Attrition Final

HUMAN RESOURCE MANAGEMENT

GROUP MEMBERS

SR NO. NAMES ROLL NO.

1 Dhiraj Shrivastava 61

2 Tushar Khairnar 62

3 Mitesh Kambli 63

4 Kinchit Pandya 64

5 Neelima Chaudhary 65

6 Manisha Vaishnav 66

7 Vishal Sadakal 67

8 Pradeep Yadav 68

9 Gopalkrishnan Ganeshan 69

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ACKNOWLEDGEMENT

We are privileged to introduce this assignment for “HUMAN

RESOURCE MANAGEMENT”. Being a management student of M. B. A.

we need to acquire knowledge of each and every aspect of management

tactics. Keeping this objective in mind, this project has been written in a

paper and systematic manner. While all necessary information has been

covered and care has been taken to avoid information overload.

We had great pleasure in preparing this project. We are confident that

the information given in this project is true as per our knowledge. We shall be

eagerly waiting for any suggestions given by our respected professor.

We take this opportunity to thank our honorable “Mrs. Rashmi

Gopinathan” for her support and encouragement extended to us.

Date of Submission,20th March, 2010

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CHAPTERIZATION

CHAPTER NO.

TITLE PAGE NO.

1 Executive Summary 5

2 Introduction on Attrition 6-10

3 Attrition Analyzing through Maslow Hierarchal Model

11-18

4 Literature Review 19-23

5 Business Process Outsourcing 24-25

6 Intelenet Company Profile 26-31

7 Objective of Study 32

8 Research Methodology 33-35

9 Reasons Why Attrition Occurs 36-38

10 Effect of Attrition on Organization

39-40

11 Steps Taken To Control Attrition 41

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12 Limitations 42

13 Recommendations 43-44

14 Conclusion 45

15 Bibliography & Webliography 46

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Chap 1- Executive Summary

Our group has choose this topic because we all know that ‘Attrition’ is fact of life every HR manager has to live in today’s fast changing and highly competitive business world. Today attrition is a cause for the concern for the management and the HR department particular.

The cost of attrition in terms of recruitment, loss of productivity, etc. are becoming so alarming high that ultimately they might result in poor compensation to the new inductees.

This study is our first step to understand the cause and effect of attrition.In this report you will get to know about the reason of attrition. There are certain reasons which we have found during our research process which amazed us a lot. There are certain hidden facts that we had never thought of but during the course of time we got to know about some very interesting fact.

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Chap 2- Introduction on Attrition

In the best of worlds, employees would love their jobs, like their coworkers, work hard for their employers, get paid well for their work, have ample chances for advancement, and flexible schedules so they could attend to personal or family needs when necessary. And never leave.

But then there's the real world. And in the real world, employees, do leave, either because they want more money, hate the working conditions, hate their coworkers, want a change, or because their spouse gets a dream job in another state. So, what does all that turnover cost? Who is likely to stay the longest?

The IT enabled services (BPO) industry is being looked upon as the next big employment generator. It is however no easy task for an HR manager in this sector to bridge the ever increasing demand and supply gap of professionals. Unlike his software industry counterpart, the BPO HR manager is not only required to fulfill this responsibility, but also find the right kind of people who can keep pace with the unique work patterns in this industry. Adding to this is the issue of maintaining consistency in performance and keeping the motivation levels high, despite the monotonous work. The toughest concern for an HR manager is however the high attrition rate.

The much hyped "work for fun" tag normally associated with the industry has in fact backfired, as many individuals (mostly fresh graduates), take it as a pas-time job. Once they join the sector and understand its requirements, they are taken aback by the long working hours and later monotony of the job starts setting in. This is the reason for the high attrition rate as many individuals are not able to take the pressures of work.

The toughness of the job and timings is not adequately conveyed. Motivational training is still to evolve in this industry. But, in all this, it is the HR manager who is expected to straighten things out and help individuals adjust to the real world. Many experts are of believe that all these challenges can turn out to be a real dampener in the growth of this industry. This only raises the responsibility of "finding the right candidate" and building a "conducive work environment", which will be beneficial for the organization.

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All this has induced the companies to take necessary steps, both internally and externally. Internally most HR managers are busy putting in efforts on the development of their employees, building innovative retention and motivational schemes (which was more money oriented so far) and making the environment livelier. Outside, the focus is on creating awareness through seminars and going to campuses for recruitment.

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Attrition in India

In India, the average attrition rate in the BPO sector is approximately 30-35 percent. It is true that this is far less than the prevalent attrition rate in the US market (around 70 percent), but the challenge continues to be greater considering the recent growth of the industry in the country. The worse news is that, this is only the reported figures and the actual figures are much higher and can be as high as 80% annually. Nasscom in a report said the outsourcing industry was expected to face a shortage of 262,000 professionals by 2012. This impediment is likely to affect the industry severely in the long run by creating a man power shortage as well as bringing up the cost arbitrage on which the Indian industry is playing at the moment. Keeping low attrition levels is a major challenge as the demand outstrips the supply of good agents by a big margin. Further, the salary growth plan for each employee is not well defined. All this only encourages poaching by other companies who can offer a higher salary.

India at the moment is working on low end Business Processes which do not require quite a lot of amount of high skills. The reason for India's success has been primarily the low cost, high quality labor which India provides. Compared to other competitors such as Philippines, South Africa, Ireland; India is the only country where we have a balance between the cost involved and the quality provided till now. For Indian companies to remain successful in future they would have to keep the cost low. Since the tasks performed by an agent are pretty standard and does not require added skills,

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there is no benefit in retaining a highly experienced employee. 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. Hence the industry players consider the present attrition as a positive attrition which is serving the industry by keeping the cost low.

Attrition in the BPO industry is two fold. One part of the attrition is where the employee leaves the industry entirely. The other section of attrition is where the employee joins another firm in the industry. Both the sections have separate reasons which need to be identified.

