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

Business Wire, Sept 2, 2008

Incentive Plans in BPO Companies Lag General Market Practices

DELHI, India & MUMBAI, India -- 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. 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," states Mr. Oscar De Mello, Country Head of Hay Group's Reward Information Services in India.

About Hay Group

Hay Group is a global consulting firm that works with leaders to turn strategies into reality. With 88 offices in 47 countries, we work with over 7,000 clients across the world.

For more information, please visit www.haygroup.com/in.>

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