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It is interesting to note that the attrition rates in India - and the costs associated - are so high that they can override the benefits of lower wage costs. A Nasscom-Hewitt Associates Survey says that the cost of attrition in the industry is 1.5 times the annual salary.
On an average, companies today lose 25% of their annual revenue as a result of attrition. Thus, even an 8-10% decrease in the attrition rate can have a major spin-off effect on the bottom line of a company.

Causes of Attrition

The issue of attrition can be best seen in perspective of the age profile of this industry's employees - about 87% of them are less than 30 years old. And only about 9% of them are between 30 and 40 years old, compared to 22% in the IT industry.

This has been a deliberate hiring strategy in the industry. The companies lure young, just-out-of-college graduates with a triplet of opportunities: high growth, great salaries and a good work environment. This may be a difficult group from which to build a stable, low-attrition HR environment. They join with enthusiasm but are also quickly disillusioned.

The specific reasons for attrition are varied in nature. A list of issues, some very prominent and some even trivial, are identified below: -

1. No growth opportunity / lack of promotion: Only one in 10 people will ever make consultant; one in 100 will make it to line / practice manager.

2. Organisational matters: The knowledge employees always assess the management values, work culture, work practices and credibility of the organisation. The Indian BPOs do have difficulties in getting the businesses and retain it for a long time. When there is no focus, and in the absence of business plans, non-availability of the campaigns make people to quickly move out of the organisation.

3. Work environment: In the Indian BPO industry, rigid rules and strict monitoring are the norm. Employees often feel that they are being constantly spied upon. Sometimes, it even infringes on the employee's private space, thereby forcing them to look for other opportunities.

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