Indian BPO Industry: Features, Challenges & Remedies


Ms. Vijit Chaturvedi
Faculty HRM
ICFAI University

Call centers are facilities that are specifically set up to manage telephone calls from customers. They are intended to provide orderly cost efficient telephone-based services. They serve as the primary telephone interface with customers for specific services provided by the agencies
Call Centers are required for large companies to sell their products to the customers, proposing a product or service as well as for the after-sale enquiries made by the customers. Call centers in India are at its peak today. Customized solution through customer interactive programs in the success mantra of numerous corporate firms nowadays. For the strategic business development - that requires acquired skills for customer queries, solutions etc., Indian call-centers are at par with the current marketing demands. Call centers not only handle the task of interacting with customers but also provide a wider base for official tasks of inventories, bill handling, web-solutions and various other business requirement proceedings. This article attempts to identify the features of this booming industry & the obstacles associated with it. It also suggests solutions to overcome them.

Introduction: - Call centers in India is prospering upon the upscale rise amongst the entrepreneurs who are trying to allure their customers through inbound and outbound calling facility. This concept raving in US have enabled many offshore call centers establishments, in India. The quality of English is at par with the international standards. Indians are technically literate and comfortable with new technologies arising in the industry.

Indian call centers work round the clock and provide 24-hour support for the customers of these US based clients. From the concept of being just a voice based medium of customer support, today call centers are referred to as 'Contact Centers' which are capable of handling customer queries over phone or the online medium. Qualified professional talent with fluency in English and a neutral accent with the ability to shift to different accents have made India, a preferred destination for offshore clients.

(I)    Achievements & expectations

Call center industry in India is projected at $142 billion by the year 2008 as per NASSCOM. With its built-in potency, India is advertised as the hot destination for 'offshore outsourcing hub'. The booming Indian call center industry is the benchmark of the changing global trend.

Reducing cost for business proceeding is the prime focus of the corporate houses. They realized that shifting their call-center operations to India would heavily cut down their costs. Business settlement laws were reviewed and it was easier for alien firms to settle in the Indian soils. The country produces technically sound work force with high standards of English.

The call center industry estimated to grow into $301 billion industry by 2010 is a sheer pleasure for the aspiring workforce in India. Call centers in India has also effectively developed a niche in the areas of data verification, data capture, tele research, service follow-ups and renewing subscriptions, which becomes the core outbound activities of a call center. Unless there is talented enough manpower to handle such queries, no business organization will make a move. Thus India have taken a leap step in call center industry, which in recent have been the home more developed nations like Australia, New Zealand, and European nation.

(II) Customer benefits of the call centers  

* A positive experience from operators
* Accurate and appropriate responses
* High level of customer satisfaction
* Improved efficiency

(III)   Call Centre activities & Functions

1) Organization design and staff planning
2) Building Customer service representatives (CSRs)
3) Quality Assurance Programs
4) Improvement initiatives
5) Outsourcing

( IV)   Barrier to efficiency  ---High  Attrition

1) Causes

1. Long hours of work
2. Permanent night shifts
3.  Incredibly high work targets
4.  Loss of identity
5. Nature of work
6. Irritating customers from across the globe.

India is situated 5 h ahead of UK, 10 h ahead of New York and 13 h ahead of Los Angeles. US and UK companies can claim overnight response capability because during their night time, it is day time in India and agents in India can respond to emails during Indian business hours. This is known as follow the sun model. It is this working at nights that requires adjusting the biological clock and social practices to a different time, which is turning out to be a major cause for health-related and social problems.

2)   An overview of Health problems

1. About 30-40% of the employees working in the call center had complained of eye problems.
2. Soreness, dryness, blurred vision, light sensitivity, headache, all these put together is labeled as the Computer vision syndrome.
3. Digestive disorders
4. It was also pointed out that the employees are facing the possibility of losing their voice. The problem known earlier as 'The teacher syndrome' is now being found in the young workers of call centers.

As of now, no understanding of the problem exists in India, leave alone a minimum standards code. Some call center and BPO companies in the country have got together under the aegis of Nasscom to address common areas of concern - but so far these have largely centered on deciding how not to poach on each other's employees and what to do with the Shops and Establishments Act. Employee stress - and its impact on the bottom-line through high attrition rates.

3)  View of Attrition rates

US                               42%     
Australia                       29%
Europe                          24%
India                            18%
Global Average               24%

4) Scenario of Attrition

In India, the average attrition rate in the BPO sector is approximately 30-35 % . It is true that this is far less than the prevalent attrition rate in the US market (around 70 percent), but the challenge continues to be greater considering the recent growth of the industry in the country. If a person leaves after the training it costs the company about Rs 60,000. For a 300-seater call centre facing the normal 30 percent attrition, this translates into Rs 60 lakh per annum.

