Human Capital Issues

Attrition & BPO

The BPO sector in India started to gain prominence in the early nineties of the last century when North American and European countries started exporting jobs (mainly the non-core ones) due to rising wage rates. The BPO segment which is grouped under the IT sector has been developing at a phenomenal rate of more than 35% in the years from 2009-12 is currently valued at $26-$29 according to a study conducted by NASSCOM. The sector which opened up new career opportunities and options for the youth in India has been basically plagued by a steep attrition rate.

The BPO sector in India: Real Scenario

The BPO sector since its inception has provided employment to innumerable men and women in the country. However, as the sector witnessed gradual growth and development it started experiencing two fundamental problems one extrinsic and the other intrinsic. Countries like Philippines, Ireland, Mexico, and Canada which had a substantial English speaking population started offering stiff competition resulting in a flight of jobs. Nevertheless, India has regained a lot of lost ground as it enjoys the highest market share (37%) amongst all other competing nations.

The intrinsic problem faced by the sector is the soaring attrition rate in the last five years (from 2007-11) which is more alarming. What are the reasons behind individuals leaving one BPO firm to take up a new job in another? The main causes for job hopping on one end are better pay packages, and opportunities for career advancement. On the other, inconsistent and irregular working hours, high-stress working environment, and employer/supervisor dissatisfaction have also contributed towards growing attrition levels. This rising trend could have an adverse impact on the sector’s future growth and seriously jeopardize India’s dominant position in the BPO market. However, attrition rates fell considerably in the latter half or 2012 (July-December) reviving hopes of resurgence.

The Attrition Situation in 2011

The attrition rate burgeoned to 55% in the period December to April in 2011 from 40% for the same corresponding period in 2010. Irregular and lop-sided work schedules coupled with the alleged deficiency of career growth prospects in the long run were cited as the prime reasons for this phenomenon according to a survey by Assocham. Furthermore, there was a wide gulf in the demand-supply position as the industry was confronting a severe scarcity of professionally competent workers. The BPO industry requires workers to be equipped with the appropriate soft skills both for ‘voice’ and ‘non-voice’ processes and this is where most workers were found wanting.

The BPOs firms and establishments engaged in the financial, banking, insurance and pharmaceuticals recorded an attrition rate as high as 60%, infrastructure, FMCG, and automobile and retail sectors registered a 50% attrition level.

Attrition rate plummets in 2012

In contrast to the precipitous attrition rates in 2011 (from January to August), the attrition level fell significantly in the BPO sector for the same corresponding period in 2012. Many factors have worked in consonance towards bringing down the rate including the global economic recession, cross-currency oscillation, and the paucity of new jobs in this segment of the IT sector. The attrition rate remained fixated at about 5% for workers with more than a decade of working experience.

The corresponding rates for employees having 5-10 years of working experience and 0-5 years of experience were 8-10% and 15-20% respectively. These statistics were thrown up by a survey conducted by Assocham members on different stakeholders including employment agencies, HR professionals, and industrial psychologists involved in the segments of IT, ITES and BPO in the principal centres of Bangalore, Gurgaon, Noida, Pune, Hyderabad, and Chennai.