National Association of Software and Service Companies, the apex chamber of software and services companies, said on Monday that Indian business process outsourcing companies needed to have an enhanced focus on people retention and efficiency improvement.

"Though Indian BPO industry has world standard quality, it must look into internal issues like retention of people in the middle management level and improvement in operational efficiency," Nasscom president Kiran Karnik told reporters while releasing a report on key operational challenges in ITES-BPO.

Though the top companies in the BPO sector provided world class services, there was a huge gap in the operations of the smaller companies in this segment, the report, which Nasscom prepared in association with QAI India, said.

It also said attracting and retaining people across all management levels was one of the key process challenges in the sector. This was a more crucial issue for third party BPOs, compared to the captives in the sector.

"Attracting and retaining people is a key challenge for third parties. For captives, it is consistency of delivery," the study said.

It said enhancing middle management competencies and changing hiring profiles were the best ways to improve retention.