The primary reason for people leaving the industry is due to the cause that the industry 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. In addition, the BPO jobs are not being taken with a positive spirit by the society on a large. Research says that nearly 50 per cent of those who quit leave the industry.

Regarding the attrition between firms, the chief cause is the unavailability of resources in the job market causing a great demand compared to the supply available. Presently there is no certified institute providing BPO specific training and education. The scarce resource in the market leads to wide scale poaching and head hunting amongst the competitors for the common pool. Due to the immaturity prevalent in the industry, the industry also has not witnessed mature HR processes such as Work force planning being implemented by the firms. Usually new projects in the BPO industry, requires a transition stage to be implemented within a short time. The lack of preplanned recruitment leaves the firms with no option but to fulfill their immediate requirement by poaching resources working on similar projects in other firms.

There are various reasons behind attrition. These reasons include odd working hours, better opportunities, and untimely demise of an employee. In the year 2005 this attrition rate was about 30 to 40 percent in India and in 2007 it leaped to 50 to 55 percent. But Last year it has seen a considerable drop of 30 percent in this rate of attrition. The credit could be given to some

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positive and unique steps taken by companies like Infosys and Wipro to hold back good workers.

The IT enabled services companies have taken some positive steps to stop poaching, meaning the hiring of employees by rival mainly small companies. That is the reason that most big companies have an attrition rate of 45 percent. Now these international companies are showing their appreciation towards the best workers by hiking their pay package and giving them promotions so they don’t leave that quickly.

But the most unique step that these India based companies has taken to stop this attrition is helping their employees to voluntarily participates in various social works. Companies like Infosys, and Wipro are giving one year to six months break to its employees so they can help various NGOs in philanthropic work.

This is a trend that is the brainchild of NR Narayana Murthy, the chairman of Infosys. This company first introduced it at the end of the year 2008. Taking the cue from this Nasscom too is trying to encourage IT enabled services workers to do some philanthropic works. Apart from checking the attrition rate this step is also supposed to give these companies boost their image by looking more humanitarian.

Any worker who has been with Infosys for two years can avail this voluntary offer. During this period their pay package will be 50 percent of their current salary.

IT service enabled companies are now hoping that this kind of social work will help its workers find extra enthusiasm in their regular work because it will refresh their whole mental constitution.

Even some of the workers of UST Global, a company that also provides BPO services among others, are helping in the rebuilding process of a village. This village is located in Namma Chennai and is called Azhinjivakkam. These workers are now trying to give the villagers healthcare, and education. They are also trying to improve the environment there.

Now, the world can take a cue from these steps taken by the Indian companies and try to at least reduce the attrition rate.

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Chap 3-Attrition by analyzing the BPO industry through Maslow's Hierarchical model of Needs

Attrition in the BPO industry is one of the biggest issues which the growing ITES industry in India is facing. The effects of attrition are wide varying and impacts the firms in terms of losses (due to training and administration cost, high recruitment cost), incompetent processes, inability to offer services for highly technical process

Attrition though a nuisance also has some associated benefits along with such as low cost of operation, knowledge sharing amongst the firms benefiting the overall industry in increasing its competencies. Attrition usually occurs on two fronts - people leaving the industry and people shifting jobs inside the industry. Both of them have separate causes which have been identified in this paper.

The paper attempts to understand the underlying reasons for attrition by analyzing the BPO industry through Maslow's Hierarchical model of Needs. The Maslow's framework helps in giving a better perception about the motivation of the employees in the BPO industry and identifying gaps in their expectations which needs to be filled up.

Finally, the paper concludes by recommending a Win-Win Model which endeavors to satisfy the needs of both the employer and employee. The model encloses the employee by 4 levels of strategies thus reducing the attrition rate as well as minimizing the impact whenever it occurs.

It is a 4 stage framework consisting of -

Short Term Mitigation Plan

Short Term Contingency Plan

Long Term Mitigation Plan

Long Term Contingency Plan

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Various measures have been identified within each level of strategy to help in managing attrition creating a win-win situation for the industry as well as its stakeholders.

ANALYZING CAUSES OF ATTRITION USING A MULTILEVEL APPROACH

Attrition in the BPO industry needs to be tackled using a multi-level approach. Maslow's Hierarchy of Needs is a multilevel model which primarily identifies the needs which are likely to act as factors of motivation for any human behavior. We now analyze the current circumstances in BPO using Maslow's Hierarchy of Needs to develop a better understanding of what are the expectations of any person from the industry at each level and how is it being fulfilled presently. During this process the framework would also be used to identify gaps which when handled appropriately can act as motivators for a person to carry on in this industry, thus bringing the present attrition rate under control.

Maslow's basic needs are as follows: -

Physiological Needs

These are biological needs. They are the strongest needs because if a person were deprived of all needs, the physiological ones would come first in the person's search for satisfaction.

For any person in the BPO industry, this basic need is satisfied by the compensation provided. Hence he looks forward to a sufficient compensation structure which would take care of all of his basic physiological needs. This needs to be continuously updated with time such that it fulfills all the physiological need of the person and his family at every stage of his life. Presently the BPO industry has been providing a better than average salary in the entry level but there is a general perception that it does not provide a proportionate rise in salary as the experience increases.

GAP: The boom in the BPO sector has lead to exorbitant rise in salaries. Hence even after the high entry salary, the industry workforce look forward to opportunities for making easy money. An absence in such arbitrage opportunities leads to dissatisfaction of the physiological need.

Safety Needs

When all physiological needs are satisfied and are no longer controlling thoughts and behaviors, the needs for security becomes active. Adults have

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little awareness of their security needs except in times of emergency or periods of disorganization in the social structure (such as widespread rioting). Children often display the signs of insecurity and the need to be safe.

