The BPO industry in India is growing rapidly and in a few years, it is likely to increase its human resources manifold. However, it is plagued by problems concerning human resource management itself. Industry surveys show that one of the important concerns BPO employees have is with the appraisal system. This field study focuses on the appraisal system in the BPO industry.

The BPO Industry is growing at a fast pace. As per surveys conducted¹, "Forrester research predicts 3.3 million US jobs to move Offshore by 2015." As per Nasscom-Mckinsey report, "the total opportunity is at $148 bn and if India captures 1/6th of that then it will translate to about 540,000 jobs by 2010 with revenue of $24.67 bn." The only major concern is how to match the pace, while retention becomes difficult and problematic. For any People-enabled Industry 3Rs are the vital, i.e. recruiting, retaining and rewarding. When we see BPO Industry as a whole, they are superb in the first stage (recruiting), but in the later stages (retaining and rewarding), they are failing. Reasons for joining and leaving an organization are depicted through Chart 1 and Chart 2 respectively.

As per the findings of the Survey conducted by dqindia.com, Compensation and Appraisal System are ranked lowest in BPO industry. And these two factors are responsible for low levels of employee satisfaction.A good Performance Management System can thus mitigate the problem and improve retention rate. The most important mechanism in Performance management is the Appraisal and organizations must have fair and meaningful appraisal systems to enhance employee retention. Therefore, this study attempts to understand the prevailing appraisal systems in some BPOs.

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