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."

Newer Areas for offshore outsourcing:2006

Is 2006 going to unfold newer areas of outsourcing?
Clinical Process Outsourcing probably could be one of the areas that might emerge out with simplification of health care legislations. If carefully handled, the world should witness the dream come true - a more efficient health care delivery system. The most critical part will be the selection of the offshore providers and correctly assessing the expertise level. The criteria for selection would be a tougher process and for performing that correctly the decision makers should thoroughly acquaint themselves with the medical education system prevailing in the target countries.

In fact the standard of medical education in some of the institutions in India, for example, is highly comparable with what is known as best in the world. It will be misleading to comment on the standard of medical education on the basis of the current scenario of health care delivery system as exists in those target countries. These are two different issues, the latter being an intrinsic function of socio-political parameters.