An Analytical Study Of Impact Of Attrition Rate In BPO Industry In Indore City

Authors: Dr.Anju Agrawal

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Abstract

In the best of worlds, employees would love their jobs, like their coworkers, work hard for their employers, get paid well for their work, have ample chances for advancement, and flexible schedules so they could attend to personal or family needs when necessary. And never leave. But then there\'s the real world. And in the real world, employees, do leave, either because they want more money, hate the working conditions, hate their coworkers, want a change, or because their spouse gets a dream job in another state. So, what does all that turnover cost? And what employees are likely to have the highest turnover? Who is likely to stay the longest

Introduction

The IT enabled services (BPO) industry is being looked upon as the next big employment generator (Nasscom predicts 1.1 million job requirement by the year 2014). It is however no easy task for an HR manager in this sector to bridge the ever increasing demand and supply gap of professionals. Unlike his software industry counterpart, the BPO HR manager is not only required to fulfill this responsibility, but also find the right kind of people who can keep pace with the unique work patterns in this industry. Adding to this is the issue of maintaining consistency in performance and keeping the motivation levels high, despite the monotonous work. The toughest concern for an HR manager is however the high attrition rate. In India, the average attrition rate in the BPO sector is approximately 30-35 percent. It is true that this is far less than the prevalent attrition rate in the US market (around 70 percent), but the challenge continues to be greater considering the recent growth of the industry in the country. The US BPO sector is estimated to be somewhere around three decades old. Keeping low attrition levels is a major challenge as the demand outstrips the supply of good agents by a big margin. Further, the salary growth plan for each employee is not well defined. All this only encourages poaching by other companies who can offer a higher salary.

Conclusion

There are massive costs associated with attrition, while some of these are not visible to the management reporting system, they are none the less real, if a company has 100 people doing a certain job paid 25,000 and that turnover or attrition is running at 10%, 100 staff at 10% attrition means 10 people leave and are replaced each year. ? A replacement cost of 80% of a salary of 25,000 means the cost of each replacement is 20,000. ? The cost of turnover is 200,000 a year. ? The on- cost to the overall salary bill is 8%. Attrition in the BPO industry is one of the biggest issue which the growing ITES industry in India is facing. The effects of attrition are wide varying and impacts the firms in terms of losses, incompetent processes, inability to offer services for highly technical process etc. Attrition though a nuisance also has some associated benefits along with such as low cost of operation, knowledge sharing amongst the firms benefiting the overall industry in increasing its competencies. Attrition usually occurs on two fronts – people leaving the industry and people shifting jobs inside the industry. Both of them have separate causes which have been identified in this paper. The paper attempts to understand the underlying reasons for attrition by analyzing the BPO industry through Maslow’s Hierarchical model of Needs. The Maslow’s framework helps in giving a better perception about the motivation of the employees in the BPO industry and identifying gaps in their expectations which needs to be filled up. Finally, the Study concludes by recommending a Win-Win Model which endeavors to satisfy the needs of both the employer and employee. The model encloses the employee by 4 levels of strategies thus reducing the attrition rate as well as minimizing the impact whenever it occurs.