There are two aspects of the security which would concern a person in the BPO business. One is the physical security of the employee and their family. This need becomes particularly important for the weaker sex who sometimes avoids BPO jobs because of the late night timings. The other aspect is the psychological fear of job security. At the moment since the industry is growing and there is ample abundance of jobs, this is not an issue. Also the Indian laws are not favorable to retrenchment. Hence the later is not an issue although physical security is.

GAP: The companies presently provide the best of available security but with the industry growing rapidly there is a need to maintain the same standards if we don't want this need to be a cause of attrition.

Needs of Love, Affection and Belongingness

The next higher class of needs which emerge is the need for love, affection and belongingness. Maslow states that people seek to overcome feelings of loneliness and alienation. This involves both giving and receiving love, affection and the sense of belonging.

This need of an individual gets highly affected by the BPO industry predominantly for people working in the night shift. Night Shift causes separation from ones family, friends and relatives. Employees have been found complaining about not being able to spend ample time with their family after working in night shift. The BPO companies try to compensate for this by creating a fun-filled working environment and much stress is laid down on developing friends and relationships inside the company. But there is a huge gap in expectation and fulfillment which needs to be satisfied.

GAP: Lack of family and social interactions is one of the major concerns for the employees which need to be dealt by the BPO companies. This issue needs to be dealt with the importance and sensitivity which it deserves.

Needs for Esteem

As per Maslow, after the first three classes of needs are satisfied, the need for esteem becomes dominant. These involve needs for both self-esteem and for the esteem a person gets from others. Humans have a need for a stable, firmly based, high level of self-respect, and respect from others. When these needs

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are satisfied, the person feels self-confident and valuable. When these needs are left unfulfilled, the person feels inferior, weak, helpless and worthless.

BPO industry 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. This diminution in esteem sometimes leads to reasons for one to leave the industry. The industry presently requires an image makeover. Some of the present firms are focusing on creating a positive image of the industry by using the media in a positive manner, though much is yet to be done. Certain measure such as change in Job Title is a positive step in this direction. Providing great working environment in terms of infrastructure and facilities also acts as boost to ones esteem for the employees.

GAP: People working in this industry have an unsatisfied Esteem need because of the general perception about the industry. As the industry matures, the industry's positioning needs to change from being a mere money maker option to an industry which provides immense learning, high growth prospects and opportunities for foreign experience.

Needs for Self-Actualization

When all of the foregoing needs are satisfied, then the need for self-actualization gets activated. Maslow describes self-actualization as a person's need to be and do what the person was "born to do". These needs make themselves felt in signs of restlessness. The person feels on edge, tense, lacking something, in short, restless.

The BPO firms nowadays are trying to provide Career growth path and higher Educational Opportunities for employees as a measure of retaining them. These steps are strides in fulfilling the discontented Self Actualization needs of the employees. These are one of the few long term motivations provided by companies.

GAP: Though recently companies have been trying to cater to the self actualization needs of their employees, this has been one of the major reasons for attrition. Industry workers are not able to envision the BPO industry as a long term career option. They feel that a long term career in the BPO industry is not feasible.

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RECOMMENDATIONS

Owning to the nature of the industry we can predict that the attrition problem will remain a hurdle for BPO industry in foreseeable future. The attrition in the BPO is consistent with what has been witnessed in any industry during its growth phase.

The IT industry, manufacturing industry had seen similar high attrition during their growth stage which later reduces as the industry matures. The need of the hour is not to be bogged down but to accept the problem and see what we can do best in given scenario to reduce the impact. A win-win model needs to be devised for this, satisfying the needs of both, the employer and the employee.

Needs of the employer: To get maximum returns from each employee, recover training and development costs, minimize cost in terms of time in training new workforce, ensure that adequate no of people are there to carry on the process (proper manpower planning)

Needs of the employee: Enriched job profile, better career path, challenging work environment, future prospects of the job; in a nut shell a job that satisfies his overall needs as discussed earlier.

THE WIN-WIN MODEL

The Win-Win model is conceptualized on the supposition that the employees need to be enclosed from the universe by strategies at each level such that the attrition and its impact can be reduced to the minimum. Plans differentiate on the basis of tenure into short and long term as well as on the basis of usage into mitigation and contingency.

Short Term Mitigation Plan

Break Even Period

One of the objectives at this level should be on retention for a specified period of time (break even period) so as to recover the cost incurred on the employee. This should be formally included as a process such that the organizations include this in consideration while recruiting candidates. Here are few suggested steps to calculate the minimum time period to recover the cost of employee.

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Small Tenure Bonds

Once this period is calculated, strict actions can be taken to ensure that employees do not leave the organization before completion of this min timeframe. One such measure is getting a bond signed between the employee and the employer.

80 - 20 Rule

The firms concentrate on 20 % of the roles/ employees who contribute to 80 % of the productivity. These identified employees/roles need to be retained by special attention from the management's side.

Short Term Contingency Plan

This plan will focus on the work environment that enhances employee motivation for the job. It includes work conducive and fun filled environment, informal work culture suiting to the needs of the young employees. This is essential for compensating the affected social life owning to the nature of the job. Certain measures that can be included -

Having crèche in workplace would also help for the same

Flexible Salary Structure

Variable pay package based on performance

'Working from home' when required for a short term

Added benefits like sponsored vacations

Provide job rotation amongst department such as Quality, operation etc on a periodic basis such that employees get bored with the same monotonous work.

Long Term Mitigation Plan

The long term mitigation plans are steps taken by the management to minimize the impact of attrition such that the firm does not face losses on the long term basis.

Defining job roles would help in mitigating the effects of attrition.

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Clear documentation of the process and the jobs performed so that the process is not dependent upon an employee.

Succession planning for the critical positions in the organization for faster replacement.

An assessment and certification can also be helpful in creating an employable talent pool with benchmarked-requisite skill for frontline management.

Long Term Contingency Plan

The long term contingency plans are attempts by the industry to reduce the attrition as a whole.

