Success is more than a resumé: the role of social and psychological capital in compensation for offshore BPO professionals

Abstract

Multi-national corporations (MNCs) are increasingly using offshore business process outsourcing (BPO) to manage their primary and support functions and achieve their strategic objectives. Though India is regarded as the "undisputed leader in offshore services," the Indian BPO industry is plagued by high employee turnover and labor shortages. Indian BPO firms will need effective employee selection and retention strategies to sustain their growth. While compensation is an important mechanism to attract and retain employees, and competencies such as "practical intelligence" are important to the performance of technical professionals, research has not yet examined how offshore BPO firms price these competencies and determine compensation for their professionals. This paper addresses the research gap by developing theory on the role of social and psychological capital in employee compensation, and tests the theory using data from 3,900 Indian BPO professionals over the 2006-2008 time period.