The Indian BPO industry has attracted the worlds attention by its wonderful performance. Though western countries view India as a low cost destination, the talented young pool of BPO employees is contributing about $5 bn to the countrys GDP. Unfortunately the boon of the industry is blurring due to the presence of some issues in Human Resource Management. The article discusses the HR issues in the BPOs, which need to be addressed.

Business Process Outsourcing (BPO) has become a critical agenda for many multinationals in this era of globalization. BPOs entered the Indian territory in the early 1990s and since then India has progressed substantially. Presently, the US$5-bn worth industry is expected to touch US$20-22 bn by 2007-2008. India is a unanimous choice across the globe due to the availability of a large amount of cheap but skilled manpower.

But, in the recent times BPOs in India are facing a serious problem of employee attrition. Repetitive low-end jobs, physical and psychological problems and few career growth opportunities are the major reasons cited for the high attrition rate. This disadvantage has increased the operating costs of BPO entities (Refer Exhibit 1) and is considered to be a threat to the growing industry. The competitive advantage of India would be lost, if such a critical problem is not addressed well and soon.

The BPO industry stepped into India with the entry of captive units of GE, American Express, HSBC, etc., in 1992. By the end of the decade, various third party units joined the party. BPO entities in earlier days paid a handsome salary to attract a large number of employees (Note: Henceforth employees will be implied to youngsters, since they constitute the majority of the workforce). Hardly did people imagine of high pay, incentives, sophisticated working environment and personal growth in any organization during those days.