India’s BPO Sector Sees Surge In Attrition Rate

April 29, 2011

According to study, India’s flagship industry  – outsourcing – has seen a 55% increase in its attrition rate.

The study was done by the Associated Chambers of Commerce and Industry of India (Assocham), which said that the high figure was due to poor working conditions and poor prospects for a long term career growth.

According to Assocham, the BPO industry’s attrition rate jumped to 50% from 40% between December 2010 and April of this year in comparison with year ago figures.

D.S. Rawat, the secretary general of Assocham said in a statement, “Although the BPO sector has been popular since the beginning, as it has opened up plenty of job opportunities, the high attrition rate is plaguing the sector now,” reports AFP.

The industry is also looking at a shortfall in skilled employees, the study confirmed.

Due to the high literacy in India, foreign firms in the west have been taking advantage of India’s English speaking staff and lower costs. Now, there are numerous jobs such as attending client calls in banks, insurance claims processing and analysis of equities.

The industry that has seen the highest attrition rate of 60% are the financial and pharmaceutical sectors.

“The growing trend of job-switching in the industry might prove fatal for the survival and growth of India’s BPO sector,” added Rawat. The inability to retain workers is combined with stiff competition from the Philippines, Mexico, Malaysia, China, Ireland and Canada.

In terms of employment figures, the outsourcing industry in India directly employs2.5 million employees and accounts for 6.4% of the GDP in India.

In a recent finding, India trailed Philippines as the hub for call center activity. Despite this, India continues to lead other top outsourcing countries as a leading outsourcing destination in the global market. India’s market share in the outsourcing industry has spiked from 51 percent in 2009 to 55 percent in 2010. India has been leading the outsourcing sector for nearly two decades.


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