This Paper has won Consolation Prize in the CoolAvenues' Paper-writing Competition - "In Search of Excellence" - for the Year 2005.

Page - 1

Abstract

BPO industry in India is growing at a very rapid pace of 40-50% growth rate annually. This sector is said to be poised to generate one million jobs by the year 2008. But, this industry faces a very acute problem of attrition rate which is as high as 30-40%.
To compel this, there is another problem of poaching, which increases the attrition rate. All this leads to higher costs to the company. This paper suggests various strategies to counter this growing attrition rate. BPOs needs to hire right kind of people; give more to the employees not only in terms of salaries and perks but also in terms of experience. For good performing employees, the company needs to have a good career growth plan. Companies need to build a long lasting relationship with the employees. This paper goes into the details of these aspects of the BPO industry and its ways of tackling attrition rate.

Introductiion

BPO industry in India is one of the fastest growing industries in the country. It creates a large chunk of jobs in the country. However, as with the growth come the deterrents. One of the most critical problems faced by this industry is that of attrition. Attrition arises with employees leave the company for one of the three reasons:
i) Death of employee,
ii) Retirement, or
iii) Better opportunity in some other company.

Attrition causes huge loss to the company, not only in terms of manpower but also in monetary terms. The cost of attrition would be explained in details later in this paper. Moreover, this paper will also cover the reasons why the employees leave a particular company. Lastly, this paper will explain what can be done to control the attrition and the road ahead for the BPO industry.

BPO Industry in Indiia

India has remained one of the most favorite offshore destinations for BPO/ITES activities. One of the most prominent reasons for the same is cheap labor. Over the past five years, the Indian BPO/ITES has been growing at a rate of about 50-60%. As per NASSCOM, the Indian BPO/ITES registered a growth rate of 46% and clocked a revenue of UD$ 3.6 billion in 2003-04 up from UD$ 2.5 billion in 2002-03.

Next

* Contributed by -
Nishant Waghela,
Alumni IIM Ahmedabad,
Currently working with State Bank of India at Mumbai.