Competition, attrition force foreign banks to ratchet up BPO salaries

At a time when BPO operations are much in the news on account of the US backlash and the Indian government imposing tax on foreign companies outsourcing operations to India, foreign banks are reviewing their operations here.

Interestingly, their problem is controlling the high attrition rates in the industry.

The Netherlands-based ABN Amro Bank has hiked salaries at its BPO outfit in Chennai. "We have increased salary levels at our global support centre in Chennai. According to our benchmarking study, we are now well placed in the market (based on salary level)," said ABN Amro Global Trade Advisory (working capital group) managing director Daniel Cotti.

A big part of managing costs is on the personnel side, where India offers a huge reservoir of skilled labour at a cheap cost, he added.

Offshore centres of the global banking industry in Chennai have become an issue since the IT-skilled labour in the metropolis has a host of options including careers at ABN Amro Bank, Standard Chartered Bank or Amex.

The competitive atmosphere has resulted in ABN Amro increasing salaries of its employees to bring down the attrition rate. "If five more banks choose to set up similar back-office operations in the same state, it will force players to do more to manage their staff," said Cotti.

With the high turnover rate in the BPO industry, foreign entities tend to lose out on the knowledge created and need programmes to keep their staff," said a senior foreign bank executive based in India.

ABN Amro, unlike many of its counterparts, practices an integrated approach in its BPO operations. "Our BPO is integrated to our processes and hence does not operate as a stand-alone process. We call them global support centres," Cotti added.

The Netherlands-based bank has integrated its overseas operations with its centres in India, whereby the local staff here can be provided with career opportunities. This has helped keep the turnover rate at less than 10 per cent. Some other foreign entities experience attrition rates of over 30 per cent.

Even as the US and UK governments hit out at India for stealing jobs from their respective countries, the global financial sector views BPO in India as a means of "providing shareholder value/returns".

India is considered to be the world's biggest supplier of IT personnel. The country has a great combination in terms of labour, skill, costs and infrastructure. A fundamental plus point for Indians is their ability to speak English, making them eligible to be global employees, said Cotti.