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In the past two years, the BPO (business process outsourcing) sector has recorded above 50 per cent growth year-on-year. The express growth and entry of new players have resulted in poaching of employees in high numbers. Salaries at the entry level have risen 10-15 per cent while the 25-30 per cent at the top level. A look at the changing trends in country's BPO sector. By Manu Kaushik
The gentlemen who run the BPO industry in India will be surprised if they are told that they ought to be suffering from existential angst. Their main headache is delivering what they have contracted for. This is because the competition is also in the same boat, not knowing how to chew what they have bitten off. The result is a massive raw materials shortage - in this service industry, bottoms that can be put on seats. They are surviving by poaching on each other. The BPO industry in the country, which is expected to employ around one million people by 2008, is facing the challenge of finding quality human resources given the current attrition rate of around 50 per cent. The attrition rates vary by 20-40 per cent in some firms, while the top ones averages at least 15 per cent. Nasscom in a report said the outsourcing industry was expected to face a shortage of 262,000 professionals by 2012. The reasons for the high rate of attrition was due to various factors like salary, work timings, other career options. Also, there is always the danger of costs increasing while billing rates decline. Although most industry watchers are confident that over the next few years the industry will grow its topline in dollar terms by 40 per cent plus. So, what's the problem? The catch, the reason industry leaders should be worrying about the future of their existence, is that this growth does not have a firm foundation. About 85 per cent of Indian BPO work is handling calls, but this category accounts for less than 10 per cent of work outsourced globally. High attrition rate, price wars, poor infrastructure and lack of data protection laws could derail India's booming outsourcing industry. Analysts say the attrition is forcing BPO companies to pay more. Both IT and ITES industry saw an average increase of 8-9 per cent on median salaries across levels in comparison to 2004. This is affecting their gross margins and so they are being left with less to invest. Without investing you cannot maintain consistent quality with growth. The cost of attrition is 1.5 times the annual salary. For BPO service providers, moving up the value chain is critical, given the attrition rates in the industry, which are on an average higher in low value-added segments (in call centres) as compared to higher value-added segments like engineering. It will not be possible for the industry to arrive at a blanket agreement on poaching but bilateral agreements between companies are being signed. Basic norms are being put in place and code of ethics is being stressed upon by industry. Companies are being encouraged to adopt responsible behaviour in order to ensure that the industry does not become a victim of its own actions. Industry needs to go aggressive but not cannibalistic. In order to ensure a consistent flow of trained manpower in the future, the industry needs to work with the government to introduce courses at a school and college level, which are in line with the requirements of the ITES-BPO industry. India has one of the largest pool of English speaking graduate workforce. The challenge for the industry is not in employment but employability. The industry is also hiring professionals from outside the industry in order to meet its steady supply of manpower. But nothing is lost yet, as the industry is still in its nascent strategy there is a lot of strategies available to reverse this trend and make it an attractive employer. Nasscom ITES-BPO forum has identified HR as one of the key challenges of the ITES-BPO industry and has formed a special task force to address short-term challenges such as attrition and also long-term challenges such as ensuring availability of a skilled talent pool. To arrest the disturbing trend, companies can look into various options like good rewards, bonding programme, flexible working hours and stronger career path. With attrition rates ranging between 30 and 60 per cent in the BPO industry, HR should look for a scientific and analytical approach.
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