To minimize the training costs, the industry needs to work with the government to introduce courses at a school and college level, which are in line with the requirements of the ITES-BPO industry.

To reduce poaching of employees within the industry bilateral agreements between companies should being signed. Basic norms are being put in place and code of ethics is being stressed upon by industry.

A Common Database should be maintained by all the players of the industry to ensure that they are not cannibalizing each others resources.

The industry should look at Tier II and Tier III cities, where it can move its operations. These would increase the resource pool as well as would minimize the attrition. Awareness needs to be spread in these cities about the industry through advertisements.

Focus should be on having education and ongoing learning for the workforce, sponsoring employees on post-graduate programs and treating applicants and employees in the same way as one treats customers.

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The WIN-WIN MODEL

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Chap 4 - Literature Review

What is a Literature Review?

A literature review is a summary of previous research on a topic. Literature reviews can be either a part of a larger report of a research project, a thesis or a bibliographic essay that is published separately in a scholarly journal. Some questions to think about before developing literature review:

What is known about the subject? Are there any gaps in the knowledge of the subject? Have areas of further study been identified by other researchers

that you may want to consider? Who are the significant research personalities in this area? Is there consensus about the topic? What aspects have generated significant debate on the topic? What methods or problems were identified by others studying in

the field and how might they impact your research? What is the most productive methodology for your research based

on the literature you have reviewed? What is the current status of research in this area? What sources of information or data were identified that might be

useful to you?

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Articles on Attrition(Literature Review)

Article No:-1 “Surviving the Attrition Syndrome”, the author Anil Verma explains that, in the current scenario where every organization wants to be at its competitive best, high attrition rate could really act as a threat to its success. Many authors worldwide and specialists in this field have been suggesting umpteen strategies to combat attrition. The article highlights that it is generally observed that software firms, in particular, suffer from this so called Attrition syndrome. Why is so much importance being attached to Attrition? In this article we try to understand the concept and try to evolve some strategies to combat this problem. The author also states that the most important strategies are career development, effective talent management, empowerment, leadership development, succession planning and respectful treatment of employees. In today’s competitive business environment, success is highly dependent upon the employee retention. So, if an organization wants to achieve goals through people, better HR practices have to be adopted to bring down the attrition levels. In the second article “Strategies for Surmounting High Attrition”, the author Swati Gupta focuses on the causes of high attrition rates in various industrial sectors. It also focuses on a few strategies which may be adopted by an organization to minimize, prevent and overcome high attrition rates. The author states that the attrition rate faced by the IT sector is about 15%-20%. A number of IT professionals are looking at more challenging jobs, higher income, extra perks, career satisfaction and exposure to new technologies. When these expectations remain unfulfilled, they leave the organization. If these expectations are met, the IT professionals are more likely to stay in their current jobs for a longer time. The article also highlights that the needs of the employees should be regularly reviewed through open communication and feedback strategies in order to improve their performance and motivation levels. The consequence of ignoring employees can be very hazardous to the growth of an organization.

As the adage goes “Prevention is Better than Cure”, even the management must be proactive in dealing with high attrition rates.

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Article No:- 2“Attrition Management in BPO”, the authors A Srikant and Animesh Tyagi explain that BPO companies have very different HR issues, when compared to those in the brick and mortar business. 24-hour working schedules, employment of women in night shifts, higher levels of stress contribute to the already high attrition levels in the software industry. An average Indian call center employee works with a company for 11 months, whereas an average UK call center employee stays in a company for three years. The article highlights that India is strategically placed in the industry to exploit the untapped outsourcing market. The hurdle which is largely stopping India from fulfilling this dream is the ever-growing rate of attrition.

The solutions already implemented by the companies and certain strategies suggested could help India overcome this obstacle.

The article “HR Issues in BPO” authored by Anandan Pillai explains that, in recent times, BPOs in India are facing a serious problem of employee attrition. Repetitive low-end jobs, physical and psychological problems and few career growth opportunities are the major reasons cited for the high attrition rate. This disadvantage has increased the operating costs of BPO entities and is considered to be a threat to the growing industry. The competitive advantage of India would be lost, if such a critical problem is not addressed well and soon. He further highlights that in this era of globalization, the company is responsible for communicating to the employees, where it wants to go and how it plans to achieve its corporate strategy. The high rate of attrition can be effectively curtailed, if companies succeeded in infusing creativity in the ‘routine’ job and communicated the company’s larger objectives and customer goals to each employee.

Sagar Chakraverty in the next article “Employee Attrition in the IT/BPO Sector: Cost and Consequences”, states that there was a heavy exodus of employees from one organization to another especially in the Information Technology (IT) – Business Process Outsourcing (BPO) sectors in India and the biggest challenge for the HR managers was to retain employees. The battle for head hunting had become fierce and the organizations adopted all possible means to recruit the available talent pool.

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The article discusses the costs incurred and the consequences faced by the industry which were caused due to employee attrition.

The topic of attrition is receiving daily media attention, and the complexity of the issue can be confusing to businesses that are interested in investigating off shoring work to India. The article “India: An Attractive BPO Destination Marred by Alarming Attrition—Insights into the Causes, Impact and Mitigation Actions” by Dinesh Goel and Prabhash Thakur examines the varied and often complex causes of attrition in the context of the rapidly growing Indian off shoring industry and also suggests how some industry participants are attempting to proactively address this problem that threatens the long-term sustainability of India as an offshore destination. The article provides an insight into the likely scenario in the next few years.

Suggestions are also presented for quantifying attrition levels and for consistently measuring rates over time, so that apples-to-apples comparisons of attrition rates may be made by all interested parties when planning and evaluating employee retention measures.

