Human Resources in Indian Business Process Outsourcing Organizations -  Attrition.
Is there any solution?


By
Harinath Kona
Dhruva College of Management
Kachiguda, Hydearabad-500 027
 


Human Resources In Indian Business Process Outsourcing Organizations- Attrition.
Is there any solution?

Business Process Outsourcing (BPO) is likely to be the next big thing for services in this decade. The industry is very diverse, with several sub-segments, each displaying its own unique characteristics. The BPO players need to be excellent in every facet of operations as the market is highly competitive at every level and re-defining itself every day. Being a People-Centric industry what are the people issues that, the HR will have to handle? What are the challenges faced by HR in dealing with them?

HI Before this, one needs to gain an understanding about BPO's and what businesses are Indian companies doing in this segment?

BPO is based on the premise that whatever competencies are not very important for an organization  (not their core competencies); outsource or ask somebody else who is adept at doing it, to do it for the organization. In this way the organization can concentrate on its core competencies and not worry about on trivial issues, which are not strategic in nature. But these days we even find organizations outsourcing their core competencies or the core business aspects to BPO's to gain the advantage of cost cutting and quality issues.

Typically, BPO would include call centers, problem solving in insurance sector to other sophisticated activities like research and other back office dealings. India has the advantage of low cost, highly qualified English speaking labour, thus most of the BPO ventures in India are call centers, although of late, companies are entering into high-end areas like research. But for sometime at least we can assume that most of the companies would be doing the call center kind of business.

Most of these kinds of jobs get done in the night in India to account for the 12-hour time lag between US and India. Over a period of time the biological rhythm of the employee changes, causing various kind of disorders like indigestion, fatigue, headaches etc. so the health of the employee is a major concern for the HR, more so because most of them are graduates in their early twenties. In addition the jobs are monotonous, often nerve wracking. So it is a challenge for HR to adequately rotate the jobs of employees and provide them with enough time to refresh, so that they are able to deliver service of highest quality.

Although many companies are targeting fresh graduates, they are not able to retain them. Attrition continues to be high 35%. HR has to ensure that a proper career path is chalked out so that graduates increasingly see this area as a potential career for them.

Clients in US, UK and other European Countries are very quality conscious and as increasingly complex jobs get outsourced, it becomes important that HR ensures right quality people are selected and the right quality of training is provided to them. This ensures that later they do not face embarrassing time from their clients.

There has been enormous requirement in this sector for manpower and huge salaries are up for taking. The times are good for this industry, but one has to keep in mind that this industry is still in its way to figure out in the growth stage. One cannot predict the future so easily and the sour experience of software companies is still fresh in minds. So a little bit of caution is to be exercised in this matter and proper trends have to be forecast by the HR to ensure that they do not go the software way when ultimately the industry stabilizes.

Attrition … A major problem rocking the Industry.

Some Facts to Ponder about…

    * 95% companies in the industry have Attrition problems
    * The small-sized and medium-sized companies loose more people
    * Turnover rates are as high as 30% in some reputed BPO's and over all around 35% in the Industry.
    *
    Employees move to smaller companies for exciting opportunities and greater identity and move to large companies for defined roles, clearer career paths and better HR systems.

Loyalty towards their employer or towards the organization has slowly seems to have disappeared. Executives know that fast-moving markets require fast-moving organizations that are continually refreshed with new talent, and they have become quite adept to outside hiring.

Even companies are quite comfortable with bringing in talent; they remain distinctly uncomfortable about seeing talent leave. The competition to headhunt employees with good performance ratings of other organizations is an open ploy. The mediators (so called Consultants) make this job easy for the organizations by gaining the data bases of employees and they lure the employees by offering huge pay packages finally making them to move from their job.

One of the biggest assets of the BPO Industry is manpower. So, the biggest challenge in this industry is to attract and retain knowledgeable manpower. Today, BPO companies are facing a shortage of knowledge workers because the rate at which they lose employees is almost double the rate at which they hire. A major proportion of the turnover issue is attributed to the movement of manpower to the Companies who lure them by offering either better pay or higher designation. The average stay of an employee in bpo companies has dropped to one year. In such a scenario where companies are fighting to combat global business competition, and struggling to survive, employee turnover comes as a double blow. And the issue of managing employee separation often gets ignored.

The root of the Attrition problem is the change in the priorities of the Call center Professional.

Someone who joins a company to learn more but leaves it for more money.  Can be analyzed as "his knowledge becomes his self-concept ("I am only as good as I know").

Being a high achiever, he needs regular and specific feedback, wants to work with the latest technology, and values autonomy and respects innovation.

Keeping this in mind, we can come up with the most probable reasons why a call center professional would like to leave a company.

    * Monotonous nature of work and lack of challenge
    * Lack of responsibility
    * More money
    * Lack of value-addition to career
    * Lack of good processes
    * Idle time 'sitting on the bench'
    * Lack of transparency
    * 'Promises not kept' and ill-treatment
    * Organization culture
    * Lack of quality consciousness
    * Better career opportunities outside the Bpo Industry
    * Inadequate performance ratings
    * Absence of good relationship with immediate manager/Supervisor
    * Stress at work
    * Feeling lost in the organization
    * Personal reasons like (Relocation, Marriage, Health, etc..)

Probable solutions to Fight Attrition

As a result, certain prescriptive ideas have come up for the sake of retention:

    * Ensure realistic expectations among applicants and avoid hype (i.e., do not promise a paradise)
    * Emphasize and test soft-skills in selection
    * Build good work environment, good house-keeping, open and informal culture, concierge services and so on
    * Share the wealth through ESOPs, profit-sharing, Dollar Incentives
    * Train in process skills and team-working
    * Get top management involved in training
    * Insist on sensible schedules, give breaks
    * Promote more IJP'S (Internal Job postings), move them from one process to other at regular intervals with their willingness to avoid Monotony
    * Keep structures open, flexible, non-bureaucratic through small teams in large setups
    * Encourage entrepreneurship vis-à-vis idea incubators, offer good rewards to the best idea generators.
    * Certifications and encouraging mastery in applications
    * Ideas for compensation structure:

      * Regular increments
      * Differential pay scheme. "More you perform more you are paid."
      * Tax-free benefits like HRA, lunch etc.
      * Skill up gradation reimbursements
      * Pay for performance - project-based profit sharing, early completion bonus etc.
      * Tenure-based rewards
      * Pay directly for facilities offered - insurance premium and not cash and so on
      * Dollar Incentives
      * Subsidized Accommodation

THE FLIP SIDE…

In some cases, companies have found that high turnover isn't as big a problem as it appears. Just because a business is dependent on Communication skills, for instance, doesn't mean that it has to go to great lengths to retain its employees. If there's a large pool of people with good communication skills available, it might want to focus on recruitment rather than retention. Moreover, since new hires have lower salaries than long-term employees, the company is able to keep a lid on compensation levels. Cooperating with competitors is another way of dealing with retention. Because of the intensity of talent-war, companies instinctively view retention and recruitment as competitive exercises. But history shows that cooperation, even among competitors, can be one of the most effective ways of dealing with talent shortages.

A New concept called Anti Poaching agreement between BPO organizations is on the Move. According to this agreement, the parties getting in to the agreement will share their employee databases with each other and so will restrain employees to shift in to each other companies.

Lets hope that this works good for the BPO's. Frequent job-hopping of employees is not good for any one, neither for the company nor for the employee in terms of Growth.
 


Harinath Kona
Dhruva College of Management
Kachiguda, Hydearabad-500 027
 

Source : E-mail July 29, 2004

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