Attrition in IT - BPO: A Critical Appraisal in Indian Context


By

Dr. Ashutosh Nigam
Reader & Head
Department of IT
Centre For Management Development
Modinagar
 


Abstract

Attrition in IT-BPO not only pushes up costs incurred on the training of employees but also affects productivity along with the ideal level of 'knowledge maturity' of the organization and the employees. The organizations having capacity to withstand its long lasting relationship with employees would survive in the market place and others would fade away in the long run. The final solutions of IT-BPO  lies in the stabilization of business operations and availability of trained and matured manpower in abundance and which may bring a long lasting solution for the high attrition the sector. More of committed of employees at all levels will help this industry to stabilize, grow and add value to the economic growth.

Outsourcing of IT operations has become so pervasive function that no IT Managers and CIOs of any organization afford to ignore this option. The outsourcing of the IT functions is primarily done to reduce the cost, access to IT skill set of global level, seek the resources that are not available in house, access to new technologies, speeding up the delivery process and to keep   focus on their core competencies by leaving low end work to third parties. According to industry estimates, the IT-BPO sector in India contributed 4.1 per cent to the country's GDP in 2004-051. With a projection of 50 per cent annual growth, India has not only emerged as star performer in IT-BPO segment, but also projecting dramatic growth rate in the future. NASSCOM McKinsey Report 2002 estimates that the total number of people employed in the IT-BPO sector will reach one million by 2008. Assuming about  850,000 of these will be at the associate level, the number of team leaders required would be in the range of 60,000 to 85,000. The global process outsourcing of this segment has huge potential for generating revenue and employment (shown in table 1.1). In India, this segment began to evolve in early nineties with setting up of operations by MNCs like American Express, British Airways etc. Anticipating the growth in this sector the Indian IT Multinationals and domestic firms have ventured actively into this segment in order to add and stabilize their revenue models.  IT business outsourcing operations involves managing  e-mail, storage, training, process re-engineering. internet access , network, security and firewalls, web services, e-commerce, post implementation package support, portal development, customer support services, data entry services,   security certificates, logistics, multiple subcontracting, web learning spaces by the third party, instead of doing it in house.

Table 1.1

Employment in IT- Enabled services  sector in India

Year

2000

2001

2002

2008 (Expected)

BPO

23,600

35,000

68,000

570,000

Other IT Enabled Services

21,400

35,000

38,200

530,000

Total

45,000

70,000

106,200

1,100,000

                            Source IDC, NASSCOM

Due to high growth of the industry attrition is rampant in the industry because it is one of significant contributor in the Indian economy. Attrition  have become very rampant in the industries of high growth sectors of the economy BPO  industry. According to the Ekta2 consulting leader, Helwitt Packard Business, Chennai," Attrition rates in the BPO industry varies from 24 percent to 40 percent ". Attrition not only increases the overall cost of operation but also increase recruitment and training cost on the employees. For employing people in the BPO–IT segment  very long training hours are not required  so graduates and undergraduates can be hired Attrition is not a new problem and it has existed earlier and will continue to exist in any industry. But rate is really alarming in this sun rise industry. Attrition  have become very rampant in the industries of high growth sectors of the economy Attrition means not include loss of talent, but also includes the cost of training and hiring the new recruits. This in turn would arise the security threat for the organizations. The attrition rate in the industry has been hovering around 25-35%, At least 60,000 of the 171,000 workforce involved in BPO-ITES change jobs every year, which is quite high for any industry. An average Indian call center employee works with a company for 11 months, where as an average UK call center employee stays in a company for 3 years. So it is mandatory for It is expected that the attrition rates would come down once the growth stabilizes. Steep growth is one of the reasons for the high attrition rates, according to many in the industry.