In the article “Management of Call Center—Boredom, Employee Attrition and Retention”, the author Anupama D Raina states that Attrition is not a new concept in industries; infact, it has been there in all the industries. The call center industry is new and every entrepreneur is interested to contribute to this industry. Our country is fortunate to be identified as one of the best places for BPO and the beginning is really good. However, attrition of the employees in the call center industry is increasing costs like recruitment, training etc. The objective of the article is to study the problems of attrition in call center industry in India, to study the retention in that industry and to develop a model which would help in curbing the problem of attrition in the call center industry.

In the article “The Omnipresence of Attrition and its Management in Business Organizations”, the author Richa Sharma states that employee retention is an arduous task for the HR department. However, sufficient steps should be taken towards achievement of this goal. The efforts should start right from the beginning, i.e., at the time of hiring. One should hire only those employees who can be retained easily. This article looks at some of the

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techniques by which attrition can be curbed and managed in any business organization.

In the article “Preferences as a Strategic Approach to Tackle Attrition: IT and ITES Industry Perspective” the author S C Poornima states that the problem of attrition is a major challenge faced by the human resource managers of software development industries in India. The various compensation practices followed by organizations would indicate the direction of the retention strategies designed and implemented by the organizations. The fact remains that the software development industry is not only people-oriented but also knowledge-based. The head matters most in the industry. Every employee at the programmer level thinks in terms of the benefits, returns, growth, recognition, career and project. Software professionals seem to be more committed to themselves and their career growth. The article suggests that human resource development efforts have to strike a judicious balance between individual identity and team spirit. Human resource departments need to visualize a broader perspective by aiming at commitment and loyalty rather than retention. Strategic retention has to be initiated as an extremely proactive practice rather than as a reaction to a problem.

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Chap 5 - Business Process Outsourcing (BPO)

ABOUT THE INDUSTRY

Business Process Outsourcing (BPO) is the delegation of one or more IT-intensive business processes to an external provider that in turn owns administers and manages the selected process based on defined and measurable performance criteria. Business Process Outsourcing (BPO) is one of the fastest growing segments of the Information Technology Enabled Services (ITES) industry.

The Indian business process outsourcing industry, roughly around 4-5 years old, is growing at a phenomenal pace. The number of BPO companies in Indian cities has mushroomed from a handful a few years ago to about 500 in 2004. The size of the Indian BPO market is likely to be around $9-12 billion by 2006 and will employ around 400,000 people (ICRA, Indian BPO industry report). For a fresh college graduate, a call centre job pays about 2.5 times as much as other job openings. And the boom shows all signs of continuing considering that the cost per transaction in India are estimated to be the lowest at 29 cents compared to 52 cents in China.

Even after displaying impressive statistics about the growth and future, the BPO industry in India is bleeding with heavy attrition. According to several recruitment firms in the country, attrition in the ITES (IT enabled services)-BPO industry is close to 35-40 %. The worse news is that, this is only the reported figures and the actual figures are much higher and can be as high as 80% annually. Nasscom in a report said the outsourcing industry was expected to face a shortage of 262,000 professionals by 2012. This impediment is likely to affect the industry severely in the long run by creating a man power shortage as well as bringing up the cost arbitrage on which the Indian industry is playing at the moment.

Attrition cannot be blindly classified with a negative connotation. A healthy attrition rate in any industry is necessary for new ideas and innovation to flow in as well as to facilitate the overall growth of the industry in terms of knowledge sharing. But after a particular level the same boon becomes a bane.

Recruiters explain that the high attrition rates significantly increase the investments that are made on the employees. The problem of losing funds in employee acquisition is more prominent in the high-end BPO segment. Companies invest a lot of time and money in training a candidate for the first four months. But these investments do not always get converted into actual

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profits. In case of the BPO industry, each agent level recruitment roughly costs the company Rs. 5000/-.

This is the amount which a company needs to pay the job recruitment agency. Other than the direct cost, an associated cost of training and administrative service is also involved.

Each agent works is non-productive or partly productive in the organization for nearly the first 2-3 months. Hence an employee leaving the organization within the first 6 months is a bad investment for the company. Also, as stated earlier the cost of attrition in the industry is 1.5 times the annual salary.

Dominant outsourcing service providers in the BPO fields (some of which also dominate the IT outsourcing business) include US companies IBM, Accenture, and Hewitt Associates, as well as European and Asian companies Cap Gemini, Genpact, TCS, Wipro and Infosys.

Business process outsourcing (BPO) is a form of outsourcing that involves the contracting of the operations and responsibilities of specific business functions (or processes) to a third-party service provider. Originally, this was associated with manufacturing firms, such as Coca-Cola that outsourced large segments of its supply chain. In the contemporary context, it is primarily used to refer to the outsourcing of services.

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http://en.wikipedia.org/wiki/Manufacturing

http://en.wikipedia.org/wiki/Business_process

http://en.wikipedia.org/wiki/Contracting

http://en.wikipedia.org/wiki/Outsourcing


Chap 6 - Intelenet Company Profile

Type : Private

Founded : October 11, 2000

Headquarters : Mumbai, India Mind space,

Number of Location : 35

Key people : Sushir Kumar (CEO)

Revenue : Rs. 1062 crores (FY: 2008-09)

Employees : 32,000

Subsidiaries : Sparsh BPO Services Intelenet.

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http://en.wikipedia.org/wiki/Subsidiary

http://en.wikipedia.org/wiki/Employment

http://en.wikipedia.org/wiki/Financial_year

http://en.wikipedia.org/wiki/Crore

http://en.wikipedia.org/wiki/Indian_Rupee

http://en.wikipedia.org/wiki/Revenue

http://en.wikipedia.org/wiki/India

http://en.wikipedia.org/wiki/Types_of_business_entity


Mission & Values

Mission:

To add value to our clients' business by providing cost-effective, premium quality Customer Management services and be the preferred vendor for global outsourced BPO services.

To be a outstanding model of excellence in meeting social commitment, in operations and responsibilities without compromising quality in services along with employee welfare and relations.

Values:

Discipline.

Trust.

Care.

