Show Me the Money

Despite the boom, BPO employees got lower hikes than their IT counterparts. But lower salaries, hikes and perks notwithstanding — employee satisfaction remains high. DQ-IDC’s BPO Salary survey–the first ever of its kind–looks at what this industry’s salaries look like and how they stack up against the IT industry. 

In many ways it is reminiscent of the IT industry during its peak period: mercenary, unstable and plagued by high attrition.

Money appeared as the second most important reason for joining this industry (first reason: high growth opportunities). It also appeared as the second most important reason for leaving this industry. Of the over 500 BPO employees interviewed, nearly 45% said they had joined for the money and 40% said they would leave their current jobs for better money elsewhere. This, despite the fact that on a scale of 1 to 10, BPO employees said they were far more satisfied with their salary and compensation packages than IT industry employees were. 

Here are some quick numbers though–entry level salaries begin with around Rs 1.8 to Rs 1.9 lakh. After a year or so on the job, employees can expect to get about Rs 2.3 lakh per year. Team leaders can be had for around Rs 4 lakh while practice heads with just over 7 years of total experience get about Rs 7 lakh per annum. After that salaries can become unpredictable. 

Some of this quicksilver character comes from the nature of the industry itself. After six months in the business, an employee is already seen as “experienced”. That has its costs. One of them–employees don’t hesitate to leave after six months. More importantly, this is one industry where employers don’t look for stability — so people who jump ship every six months are not looked at with suspicion. Yet. Things will change though, with time and stability.

Gross salaries

Entry level salaries in the BPO industry can be a good 65-100% less than in the IT industry. On an industry-wide average, BPO salaries are about 60% lower than IT salaries. This is not surprising since a very large proportion of the BPO employees are vanilla graduates compared to a larger proportion in IT consisting of either engineers or MCAs. In fact, if classified as “first jobbers and non-first jobbers” the BPO employee gets half of what the IT employee gets paid. After that though comparison becomes difficult. By its very nature the BPO industry has to be classified under different and narrower experience groups than the IT industry. By and large though, BPO salaries remain lower except at the top management level where they may sometimes merge. However, in this industry “experience” is quickly gained. Employees with just over six months in the business are already treated and paid marginally higher than complete new comers and salary bands tend to change over every one or two years of experience after that.

Company Rankings

The two biggest hirers in the industry–GE Capital and Convergys - also have among the lowest average salaries in the industry. Interestingly though, they also have among the highest employee satisfaction on salary and compensation. Reason — employees put a high premium on their company’s branding. Conversely, Wipro Spectramind, the second highest pay master in the industry, has significantly lower salary satisfaction. An interesting sidelight–GE employees usually tend to get higher salaries when they shift jobs unless they are going to better branded BPOs like IBM.

Salary distribution

While over 55% of all call center/BPO employees get less than Rs 2 lakh a year, about 57% of all IT employees tend to make more - at Rs 2 to Rs 4.5 lakh every year. This is partly because the BPO industry hires a much higher proportion of new comers and partly because absolute salaries in the industry are lower than in the IT industry. This is seen across most experience groups as a matter of fact except at the very top end of the management spectrum where salaries either tend to merge or can even on occasion be higher than the IT industry. That shows up here in the incidence of slightly higher proportion in the BPO industry getting between Rs 25 to Rs 35 lakh per year. Interestingly, this can also arise from the fact that industry seems to hire a higher proportion of MBAs than the IT and IT services sector. (see profiles later in section)

Satisfaction levels on salary and compensation

It’s about the numbers of course. But it’s also about expectation management. Overall, call center and BPO employees said they were more satisfied with their salary and compensation packages than their IT counterparts. However, that had two key riders: One, in the BPO industry, satisfaction with salary decreased rapidly with experience contrary to the IT industry where it grew with experience. So much so that those with more than five years in the BPO sector were substantially less satisfied than their senior IT counterparts despite getting among the highest hikes last cycle. Two, satisfaction with salaries was very unevenly distributed in the BPO industry and fell rapidly from the company ranked 1st to that ranked 15th. To illustrate: while HTMT ranked 1st with a mean satisfaction score of 8.55, WNS at 15th scored only 4.61 In contrast, in the IT industry scores fell from 8.5 to just 7.1 between the companies ranked 1st (Cadence) and 15th
(TCS).

All of which is interesting on many counts, the most important of which is the apparent disconnect between actual salary paid and satisfaction on salary. BPO employees are paid less and got lower hikes but are on the whole more satisfied because they have relatively lower expectations. Within the industry itself, two companies with among the lowest average salaries–GE and Convergys–had among the highest employee satisfaction on salaries. Reason: there were other compensating factors including branding and work environment. While Wipro Spectramind, which is among the best pay masters, had much lower employee satisfaction scores.

Salary hike

This is interesting. Though the BPO industry boomed last year compared to the IT industry, the bigger increments aren’t coming in here. While the industry grew at 59% last fiscal it gave its employees an average 13.8% hike in salaries. In comparison, the IT industry grew at a relatively much lower 19% but gave average increments of 14.5%. This, incidentally, being the lowest average hike in the IT industry in the last two years. Lesson: while joining salaries are good for vanilla graduates, the promise of quick pay packet growth isn’t really being met. For those who’ve been watching the industry closely, this was to be expected though. For two key reasons: one, any industry that hires at such an hectic pace cannot afford to give large increments; two, till a consultant becomes team leader, his job profile doesn’t really change at all with experience.

A call-taker or a back-office finance consultant tends to do pretty much the same job from his first day on the job to the end of his fifth year or whenever he moves up the ladder. There are productivity gains with more experienced employees but apparently not as comparable as in the IT industry. 

