Attrition in Indian BPO

8/11/2019 Attrition in Indian BPO

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The Business School University Of Jammu

Abstract Presentation

Topic : Managing Attrition in In ian BPO In ustry

By : Ridhi Sharma Under The Supervision Of

Prof. Keshav Sharma& Prof. Alka Sharma


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Intro uction

The statement by Grossman and Helpman (2002)that we live in an age of outsourcing clearly

indicates that outsourcing has now become anacknowledged, accepted and establishedbusiness strategy !ne of the most familiar forms of outsourcing is "

#$usiness %rocess !utsourcing&


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Cont..

$usiness %rocess !utsourcing is an act of transferringsome of an organi'ation s repeated non"core business

processes to an outside provider to achieve cost reductions .

Many global corporations across the world haveoutsourced their non core business processes to low costdestinations like India, Philippines, China, Vietnam, Ireland,Mexico etc. !or the "oreign clients who are looking "or o""shoreoutsourcing providers, India has always been lucrativedestination# $ Price %ater$&ouse Coopers business solutiongroup '())*+


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Cost i""erentialover -)

/ong termlabor arbitrage

/arge pool o" 0nglishspeaking, computer savvy graduates.%ool of 2 m graduates

i""erential1ime 2one

Benefits of

India as anOutsourcingDestination

Source: - Price Water-HouseCoopers business solutiongroup (2005), Indo American Chamber oCommerece!

/iberali2ationo" telecom

industry

I1 0nabledsector 3

1op priorityin govt.

policy

Proven4""shore

model


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Performance of Indian BPO Industry

In recent years the Indian 5usiness Process 4utsourcingindustry has witnessed phenomenal growth "rom 6ust dataentry services, to provisions o" highly complex services like

"inance and accounting, customer interaction and support,in"ormation technology services as well as knowledgeprocess outsourcing. In 6ust over a decade, the industryhas grown to reach nearly 789 :: billion in exportrevenues, employing more than ;)),))) people, andaccounts "or a market share o" more than ** percent o" theworldwide 5P4 market NASSCOM (2011


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!urno"ers and #ro$t% of BPO Sector in India

&' 200) &' 200* &' 200+ &' 200, &' 200- &' 200. &' 2010/ 11

BPOorts 3

Domestic

.* :(.* :=.?

#ro$t% yearto year 4asis

*)


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Challenges faced by BPO industry" &uman 3 @esource centric industry,

as it involves the use o" broad skillsets.

" irect interaction o" employees withclientBs customer.

" Complete dependence on human 3technology inter"ace puts a lot o"challenges to human resourcepro"essionals o" this industry.

" 1he ma6or challenges being "acedby the 5P4 industry in India is theshortage o" competent managers"or the middle and seniormanagement.

" &igh attrition rates amongoperational level o" employees


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Cont ccording to the ;


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Purpose of the study ttrition in $usiness %rocess !utsourcing companies has a significant impacton the organi'ations The *ndian $usiness %rocess !utsourcing industry,which has established itself as low " cost destination, is losing its position asthe low 8 cost destination because of the rising people costs This has raiseddoubts about whether the *ndian $usiness %rocess !utsourcing industry cansatisfy clients for the long term and sustain the considerable growth rate it iscurrently e>periencing Therefore in the present study an attempt has beenmade to understand the problem of employee attrition in *ndian $%! industry

*n conte>t of $usiness %rocess !utsourcing industry in *ndia it has beenanalysed by many researchers ( Assocham 2011; Misra and Yadav 2009;NASSCOM 2011) that the problem of employee attrition is voluntary in natureTherefore this research study is an attempt to understand the causes andconse uences of voluntary turnover


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7nderstanding 9o5untary !urno"er

lthough there is no universally accepted account or framework for why peoplechoose to leave (1orrell, Aoan"-larke and Bilkinson 200+) yet it has been analy'ed that theidentification of variables associated with turnover intentions is considered aneffective strategy in reducing actual turnover levels (1aert' and campion +33:C 1obely +355CHom and Griffeth +33 C 1obely et al +35:C Dishbein and /'en, +359 )

Turnover intention is an employee@s decision to leave an organi'ation (?ougherty ,$luedorn and 7eon ,+3: C 1obely +355)

