Indian Outsourcing - What a turnover!

I read an interesting article in the Indiatimes today.

It said that Indian outsourcing companies are experiencing a 23.5% staff turnover rate. This is high in just about any industry, but when you consider that the large majority of the outsourcing individuals in India are highly qualified graduates, it takes on a different meaning.

What is effectively happening (as the article quotes) is
"The BPO industry hires a large number of graduates who are bright and ambitious. From our analysis, the overall compensation structure design is not competitive when compared to general market practices. This means that BPO employees do not receive as much cash-in-hand as their peers in other industries. When you add unattractive remuneration to working shifts, lack of career development, and monotonous tasks, it is not surprising that employees leave when offered a small salary increase,"

So what is the impact of this? Well, as with any change of people, there will potentially be a drop in the service expected. Handovers may be loosely done and things may get 'dropped' as a result. This will, in turn, lead to a loss of confidence in the outsourced BPM function in India leading, potentially, to a withdrawal of western companies from using this function.

The irony of it all is that the very thing that is leading companies to outsource BPM to eastern countries (High education standards and low cost) may be the thing that causes the service to fail.

Indian companies will - in their turn - start to increase their salaries to aid retention. This increase will be passed on to the western organisations using the service. This will, in turn, decrease the attractiveness of outsourcing to Indian companies and the result will be the same.

With Gartner identifying a large jump in the need for BPM services, this is not good news for India.

What can they do about it? Comments, please.....

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