Attrition Rates  at the Global level

Attrition rates

%

US

42%

Australia

29%

Europe

24%

India

18%

Global Average

24%

*Source-Times News New York (2003)


With an increasing number of organizations in the US, UK, Canada, EU and Australia preferring business process outsourcing from low-cost countries like India, the company foresees a good potential in this segment. It is proud of the fact that it gets repeat orders from its employees. Attrition cost includes3 the cost incurred on recruiting, training, agency fees (either recruiting agencies and/or temporary agencies if you use temps until you can find the right agents to hire permanently), cost of overtime (that you must pay to existing agents while you look to replace open positions). This also includes the opportunity cost of things like lost customers due to lower service quality, decrease in productivity of all resources involved in recruiting, hiring, training and orienting new hires and  lost opportunities because of diminished resources in the center (i.e. abandoned calls, lost sales etc.). The other indirect costs includes center's employee morale, culture and climate The hiring cost is associated with getting an employee on board, job posting through channels to the training part that is involved in the recruitment process. The advertising cost to agency fees (in case the hiring is done through recruitment agencies), salary of the HR team involved in the recruitment process, travel, relocation charges by number of hires would incur in the hiring cost factor. On the other hand, when an employee leaves the organisation, the turnover cost can start from the termination to vacancy and training costs.

Objectives of the Research Study

1. To Study the Key factors involved in the attrition in the BPO-IT Segment
2. To study the avenues and the opportunities available  to  Indian IT- BPO Sector
3. To draw out the strategies to club attrition in the BPO –IT Segment

Key Strength for Indian BPO Industry

India has emerged as the world's most attractive IT-BPO destination on account of location attractiveness which includes Investment in infrastructure, liberalized telecom sector and friendly regulatory environment and people attractiveness which encompasses large and low cost pool of English speaking workforce in the country. The people factor is evaluated on the lines of size of the job market, workforce education level, language barriers, past outsourcing experience and employee retention. This sector has advantage of cost effective solutions as there exist huge gap in the salaries in comparison to other competitive countries such as Philippines, South Africa, Ireland; India is the only country where we have a balance between the cost involved and the quality provided .India have large pool of entry level employees where as huge gap exist in middle and senior level.

The dynamics of IT- BPO is that at the floor level operation, a non-experienced candidate could work with the same efficiency of a 2-3 year experienced employee after minimal training. So fresh college graduates  and undergraduates can be put up in the operations .so India can take up the advantage of its huge unemployed workforce.

Reasons of Attrition in ITES-BPO

The BPO center industry is relatively new and every one is in a great hurry to make some thing or do some thing, become someone in the sun rise industry. The government, promoters, management team, employees, consultants, media and so many others play a major role in developing any new industry and extend helping hand for stabilization and finally growth of the industry.

The reason for the high rate of attrition in the BPO sector particularly call centre segment range from lack of comfort of enrichment potential in terms of career growth. The growth of BPO industry is mainly depending on the cost effectiveness and quality of the manpower. Attrition is not a new problem and it has existed earlier and will continue to exist in any industry. Typically there are three main categories of costs associated with turnover/attrition

The inexperienced middle and frontline management is one of the key causes of attrition. Working environment is the most important cause of attrition.. Employees expect very professional approach and international working environment. They expect very friendly and learning environment. It is proved beyond doubt that Theory X will not work in the call centre. It means no bossism; rigid rules and stick approach will not suit the call center. Employees look for freedom, good treatment from the superiors, good encouragement, friendly approach. The work of IT-BPO have to be completed  under a specified time period  round the clock which makes employee to be put  under pressure and stress. The firms who pool up the  large number of projects resulting in stretching up on its employees and develop stress in the employees. 

It is quite common that employees are moved from one process to another in BPO operations which makes it employees difficult to be adjusted to the new campaigns and often makes employees find it difficult to get adjusted to new assignment and resultant in attrition. The call centre have employed large percentage of youngsters who took IT-BPO  jobs as temporary and part time option and they quickly change the job once they get in to their own field. This mismatching of job expectations creates the  problem of attrition as the advertisement  for recruitment placed in various media to attract suitable pool of candidates project job of IT- BPO to be happening , work for fun, flexible timing schedule, with no age foundation and good compensation package. Which creates lot of mismatch in the expectation. Employees who start their career in outbound call centre desire to move to inbound and similarly all employees with professional courses back ground people would like to land up in inbound process as the work pressure is little lesser. The employees also when having strained relations with the superiors. The employees work under high specifications that requires so the employees work under high specifications. This creates lack of enrichment potential in terms of growth.

