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The average BPO salary grew 14.8% in 2007 as compared to the 17.2% in 2006, according to a survey by Dataquest-IDC. This was again lower than the 18% average hike that BPO professionals got in 2005. The salaries at the Indian BPO industry are seeing a gradually downward trend.
Labor costs (primarily Salaries) account for approximately half of the total costs of the Indian BPO industry. The following exhibit provides an approximate break-up of the direct costs of a BPO. Cost Structure
| % Share | | People Cost | 54% | | Labor& Mgt | | | Recruitment | 2% | | Infrastructure | | | ICT & Utility | 22% | | Facility | 12% | | Other Administrative expenses | 10% | | Total | 100% |
Source: ValueNotes Research
The above cost break-up varies marginally for the KPOs depending upon their infrastructure requirements, and the labor costs contribute more towards the total costs for some specialized KPOs. The following exhibit provides an approximate salary range in the BPO industry across 3 tiers of their billable employees: Approximate Salary Range Per Year | Level | Entry level
| Mid level | Project Manager
| | Experience | 0-2 years
| 2-5 years | 3-7 years | | Segment | | | | | Voice based BPO | INR 0.12-0.18 m
$3000-4500 | INR 0.3-0.6 m
$7500-15,000
| INR 0.6-1.5 m
$15,000-38,000
| | Non-Voice /Back-Office | INR 0.1-0.18
$2500-4500
| INR 0.3-0.6 m
$7500-15,000
| INR 0.6-1.5 m
$15,000-38,000
| | LPO | INR 1.5-3 m
$3700-$7500
| INR 0.3-0.8 m
$7500-20,000
| INR 0.7-1.5 m
$17,500-38,000
| | Market/ Business research | INR 0.1-0.3 m
$2500-$7500
| INR 0.3-0.6 m
$7500-15,000
| INR 0.6-1.5m
$15,000-38,000
| | Advanced Research/Analytics | INR 0.4-0.7
$10,000-17,500
| INR 0.7 – 1.2 m
$17,500-30,000
| INR 1.0-2.5 m
$25,000-63,000
| | Engineering design | INR 0.25 – 0.4 m
$6200-10,000
| INR 0.4-0.7 m
$10,000-17,500
| INR 0.7-1.0 m
$17,500-25,000
| | Publishing BPO | INR 0.1-0.18m
$2500-4500
| INR 0.3- 0.6 m
$7500-15,000
| INR 0.6-1.5m
$15,000-38,000
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Source: ValueNotes Research Note: The above data is relevant for mid-large BPOs/KPOs providing offshore services. The salary levels at some small BPO/KPOs providing services to domestic market are lower.
The salary range amongst BPOs is dependent on various factors like: - Relevance of experience and qualifications
- Location (Employees for the same process inTier-1 cities like Mumbai, NCR, Bangalore are paid marginally more than those in Tier-2 cities like Pune Hyderabad, Vizag)
- Process complexity handled in the organization. The employee handling a service that is billed higher is likely to receive a slightly better compensation than the ones that are not.
What Lies Ahead
In the initial growth phase of the industry, there was dearth of trained BPO professionals and the employers were desperate to retain their investments in trained people. The salary hikes in the industry were driven by the need to hire capable employees and retain them. Employee attrition and talent poaching by competitors led to further escalation of salaries and loaded additional costs to BPOs including freebies/incentives to employees.
| According to a Hewitt survey, India had the highest wage hike in APAC region, with average salary increases of 14.6% in 2006. The Philippines was second, with an average of 8.2% while China had an 8.1% hike in salaries. |
However over the last couple of years, the industry has moved up the learning curve. With more investment in processes and documentation of training methodologies, the desperation to provide indiscriminate salary hikes for employee retention has gone down. This is reflected in an observation by an industry veteran, Viswamitra Hariharan, COO Hurix, "Attrition is a fact of life in today's scenario in India. The minute you accept that people are going to leave, you will make plans accordingly. We invest in building very strong processes, so that the impact of attrition is minimal".
The Indian BPO industry registered a huge growth of 45% during 2004-05, and war for acquiring talent led to significant salary hikes in the industry. Circa 2007. As the BPO industry is grappling with increasing cost pressures to save margins in an era of rupee appreciation, the gradual downward spiral of salary hikes seems to have begun.
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Outsourcing revenues from the Indian banking industry are estimated at Rs. 4 b for FY08