India’s outsourcing industry suffers 55% attrition

The attrition rate in India’s business process outsourcing sector jumped to 55 percent from a year earlier, dealing a potentially fatal blow to the flagship industry, a study said on Thursday.

The study released by the Associated Chambers of Commerce and Industry of India (Assocham) blamed the high turnover rate on bad working hours and a perceived lack of long-term career growth.

Between December 2010 and April 2011, the attrition rate in the BPO industry increased to 55 percent from 40 percent during the same period a year earlier, Assocham said.

“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,” Assocham secretary general D.S. Rawat.

The sector is also facing serious challenges such as a shortage of skilled workers, the study said.

US and other foreign firms, drawn by India’s English-speaking workforce and lower costs than in the West, have farmed out a wide range of jobs from answering bank client calls to processing insurance claims and equity analysis.

Worst hit by the turnover problems are the pharmaceutical and financial services industries, which have an attrition rate of 60 percent, the study said.

“The growing trend of job-switching in the industry might prove fatal for the survival and growth of India’s BPO sector,” Rawat said.

The job retention crunch comes as India’s BPO industry faces stiff competition from countries such as Mexico, Philippines, Malaysia, China, Canada and Ireland, the study noted.

The Indian outsourcing sector directly employs 2.54 million workers and accounts for 6.4 percent of the country’s gross domestic product.

India recently lost its crown to the Philippines as the call centre capital of the world. But India continues to lead the overall global outsourcing market, increasing its share to 55 percent in 2010, up from 51 percent the previous year.

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