Value Delivery.

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Intelenet Global Services

Intelenet Global Services is a leading global third party BPO Company that delivers Business Process Outsourcing (BPO) services to Fortune 500 companies in India, USA, UK, Australia, Mauritius, Philippines and Poland. Intelenet constantly focuses on providing effective solutions to global organisations seeking to reduce costs while consistently maintaining superior service levels.

The Intelenet growth story involves rapid growth from just 25 employees at a single site to over 32,000 employees across 35 centres in India and overseas in just 7 years, making it the 2nd largest employer in the Indian BPO space.

Our solutions extend across all strata of BPO, technology and consulting and can be applied across diverse industries spanning banking & finance, insurance, retail, telecom, information technology, travel and hospitality.

Intelenet is a global BPO company led by the Intelenet Management team, backed by Blackstone, a leading Global Private Equity Player. While Blackstone, the majority stake holder, provides the financial strength Intelenet needs to lead in a global marketplace, Intelenet’s Management team, which has been with Intelenet since inception, has been instrumental in driving the growth experienced by the company.

Our highly specialised BPO expertise enables Intelenet to cost-effectively align practical and effective solutions with the specific outsourcing strategies and needs of our client base. In addition, Intelenet has built a robust infrastructure consisting of state-of-the-art facilities strategically located throughout globe. Our facilities are staffed by employees who continuously outperform client's expectations.

Blackstone has been a leader in the field of private equity investing since 1987 with investments in over 100 companies and a superb record in financing companies. Blackstone’s support is testimony to the strength of the Intelenet brand, the management team and the potential of the global BPO industry and will provide Intelenet with the necessary thrust to help augment its growth trajectory and vision.

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Blackstone has been a leader in the field of private equity investing since 1987 with investments in over 100 companies and a superb record in financing companies. Blackstone’s support is testimony to the strength of the Intelenet brand, the management team and the potential of the global BPO industry and will provide Intelenet with the necessary thrust to help augment its growth trajectory and vision.

At Intelenet, our capabilities are specifically geared towards the design of customized, scalable solutions that address both the current and future needs of our clients. The solutions we develop are based on the in-house toolkits we have designed based on our year-long expertise and domain management.

Company applies the following six key steps toward any outsourcing initiative:

Process Selection –Identifying and prioritizing the processes to be outsourced.

Transition – Managing the seamless movement of the process to the offshore environment and its integration into existing business operations

Risk Management – Identifying and mitigating the risks involved in outsourcing and in the offshore environment as well.

Pilot - A key phase in the outsourcing life cycle in which we carefully monitor and track the primary dependencies that affect the performance for a given process in the offshore environment.

Ramp Up - Consequent to the success of the pilot, infrastructure and resources are scaled up to meet specified client volumes.

Business as Usual - The process is completely set up and operational leading to business as usual.

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http://www.intelenetglobal.com/howwedoit_risk&business.html

http://www.intelenetglobal.com/howwedoit_transition.html

http://www.intelenetglobal.com/howwedoit_processselection.html


Location

Intelenet currently operates 35 state-of-the-art centres across India, USA, UK, Australia, Mauritius, Philippines and Poland. With 100% redundancy, these facilities continually provide clients with 99.99% uptime.

Mumbai- Malad New Mumbai- Mhape

Chennai - Prince Park Chennai – Ascendas

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New Delhi Gurgaon

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Chap 7 - Objective of Study

(1) To identify the cause of high rate of attrition in BPO industry.

(2) To analyze the effect of attrition on the cost to the company.

(3) To analyze existing measures being used to combat attrition.

(4) To find out possible measures that can be taken to control attrition.

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Chap 8 - Research Methodology

PRIMARY DATA

Interview Method:

The interview method of collecting data involves presentation of oral-verbal stimuli and reply in terms of oral-verbal responses. This method can be used through:

1. Personal interviews

2. Telephone interviews

We have selected the type of interview method of data collection as:

(1)Personal interview:

Personal interview method requires a person known as the interviewer asking questions generally in a face-to-face contact to the other person or persons. This sort of interview may be in the form of direct personal investigation or it may be indirect oral investigation. In the case of direct personal investigation the interviewer has to collect the information personally from the sources concerned. He has to be on the spot and has to meet people from whom data have to be collected. This method is particularly suitable for intensive investigations. But in certain cases it may not be possible or worthwhile to contact directly the persons concerned or on account of the extensive scope of enquiry, the direct personal investigation technique may not be used.

The ways in which interview can be conducted are:

Structured interview:

The method of collecting information through personal interviews is usually carried out in structured way. As such we call the interviews as structured interviews. Such interviews involve the use of a set of predetermined questions and of highly standardized techniques of recording. Thus, the interviewer in a structured interview follows a rigid procedure laid down, asking questions in a form and order prescribed.

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The method which we have used for the purpose of finding attrition is the form of:

Unstructured interview:

Characterized by flexibility of approach to questioning. Unstructured interviews do not follow a system of pre-determined questions and standardized techniques of recording information. In a non-structured interview, the Interviewer is allowed much greater freedom to ask, in case of need, supplementary questions or at times he may omit certain questions if the situation so requires. He may even change the sequence of questions. He has relatively greater freedom while recording the responses to include some aspects and exclude others. But this sort of flexibility results in lack of comparability of one interview with another and the analysis of unstructured responses becomes much more difficult and time-consuming than that of the structured responses obtained in case of structured interviews. Unstructured interviews also demand deep knowledge and greater skill on the part of the interviewer. Unstructured interview, however, happens to be the central technique of collecting information in case of exploratory or formulative research studies. Method of eliciting information under it is generally left to the interviewer’s discretion.

Advantages of personal interviews can be enumerated in a general way. The chief merits of the interview method are as follows:

(i) More information and that too in greater depth can be obtained.

(ii) Interviewer by his own skill can overcome the resistance, if any, of the respondents; the interview method can be made to yield an almost perfect sample of the general population.

