Indian BPOs face talent crunch, attrition: Study

No growth opportunity and lack of promotion cited as reason for flight of people

In contrast to popular impression that India’s BPO sector is the most competitive in the global arena, fast emerging BPO players in countries like China, Mexico and Philippines are posing a grave threat to the growth of country’s BPO sector, the study conducted by Assocham has cautioned.

The BPO industry is facing serious challenges vis-à-vis shortage of skilled and educated workers as the attrition rate in India’s BPO sector has risen phenomenally at the rate of 55 per cent with a significant visible movement in mid and senior management levels, it reveals.

BPO is a broad term referring to outsourcing in all fields. BPO in popular parlance means the delegation of one or more Information Technology (IT)-intensive business processes to an external provider that in turn owns and manages the selected process. As per the 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 per cent. In the domains of retail and IT sector an attrition rate of around 55 per cent has been recorded. Auto, FMCG, manufacturing and infrastructure sectors have registered an attrition rate ranging between 45 to 50 per cent. Amongst all relevant sectors, services offered by IT/ITeS and BPO in the domain of energy sector has recorded an attrition rate of 45 per cent.

The rising trend of attrition level is due to factors like no growth opportunity and lack of promotion in the segment. “Most people leave for higher salary and higher education. The level of attrition in BPO is rising because the workload in industry is such that there is no personal life. On top of that there are physical strains because of odd duty hours. Many leave jobs because of uneasy relationship with peers or managers,” HR experts explain.

The study cautions that “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”.

To establish 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”, it said.

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, the study suggests.