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Managing Attrition in BPO

- by Anirban Majumdar & Kamal Poddar *


Page - 2

So, with everything looking very hunky dory, the Indian BPO industry is ready to take-off. Right? Wrong. The biggest challenge for a BPO HR manager today is to find the right kind of people who can keep pace with the unique work patterns in this industry. The industry is expected to have a manpower shortage of 2,62,000 in 2008.
In a country where only 3 million graduate every year, the task is daunting. And with an attrition rate that is the highest in the Asia-Pacific region, the task doesn't get any easier.

Attrition in the Indian BPO Industry

The biggest challenge facing the BPO industry today is to manage the ambitious and transient workforce. Moreover, since the industry is predominantly service-oriented, the importance of attracting and retaining talent has become very critical.

In India, the average attrition rate in the BPO sector is approximately 30-35 percent. It is true that this is far less than the prevalent attrition rate in the US market (around 70 percent), but the figure is way above the figure for China, of around 15%. Most interestingly, in an increasing number of cases, when an employee leaves a BPO job, he also leaves the industry. This is a disturbing trend, which needs to be addressed at the earliest.

Attrition - The Financial Aspect

Apart from the inherent need for companies to retain experienced and talented employees, who form the lifeline of the company, there is a cost aspect to attrition too. A company invests a great deal of its resources in its employees in the form of salaries, benefits, bonuses, training and other personnel costs.

When an employee leaves a job, there is a cost incurred for the person who temporarily replaces him, as also the cost due to loss in productivity. Administrative expenses of conducting an exit interview, the cost of lost knowledge and the cost of training invested in the person leaving the company are substantial.


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* Contributed by -
Anirban Majumdar & Kamal Poddar,
Indian Institute of Management,
Kozhikode, Kerala.

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