High attrition and property prices to impact BPO sector

High attrition and property prices to impact BPO sector
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First Published: Mon, May 28 2007. 03 01 PM IST
Updated: Mon, May 28 2007. 03 01 PM IST
New Delhi: A high attrition rate of 40% coupled with an unprecedented hike of 100% in property prices in the metros has impacted the growth of BPO firms negatively.
As against a projected growth rate of 35%, the next 2-3 years will see growth dip by 25%, according to a study titled ‘Rising property prices and high attrition in outsourcing industry’ undertaken by Assocham.
80% of leading BPO companies that took participated in the study said that attrition rates in future will rise over 40% whereas remaining 20% firms are optimistic that they will drop down and stabilize between 20-25%.
The attrition rate in BPO firms is at the highest because of better opportunities elsewhere, encouraging technical pool of human resource to seek greener pastures. At a time when property prices are sky rocketing, its adverse impact is the largest on the BPO industry. This was part of the findings that were revealed from a study that was carried out amongst leading BPO firms, including Genpact.
Reasons for high attrition
* 60% people leave BPO units because they are offered higher salaries elsewhere
* 40% leave because of stagnation in career graph, long duty hours, night shifts and non-conducive HR policies.
The impact of high attrition rates will see an increase in expenditure of training and development, loss of clientele, failure to attract more business based on high output, inconsistent delivery and quality issues/loss of productivity, high turn-around-time and costly recruitment process which would create a dearth of 300,000 professionals by 2009 .
Suggestions on curbing attrition
* Provide more options in the work profile
* Have frequent training and development programmes to help sustain employees’ interest
* Create better work environment and award reward and recognition
* Have competitive pay package system
* Build talent pool of employees by setting up tie-ups with education institutes for training and campus recruitment.
The industry is currently undergoing a growth of 25-30% per annum which would see a further spurt in coming five years. India produces about a million graduates annually and BPO companies take up about 6-7% of the whole.
Affect of rising property prices
* Post liberalization demand for space increased manifold in metros. With flexible government policies and India figuring as a major IT/ITES destination, property rates have only surged. Rentals in Delhi increased by 20-30% pushing up establishment costs and operating costs of BPOs.
* 80% of BPOs feel that property prices have grown by nearly 100% in the last decade, affecting their bottomlines.
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First Published: Mon, May 28 2007. 03 01 PM IST
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