Wednesday, December 14, 2005

BPOs Losing To High Attrition?

According to a study conducted by Hay Group India, attrition cost in the Business Process Outsourcing companies (low-end voice based process) is 76 per cent of annual salary. The study mainly focussed on the 'impact of attrition on the bottom line of the BPO- ITES World'.

According to the study, total attrition cost is 27 per cent of operating expenses for a voice-based process. Total cost of attrition in high-end process is nine per cent of the operating expense, while in the low-end non-voice process it is 12.5 per cent of operating expense.

The survey says managing attrition in BPOs has become a strategic priority for CEOs as it is affecting the bottomline. "Though the BPO sector is booming, attrition is creating enough headaches for the CEOs. It can be better served if they focus on the cost of attrition, rather than attrition per se and alter the attrition mix to increase planned and desired exits," said, Gaurav Lahiri, operations manager of Hay Group India.

Largest disruption in attrition in India is caused by unplanned, undesired exits. Short duration employment contracts can substitute unplanned attrition with planned attrition. Short duration contract will assist in lowering unplanned attrition, limiting investment in training, cherry picking high performers, etc.

To create short duration contract there should be guidelines, like draw up training calendar, clarify performance expectations, back–end compensation and offer study leave assistance.According to Nitin Aggarwal, head of Technology Practices at Hay Group India, "To control the attrition rate, BPO companies have to create an environment of engagement to employees by offering tangible rewards, quality of work, future growth opportunity, inspiration values and work-life balance."


Anonymous Anonymous said...

I don't think it is right to choose that planned attrition over unplanned attrition. We should not choose neither of the two. Companies should give focus on WHAT CAUSES THE HIGH ATTRITION RATE? Has it something to do with the environment? Stability? Personal relations between superiors and staffs? Compensation or benefits? Because these are the major concerns that trigger employees to leave the company. Aside from that, the preventive action regarding this matter should start on the screening process to be done by RECRUITMENT. If you were able to choose RIGHT candidates for the RIGHT position, high attrition rate would be avoided because it is another reason why people choose to try a new job on a different nature of business. If an employee is not happy with what he is doing and on what he is performing, sooner or later it would definitely leave the company. So the preventive measures should definitely start in RECRUITMENT. Do not focus on filling up requirements per se because it would only lead you to a more complex tasks and responsibilities.

7:39 AM  

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