5) Types of Attrition :- It can be of following two types

a) Drive Attrition" which is caused due to the employer b) "Drag Attrition" which is caused due to the employee.

The reasons for Drive Attrition are due to employer's policies of Terminating the employee at the end of the contract period for employment.

Drag Attrition is basically due to the host of insecurities and vulnerabilities Associated with the taking up a career with a BPO company

6) Cost of Attrition to the company

I) Recruitment Costs

1. The cost of advertisements; agency costs; employee referral costs; internet posting costs.

2. The cost of the internal recruiter's time to understand the position requirements, develop and implement a sourcing strategy, review candidates backgrounds, prepare for interviews, conduct interviews, prepare candidate assessments, conduct reference checks, make the employment offer and notify unsuccessful candidates. This can range from a minimum of 30 hours to over 100 hours per position.

3. Calculate the cost of the various candidate pre-employment tests to help assess candidates' skills, abilities, aptitude, attitude, values and behaviors.

ii)  Training Costs

* Calculate the cost of orientation
* Calculate the cost of departmental training
* Calculate the cost of the person(s) who conduct the training.
* Calculate the cost of various training materials

iii)     New Hire Costs

* Calculate the cost of bring the new person
* Calculate the cost of a manager's time spent developing trust and building confidence

According to Nasscom (national association of software and services companies), an apex body that tracks the Indian software industry,  the headcount has doubled from 220,000  in 03-04 to 410,000 in 2005-06.  Companies like Genpact (formerly GE Capital International Services) recruit about a 1000 people on an average per month while others average around 350-500 a month.

Today, Genpact has the highest number of employees at 15,000 in India followed by Wipro BPO at 14,000 while others such as Convergys, WNS and IBM Daksh , Dell and Intelnet  have an employee strength of around 10,000 each. In such rising demand & expectation level it becomes need of the hour to monitor, control & regulate this Attrition problem

7)   Reasons & Remedies

What do employees expect???...

* A caring company culture
* Team spirit
* Competitive salary
* Supportive and effective team leaders
* Training
* Career growth, learning and development
* Exciting work and challenges
* Meaningful work

The Top Three Reasons Why They Leave

* Low Company Morale
* Lack of trust for Managers
* Job burnout

8) Recommendations

* A need to be more explicit, detailed and relevant in regulations, guidance.
* Health risk assessments both pre-employment and periodic for employees should be conducted especially for eye and audiometric tests.
* Length and frequency of breaks should be adequate.
* Need for full time counselors
* Establishment of welfare committees
* Ergonomic assessments of work stations.

9) Specific & General Retention Strategies

1) Specific Retention Strategies adopted by BPO Industry

Companies have different kinds of strategies adopted to tackle the problem of Retaining human capital. It ranges from cash incentives to career concern for the Employee.

1) Providing Incentives : - As only 5 out of 150 employees become team leaders in a year, companies like Daksh services and Global Vantedge believe that cash incentives are a great way.
2) Educational Support: - Companies like GE, Wipro Spectra mind Offer management diplomas and MBA courses to their employees. 
3) Accommodation benefits: - Exl and ICICI one source hires outstation
Candidates (Mainly Non-Metros) and put them in shared company accommodation.
4) Career counseling and Planning career paths
5) Group Medi-claim Insurance Schemes
6) Personal Accident Insurance Scheme
7) Subsidized Food and Transportation
8) Recreation, Cafeteria, ATM, gym. Corporate Credit cards
9) Cellular Phone / Laptop
10) Personal Health Care (Regular medical check-ups)
Loans . & Educational Benefits
  Performance based incentives
13) Regular Get together and other cultural programs
14) Employee Referral Scheme
15) Employee Stock Option plan 

2) General Strategies Suggested For Retaining Human Capital in BPOs
*  Change the employable target audience and also in a way become socially

*  Make employees feel important  & practice  effective

*  Clear role & goals
*  Good reward structure


The strategies suggested in the paper are not exhaustive to retain the human capital of BPOs. These are just the basics and if implemented in a proper way can give good Results, but it can only become effective when both employee & employer understand the importance of these precautionary measures & continuously follow them   only then this emerging & growing sector will give its proper results.


01)  Arundhuti Dasgupta (2002), "Global Call" Indian Management, Volt 41, Issue 6, pp 31- 35.
02)  Shelley Singh (2003), "Keeping 'em from straying," Business World, August, pp 25-
04)  R Raghavendra(2003), "BPO firms Head Hunt in smaller cities" The Economic Times, 8th October, p10.

Ms. Vijit Chaturvedi
Faculty HRM
ICFAI University

Source: E-mail June 18, 2007


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