Turnover intention is a comple> phenomenon that depends on various factors growing body of research on employee turnover behaviour indicates that /obsatisfaction, organi'ation commitment, tenure, emotional e>haustion, dissatisfaction

with salary and promotional opportunities are constantly related to turnoverintentions and actual turnover (e g rnold E Deldman, +3:2C -otton E Tuttle, +3:.C Gerhart, +330C1obley et al, +353C %rice E 1ueller, +3:.C Bai E Fobinson, +33:C


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Cont 6*n conte>t of $usiness %rocess !utsourcing firms it has been reported by ?ata uest (2005)

=< survey that the main reasons of employee attrition in $usiness %rocess !utsourcingindustry are the lack of growth opportunities, higher education needs of employees,dissatisfaction with work timings, no peaceful life, irate customer and working on holidays

*n 200 a study conducted by Hill and ssociates has also found that mismatchede>pectations, dissatisfaction with company@s policies and lack of growth opportunities andnever ending uest for a better /ob leads to the problem of attrition in *ndian $usiness %rocess

!utsourcing industry

!ne of the significant studies on the problem of employee attrition in *ndian outsourcingcompanies was conducted by nanthra/a (2002) The study suggested that the ma/or factorsresponsible for employee attrition in outsourcing companies are "disliking the nature of work,mismatch of *nterest, less interaction with end usersC changing policies of company, lack oftechnical career advancement, lack of opportunity for constant up " gradation of skills, delay in%romotion, no transparent appraisal, unsure Duture, and limited career growth lso in 200: it has been reported by Hay Group -onsultancy that dissatisfaction withremuneration is one of the reasons for high attrition rate in this industry The report pointed outthat the remuneration structure of *ndian $usiness process outsourcing firms is not ascompetitive as they are in the rest of the *ndian market


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!%eoretica5 Mode5 for !urno"er Intentions

$ased on the review of literature, a theoretical model for turnover intentions was proposed

*n this model some variables are regarded as pro>imal variables %ro>imal variableshave direct relationship with turnover intentions

The %ro>imal variables are ob


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OB; C!I9 S

1o examine the sources o" employee attrition in 5P4 sector.

1o study the relationship between turnover intentions and 6ob satis"action.

1o study the relationship between turnover intentions andorgani2ational commitment.

1o analyse the e""ect o" pay related variables on turnoverintentions.

1o "ind out the measures that can control employee attrition.


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HYPOTHESES


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>esearc% Met%odo5ogy

The present study has adopted a descriptive research designThe ma/or purpose of this research has been the description of the state ofaffairs or problems as they e>ists and are faced at present by $%!employees as well as employers systematic and organi'ed methodology has been formulated for theresearch study survey techni ue has been used to obtain the re uired information uestionnaire has been designed to tap the demographic variablesincluding age, education, gender, marital status, and tenure of therespondents

*t also gathered information about the factors responsible for attrition, suchas the overall /ob satisfaction, pay satisfaction, organisation commitmentand turnover intentions of $%! employees


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Data Sources

Primary Data: The present study, which is e>ploratory in nature, has beenconducted on four $usiness process outsourcing companies operating in the ?elhi;-F region vi' Genpact, *$1 ?aksh, -onvergys *ndia and H-A Technologies( !%ese com anies are c%osen from a 5ist of to 20 BPO m 5oyees on t%e 4asis of em 5oyee strengt% and re"enuegenerated6 Source / Nasscom 2010 Sur"ey

The respondents have consisted of employees working at entry level and firstlevel managers Fespondents were not contacted directly *n each $%! company,team leaders were asked to distribute the uestionnaires to employees working atentry level and first level of management

Secondary Data: Iarious manuals and publications, i e , survey reports,ournals, 1aga'ines, etc related to the topic were consulted The reports ofvarious advisory and consultancy firms of national and international repute havealso been consulted to get reliable information


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QUESTIONNAIRE DESIGN AND DE E!OP"ENT

The primary data was collected by using the field survey method Dor the purposea uestionnaire was developed, pretested and administered to the target population under the study

The initial uestionnaire was developed using five point Aikert scale i e +" beingstrongly disagree and " being strongly agree *t consisted of si>ty four items whichwere organised into five sections


