BPO blues worry outsourcing industry

Excerpts from Power Breakfast on CNBC-TV18 Watch the full show »

Last heard, Indian BPOs were fretting about attrition rates. Now, they face a more serious issue - a disappearing middle level management. CNBC-TV18 reports on how clients overseas are expressing serious concerns about this vanishing breed.

Step onto a BPO workfloor and it strikes you first - young employees. From the new recruits to the middle level management to clients, it reads inexperience. And they have expressed their concern in as many words.

"We have met with many foreign clients and all of them have told us that they are seriously concerned about the inexperienced workforce in the BPOs," said Sunil Chandiramani, Partner, Ernst & Young.

It's a direct fallout of attrition, which is between 24 to 40%. If it has clients worried, then it is of concern to the USD 4.6 billion industry; especially, since it is expected to grow from the current 3 lakh employees to over 4 lakh by 2006.

"I admit that it's a matter of serious concern to the industry at large and we are striving everyday to find ways and means of dealing with this issue," said Kiran Karnik, President, NASSCOM.

At 40%, it is one of the fastest growing industries. But then clients do not agree to increase hourly rates for employees, despite rising costs. The result is that the industry is already on the backfoot trying to strike a balance between cutting cost and quality.