Indian outsourcers haemorrhaging staff

Indian outsourcers are facing record staff turnover according to a new report, with companies struggling to hold onto bonus-hungry workers.

Attrition rates in the country's business process outsourcing (BPO) industry are about eight per cent higher than the national average, according to a report by global consulting firm the Hay Group.

Annual staff turnover at Indian BPOs stands at 24 per cent, ahead of the country's average of 16 per cent.

The report blames lower and less attractive short term bonuses – worth about four per cent of total pay for BPO workers compared to 10 per cent generally.

More on outsourcing…

♦ Gov't stung by 'rip-off' outsourcing deals

♦ Shell signs $4bn IT outsourcing contract

♦ Cloud computing – the data centre of the future?

♦ Tough bargaining forces outsourcing price cuts

♦  Profile: Nandan Nilekani, co-chairman, Infosys

♦  India losing status as offshore king?

♦ Productivity gains driving IT outsourcing

♦ Tax payer still owed millions by EDS

♦ Cheat Sheet: Offshoring

♦ Special Report: Inside India

Oscar De Mello, head of Hay Group's reward information services in India, said in a statement: "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.

"The BPO industry is a critical sector in the Indian economy, worth $11bn and employing more than two million people.

"If the industry is to achieve the projected $30 billion by 2012, we have to tackle this talent attrition issue now."

The report recommends better designed and larger reward packages to help the industry hold onto staff.

The country's largest IT and business process outsourcers Infosys, Tata Consultancy Services and Wipro were recently predicted to overtake the largest western outsourcing companies in revenue by 2012.