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P> / ! S!IN# !< ?7 S!IONNAI>

%rior to the main stage of data gathering and analyses, a pilot study wasconducted by collecting data from 200 participants The results of the pilotsurvey suggested some modification in the /ob satisfaction scale Therefore thefinal uestionnaire was framed using a five point Aikert scale containing .4statements, covering the following dimensions vis"J"vis

!verall /ob satisfaction 8 itemsBork overload 8 9 itemsBork environment 8 . itemsBork to Damily Aife -onflict 8 . items%eer


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SAMP@IN# P>OC D7> ADOP! D

The population for this study comprised of employeesworking in select $%!s in the ;ational -apital Fegion, ;ew?elhi sample si'e of +200 was chosen for this study andthe Fespondents (+2K sampleC employee strength 2000"

2 00 in each $%! campus) were taken from each companyamination, 30 uestionnaires were found to be completeand valid for the study


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Sam 5e DesignName of t%e ?uestionnaires Num4er of >es onse >ate Percentageorganisation distri4uted >es ondents organisation

IBM Da s%


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C P@AN

*n Cha ter ! an overview of $usiness %rocess !utsourcing *ndustry in *ndia has been presented, this is followed by the role played by the !utsourcing industry in making*ndia a knowledge base economy as well as its contribution in increasing *ndia@s e>portrevenues and Gross ?omestic products thereby generating employment opportunitiesfor *ndian youth Bith this background information the flip side of $usiness %rocess!utsourcing industry that is the problem of employee attrition has been discussed andfinally an attempt has been made to understand the concept of employee attritionTherefore this chapter is e>clusively devoted to the concept of employee attrition, itsconse uences, and various factors responsible for it

Cha ter !! focuses on detailed review of literature Iarious research studies onemployee turnover, /ob satisfaction, pay satisfaction and organisation commitment arediscussed in this chapter The different sources for the review of literature are asfollowsFesearch %apers and rticles in ournals%ublished $ooks*ndustry FeportsThesis and ?issertations

!ther 1iscellaneous rticles


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Cont 6

*n the Cha ter !!! , detailed discussion on the methodology adopted for the study has been

presented which is followed by formulation of research ob/ectives and hypotheses for the study,research area, sampling techni ues, uestionnaire design and pilot survey theoretical modelfor employee turnover has also been discussed in this chapter Dinally the chapter highlights thevarious statistical tools used for analysis and interpretation of the data of the study

Cha ter !" discusses the characteristic features of the $usiness %rocess !utsourcing *ndustryand the profile of the select companies study *n particular this chapter discusses thecharacteristic features of $%! industry in conte>t of human element involved in it *t attempts toe>plore the work culture and the work environment of outsourcing industry and the varioushuman"resource challenges faced by the mangers of this industry

Cha ter " is about data analysis and interpretation which is presented in seven sections (a)?ata %urification Fesults (b) ?emographic profile of respondents (c) =mployment History ofrespondents (d) ?escriptive statistics (e) -orrelation analyses (f) Fegression results (g)1ediated regression analysis The main tools that were used are Dactor nalysis, Feliability

nalysis using chronbach@s alphaC -orrelation nalysisC Fegression nalysis, $aron and 7enny@sAinear = uation 1odel to test 1ediation =ffect and


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&AC!O> ANA@'SIS

!or measuring the dimensionality o" the items o" the 6ob satis"action, thecollected data was sub6ected to "actor analysis.

Bart5ett s !est of S %ericity indicated a high Chi$ s uare value o" :;-)*.*=with =)- degrees o" "reedom at signi"icance level o" .)))

!urther, a high M4 value o" ).?


