High attrition is hurting India's BPO sector

By siliconindia   |   Friday, 15 April 2011, 00:41 IST   |    7 Comments
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High attrition is hurting India's BPO sector
Bangalore: India's Business Process Outsourcing (BPO) sector is facing stiff competition from the likes of Mexico, Philippines, Malaysia, China, Canada and Ireland that are posing a grave threat to the growth of India's BPO sector reports ASSOCHAM press release. The BPO industry is facing serious challenges vis-a-vis shortage of skilled and educated workers as the attrition rate in India's BPO sector has risen phenomenally at the rate of 55 percent with a significant visible movement in mid and senior management levels, according to an industry specific analysis of the Associated Chamber of Commerce and Industry of India (ASSOCHAM). "Although, the BPO sector in India has been very popular since the beginning, as it has opened up plenty of job opportunities and has totted up huge revenue, but the awfully high attrition rate coupled with talent crisis has plagued the sector since the very beginning", said ASSOCHAM Secretary General, D.S. Rawat. As per the ASSOCHAM analysis BPO-ITes sector has emerged at the top with highest attrition rate of 65 per cent during the course of last two years, giving a serious jolt to India's prospects which was till recently the most sought after BPO destination. Services offered by the IT/ITes and BPO in the domains of pharma and BFSI (Banking, Financial Services and Insurance) have registered an attrition rate of around 60 percent. In the domains of retail and IT sector an attrition rate of around 55 percent has been recorded. Auto, FMCG, Manufacturing and infrastructure sectors have registered an attrition rate ranging between 45 to 50 percent. Amongst all the relevant sectors the services offered by the IT/ITes and BPO in the domain of energy sector has recorded an attrition rate of 45 percent. "The growing trend of job-switching in the BPO industry might prove to be fatal for the survival and growth of India's BPO sector. Companies these days do not put much focus on enhancing individuals' performance, this might hamper India's rapid ascension on the world economic stage in the long run", said Rawat. "Rapid job hops prove to be a disadvantage both for the companies who pay higher wages and those individuals who benefit from higher wages in the short-run, as the rise in package is not keeping up with the rise in knowledge/skill levels of the individuals", added Mr. Rawat. To establish a substantial lead over competing countries acquiring a larger market share in the BPO sector and to remain globally competitive, India's rising wages must reflect in rising skill levels. "Rapid job switches amongst professionals have certainly raised the wages but there's hardly any development of expertise amongst knowledge workers which is significant to justify their fat pay cheques globally", further added Rawat. If the companies continue to promote job hopping, they would be doing a disservice to themselves and their employees as it translates into huge losses for the company which invests huge amount of money in training new employees. Rapid increase in job-switching has compelled people to question India's competitiveness in the BPO sector and thus, it is imperative that BPO companies must provide adequate training and work experience to employees, said ASSOCHAM.