In this article, we argue that the rapid growth of the outsourcing industry has resulted in both high turnover and labour shortages and at the same time provided employment opportunities to a new group of employees: young upwardly mobile college graduates. We argue that this particular demographic profile is prone to high turnover and presents new managerial challenges. We then examine the variety of recruitment and retention strategies that companies in the business process outsourcing industry are experimenting with and show that many novel HR strategies are being crafted to address the needs of this young middle-class workforce. We also examine macro efforts by state and central governments and the industry association to help resolve some of these problems.