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Indian BPO's biggest challenge is attrition

Last updated on: August 27, 2009 16:19 IST

The BPO industry in India has undoubtedly been a very popular field of employment in recent years but one of the biggest challenges it is facing is a phenomenal rise in attrition rate, says a new book.

"On its flip side, it (the BPO industry) is characterised by lopsided working hours, high-stress work culture and extremely high attrition rates. Apart from other factors such as recession, currency dynamics and higher wage arbitrage, one of the biggest challenges which will have a lasting impact on the Indian BPO sector is the upswinging attrition rate," says writer-teacher Shalini Verma in 'Soft Skills: For the BPO Sector'.

"Of late, attrition rate in the BPO sector has risen phenomenally. Retaining manpower at the mid and senior management levels, where there is a visible significant movement, is proving to be a particularly challenging job," the book published by Pearson, says.

According to the author, the rationale behind job-switching is that a year or so at the mid-managerial level in some large BPO is supposed to be a ticket to the senior management level somewhere else in the industry.

"This growing trend could prove fatal for the growth of the sector and could even derail its stability. The widening demand-supply gap and the dearth of skill sets required to handle the scalability and multilateral integration at the top level may only lead to the opening of doors for experienced expatriates.

This could be a jolt to India's prospects of remaining the most sought-after BPO destination because that would eventually scale up costs further," she writes.

Verma says soft skills are very important in the BPO-ITeS sector.

"It is essential to be technically sound, but one should also have the ability to convey the idea to the client in the simplest possible manner," the book says.

India is undoubtedly one of the most favoured BPO destinations in the world. According to a Nasscom study, the Indian BPO sector has been growing at a rate of over 35 per cent in the past three years (2005-08).

The book also says BPO is the fastest growing segment of the overall offshore market, and currently estimated at $26-29 billion.

According to another study, India has established a fairly substantial lead over competing countries with a market share of 37 per cent compared to Canada's 27 per cent and Philippines' 15 per cent. Countries like Ireland, Mexico and China have single-digit market shares.

The author says that the recent global economic slowdown has, to some extent, adversely affected the growth of the ITES-BPO sector.

"But the Indian ITES-BPO sector and BPO exports, with the sector's youth power will soon turn around and reclaim their high growth rate," Verma writes.

"Over the past decade, the Indian BPO sector has witnessed significant transformation. What started with the outsourcing of basic data entry tasks by some US-based companies has graduated to the outsourcing of a range of voice-based services and back-office activities by companies spread across the US, Europe and Australia."

As the Indian economy has become more globally integrated, businesses, especially small and medium enterprises in India, are facing increasing levels of global competition and are being pushed to deliver world-class product lines and service quality, the book says.

"Domestic and rural BPO companies have emerged as effective means of entrusting specialists with the task of consistently delivering the desired levels of quality," it says.

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