“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,” Hay Group, Reward Information Services, Country Head (India) Oscar De Mello said.

“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,” he said.

The short-term incentives account for only four per cent of total remuneration, compared to 10 per cent generally. Moreover, the benefits are also 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 is a critical sector in the Indian economy, worth USD 11 billion and employing over two million people. However, if the industry is to achieve the projected USD 30 billion by 2012, we have to tackle this talent attrition issue now. (more…)