High staff turnover and a shortfall in qualified employees could slow the growth of the Indian call center market.
Posted Sep 14, 2005
"Staff Attrition May Stall the Offshore Call Center Boom," a recent Gartner study, claims that a shortage of skilled labor could threaten cost, quality, and security issues, and could slow the offshoring of business processes to India This, according to the report, might cause firms to assess other locations for offshoring. The Indian government estimates that the need for trained, qualified employees in call centers will reach one million by 2009, with an expected shortfall of more than 260,000 workers. Still, although the attrition rate among staff is high, Sujay Chohan, analyst and author of the report, says the situation is not yet dire. "The labor pool is very large. However, attrition must be addressed quickly if India is to maintain its dominance in the industry."
The study also notes that this problem can be attributed to the demand for offshore BPO resources catching call center service providers by surprise, more so for India than other regions like the Philippines, another outsourcing hot spot.
With more than 2.5 million students graduating every year, the supply of educated staff is not the problem, according to Chohan. The issue is the shortage of trained individuals, specifically those with good English-language skills. The shortage will have an escalating effect on India's call center service industry, especially when combined with the rise of other global outsourcing locations, such as parts of Africa and Eastern Europe. "The pressure on [call center service providers] to continuously recruit will not slow down anytime soon," Chohan says.
High employee attrition rate within the call center industry is both common and manageable (the U.S. call center industry also operates with high attrition rates), but a shortfall in qualified personnel will effect service providers in three areas:
Costs: To arrest high attrition rates, service providers will have to offer better salaries and benefits to employees. Given time, this will reduce the competitive advantage India currently enjoys in labor costs.
Quality: The top available talent has already been absorbed by the industry. Service providers have no option but to recruit from a level below their optimal requirements, thus making in-house training very important. Gaps in this training directly affect the quality of staffing.
Security: Any reduction in diligence resulting from the need for rapid recruitment increases the possibility of less-trustworthy staff being employed. The increase the risk of fraud or theft of confidential data.
Chohan says the key for companies looking to offshore their call centers is to look past the denials from certain Indian service providers and understanding the importance of the issue. "Before engaging call center providers, inquire about their attrition rates and security measures." This ensures that adequate quality mechanisms like service-level agreements with associated penalties, call monitoring, and customer satisfaction surveys, are built into contracts.
As for the service providers, Chohan says they must reassess their growth plans and be more selective in pursuing customers. "For example, focusing on strategic clients that offer a longer-term growth opportunity over those that initially require high staffing levels is an approach worth considering."
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