High staff turnover hits Indian offshore firms

One of India's leading IT outsourcers is struggling to cope with the high turnover of call centre and business process outsourcing (BPO) staff, despite posting another quarter of bumper profits.

Bangalore-headquartered Wipro said high staff turnover rates had forced it to replace 90 per cent of the 14,340 employees in its largely call centre-focused BPO business in the last year, according to a report by Reuters.

A 'non-poaching' agreement between India's main IT and BPO outfits last year was supposed to tackle the problem of staff moving from company to company and vice chairman Vivek Paul told the newswire that Wipro wants to reduce the BPO unit's dependency on call centres, which account for 90 per cent of its work.

Wipro grew its total revenues 34 per cent to £254.9m for its third quarter, which ended 31 December 2004, while net profit jumped by just over 60 per cent to £52.1m. Wipro, the third largest Indian offshore company, also said European growth was stronger than the US at 54.3 per cent.

Samad Masood, analyst at Ovum Holway, said Wipro's operating margin of 30 per cent was also impressive especially in the face of huge staff turnover rates.

"Overall, this is another set of results to make many a software and IT services player jealous. It's a measure of the level of performance being sustained by the Indian 'majors' that Wipro's growth this quarter looks a little lacklustre against that of some of its key rivals. Nonetheless, this all adds up to confirmation that Wipro, like TCS and Infosys, remains a very formidable performer - and indeed competitor - in today's IT services market," he said.