BPO Companies Highest Attrition Rate in India, Says Hay Group Report

Incentive Plans in BPO Companies Lag General Market Practices

DELHI, India & MUMBAI, India--(BUSINESS WIRE)--Attrition rates in India’s lucrative BPO industry are about 7.8 percentage points higher than in other industries, according to a report released today by Hay Group, a global management consulting firm.

The finding comes from a new report, BPO Special Sector Survey 2008, based on Hay Group’s global online compensation and benefits database, PayNet. It showed that in general, staff turnover in India is 15.7%, but at BPO companies, attrition is the country’s highest at 23.5%, followed by Communications (22%) and Retail (18%).

The report explained that one of the factors is that the remuneration structure design is not as attractive when compared to other industries in India:

• Short-term incentives account for only 4% of total remuneration, compared to 10% generally
• Benefits are limited to those that can be enjoyed only post-retirement, like pension fund and gratuity, and not during the employment period.
• While pay is generally designed to give employees more take-home cash, a higher portion is allocated to allowances like housing/rent and not base salary.

“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.
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