Tuesday, September 9, 2008

BPO's losing their charm?

The latest news in the Job Market is that the BPO sector has the highest attrition rate in India. Perhaps it is due to the remuneration that is less then pretty, or the irregular work schedules, but the fact still remains that the BPO jobs in India is suffering from a 23.5 percent attrition rate. This means that it is 7.8 percent higher then other suffering sectors.

An article from the Economic Times said: The report by Hay Group showed that, in general, staff turnover in India is 15.7 per cent, but in BPO companies, attrition stands at 23.5 per cent - the country's highest.

"The overall compensation structure design is not competitive when compared to general market practices. This means that BPO employees do not receive as much cash-in-hand as their peers in other industries," Hay Group, Reward Information Services, Country Head (India) Oscar De Mello said.

"When you add unattractive remuneration to working shifts, lack of career development, and monotonous tasks, it is not surprising that employees leave when offered a small salary increase," he said.

The short-term incentives account for only four per cent of total remuneration, compared to 10 per cent generally. Moreover, the benefits are also limited to those that can be enjoyed only post-retirement, like pension fund and gratuity, and not during the employment period.
While pay is generally designed to give employees more take-home cash, a higher portion is allocated to allowances like housing/rent and not base salary.

"The BPO industry is a critical sector in the Indian economy, worth USD 11 billion and employing over two million people. However, if the industry is to achieve the projected USD 30 billion by 2012, we have to tackle this talent attrition issue now.

"By creatively designing their total reward package towards more short-term incentives and benefits, and linking the package to performance, companies can ensure that they get higher productivity without hefty increases in salary costs and minimize attrition costs at the same time," De Mello added.

The report also recommended that by planning a combination of short and long-term incentives, such as performance bonus, Employee Stock Option Plans, deferred and retention bonus, the industry can tide over the problem of attrition.

What is your take on this topic? Do you agree or disagree? Write in and post your comments right here..

1 comment:

S.C. Mishra said...

Thank you for the insight TimesJobs! It is too true..