Attrition in the Indian BPO sector: Role of compensation and opportunity to advancement on employee’s intention to quit

Abstract

Human capital is the most crucial resource on which the BPO industry in India depends. However, it is plagued by this never ending problem of employee attrition. Whenever a well-trained and well-adapted employee leaves the organization, it creates a vacuity. The organization loses a skilled, trained, and essential resource. Consistent employee attrition not only leads to an increase in tangible cost but also includes an intangible or “hidden” cost associated with it. Purpose: This study intends to study the impact of tangible factor like compensation and an intangible factor like opportunity for advancement on an employee’s intention to quit. Research Design: Employee intention to quit, employees satisfaction from compensation levels and opportunity for advancement were measured using 5-point Likert scale. Statistical techniques such as, correlation analysis, Principal component analysis, descriptive analysis etc were used for understanding the data and analysis. Results: A study of the statistical output reveals that both compensation and opportunity for advancement factors play a significant role in influencing an employee’s intention to quit. Although opportunity for advancement is a major factor which plays a more significant role than compensation. Keywords: Employee attrition, Compensation, Opportunity for advancement.