We all are aware that attrition results in a lot of losses not only in terms of cost but also employee morale. But i want to know whether attrition can also be useful to an organization. Does it effect an organization in a positive way.
From China
From China
Hi Anusha,
Well this is like out of the box thinking. A good question indeed. I would say attrition does not actually help any organization; but to put it little off beat; i would comment that the organization has got another chance to chose the best headcount pertaining to their line of business; and probably could take the latest attrition cases as case studies for effective recruiting. . .
Regards
Harish
From India, Madras
Well this is like out of the box thinking. A good question indeed. I would say attrition does not actually help any organization; but to put it little off beat; i would comment that the organization has got another chance to chose the best headcount pertaining to their line of business; and probably could take the latest attrition cases as case studies for effective recruiting. . .
Regards
Harish
From India, Madras
Hi Harish,
Thanks for your reply. But i do feel that attrition can get some benefits in terms of as u said new talent also it will help to reduce cost as the new recruit will be cheaper than the old and probably will get new and innovative ideas along with him.
From China
Thanks for your reply. But i do feel that attrition can get some benefits in terms of as u said new talent also it will help to reduce cost as the new recruit will be cheaper than the old and probably will get new and innovative ideas along with him.
From China
Hi
Some times attrition may be useful to the small companies especially very samll R&D companies where product is already developed and only people are required who manage or customise the products.
for example a Software Developer from REC or IIT will be costly for a start up company their expertise is required to develop the product and once product start rolling then that much brighter brain is not required in that case if the person stays back u have to pay them more and give them sufficient work in this scenario i think attrition is good and untill employees here also 1 case is there:
High Performer with High Potential
If this kind of people are leaving then company is losing some talent .
Low potential with High Performance
People from this category are the back bone and dark horse of the company .
Low Potential and Low performance
This kind of people leaves then no issues
High Potential Low Performer
If this people if they can be corrected its Ok if they can't be corrected then it beeter to leave them
So u need do see which kind of people are leaving ?
Rgrds
Vinay
9866254387
http://finance.groups.yahoo.com/grou...ResourceOnLine
From India, Hyderabad
24Some times attrition may be useful to the small companies especially very samll R&D companies where product is already developed and only people are required who manage or customise the products.
for example a Software Developer from REC or IIT will be costly for a start up company their expertise is required to develop the product and once product start rolling then that much brighter brain is not required in that case if the person stays back u have to pay them more and give them sufficient work in this scenario i think attrition is good and untill employees here also 1 case is there:
High Performer with High Potential
If this kind of people are leaving then company is losing some talent .
Low potential with High Performance
People from this category are the back bone and dark horse of the company .
Low Potential and Low performance
This kind of people leaves then no issues
High Potential Low Performer
If this people if they can be corrected its Ok if they can't be corrected then it beeter to leave them
So u need do see which kind of people are leaving ?
Rgrds
Vinay
9866254387
http://finance.groups.yahoo.com/grou...ResourceOnLine
From India, Hyderabad
dear
a very relevant and futuristic question :!:
in my view soem attrition is very useful for any organisation with the only exception that outgoing people are not kry persons for the org
some attrition helps in infusin fresh blood in the org and moreover it may also drain out disengaged employes of ur org
i know one such company which is in trouble coz of less attrition in the top management i:e Ranbaxy, they are fighting hard to replace their top level managers with new ones as the oldies are not leaving their spot
PSU's are also facing the same problem"no attrition"
i can put it like " running water is fresh if it stays for too long it becomes stagnant then it starts to stink"
regards
deepak
From India, Delhi
a very relevant and futuristic question :!:
in my view soem attrition is very useful for any organisation with the only exception that outgoing people are not kry persons for the org
some attrition helps in infusin fresh blood in the org and moreover it may also drain out disengaged employes of ur org
i know one such company which is in trouble coz of less attrition in the top management i:e Ranbaxy, they are fighting hard to replace their top level managers with new ones as the oldies are not leaving their spot
PSU's are also facing the same problem"no attrition"
i can put it like " running water is fresh if it stays for too long it becomes stagnant then it starts to stink"
regards
deepak
From India, Delhi
hi anusha
definitely an off beat question
but yes attrition is useful to some companies.
many companies like ICICI bank have high attrition rate. here their main aim is to utilize the soucrces of all employees i.e insurance agent. so even if that employee leaves , they still have customers.
high attrition is harmful at higher level in hierachy. but its very common at lower level. its good even for a company sometimes as they can get fresh talent at cheaper rate
so as its famously said every coin has two sides attrition has its pros and cons but unfortunately its cons are much more.
rgds
namrata
From India, Ahmadabad
definitely an off beat question
but yes attrition is useful to some companies.
many companies like ICICI bank have high attrition rate. here their main aim is to utilize the soucrces of all employees i.e insurance agent. so even if that employee leaves , they still have customers.
high attrition is harmful at higher level in hierachy. but its very common at lower level. its good even for a company sometimes as they can get fresh talent at cheaper rate
so as its famously said every coin has two sides attrition has its pros and cons but unfortunately its cons are much more.
rgds
namrata
From India, Ahmadabad
hello anusha,
attrition is the now-a-days rapidly growing in BPO industry...