Interestingly, much as in the IT industry, the most senior and therefore the already highest paid got the largest hikes. Moreover, average hikes decreased uniformly with lower experience in the BPO industry unlike in the IT industry where relative hikes have moved around a bit in the last two cycles. Women in the BPO industry got marginally better hikes during the last cycle and marginally less in the cycle before that. Women in the IT industry say they got lesser hikes in both cycles. 

Satisfaction on the appraisal system

By and large, satisfaction on salaries and the appraisal system have been found to be closely related. This is not surprising since most of the increments and promotions in any industry are closely connected to an employee’s appraisal. This was found to be true in both the BPO and IT industries which followed the same overall pattern — greater overall satisfaction in the BPO sector compared to IT; within the BPO industry though satisfaction on appraisals decreasing uniformly with experience; while in the IT industry, the senior most tended to be most satisfied while the other experience groups showed no clear pattern. In fact growing disenchantment with experience showed up in another metric — those on their first job in the BPO industry were a lot happier than those who’ve worked in the industry before. Only two companies significantly varied from the trend somewhat–Wipro Spectramind and ICICI OneSource employees were a lot more happier with their appraisal systems than with their salary packages. Women - as in the salary satisfaction metrics — were more dissatisfied than men. 

Perks & benefits

This isn’t what one would really call a “perks” industry. Some benefits like life and medical insurance and hospitalization cover have become standard across most forward looking industries today. They exist in the BPO industry too but do not cover quite as many employees. In fact, fewer call center and BPO employees are covered under almost every single perk when compared to the IT industry. This ranges from reimbursement of medical bills to all loans (personal, housing and car included), as well as simpler things like books and periodical allowances. Partly, this is because most call center employees don’t stay in one company long enough to be eligible for things like loans that are usually tied to number of years served. However, things like only 40% eligible for leave encashment are difficult to explain. The perks on which the BPO industry does do better than the IT industry — overtime benefits, company car and food coupons or lunch allowances. All three related largely to the odd hours this industry keeps. 

Type of accomodation

More call center employees say they live in houses they own compared to the IT industry. However, as in the case of “other earning members”, a significant percentage of this is more likely to be houses owned by parents, unlike in the IT industry which is more peripatetic and employees tend to buy houses in the cities they decide to settle in. 

How young?

It’s a young industry. Over half are less than 25 years old and nearly 87% are less than 30 years old. In comparison, nearly half the employees in the IT Industry are between 26 to 30 years old. Much of that is as a result of a deliberate hiring policy in the BPO industry that targeted just-out-of-college youngsters. The next year however should see some churn as the industry has begun to experiment with both extreme ends of the spectrum — moving down from graduates to teenagers with 10+2 qualifications and moving up toward the retired, over 50 employees. Don’t expect things to stabilize on age quite so soon. 

Passed out from colleges in

Delhi colleges aren’t contributing much to the IT pool but they are definitely pouring in hordes of graduates into the call center industry. One out of every five call center employee has finished his last education in some college in Delhi. On the other hand, Karnataka and Tamil Nadu colleges contribute similarly to the IT pool (both providing over 1 out of every 5 employees).

State of origin and education match closely, with 35% of all call center employees and 59% of all IT employees finishing their education from some college in the south. 

The state they belong to

Delhi and Bangalore are emerging as the call center capitals of the country. Bombay, which had missed the IT Services trend a bit, is catching up fast in the call center industry however. All told though, the South though doesn’t dominate the BPO industry as it does the IT industry — only 36% of all BPO employees come from one of the four southern states compared to 59% in the IT industry. 

74%	26%
86%	14%

Woman power

That the BPO industry has at least 12% more women than the IT industry is interesting. While empirically this seems self evident, what makes it interesting is that this is in an industry that usually works odd hours. Word of caution though: since many of the BPO companies did not share data with us, the BPO male/female sample size is not weighted against the actual and could be skewed by the random sampling. 

Married?

This is a surprise. That half the IT employees are married is no surprise. But that a quarter of the BPO employees are married comes as a bit of an eye-opener. Can also be a cause for concern where “work timings” and “no personal life” have emerged as key reasons for stress. And where 35% and 33% have specifically said they would consider leaving the industry either because of the timing or when they get married. 

How often do you surf the internet?

It isn’t about the industry apparently. Both industries provide access to computers, the net and they require a certain facility with the system–no major surprise that frequency with which employees surf the net is pretty much the same. 

Time of car

Difficult to say who this is good news for. For small car makers because nearly 60% of all car owners from both industries own small cars? Or for Mid-size car makers because 30% from both industries own mid-sized or premium cars? Either way, it is interesting that more employees in the BPO industry own mid-sized cars than in the IT industry though some of these would not be “own cars” and may in fact be owned by their parents. Either way, the call center phenomenon looks a lot like an urban, upper-middle phenomenon so far. 

Educational background

That half the BPO employees are vanilla graduates is no surprise (compared to just 3.5% in the IT industry). But what is a surprise is the larger proportion of post-graduates (seen actually in specific companies like HCL Technologies) and MBAs in this industry when compared to the IT industry. Some of this is accounted for the fact that the IT survey was dominated by IT Services companies which are very tech-employee dominated with as few as 200 sales and marketing people per 20,000 employees. In contrast, though the BPO industry also has a lower S&M work force, “operations management” is a key function in this industry. 

Other earning members in the family

The fact that a lot more call-center/ BPO employees have other earning members has partly to do with the fact that these are young graduates, most often living with their parents and as such one or either of their parents are likely to be working. Most of the older IT employees though would have struck it out on their own and a substantive percentage of the “other earning members” will also come from working spouses instead of working parents.