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

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Abstract

Managing attrition is not just a 'nice thing to do' in the BPO industry. It is the route to their survival.

Staff attrition (or turnover) represents significant costs to most organizations. It is odd, therefore, that many organizations neither measure such costs nor have targets or plans to reduce them.
Many organizations appear to accept them as part of the cost of doing business - a sign of increasing job mobility and decreasing staff loyalty perhaps, a matter to be regretted but just 'one of those things'.

An attrition rate in call centers has become legendary. Indeed, the attrition rates in some Indian call centers now reach 80%. This is an extreme figure but the average attrition rates in Indian call centers are up around 30-40%. It is interesting to note that the attrition rates in Indian BPO industry - and the costs associated - are so high that they can override the benefits of lower wage costs.

In this paper, we have made an endeavor to highlight attrition issue faced by BPO industry. We try to find out the various reasons for this problem, and have proposed some ways in which this issue can be addressed.

Introduction

The business process outsourcing industry in India is growing at a phenomenal pace. Exports were worth $ 5.2 billion in 2004-05, growing at 44.5 per cent, and are projected to have 41 per cent growth in 2005-06 to $ 7.3 billion. (Source: NASSCOM)

With 245,100 people employed at the end of March 31, 2004, against 171,100 last year, the industry witnessed a hiring growth rate of about 40-42 percent. On the hiring front, the industry absorbed about 74,000 people in 2003 despite the attrition rate of 45-50 percent being a matter of concern. The size of the Indian BPO market is likely to be around $ 9-12 billion by 2006, and will employ around 400,000 people. (Source: ICRA)

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* Contributed by -
Nikhil Relan & Sudhanshu Duggal,
National Institute of Industrial Engineering,
NITIE, Mumbai.