Money is  one of the key influencing factor for moving of  one job to another for higher salary, better positions and better benefits are the most important reasons for attrition. The employees expect salary revision once in 4-6 months and if not they move to other organizations because of the rapid growth of the industry. Some times  due to personal reasons like  getting married (especially for  the male employees) or falling in love or change of place. The next important personal reason is going for higher education. Most of the employees with professional degrees like BE, MCA and others appear for higher education or grooming them, for  highly specialized courses quickly move out. Health is another aspect, which contributes for attrition. Employees do get affected with health problems like sleep disturbances, indigestion, headache, throat infection and gynecological dysfunction for lady employees. Employees who have allergic problems and unable to cope with the AC hall etc will tend to get various other health problems and loose interest to work.

The demand for trained and competent manpower is very high. The poaching became the prevalent practice in ITES-BPO because it's a way of acquisition of  good in lesser time in comparison of developing the talent internally. The poaching results in quicker promotion in the grade in short span in comparison to achieving promotion in the same organization stature. It is also acting as a source to damaging the competitor's ability to achieve strategic objectives. The big companies target employees of small companies. The placement agencies have good days for doing more business. The employees with 4-6 months experience have very good confidence and dare to walk out and get a better job options. Most of the organizations have employee referral schemes for new upcoming centre and this makes people to spread message and refer the know candidates from the previous companies for earning prompt poaching. The problem is more intense for the third-party outsourcing companies which have just ventured into this business. They cannot even invest in training, given their financial and other constraints. Captive BPOs like GE and American Express, which are established players in the business, have no such problems. They in fact invest substantially in training their managers. However, they have been facing a problem of a different kind. Their middle and senior level managers are being poached by the new entrants to the industry. The employee been required to do similar types of jobs resulting monotony at the work resulting in reduction in efficiency and the quality of work levels, monotonous nature of the job, demand-supply disparity and lack of career growth potential on the professional front; loss of identity, mismatch with normal cycle, complete change of life style and lack of comfort on the personal front. In IT-BPO there is no benchmarking of compensation benefits versus performance. The employee having the growth avenues are relatively stagnant in comparison to the other sector people having lack of growth avenues, expectation mismatches, dissatisfaction with company policies and quest for a better job content.

The system works as a big assurance for BPO employees that the skills they have learnt such as customer friendliness and rapid response to customer problems have wider applications and market demand.

Some times during the integration activities of business operations are not properly communicated in the y are able to access the information through corporate grape wine or other media which creates the feeling of resentment in the employees. Another  reasons for people leaving the industry is because IT-BPO is viewed as a gap filler occupation. There seems to be a flaw in the way the industry is structured. The industry has been mainly dependent on youngsters who are taking out time to work, making money in the process also while thinking of career alternatives. Hence for this group BPO is never a long term career but only as a part time job. The easy availability of BPO jobs is only a source of easy money till the time there is no other source of funding. Also the unfriendly working conditions, late night work shifts, high tension jobs acts as a deterrent for people to stick to this industry for long time. BPO industry  are not being taken with a positive spirit by the society on a large unfortunately has been regarded by the Indian society as a low value industry with low end work and which does not need high educational qualification. Hence a person working in this industry is viewed as a person of less ability compared to others working in any other industry. This attitude has developed because of the mass recruitment undertaken by BPO firms during the initial days, where not much focus was laid on selecting highly capable person. Lack of family and social interactions is one of the major concerns for the employees which needs to be dealt by the BPO companies. This issue needs to be dealt with the importance and sensitivity.

Disturbed Personal

The people working the call centers  have different require of the job . The employees has to deal with the over.  Sometimes long absentism which results in attrition of employees is employees inability to cope up with the job. 

Lack of the growth opportunity

Stratergies For Retension of the Employees

2. Employee welfare/morale programs 3. Recruiting/retention programs


Since IT – BPO is people intensive industry lot much investment has to be made on employee development and retention. The general methodology in IT-BPO should be total transparency in its HR practices to ensure continuous of an individual goals with the organizational goals. The HR department should go for the for root cause analysis to club attrition and clearly mention the career graph of an employee by strategically streamlining the employees  growth  with the organizational objective by optimizing the available recourses .

