Indian outsourcing firms battle to keep staff

Rosemary Arackaparambil

MUMBAI: Indian back-office firms face a growing challenge holding on to employees, even as they hire tens of thousands every quarter.

Some firms say they need to replace up to half their people every year. Call centres, which snap up English-speaking youngsters with the gift of the gab, are the worst hit, and they account for nearly 40 percent of back-office jobs in the country.

"It is a major problem," said Jerry Rao, chairman of back-office and IT services firm MphasiS BFL Ltd.

Staff tend to account for half of a back-office operation's costs, according to research firm Evalueserve, and the battle for talent has led to a 10-15 percent rise in employee salaries.

Recruitment and training makes up 3 percent of the overall per employee cost of about $13,000 per year, including administration and telecoms costs, according to Evalueserve.

But the really damaging cost is the lost business for companies who cannot fill key jobs quickly enough. Many face a shortage of mid-level manpower to manage their rapid growth as they lure clients with promises of 40 to 50 percent cost savings.

As the industry clocks up 50 percent-plus growth, demand for quality personnel is outstripping supply. Employees often hop to new jobs for slightly more money, and many do not view back-office work as a career.

FIGHTING ATTRITION

Companies provide free transport, subsidised meals and housing to retain staff, and try to enliven the environment with musical entertainment, yoga classes and costume contests.

But that is not always enough.

Spectramind, the back-office arm of India's third-largest software services company, Wipro Ltd., reported a 90 percent annualised attrition rate at the end of December.

"The high attrition rates we have had really limited our ability to continue to add people once we get to the scale and range we are in," Wipro Vice-Chairman Vivek Paul said, predicting slowing growth for the division in the current quarter.

India's business process outsourcing sector has 400 players, though the top 20 account for nearly half the sector's revenue, seen touching $5.7 billion this year.

The industry is on track to employ 350,000 people by the end of March, up from 253,500 a year earlier. With international businesses increasing call-centre and other back-office operations in India, the industry is expected to need a million people by March 2008.

But B. Sudhakar, chief operating officer at PeopleOne Consulting, says the pool of good candidates -- particularly for call centres -- is limited.

"Not everyone who speaks English has accent-free diction, so very few are 'camera-ready'," he said.

NEW BUSINESS MODEL WANTED

Experts say the way out is to move up the value chain by expanding from voice-based business to more transaction-based business, where employees may see better career opportunities.

The National Association of Software and Service companies estimates that technical support, accounts management, payroll and benefits services are areas with high growth potential.

Firms are also beginning to take on more "knowledge-oriented" jobs such as equity research and data mining, which may interest recruits more, but they form just a fraction of the industry now.

Gautam Sinha, chief executive of Bangalore recruitment firm TVA Infotech suggests that outsourcing firms centred around Bangalore, Bombay and Delhi should fan out to other cities, where expectations are lower and employees are less opportunistic.

He said the industry needed to expand tie-ups with schools and offer part-time professional courses and subsidised tuition fees and recommended companies send veterans to campuses to tell students about potential career prospects, since many enter the industry for the easy money and then leave after a few years.

"People also move out when they realise this is not the career they wanted, or they want to get more education," said K. Thiagarajan, chief operating officer at Hinduja TMT Ltd..

Sara Quinny, 23, quit her job two months ago after 2-1/2 years of phoning Americans about their overdue credit card payments.

"It was my first job interview, I got it and it was pretty exciting at first. But I ended up doing the same thing every day. Just sitting there for nine hours and making calls all the time," said Quinny, who said she'd wanted to join the airline industry when she finished college.