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How Indian BPO could lose out to other nations

Last updated on: April 14, 2011 17:20 IST

How Indian BPO could lose out to other nations

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Talent crunch and soaring attrition rate might push India behind other BPO giants, according to a study by ASSOCHAM.

India's Business Process Outsourcing (BPO) sector is facing stiff competition from the likes of Mexico, Malaysia, Philippines, China, Canada and Ireland that are posing a grave threat to the growth of India's BPO sector, said the Associated Chamber of Commerce and Industry of India.

The BPO industry is facing serious challenges vis- -vis shortage of skilled and educated workers as the attrition rate in India's BPO sector has risen phenomenally at the rate of 55 per cent with a significant visible movement in mid and senior management levels.

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Photographs: Reuters
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"Although, the BPO sector in India has been very popular since the beginning, as it has opened up plenty of job opportunities and has totted up huge revenue, the awfully high attrition rate coupled with talent crisis has plagued the sector since the very beginning," said ASSOCHAM Secretary General, D S Rawat.

According to the business chamber's analysis, BPO-ITes sector has emerged at the top with highest attrition rate of 65 per cent during the course of last two years, giving a serious jolt to India's prospects, which was till then the most sought after BPO destination.

Services offered by the IT/ITes and BPO in the domains of pharma and BFSI (Banking, Financial Services and Insurance) have registered an attrition rate of around 60 per cent.

In the domains of retail and IT sector an attrition rate of around 55 per cent has been recorded.

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Photographs: Reuters
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Auto, FMCG, Manufacturing and infrastructure sectors have registered an attrition rate ranging between 45 to 50 per cent.

Among all the relevant sectors, the services offered by the IT/ITes and BPO in energy sector domain have recorded an attrition rate of 45 per cent.

"The growing trend of job-switching in the BPO industry might prove to be fatal for the survival and growth of Indias BPO sector. Companies these days do not put much focus on enhancing individuals performance, this might hamper India's rapid ascension on the world economic stage in the long run," said Rawat.

"Rapid job hops prove to be a disadvantage both for the companies who pay higher wages and those individuals who benefit from higher wages in the short-run, as the rise in package is not keeping up with the rise in knowledge/skill levels of the individuals," said Rawat.

 



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