At Macroscopic level

Earlier the retention was the sole responsibility of HR Department and at the most the department heads will be accountable for the retention of talent. In call center the wheel has changed and multi dimensional approach needs to be adopted. More of concerted efforts only would help to retain the talent. Everyone has to contribute to hold the employees little longer period. All the leading call centres are trying several methods to retain the talent and few of those innovative HR practices providing stimulating work environment, Good pay and benefits Career progression should be based on the performance and not on the number of years of experience or seniority in the organization, good performance based incentives. Free transport and free food Lateral career moment and well-defined career path for star performers.
Promotions and salary increase on a regular basis. Regular holiday packages, gifts, outings etc. Recreation clubs, fun activities with in the work area.
Initially the  responsibility of the HR dept is stress up to the development and looking after the promotion and providing incentives but the it should be looked in integrated way for  proving appraisal and other development to the employees.  IT-BPO companies are trying to fix attrition by adopting the policy of the recruiting the spouses, and non recruitable persons like housewives and old age people. The   companies are providing accommodation to their employees at nominal rent  For example EXL has taken 125 flats in Noida for its young staffers.

1 Move to Secondary locations The companies should move up to the secondary location  like Chandigarh, Bhopal, Lucknow, Dehradun. This would enable the ITES-BPO to tap the manpower that has been largely untapped due to location   dis-advantage. The can be harnessed for domestic call centers.  

Training focus

The company has a strong focus on manpower training according to their requirements. The internal training department aims at improving the skill sets relevant to the work profile of employees. This includes improving communication skills, e-mail programming and operation systems. The employees attend calls (inbound) from customers of its clients from ISP and other wireless software services companies. They also provide services to clients through online chat or e-mail. As the company is involved in sales order processing work, it also does transaction processing. The promotion mechanism should be healthy promotion system, which keeps pace with the growth of the company. Whenever a new position is created at a higher position, the first priority goes to an internal employee. If the slot is not filled by an employee because of non-availability of a particular skill set, then only we opt for outside recruitment. Zenzar 4 Technologies has also done its bit. The company has partnered with Symbiosis International Educational Centre to offer placement guarantees to successful graduates of the institute's management course in information technology. Few  examples of Indian IT-BPO policies are

1 Wipro Spectramind, Zenstar technologies has tied with leading academic institutions like BITS Pilani and Symbiosis pune to prove distance learning programme to its employees

2 ICICI Onesource, the banglore based BPO which employs around 41000 people give scholoships of Rs 50,000 to employees who enrolded for distance learning programme.

Move from BPO To KPO  Segment

The Expectations is huge gap exist in the expectations of the employee the people working in the  ITES –BPO Segment because many fresher after completing there professional degree of MBA's LLB, MCA's, B.Tech courses joined the call centers because in comparison to other sectors the salary packages, flexibility in job  and the other facilities provided by the organization comparatively better. As a long term soluction BPO must try to move up the value chain .The BPO should take knowledge oriented jobs and try develop the capabilities of the large projects. It is important for the industry to move up the value chain and offer high quality and unique services to customers.. Globally the KPO pie is estimated to touch $ 25 billion 5 by 2010.

Non existence of Single Body Or Forum

In India the IT-BPO is still nascent  industry. It lacks licensing policies, labour law restriction, common state laws for 24x 7 services and working in night shift, long ter financing options for  infrastructure development and red tape in the sanctioning  of the policies. There is no single body or forum to represent the views, problem and issues of the industry or the national level. NASSCOM takes ITES under is purview but industry would be benefited by the body purely devoted to IT-BPO. There should be common platform foe all Indian-BPO to share best practicesand move the industry from commoditization.

Non Poaching Agreement Between Various Organizations Another way is form up the databases of employees because some times the call centre employees has to deal with the confidential information like credit card information and personal information of the clients. ITES-BPO Companies should by signing comprehensive employment contract with there employees The idea of a shared employee database was discussed to ensure that people with criminal records do not get into jobs where they can access sensitive data of customers and their bank or credit card details. Like Wipro Spectarmind has signed non poaching agreements with nine call centres in an attempt to club its attrition.

Operational Excellence

The  key driver in the Indian –BPO has been the cost effective workforce but the  position of Indian ITES should be operational excellence in terms of performance .

Good Hiring Excellence

Getting the right person is now becoming an issue. This happens because there is so much of choice for freshers. On the other hand, recruitment can be on account of growth or replacements for attrition. Higher the attrition, higher the replacements and the resultant hiring cost.

Flexible time Schedule

Considering the personal needs of employees, The  practices should be  a flexible shift system that facilitates employees to work in different shifts. The BPO-ITES companies should allow employees to work for the entire week and club the holidays together. Employees should be given flexibility at work. Flexible time schedule should be initiated by the employees and approved by management to meet business commitment while supporting personal life. The factors on which flexi time is allowed to an employee include child or parent care, health situation, maternity or formal education programme. The work from home should will attract diversity of employees that will retain them for the longer period and unable to cop between there family and work.

