|
|
Like this article? PLEASE +1 it! |
|
Recession impacts salaries, attrition in Indian BPO sector
Written by: Daryl JamesArticle Overview: Earlier this month, the association that supports and promotes India’s business process outsourcing predicted a bright future for the sector. While the past year has presented challenges, there is undoubtedly strong growth ahead, NASSCOM said at the CEO Summit 2009. In fact, Som Mittal, the president of NASSCOM, forecast that outsourcing to India is likely to increase threefold by 2020, earning aggregate revenues of $225 billion. "While the short-term challenges exist, the potential for this industry is tremendous and the industry will not be demand constrained," he said.
![]() |
Free Download - Philippines BPO outsourcing market expected to grow By Daryl James |
Recession impacts salaries, attrition in Indian BPO sector
Earlier this month, the association that supports and promotes
India’s business process outsourcing predicted a bright future for the
sector. While the past year has presented challenges, there is
undoubtedly strong growth ahead, NASSCOM said at the CEO Summit 2009.
In fact, Som Mittal, the president of NASSCOM, forecast that
outsourcing to India is likely to increase threefold by 2020, earning
aggregate revenues of $225 billion. "While the short-term challenges
exist, the potential for this industry is tremendous and the industry
will not be demand constrained," he said.
These are optimistic words for a sector that is accustomed to robust
growth, with many graduates aspiring to work for one of the country’s
top outsourcing companies. In recent years, salaries in the sector have
grown in the double digits on an annual basis, while employees have had
their pick of open positions. However, the recession has changed
"business as usual" at India’s top BPO firms.
Rethinking salaries
There are plenty of signs indicating that Indian outsourcing
providers may be rethinking their hiring and salary strategies in the
wake of the global downturn.
The recession has resulted in declining revenues for the country’s
major outsourcing providers and also had a knock-on effect with regard
to employees’ pay. According to a BusinessWeek article, salaries are
flagging in the sector. After years of continually strong salary
growth, IDC noted that this year the average wage increase for
outsourcing industry employees was only 1.4 percent.
The article also describes how employers at the country’s largest
BPO providers have been freezing salaries and cutting pay for software
engineers and other employees as a way to maintain their own growth as
order volumes contracted. Many companies had been overstaffed at the
beginning of the year, meaning that a number of cutbacks were required.
"These drops [in employee salaries] are not surprising in a year
where the IT companies had taken the scissors out to trim flab,
nonperforming employees and done away with the bench," Ibrahim Ahmed,
group editor of Indian IT magazine Dataquest, told BusinessWeek.
While workers may not be happy about stagnant salaries, the trend
could benefit India’s competitiveness as a global offshoring
destination. In recent years, a number of analysts have suggested that
rising wages could knock the country off itss place as the most
attractive overseas outsourcing location.
According to oDesk data, the average wage commanded by an
India-based freelance provider is $10.91 – just around the oDesk
average and higher than some of its competitor countries, such as
Pakistan. At the same time, quality ratings are lower than might be
expected. Indian workers’ typical feedback scores hover around 4.12,
which is below the overall average.
Less employee turnover
The downturn has also had an effect on the level of worker turnover
experienced at BPO firms. In November, LiveMint.com reported that in
pre-recessionary days, employees stayed with the same company for an
average of 11 months.
But concerns about job security have prompted people to stay in the
same role for longer. The churn rate in the BPO sector fell from 35
percent in 2007 to under 20 percent in the third quarter of 2008,
according to LiveMint. And BusinessWeek says that current attrition
rates are close to 15 percent.
This trend may benefit the industry in the long term, as workers
gain more expertise by working for longer at the same job. Samir
Chopra, president of the Business Process Industry Association of
India, told LiveMint.com that "there are less jobs on the job market,
but there is also more maturity in the job market."
Article Tags: average wage, bpo providers, bright future, business process outsourcing, businessweek, ceo summit, double digits, global downturn, graduates, open positions, outsourcing companies, outsourcing providers, outsourcing to india, recession, robust growth, rsquo, salaries, salary growth, software engineers, term challenges
|
About the Author: Daryl James RSS for Daryl's articles - Visit Daryl's website Daryl writes/blogs for oDesk, the marketplace for online workteams. oDesk offers the best business model for both buyers and providers with a unique approach that guarantees that an hour paid is an hour worked, while also guaranteeing that an hour worked is an hour paid. Click here to visit Daryl's website Why You Should Include Open Source Work in Your Portfolio 6 Ways to Market Yourself Online Workers still concerned about job security How to Make Better Outsourcing Decisions 38 of software development professionals use outsourcing |
Related Forum Posts
Share this article with your friends. Fund someone's dream.
Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.
Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!
Marketing & Sales tools – going back to basics
Executive Blind Spots
Severance and Separation Agreements
Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.



