High attrition, prices cost BPOs dear
India's $30 billion (Rs 123,000 crore) BPO industry is headed for a slowdown due to high employee attrition rate and rising property prices, reports Madhur Singh.Updated: May 19, 2007 04:20 IST
India's $30 billion (Rs 123,000 crore) BPO industry is headed for a slowdown due to high employee attrition rate and rising property prices, according to a survey of the country’s top BPO companies conducted by Assocham.
The survey shows the industry also faces an uncertain future due to lack of skilled workforce and infrastructure, as well as competition from other countries.
While the attrition rate is as high as 40 per cent, almost 80 per cent of the respondents said they expected it to go up in future. Employees are apparently put off by the pressure of working night shifts, fear of stagnation and generally poor HR policies. Higher salary expectations are also a factor.
The high attrition rate is expected to create a paucity of 300,000 BPO professionals by 2009, the survey shows. This will raise expenditure on recruitment and training and development – depriving the industry of its low-cost benefit.
The present annual growth rate of 25-30 per cent will create jobs for 2.8 million skilled workers, but India is presently producing a million graduates annually, of which only 6-7 per cent join the BPO industry.
To attract new graduates and retain employees, BPO companies must improve their HR policies and provide a more conducive work environment, the study suggests.
Nearly 80 per cent of the respondents also said they had experienced rentals and property values going up by 100 per cent over the last decade. Larger investment by multinationals, greater migration to cities and false appreciation by agents were cited as primary factors. Since land costs constitute half of BPOs establishment costs, this trend is also likely to affect Indian BPOs negatively.
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