Source : Hay Group Attrition Rate in BPO Companies is 7.8% Points Higher than Other Industries in India: Report Released by Hay Group Incentive Plans in BPO Companies Lag General Market Practices New Delhi, Delhi and Mumbai, Maharashtra, India -- (Business Wire India) -- Monday, September 01, 2008 10:20:00 AM 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. “The BPO industry is a critical sector in the Indian economy, worth USD11 billion and employing over 2 million people. However, if the industry is to achieve the projected USD30 billion by 2012, we have to tackle this talent attrition issue now. We are all too familiar with what happens when employees leave – work falls through the cracks, unhappy clients. Contrary to belief, adjusting pay need not automatically lead to higher operating costs for BPO companies. By creatively designing their total reward package towards more short-term incentives and benefits, and linking the package to performance, companies can ensure that they get higher productivity without hefty increases in salary costs and minimize attrition costs and issues at the same time,” Mr De Mello added. The report also recommends: -- planning a more robust combination of short and long-term incentives, such as performance bonus, Employee Stock Option Plans, deferred and retention bonus, that meets the aspirations and needs of their young employees so as to drive performance and improve productivity -- effective communication of the compensation plan so as to promote employee buy-in -- non-pay measures like open communications, promotion of team-based culture and transparent performance management systems -- focus on providing opportunities such as career development, job rotation, and local/international mobility. About Hay Group Hay Group is a global consulting firm that works with leaders to turn strategies into reality. We develop talent, organise people to be more effective, and motivate them to perform at their best. With 88 offices in 47 countries, we work with over 7,000 clients across the world. Our clients are from the public and private sector, across every major industry, and represent diverse business challenges. Our focus is on making change happen and helping organisations realise their potential. Media Contact Details Michelle Low, Regional Marketing Manager, Hay Group, + 65 6323 1668, michelle_low@haygroup.com Oscar De Mello, Country Head, Hay Group India, +91 12 4417 7400, Oscar_De_Mello@haygroup.com Submit your press release at http://www.businesswireindia.com