NEW DELHI, May 23 (Reuters) - Nearly 60,000 outsourced contract workers lost jobs in India's information technology sector in the year ending in March as jobs for flexi workers hired through contractors by companies shrank 7.7% from a year earlier, a recruitment body said on Tuesday.

"The drop in new employment generation within the IT flexi staffing sector mirrored the global slowdown in IT hiring," said Lohit Bhatia, president of the Indian Staffing Federation, representing over 120 recruitment agencies across the country.

However, the hiring in the manufacturing, logistics, and retail sectors remained strong, helped by domestic consumer demand, he said.

The $194-billion sector whose software services helped businesses adopt pandemic-era practices of online shopping and remote working is facing a slowdown this year as employees return to offices and the Russia-Ukraine war weighs on spending from clients in Europe.

A report by J.P. Morgan analysts warned last week that soaring inflation, supply chain issues and the hit from the Ukraine war will bring an end to the growth boom that India's IT services enjoyed during the pandemic.

The hiring of flexi workers in the IT sector shrank 6% quarter-on-quarter in the March quarter, Bhatia said, noting that hiring of contract workers through a third-party may remain weak for the next few quarters in the software industry.

India's unemployment rate in April rose for the fourth month in a row to 8.11%, from 7.8% in the previous month, according to the Centre for Monitoring Indian Economy, (CMIE), a Mumbai-based think tank.

The Federation said overall demand for flexi workers slowed down in other sectors as well, adding 177,000 jobs through vendors in the financial year 2022/23 ending in March, compared with 230,000 workers in the previous year.

The number of flexi workers, hired through vendors by Indian companies has increased to 1.4 million including one-fourth of women workers.

Reporting by Manoj Kumar; Editing by Jacqueline Wong

Our Standards: The Thomson Reuters Trust Principles.

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