect to lose 15 to 20 percent of their work forces each year, versus single-digit percentage losses in the late 1990s.

The data from India show that, to some extent, the offshore outsourcing phenomenon may be self-correcting. Though outsourcing shows no sign of fading, rising wages and rapid turnover in Indian hubs may reduce the savings American companies reap when they send work abroad.

The stiffest competition for offshore labor tends to occur in India’s so-called first-tier cities: Bangalore, Mumbai, New Delhi and Hyderabad. In some sectors of the outsourcing market, attrition rates are 50 to 75 percent a year, according to Sunil Mehta, vice president of the National Association of Software and Service Companies, or Nasscom, an industry trade group in India.

Managers in the business-processing sector, in particular, have difficulties keeping workers. A typical outsourcing contract sends workers from an Indian company “onshore” –– to the American company’s headquarters –– while the outsourcing project is starting. The problem is that the onshore experience becomes a valuable credential in the American or Indian labor markets.

(By Permission, The New York Times)