Coping with attrition

Coping with attrition

The BPO industry in India is facing the challenge of finding quality human resources, given the current attrition rate.

 

Attrition is emerging as a key business concern for organisations. It is turning into a bigger issue than attracting talent. The annual attrition rate is 20-30 per cent (reduction in the number of employees through retirement, resignation or death) across industries in India. It is as high as 44 per cent in BFSI (banking, financial services and insurance) vertical and 35 per cent in BPO (business process outsourcing). Attrition is an expensive phenomenon, potentially impacting the bottom line of businesses.

The cost of attrition is not just the loss of that employee but it includes an array of hidden costs such as recruitment costs, selection costs, training costs, cost of covering during the period and opportunity costs.

The organisational costs associated with the turnover in terms of hiring, training and productivity loss costs can add up to more than five per cent of an organisation's operating costs, says Cabot Jaffee, Chairman, Global Talent Metrics.

As far as India is concerned, attrition is a serious trend, especially in today's knowledge-driven marketplace where people are the most important assets. While organisations cope with attrition by devising compelling retention strategies, it is imperative for organisations to predict attrition early in the recruitment process to curtail loss of time, cost and effort.

What is the biggest challenge for the BPO industry in India today? Well, it is none other than attrition. The BPO industry in India, which is expected to employ around one million people by 2008, is facing the challenge of finding quality human resources, given the current attrition rate. According to NASSCOM, the outsourcing industry is expected to face a shortage of over two lakh professionals by 2012. Where is it leading to?

According to Jaffe the challenge of attrition, though not special to India, is unique and intense in a manner not seen in other markets across the world. "This makes it imperative that any knowledge or psychometric tools in this area be locally validated," Mr. Jaffee says.

However, many industry officials feel that results shown by a psychometric tools (designed to eliminate high attrition risk during the selection process) and attrition are not necessarily correlated.

Survey findings

Global Talent Metrics has conducted a survey in partnership with IIM Bangalore and AlignMark of the U.S.-based tools provider for optimising human capital resources, on the attrition rates in India. The survey reveals that pay, contrary to popular notion, is not the top reason for attrition.

Lack of career growth opportunities and recognition from supervisors are more compelling drivers for attrition. Nearly 50 per cent or more people rate the following four important factors in selecting or leaving a company — clarity or career path, relationship and recognition from supervisor, career growth opportunities and pay. About 70 per cent of the respondents do not consider family-oriented events as important factors to leave a company, although employees conveniently use family-oriented events like marriage, childbirth, need to stay closer to family — as explanation for departure.

Mr. Jaffee feels that to control the attrition levels in an organisation, it should adopt certain recommendations. Fundamentally, a company should select candidate whose preference and aspirations are in line with what the company has to offer. Since job content is key driver for attrition, a well-institutionalised job rotation programme will be a great retention strategy. The company should provide career growth opportunities along with rewards and recognition. The most important aspect is open communication and fair treatment. Along with an open culture, these will increase retention of staff. The last but not the least is the brand image of the company. It will surely stop an employee from moving out.

SHANTHI KANNAN