First, the good news. The business process outsourcing industry in India is growing at a phenomenal pace. Exports were worth $ 5.2 billion in 2004-05, growing at 44.5 per cent and industry body Nasscom has projected a 41 per cent growth in 2005-06 to $ 7.3 billion.
The employee base has grown at a compounded annual growth rate of 52.6 per cent, from 42,000 in 2001-2002 to 3,48,000 in 2004-2005.
Also, a Nasscom-Hewitt Associates survey says that the cost of attrition in the industry is 1.5 times the annual salary.
For a fresh college graduate, a call centre job pays about 2.5 times as much as other job openings. And the boom shows all signs of continuing considering that the cost per transaction in India is estimated to be the lowest at 29 cents compared to 52 cents in China.
Now, the bad news. Already grappling with a 30 per cent attrition rate (the highest in the Asia-Pacific region, compared to China at 10-15 per cent), the industry is expected to have a manpower shortage of 2,62,000 in 2008. In a country where 3 million graduate every year, the task is daunting.
HR consultants say one of the key gaps being faced by the industry is the low level of expertise at frontline (lower-middle) management, in managing and sustaining an ITES-BPO operation.
The inexperienced middle and frontline management is one of the key causes of attrition. Another disturbing data is that nearly 50 per cent of those who quit leave the industry.
So what's the way out? First, the industry has to get out of its image of an Internet sweatshop where an employee is resigned to his fate of being in office at ungodly hours for a dead-end job.
Companies which have not been able to tackle this image could take a cue from ICICI OneSource, which gives employees who have been with the company for more than 18 months an option to switch to positions in other ICICI group companies.
The system works as a big assurance for BPO employees that the skills they have learnt such as customer friendliness and rapid response to customer problems have wider applications and market demand.
This is important considering the fact that the cost of attrition in the industry is 1.5 times the annual salary.
BPOs have also started moving up the value chain -- a primary reason why the industry needs to put its act together to meet the coming crisis for trained manpower.
For example, the expectation is that by 2007, the industry demand for Java professionals alone will touch three million.
On its part, Nasscom is doing what it can by exploring the concept of a national skills registry of IT employees, which will operate on a shared services model and will be administered by a credible third party.
The industry body is also coming out with an assessment and certification programme to create an employable talent pool with benchmarked-requisite skills and will shortly unveil an assessment and certification for frontline management.
A Nasscom-KPMG study has made detailed recommendations for attracting, training, certifying and deploying resources for the ITES industry.
Some of these recommendations, which are worth implementing, immediately are:
Some IT companies have of course done pioneering work to become an employer of choice. TCS, for example, has put in place a comprehensive academic interface programme (AIP), process framework and proper infrastructure.
Under this programme, professors from academia are also sent on sabbatical to TCS.
Zenzar Technologies has also done its bit. The company has partnered with Symbiosis International Educational Centre to offer placement guarantees to successful graduates of the institute's management course in information technology.
Admission to this course are on the basis of a national entrance examination: AIMS Test for Management Admission (ATMA). The batch of 90 students in this course includes engineering students from premier institutes as well as non-engineering graduates from relevant streams.
Parametric Technology Corporation (PTC) is another company that has made available its specialised CAD/CAM software Pro/Engineer to colleges across the world and is providing training on its platform.
The company has entered into a partnership with ITC Infotech to promote technological literacy among secondary school students throughout India and has provided over 200 engineering colleges, including the IITs, BITS, and RECs, with Pro/Engineer software for their classrooms.
There are many more such examples. For BPOs, the signal is clear: shape up or ship out.