At Microscopic level

Work Life Balance

There has been phenomenal change in the employee perception of loyalty over the last decade which results in  the change in employee perception of loyalty  especially  among the knowledge workers. Under hectic work schedule it is very difficult for employees under long reeling hours. The work life balance can put up in the five stages. At the first stages6 the BPO-ITES employee should try to understand the core reasons that are creating the imbalances and try to identify the factors that are out of control. At second stage the employees should try segregate the responsibilities and develop tricks and techniques that allow you to create sense of control. This is precarious stage and should be dealt with great precaution. At the thirds stage work life balance where multiple responsibilities of home and work place is be gathered to create equilibrium. The fourth stage include work –life integration where the approach should be not only fulfill the responsibilities but also put  focus on the career planning , career development and personal growth. In the final stage work life harmony should be developed to complete the entire work task.

Career Diversity

To stem employee churn in the organizations and reduce monotony at the work place the The big IT-BPO should diversify there career in other subdivisions of the organizations. For example ICICI Onesource has introduces career diversification programme whereby employees with  the company for more than 18 months can switch to positions in the ICICI group after passing internal test. Similarly cognizant Technologies offer multiple career plans for its employees . This means technical professional can opt for different career options like project management , technical track or business development.

Handling attrition

Counseling and medical health check ups.

All the above activities are being undertaken to a greater extent or little more in all large Call centers. Surprisingly the attrition rate is not coming down in any of the companies, but it is going up and it may increase in the coming days. This is a time to introspect as to what is lacking in the approach. One thing is missing is attention to individual needs. Employees have varied expectations and it is becoming difficult to understand them and by the time you make an attempt to understand the expectation changes and it is still becoming difficult to meet the customized demands or expectations. To quote an example, if a friend leaves, another close friend will also leave and he will lure another 3-5 persons. Moving for higher education and marriage are the major reasons for attrition. To tackle these will be impossible with any type of strategies and approaches. The HR personnel have become silent spectators and start hunting for new personnel to replace.

Sharing among the  Family members

The company should talk with family members and close friend of the employees before deciding to join call centre.

Sponsoring Employees oriented events.

The companies should work on innovative techniques enhancing bonding and stress reliving activities  Employees children day celebration, Pizza Parties, picnic, group dating in the office cafeteria for reliving stress and create feeling of the belongingness wit the organization. 

Recognition

Learning Cum growth facilities should be stress up enables to attract the talent Recognition is most cost effective motivator The rewards can be given to employees on completion of  specific number of days in the organization. work culture to celebrate small successes. The rewards should be given promptly as soon as  the performance7 level of the employee is achieved. The employees should be given flexibility from the rewards menu or catalog of the organization.

Encourage education training

 and cross functional training should be provided with focus on continuous learning as its commitment towards knowledge. Better learning opportunities. Encourage enroll for distance learning programmers HR should  give more thought to career planning of an individual. Due to un availability  of middle and strategic level  sometimes.

Employee Relationship Management Cell

So far organizations stress up on development of the relations with the customers which is primarily being ignored by the many organization so effort should be made to develop cordial environment at the work place. This cell should enable the employees to have one to one session with HR. Developing and sustaining  of the employee friendly  conducive atmosphere. The cell should also be enable to stimulate professional respect and equality to employees.

References

1. www.drjohnsullivan.com.

--------------------------------------------------------------------------------------------------------------------
1. http://www.rediff.com/money/2005/mar/17bpo1.htm. last viewed on june1 , 2006
2.
Deccan Herald , June 02, 2004  http://www.deccanherald.com/deccanherald/Jun022004/av2..asp
3.
http://www.incoming.com/WebModules/QueueTips/Question.aspx?ID=87 last viewed on May 18, 2005
4. http://www.rediff.com/rss/moneyrss.xml. last viewed on jun3, 2006
5.
The economic Times, April 19, 2005.
6. The Hindustan Times May 31, 2006 , New Delhi
7. www.bpoindia.org
 


Dr. Ashutosh Nigam
Reader & Head
Department of IT
Centre For Management Development
Modinagar
 

Source: E-mail July 4, 2006

     

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