I feel i am too young to speak about this as i am still in my B.Tech 1st year only..But i too want have a say here..please read this:
What is the biggest challenge for the BPO industry in India today? Well, it is a no brainer: Attrition! Main reason for this is hike in salaries..
Industry experts feel, as the industry was still in its nascent strategy there was lot of strategies available to reverse this trend and make it an attractive employer.
NASSCOM ITES-BPO forum has identified HR as one of the key challenges of the ITES-BPO industry and has formed a special task force to address short-term challenges such as Attrition and also long-term challenges such as ensuring availability of a skilled talent pool.
To arrest this trend, companies can look into various options like good rewards, bonding programme, flexible working hours and stronger career path. With attrition rates ranging between 30-60 percent in the BPO industry, HR specialists feel that a scientific and analytical approach should be implemented.
The tremendous turnover rate is undeniably one of the main problems faced by the BPO industry globally. HR specialists at the Nasscom
summit brainstormed on various approaches to handle this bugbear- either declare war on attrition and tackle it head on, or adopt a more scientific analytical approach.
Pay cheques alone are not enough to retain employees. Management also needs to consider other aspects like secure career, benefits, perks and communication. The attrition battle could be won by focusing on retention, making work a fun place, having education and ongoing learning for the workforce and treating applicants and employees in the same way as one treats customers.
Companies need to go in for a diverse workforce, which does not only mean race, gender diversity, but also include age, experience and perspectives. Diversity in turn results in innovation and success. The 80:20 rule also applies to recruitment, she quipped, since studies showed that 80 percent of the company's profit comes from the efforts of 20 percent of the employees. So BPOs need to focus on roles, which have the most important impact.
According to experts, the cost of attrition is 1.5 times the annual salary. Age should not be a barrier for training employees and could in fact bring in more stability to the company.
Home => Research
Attrition in Indian BPO Industry
at7tri7tion
A rubbing away or wearing down by friction.
A gradual diminution in number or strength because of constant stress.
A gradual, natural reduction in membership or personnel, as through retirement, resignation, or death.
Repentance for sin motivated by fear of punishment rather than by love of God.
What is the biggest challenge for the BPO industry in India today? Well, it is a no brainer: Attrition!
The business process outsourcing (BPO) industry in the country 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 averages at least 15%. Nasscom in a report said the outsourcing industry was expected to face a shortage of 262,000 professionals by 2012.
The size of the Indian BPO market is likely to be around $9-12 billion by 2006 and will employ around 400,000 people, ICRA said in its Indian BPO industry report.
Mercer India said the industry should look beyond the traditional areas of recruitment and some thought should be given to employ physically challenged people and housewives. The reasons for the high rate of attrition was due to various factors like salary, work timings, other career options, adding that there is always the danger of costs increasing while billing rates decline.
With 245,100 people employed at the end of March 31, 2004 against 171,100 last year, 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.
Attrition rates %
US : 42%
Australia : 29%
Europe : 24%
India : 18%
Global Average : 24%
If you compare attrition rates for a Voice and Non-voice process, then attrition rates are significantly lower in a non-voice process. As the industry moves up the value chain and becomes a full-scale BPO player, attrition rates will further decrease.
For BPO service providers, moving up the value chain is critical, given the attrition rates in the industry, which are on an average higher in low value-added segments (in call centres) as compared to higher value-added segments like engineering.
It will not be possible for the industry to arrive at a blanket agreement on poaching but bilateral agreements between companies are being signed. Basic norms are being put in place and code of ethics is being stressed upon by industry. Companies are being encouraged to adopt responsible behavior in order to ensure that the industry does not become a victim of its own actions. Industry needs to go aggressive but not cannibalistic.
In order to ensure a consistent flow of trained manpower in the future, the industry needs to work with the government to introduce courses at a school and college level, which are in line with the requirements of the ITES-BPO industry. India has one of the largest pool of English speaking graduate workforce. The challenge for the industry is not in employment but employability. The industry is also hiring professionals from outside the industry in order to meet its steady supply of manpower.
