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Source: IDC, NASSCOM

The BPO industry in India is growing at a breathtaking speed. The Indian BPO sector's size in 2008 is predicted to be anywhere between $30 billion to $50 billion by various research firms that are tracking the industry.
The number of BPO companies in Indian cities has mushroomed from a handful a few years ago to about 500 in 2004. Venture Capitalists (VCs) are setting up their offices in India to identify who might be the winners 5 years from now, and are investing in those companies. VCs who had invested in the BPO sector a couple of years ago are urging their portfolio companies to merge or get acquired in order to fuel the growth, and allow them a profitable exit from these companies.

Attrition: The State of Play

What is the biggest challenge for the BPO industry in India today? Well, it is none other than Attrition. The BPO industry in India, which is expected to employ around one million people by 2008, is facing the challenge of finding quality human resources given the current attrition rate of around 50 percent. Analysts say attrition rates vary by 20%-40% in some firms, while the top ones average at least 15%. In a NASSCOM report, it has been said the outsourcing industry was expected to face a shortage of 262,000 professionals by 2012.

With 245,100 people employed at the end of March 31, 2004 against 171,100 in 2003, the industry witnessed a hiring growth rate of about 40-42 percent. On the hiring front, the industry absorbed about 74,000 people in 2003 despite the attrition rate of 45-50 percent being a matter of concern. Attrition rates in IT-enabled business process outsourcing sector have come down from the 30-33 per cent being witnessed of late to about 25 per cent now, according to statistics compiled by the National Human Resource Development Network.

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* Contributed by -
Srinath Raj Kasi,
PGDIM XI,
NITIE, Mumbai.