Labour shortage to hit BPO industry

New Delhi, Oct 30 | Updated: Oct 31 2005, 07:33am hrs
The current shortage of skilled workforce poses a threat to the Indian BPO industry as it will result in erosion of the countrys competitiveness, according to research and analyst firm Gartner.

The first major impact of shortage of skilled workforce will be on employee costs which will rise considerably, eroding the competitiveness India enjoys in the area of low labour costs, the firm said.

Apart from costs, quality and security can emerge as major issues as a result of labour shortage.

Cost, quality and security issues threaten to slow the offshoring of business processes to India and are causing firms to assess alternative destinations, Gartner said.

Quoting the government estimates, Gartner said the need for trained and qualified employees in call centres would reach 1 million by 2009, with an expected shortfall of more than 260,000 workers.

Gartner attributed the labour shortage to the growing demand for offshore business process outsourcing (BPO) resources.

The shortage has caught offshore call centre service providers by surprise. Many large multinational organisations that located their shared service centres in India did so anticipating an unlimited supply of skilled labour.

This expectation has not been met, specifically for educated recruits with good English-language skills, even though more than 2.5 million college students graduate each year.

Gartner predicted that high staff attrition will occur as professionals switch companies to advance their careers or improve their salaries.

Although high employee attrition by itself is a manageable issue, a shortfall in qualified personnel will drive up costs and to stop high attrition rates, service providers will offer employees better salaries and benefits.