Honest corporate managers will tell you that to make offshoring work, you need at least a 300% to 400% wage spread between American software writers, engineers, accountants, and call-center employees and their Indian and Chinese counterparts. Labor costs have to be very, very low overseas -- not just lower -- to compensate for time-shifting, managing over such long distances, and decreased productivity.
High attrition rate, price wars, poor infrastructure and lack of data protection laws could derail India's booming outsourcing industry. This seemed to sum up the views of BPO fraternity at the Nasscom summit here
From India, Kakinada
attrition is the now-a-days rapidly growing in BPO industry...
I feel i am too young to speak about this as i am still in my B.Tech 1st year only..But i too want have a say here..please read this:
What is the biggest challenge for the BPO industry in India today? Well, it is a no brainer: Attrition! Main reason for this is hike in salaries..
Industry experts feel, as the industry was still in its nascent strategy there was lot of strategies available to reverse this trend and make it an attractive employer.
NASSCOM ITES-BPO forum has identified HR as one of the key challenges of the ITES-BPO industry and has formed a special task force to address short-term challenges such as Attrition and also long-term challenges such as ensuring availability of a skilled talent pool.
To arrest this trend, companies can look into various options like good rewards, bonding programme, flexible working hours and stronger career path. With attrition rates ranging between 30-60 percent in the BPO industry, HR specialists feel that a scientific and analytical approach should be implemented.
The tremendous turnover rate is undeniably one of the main problems faced by the BPO industry globally. HR specialists at the Nasscom
summit brainstormed on various approaches to handle this bugbear- either declare war on attrition and tackle it head on, or adopt a more scientific analytical approach.
Pay cheques alone are not enough to retain employees. Management also needs to consider other aspects like secure career, benefits, perks and communication. The attrition battle could be won by focusing on retention, making work a fun place, having education and ongoing learning for the workforce and treating applicants and employees in the same way as one treats customers.
Companies need to go in for a diverse workforce, which does not only mean race, gender diversity, but also include age, experience and perspectives. Diversity in turn results in innovation and success. The 80:20 rule also applies to recruitment, she quipped, since studies showed that 80 percent of the company's profit comes from the efforts of 20 percent of the employees. So BPOs need to focus on roles, which have the most important impact.
According to experts, the cost of attrition is 1.5 times the annual salary. Age should not be a barrier for training employees and could in fact bring in more stability to the company.
Home => Research
Attrition in Indian BPO Industry
at7tri7tion
A rubbing away or wearing down by friction.
A gradual diminution in number or strength because of constant stress.
A gradual, natural reduction in membership or personnel, as through retirement, resignation, or death.
Repentance for sin motivated by fear of punishment rather than by love of God.
What is the biggest challenge for the BPO industry in India today? Well, it is a no brainer: Attrition!
The business process outsourcing (BPO) industry in the country 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 averages at least 15%. Nasscom in a report said the outsourcing industry was expected to face a shortage of 262,000 professionals by 2012.
The size of the Indian BPO market is likely to be around $9-12 billion by 2006 and will employ around 400,000 people, ICRA said in its Indian BPO industry report.
Mercer India said the industry should look beyond the traditional areas of recruitment and some thought should be given to employ physically challenged people and housewives. The reasons for the high rate of attrition was due to various factors like salary, work timings, other career options, adding that there is always the danger of costs increasing while billing rates decline.
With 245,100 people employed at the end of March 31, 2004 against 171,100 last year, 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.
Attrition rates %
US : 42%
Australia : 29%
Europe : 24%
India : 18%
Global Average : 24%
If you compare attrition rates for a Voice and Non-voice process, then attrition rates are significantly lower in a non-voice process. As the industry moves up the value chain and becomes a full-scale BPO player, attrition rates will further decrease.
For BPO service providers, moving up the value chain is critical, given the attrition rates in the industry, which are on an average higher in low value-added segments (in call centres) as compared to higher value-added segments like engineering.
It will not be possible for the industry to arrive at a blanket agreement on poaching but bilateral agreements between companies are being signed. Basic norms are being put in place and code of ethics is being stressed upon by industry. Companies are being encouraged to adopt responsible behavior in order to ensure that the industry does not become a victim of its own actions. Industry needs to go aggressive but not cannibalistic.
In order to ensure a consistent flow of trained manpower in the future, the industry needs to work with the government to introduce courses at a school and college level, which are in line with the requirements of the ITES-BPO industry. India has one of the largest pool of English speaking graduate workforce. The challenge for the industry is not in employment but employability. The industry is also hiring professionals from outside the industry in order to meet its steady supply of manpower.
Honest corporate managers will tell you that to make offshoring work, you need at least a 300% to 400% wage spread between American software writers, engineers, accountants, and call-center employees and their Indian and Chinese counterparts. Labor costs have to be very, very low overseas -- not just lower -- to compensate for time-shifting, managing over such long distances, and decreased productivity.