(iii) There is greater flexibility under this method as the opportunity to restructure questions is always there, specially in case of unstructured interviews.

(v) Personal information can as well be obtained easily under this method.

(vii) The interviewer can usually control which person(s) will answer the questions.

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SECONDARY DATA:

For the purposes of collecting secondary data we have collected the information from:

Internet

Journal: P00262 Attrition in B.P.O sector

Reference books: Research Methodology (KC kothari), Human Resource management (Ashwathappa)

We have interviewed Mr. Chirag Thakkar who is HR Executive Recruiter of INTELENET B.P.O. in Mhape Navi Mumbai.

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Chap 9 - Reasons Why Attrition Occurs

Following are the reasons why attrition occurs:

1) Monetary factors:Employee’s primary objective of working in the company is to earn money. If the company does not focus on the remuneration factor, then the employee may opt to work in other organization, if they are offered more remuneration compare to the current amount which they are earning.

2) Lack of good working condition:Environmental factors play a very important role in an organization. If the working environment is friendly then there is mutual admiration between employees. But if the working environment is rigid and envious then the relationship between the employee and organization goes sour.

3) No flexible work schedule:In BPO sector the working schedule is fluctuating i.e. the employee has to work in morning shift and sometimes in night shift. They do not get proper schedule which disturbs their living style. 4) Lack of respect:Employee working in the organization desires that they should get their due respect from their subordinates as well as from senior executives.

5) Career growth:Every person desire to take their career path at the peak level and if they get the job in the desired organization in which they want to work then they will leave their current job to enhance their career.

6) Role Stagnation:Every employee working in the organization desires to get promoted from their current job position, which will motivate them to work harder and if they are not promoted then they will feel neglected and try to change their job by applying in the other organization.

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7) Increase in favoritism:In BPO’s many senior executives working in the organization are more partial towards some employees due to certain reasons which will demotivate the other employees and this may also lead to leave their job.

8) Lack of appreciation:Employee should be given credit for their efficient work which will increase the productivity of employee as well as of the company which will be beneficial to the organization. If they are not getting the appreciation for their work then they will lose interest and will try to find job in another company.

9) Lack of challenges in job:“Lack of challenges in job”, this basically deals with the higher authority of the organization. They want challenges in their job as they are having higher qualification and they are also experienced. If they are not satisfied with their job then they will joined another firm.

10) Job or workplace was not as expected:A candidate before joining the organization has some expectations from the job. But it sometimes may not reach to the expectation which he/she expected, which may result in leaving the job and join another organization.

11) The mismatch between job and person:The responsibility of the HR manager is to delegate the job to the right candidate who deserves it, if right person is not assigned to that respected job then the employee will not able to perform in efficient manner which may result in frustration to the employee and he/she may leave the job

12) Work life imbalance:The working schedule of the organization is very demanding and competitive in nature so the organization has many expectations from the employees which indirectly produce a lot of pressure on the employees. This brings lots of stress in the employee’s life which also affects their personnel life which brings imbalance in their working as well as in personnel life. Due to these reason an employee may leave the job.

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13) Less frequency in giving rewards:The organization should give the recognition to the employees by providing the rewards such as incentives, holiday packages etc. which will motivate the employees and will improve their efficiency in work to yield more productivity. If they are not getting the fame and recognition which they deserve than they may leave the job due to the unprofessional attitude shown by the company.

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Chap 10 - Effect of Attrition on Organization

Impact of attrition

Direct impact: A high attrition indicates the failure of the company’s ability to set effective HR priorities.

Clients and business get affected and the company’s internal strength and weakness gets highlighted. New hires need to be constantly added, further costs in training, getting them aligned to the company’s culture.

Indirect Impact: Attrition begins decreased productivity, peoples leave causing other’s to work harder and this contributes to more attrition. All these have a significant impact on the company’s strength managing their business in the competitive environment.

Attrition Cost: One of the best methods for calculation of cost of turnover takes into account expenses involved to replace an employee leaving an organization. These expenses are:

Recruitment Costs:

1. The cost of advertisements, internet posting costs.

2.The cost of the internal recruiter's time to understand the position requirements, develop and implement a sourcing strategy, review candidates backgrounds, prepare for interviews, conduct interviews, prepare candidate assessments, conduct reference checks, make the employment offer and notify unsuccessful candidates. This can range from a minimum of 30 hours to over 100 hours per position.

3. Calculate the cost of the various candidate pre-employment tests to help assess candidates' skills, abilities, aptitude, attitude, values and behaviors.

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Training Costs:

1. Calculate the cost of orientation in terms of the new person's salary and the cost of the person who conducts the orientation. Also include the cost of orientation materials. 2. Calculate the cost of the person(s) who conduct the training.

3. Calculate the cost of various training materials needed including company or product manuals, computer or other technology equipment used in the delivery of training.

New Hire Costs

When the new person is hired that includes the cost to put the person on the payroll, establish computer and security passwords and identification cards, telephone hookups, cost of establishing email accounts, or leasing other equipment such as cell phones, automobiles.

Time Spent in orientation

Lot of time is spent in developing trust and building confidence in the new employee's work, also in making them aware about the new technology and working process of company.

Replacing qualified employees:

It is very difficult to replace the existing employee with the new employee as he requires proper training and development skills to perform the job, also there is a mismatch with the normal cycle.

Loss of productivity

Calculate the revenue per employee by dividing total company revenue by the average number of employees in a given year. Whether an employee contributes directly or indirectly to the generation of revenue, their purpose is to provide some defined set of responsibilities that are necessary to the generation of revenue, but due to the attrition the company is not able to achieve their objective.

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Chap 11 - Steps Being Taken To Control the Attrition

1. Referral Incentives:In this suppose the one employee of the organization or company suggest the name of his colleagues or friend for the a specific post in the company. After the interviews got over if that person gets selected in that company. The employee who suggests his name will get the referral incentives.