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> @IABI@I!' 3 9A@IDI!' ANA@'SIS

#e$ia%i$ity The data was sub/ected to reliability analysis using -hronbach@s lpha method The alpha values of all the scales are above 0 5, therefore themeasurement scale is deemed to be reliable for use

"a$idity: *n the present study the face and content validity of the data has beenconfirmed through internal checkups and e>tensive discussion with the e>pertsThe higher 7aiser 1eyer 8 !lkin values of multi dimensional scales such as /obsatisfaction ( 542) and variance e>plained as . :2 K gave re uired ade uacy ofthe data, there by proving the construct validity respectively Durther, convergentvalidity of the data has been proved by correlation matri> between masterstatement and the rest of statements


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OB; C!I9 S O& !< S!7D' AND !< I> ACplored to achieve the desired Iarious research

papers and previous works of different authors were analysed and onthe basis of e>tensive literature review a theoretical model foremployee turnover has been developed


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Corre5ation Ana5ysis

Correlation bet.een urno/er Intentions and Pro imal ariables

!urno"er Intentions 3 ;o4 Satisfaction!rom the results o" correlation analysis it is "ound that 6ob satis"actionhas a signi"icant negative correlation with turnover intentions 'r $.=*;NN,

p O ).):+.1he negative correlation between these two variables indicated thathigher the 6ob satis"action o" a person the lower is his intentions to uit.1he obtained "indings are in con"ormity with "indings o" '1ett and Meyer:>>;


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Cont.!urno"er Intentions 3 OrganiEation Commitment

It has been observed that a""ective commitment has a signi"icant negativecorrelation with turnover intentions 'r $.(NN, pO).):+, and continuous

commitment has also been "ound to be negatively related to turnoverintentions 'r $.


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Cont.

!urno"er Intentions 3 Pay Satisfaction Again it has been observed that there exists a signi"icant negativecorrelation between pay satis"action and turnover intentions 'r $.=(:NN,p O).):+.

1he negative correlation between these two variables indicates that thepay satis"action plays a signi"icant role in shaping turnover intentions,higher the pay satis"action lower are the turnover intentions o" theemployee working in organisation. 1he obtained "indings are incon"ormity with "indings o" '&oppockBs :>


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!urno"er Intentions 3 Dista5 9aria45es

It has been "ound that there exist a signi"icant negative correlation between 6ob

satis"action and work overload 'r $.((?NN, pO).):+ and a signi"icant positiverelationship 'r .


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O4 ecti"e2: !o study t%e re5ations%i 4et$een turno"er intentions and o4 satisfaction

@egression analysis was undertaken with turnover intentions as dependentvariable and 6ob satis"action predictor variables. 1he results o" regressionanalysis points out that 6ob satis"action ' $.=*


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Cont..

%ith respect to distal variables it has been "ound that work overload, work to"amily li"e con"lict and opportunity "or promotion signi"icantly contribute towards@( value. 5ased on @( value o" .(?< it is in"erred that these three variables could explain (?.< variation in turnover intentions o"employees.


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O4 ecti"e=: !o study t%e re5ations%i 4et$een turno"er intentions and organiEationa5

commitment6

regression was run with turnover intentions as dependent variable and affectivecommitment and continuous commitment as predictor variables The results ofregression analysis indicated that affective commitment (M L " 40., p N 0 0 ) andcontinuous commitment (M L " +25, p N 0 0 ) has a significant negative correlationwith turnover intentions The F 2 value of +. indicated that organisation commitment could e>plain +.K variation in

turnover intentions of employees lthough the impact is not very high but is significant in nature

=.=(( .)=* >;.--) .)))$.:*: .)() $.


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O4 ecti"e ): !o ana5yse t%e effect of remuneration on turno"er intentions

1he results o" regression analysis between turnover intentions and pay satis"actionindicated that pay satis"action ' $.=-;, p O).)*+ has a signi"icant negativecorrelation with turnover intentions. 1he @ ( value o" .(:; indicated that pay satis"action could explain (:.;variation in turnover intentions o" employees.

=.;-( .)*> ?).? .)))$. .)(: $.=-; $:*.?-( .)))

'Constant+P8R

Model:

5 8td. 0rror

7nstandardi2edCoe""icients

5eta

8tandardi2ed

Coe""icients

t 8ig.

Coefficients a

ependent VariableK 1Ia.


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>egression of !urno"er Intentions $it% ro ima5 "aria45es

!urther the proximal variables that are 6ob satis"action, organisation commitmentand pay satis"action are regressed with turnover intentions. 1he r s uare value o" .= indicated that these three variables could together explain .= variation in

turnover intentions o" employees.

*.:-) .)*? ?>.)=? .)))$.:;= .):= $. .)))

$?.(0$)( .):? $.:-- $=. -)< .)))$?: .)=?

$.((> .)() $.( .)))

