The number of expatriates from countries such as the US and Britain taking middle and senior-level executive jobs in India has surged, as a tightening domestic labour market has rapidly narrowed pay differentials or even reversed them.

Headhunters and chief executives say top-flight Indian managers, particularly in fields such as financial services, are now so demanding in salary negotiations that they are pricing expatriates back into the jobs market.

“We see a clear trend,” said Preety Kumar, managing partner of Amrop International, a recruitment firm. “In the last three years the proportion of expatriate managers hired for positions in India has gone up from 5 per cent to 15 per cent.”

Bharti Airtel, the country’s leading mobile operator, is one of many Indian companies now finding that expatriate managers, once considered an expensive luxury, can represent good value compared with similarly qualified Indians.

Sunil Bharti Mittal, president of the Confederation of Indian Industry and founder of Bharti Airtel, said the tele­communications group employed a number of “expats who cost less than Indian managers” and that it was now “cheaper to imports managers”. “There isn’t really a cost arbitrage any more at the mid and senior management levels,” said Anupam Yog, founder of Mirabilis Advisory, which advises cities and countries on their brand strategies.

With Indian chief executives taking home Rs10m-Rs35m ($245,000-$845,000) and divisional heads unlikely to work for less than Rs10m, search consultants say companies have started to throw their recruitment nets wider.

“As a rule of thumb, country heads now get $300,000-$400,000, and frankly you can get any expat for that money,” said Ms Kumar. “In many jobs, an expat comes cheaper or at a similar price. If you don’t tap that market, you’re missing a chance to expand your leadership pool.”

Mark Runacres, a British businessman based in New Delhi, says companies’ “overall preference for getting the right Indian means that the best local executives can now demand pretty much what they want”.

According to Peter Mukerjea of INX Global Executive Search, companies operating in India are increasingly recruiting overseas from outside the ranks of returning overseas Indians, traditionally the main source of external talent.