High attrition rate, price wars, poor infrastructure and lack of data protection laws could derail India's booming outsourcing industry. This seemed to sum up the views of BPO fraternity at the Nasscom summit here
From India, Kakinada
Surya
Very good analysis of attrition in the outsourcing industry. Keep it up.
Others :
Views put forward are fresh and of value. Yes, in certain cases, attrition (but only if properly analysed and directed) can be of considerable assistance. In other cases, where attrition is of high performers with high potential which the organisation cannot really afford to lose, it is a danger signal and needs to be battled with motivation and career enhancement. A challenge for all.
At the same time, lack of attrition in certain positions where the incumbents have low performance and low potential but are nonetheless refusing to move out, is another problem which has to be tackled with selective weeding out and golden handshakes.
All in all, a very interesting topic. Keep it up, CiteHR members!
Jeroo
From India, Mumbai
Very good analysis of attrition in the outsourcing industry. Keep it up.
Others :
Views put forward are fresh and of value. Yes, in certain cases, attrition (but only if properly analysed and directed) can be of considerable assistance. In other cases, where attrition is of high performers with high potential which the organisation cannot really afford to lose, it is a danger signal and needs to be battled with motivation and career enhancement. A challenge for all.
At the same time, lack of attrition in certain positions where the incumbents have low performance and low potential but are nonetheless refusing to move out, is another problem which has to be tackled with selective weeding out and golden handshakes.
All in all, a very interesting topic. Keep it up, CiteHR members!
Jeroo
From India, Mumbai
Hi,
Thanks for all your views. Yes i agree that if the attrition is among the low performers its beneficial to the company. As a company like GE has made it a matter of policy to retrench 10% of its least productive workers every year. But still it remains one of the biggest challenges for todays HR managers.
Regards
Anusha
From China
Thanks for all your views. Yes i agree that if the attrition is among the low performers its beneficial to the company. As a company like GE has made it a matter of policy to retrench 10% of its least productive workers every year. But still it remains one of the biggest challenges for todays HR managers.
Regards
Anusha
From China
Hi Anusha,
Your question is indeed thought-provoking for many.
Attrition is also important for organizations. It infuses fresh blood, new thinking, cross-industry perspective, vertical/industry/domain knowledge and updates, and, perhaps to some extent, lower compensation also.
Professional organizations believe that performance of employees in any Company follows a bell-curve, i.e. some are excellent performers, most are average-good-very good and some are low performers. Forced/planned attrition or consequential attrition (i.e. as a consequence of low recognition to employees) is good for Companies.
Low performers may not be given increment or good increment, and, thus leave. That's good. As they say, some churn is important and is a must. Also, some employees are a drag on the organization, working for long years and thus gradually entering a higher salary bracket with yearly increments that is hardly justifiable. They must leave to give room to infusion of better educated/skilled people, sometimes even at a lower compensation.
But the down-side is greater. Good employees or recognized/ recognizable talent also often leave for various reasons. That's bad for any organization.
Attrition thus has both sides, bad and good. The contention is that both must be well balanced which is often not the situation. Actually, the subject is more complex than it sounds. There are also issues of employee integrity, dedication, loyalty, trustworthyness, etc. that mostly long standing employees have proven over the years. Companies also yearn for these qualities.
Rahul
9968270580
From India, New Delhi
Your question is indeed thought-provoking for many.
Attrition is also important for organizations. It infuses fresh blood, new thinking, cross-industry perspective, vertical/industry/domain knowledge and updates, and, perhaps to some extent, lower compensation also.
Professional organizations believe that performance of employees in any Company follows a bell-curve, i.e. some are excellent performers, most are average-good-very good and some are low performers. Forced/planned attrition or consequential attrition (i.e. as a consequence of low recognition to employees) is good for Companies.
Low performers may not be given increment or good increment, and, thus leave. That's good. As they say, some churn is important and is a must. Also, some employees are a drag on the organization, working for long years and thus gradually entering a higher salary bracket with yearly increments that is hardly justifiable. They must leave to give room to infusion of better educated/skilled people, sometimes even at a lower compensation.
But the down-side is greater. Good employees or recognized/ recognizable talent also often leave for various reasons. That's bad for any organization.
Attrition thus has both sides, bad and good. The contention is that both must be well balanced which is often not the situation. Actually, the subject is more complex than it sounds. There are also issues of employee integrity, dedication, loyalty, trustworthyness, etc. that mostly long standing employees have proven over the years. Companies also yearn for these qualities.
Rahul
9968270580
From India, New Delhi
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Attrition-rate. xls