'Constant+F8

ACRCCRP8 R

Model:

5 8td. 0rror

7nstandardi2edCoe""icients

5eta

8tandardi2ed

Coe""icients

t 8ig.

Coefficie nts a

,ependent VariableK 1Ia.

1he regression e uation can be stated as

1I *.:- $ .:;-


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VA/I I1E 4! &EP41&0808 10810

< 1: ;o4 Satisfaction is negati"e5y corre5ated $it% turno"er intentions61he @ s uare value o" .() shows that 6ob satis"action has a signi"icant e""ect onturnover intentions i.e. ().? variation in turnover intention can be attributed to 6ob

satis"action. !urther !# value o" (


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Cont 6H

2: Organisation Commitment is negatively correlated with turnover intentions!

4rganisation commitment has been analysed on two dimensions that are a""ective commitment andcontinuous commitment. 1he correlation coe""icient between a""ective commitment and turnover intentions'r $.(NN, pO).):+, and continuous commitment and turnover intentions 'r $.


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Mediated effect of organisation commitment on ay satisfaction and turno"er

intentions6

In the present study an attempt has been made to clari"y the relationship between

pay satis"action and turnover intentions by analy2ing the role o" organisationcommitment in this relation. 1he reason "or this mediation hypothesis is theassumption that the way a worker is satis"ied by the remuneration package willcontribute in generating a bond with the organisation, which in turn lead to lowerturnover intentions. 4rganisation commitment is one o" the important 6ob relatedattitudes which is developed as a result o" employees satis"action with the returns

which they receive in the "orm o" remuneration paid by the organisation


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Cont 6

1o "ind out the mediated e""ect o" organisation commitment on pay satis"actionand turn over intentions 5aron and ennyBs ':>?-+ linear e uation method has been "ollowed.1he results o" 5aron and ennyBs ':>?-+ linear e uation method indicated that pay satis"action has a negative impact on turnoverintentions ' $.=-; PO.)*+ on controlling organi2ation commitment. %hereas on introducing organi2ation commitment it is "ound thatthere is an increase in regression coe""icient o" pay satis"action "rom $.=-; to $.. !urther the results o" the sobel test value i.e ' S $:(.(=?***)>L p ).))+ indicates that the association between the Independent Variable 'pay 8atis"action+ and the ependent Variable'turnover intentions+ has been signi"icantly reduced by the inclusion o" the mediator 'organi2ation commitment+ in the model.


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MAF4@ !ID IDG8 AD 87GG081I4D8

1he "indings o" the present study indicated that 6ob satis"action, organisationcommitment and pay satis"action are signi"icantly correlated with turnoverintentions o" the employees. 1hese three proximal variables could together explain.- variation in turnover intentions o" employees. 4ut o" these three variables

6ob satis"action ' $.


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ContPay satis"action alone could explain (:.; variation in turnover intentions o"employees. It has a signi"icant negative correlation with turnover intentions ' $.=-;, p ).))+.1he two commitment dimensions, a""ective commitment, and continuous

commitment, "ully mediated the e""ect o" a pay satis"action construct. 1his"inding is consistent with theory that would predict that the appraisal o"compensation elements may convey "eelings o" satis"action that are known to becritical "actors in the development o" a""ective bond between the individual andthe organi2ation. 1he "inding o" a mediation e""ect through continuous commitment is alsotheoretically meaning"ul since perceived sacri"ice re"lects the cost associatedwith leaving that could be "ostered in case the individual appraises hisThercompensation package to be un"avourable.


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@IMI!A!IONS O& !< S!7D'

1he present study is limited to only "our 5usiness Process 4utsourcing "irms inDorthern India due to paucity o" time and "inancial resources available at theindividual level.

@espondents especially the &uman resource managers had been reluctant indisclosing the secondary data like exit interview responses, employee "eedback

record.

1he study is heavily dependent on primary data, which is very time consuming.

1he researcher was not provided direct access to respondentsL it was notpossible to conduct in$depth interviews that probed employee behaviours and

5P4 experiences more "ully.

1he research design o" this study was cross sectional and it is thus notpossible to in"er a causal relationship. 7ndertaking research at one period intime can only re"lect that period in time.


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Documents

Attrition in Indian BPO