2. Special Days: In this the company should arrange the different activities in the organization itself such as Sports day, Traditional day etc. So that the employee get the opportunity to show their talent & they personally feel that the organization is really doing something for us.

3. Offer attractive, competitive benefits and package: The company should offer the attractive & the competitive benefits to the employee such as loan schemes, personal health care etc. so that the employee can get all the benefits from the company. The company should also provide the good packages to the employee according to their work experience & qualification.

4. Clarify Key Responsibility areas:Clarify Key Responsibility areas to the candidate and set the expectations right also make them understand the company’s Appraisal System, so they know the growth prospect before coming on board.

5. To provide Recreation facilities: The company should provide the facilities such as Cafeteria, ATM, gym etc. to the employees.

6. Performance Incentives:Bonuses and incentives are paid after every quarter if the employee sustains in the organization and he gets extra rewards if his performance exceeds the target assigned to him.

7. Rewards & Recognition:Celebrate successes and recognize when milestones are reached. Buffet lunches, birthday parties, employee picnics and creative contests will help

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remind people why an organization is a great place to work. Include fun elements at work like Parties, bashes, outings, picnics etc.

Chap 12- Limitations

As we now that data collection is tedious, Moreover the company’s do not provide sufficient data as their policy hold them back to keep it confidential from the other competitors.

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Chap 13 - Recommendation

There should be periodic review of the policies of the company in respect of its salary structure, allowances, performance appraisal, rewards system, recruitment, future manpower requirements and other benefits to its employees/members. After this, it should take necessary actions to keep these policies according to current industry standards.

We recommend the industry to do the following things.

1] Company should conduct Stay Interviews and Exit Interviews. Employee attrition costs 12 to 18 months’ salary for each leaving manager or professional, and 4 to 6 months' pay for each leaving clerical or hourly employees. So companies must pay attention towards the problem of attrition. It should conduct Stay Interviews (E.g. Stay Interviews were conducted in Accenture) and Exit Interviews. Stay Interview is nothing but another form of periodic survey of employees’ satisfaction.

2] Give salaries on time. Provide them facilities like ‘Pick & Drop’. Provide them free Life Insurance. Provide free medi-claim facility for the family of every employee. Sometimes, rewards must be family picnics, shop till you drop.

3] Providing Gym facility to workers (this idea was implemented by Mahindra & Mahindra), canteen facility with subsidized rates of meals/food (e.g. in B.E.S.T. Office and Workshop, Wadala, Mumbai) is recommended.

4] Regularly train the managers to resolve emotional, educational and relationship challenges. Keep employees informed. Update employees with technical information. A Workforce Magazine article, "Knowing how to keep your best and brightest," reported the results of interviews with 20,000 departing workers. The main reason that employees chose to leave was poor management. Hence training managers is very important.

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5] There should be training programs for new employees as well as existing employees. Provide periodic refresher courses for employees to maintain team purpose. Conduct employee help desks to assist in professional or personal problems.

← 6] Invite employees’ opinions so that they will feel valued. Address staff by their first names. Publicly praise them. Criticize privately about what the employee can do better and explain how to do it better. Create community with activities such as informal meals or events outside work.

7] Titles cost little and remind employees that they are valuable. Give them good designations as per their eligibility keeping in mind “Right person must be placed in the Right place.”

8] Conduct employee help desks to assist them in their professional or personal problems.

9] Foster an environment of open communication whereby they can put across the grievances and concerns timely.

10] The companies should appoint mentors for new higher to help them in their problems, queries. Mentors should be bright and able to understand the dynamics of power and politics in the organization and should be willing to share this knowledge to new hires.

11] In order to ensure a consistent flow of trained manpower in the future, the industry needs to work with the government to introduce courses at a school and college level, which are in line with the requirements of the BPO industry. India has one of the largest pool of English speaking graduate workforce.

12] Attrition is not bad always if it happens in a controlled manner. Some attrition is always desirable and necessary for organizational growth and development. The only concern is how organizations differentiate “healthy attrition” and “bad attrition”. This means if the ones who have left fall in the category of low performers, the attrition in considered being healthy. In case, Attrition rate goes high, the company is recommended to focus not only on remedial measures for employee retention, but also on Replacing the talent which is lost by the company.

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Chap 14 - Conclusion

Human beings are complex personalities. They differ from person to person. This difference is the result of their attitudes, perceptions, values, norms etc. that they inculcate in the process of socialization – with family, society, peer group etc. Hence it is very difficult to predict a common behavior for surety. This indicates the significance for understanding employees well.

Hence it is very necessary that the employers and the managers do understand the employees well. The making up and ruining of an individual and that of an organization, all depends upon the task master the manager. If every manager realizes this, there is no doubt that the organization would break off all its boundaries and emerge successful. In this context it is important that the managers take the following into consideration:

1. Leading people.

2. Developing them.

3. Empowering them.

4. Maintaining them.

Therefore we can say that Attrition is a serious problem that the organizations face today. This can be reduced if both the management and the managers realize this. The managers should take in a lead role here. They should be committed to tune and mould people in such a way that they best fit the organization. In fact it becomes the duty of every individual manager to understand his subordinates well. Managers should understand that their duty is not only restricted to bossing over employees but in understanding employees, leading them, developing them, empowering them and maintaining them. If this realization bestows on every manager, the

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organization is sure to succeed. This will help in reducing the attrition level to certain extends.

Chap 15 - Bibliography& Webliography

Research Methodology - C. R. Kothari.

Human Resource Management – Ashwathapa and Gary Dessler.

Journal: P00262 Attrition in B.P.O. Sector.

www.google.com

www.bpoindia.org

www.intelenetglobal.com

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http://www.intelenetglobal.com/

http://www.bpoindia.org/

http://www.google.com/


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Documents

Attrition Final