Project: To Reduce the Direct Hiring Expenses

2

Customer CommentsCritical to Quality-

CTQ’s

CEO-ABC

Our organisation has not been meeting the over all budgeted target cost. As compare to the FY 10-11 the Direct Cost has

gone up is by 25% in FY11-12, which may impact the net profit

of the company. Its not a healthy sign for the business. In order to survive the competition need to minimise the direct expenses

and to maximise the profit.

Direct Expenses.

VP- HRThe direct cost for hiring has

gone up by 20% of the allotted budget for the FY 11-12.

Exceeding the budgeted target.

HR-Executive

Increase in the businesses and high rate of attrition, lot of fast track hiring is done to fill-in the required positions to avoid any

billing loss at operation end.

Filling in the required positions to avoid any billing loss.

D M A I C

3

Approx 52% of hiring was done at MO2 level and consist of major cost contribution.

Hiring cost analysis

Business Case: ABC (Holdings) Limited (NYSE: ABC ), is a leading global business process outsourcing company. ABC offers business value to 200+ global clients by combining operational excellence with deep domain expertise in key industry verticals, including Travel, Insurance, Banking and Financial Services, Manufacturing, Retail and Consumer Packaged Goods, Shipping and Logistics, Healthcare and Utilities. ABC delivers an entire spectrum of  business process outsourcing services such as finance and accounting, customer care, technology solutions, research and analytics and industry-specific back-office and front-office processes. ABC has over 23,000 professionals across 25 delivery centers worldwide, including Costa Rica, India, the Philippines, Romania, Sri Lanka and United Kingdom.

The ABC hiring need gets identified at the Operational level as a result of which Job requisition form is sent for approval by Hiring Manager to VP – Operations. After approval, the hiring request goes to the HR department from where it gets published at designated job portals and consultancies .The organization also promotes the hiring by the way of internal referral program. The Applicants appearing for the interviews, have to go thru the written test followed by another 3 rounds of interview. and if gets selected becomes eligible for the offer letter and eventually joins in training.

The cost of hiring an executive takes place keeping in mind the planned budgeted cost of xxx which has gone up as compare to the last financial yr.

Preliminary analysis shows that 52% of hiring was done at MO2 level, which majorly constitute of hiring cost.

Team

BU Head : Mithlesh Nautiyal• Process Champion :- Shishir Singh• Process Owner : Sunil Kumar• Master Black Belt :- Pranay Kumar• Project Leader :- Neha• Team Member :- Pawan, Safdar, Kunal

Problem StatementDuring (FY 11-12 ) 62% of MO2 hiring was done over the allotted budget of

Rs.4000/candidate, Rs. 81,45,574.00 were spended over the budgeted cost which has a drastic effect over a profit.

In Scope : MO2 Hiring

Goal StatementTo reduce the average cost of MO2 by Rs. 40%, Q1 of 2012

Milestones Target Date Actual date

D Aug 1st, 2010 Aug 15th, 2010 M Aug 16th, 2010  Aug 30th , 2010A Sep 1st , 2010 Sep 30th , 2010I Nov 1st , 2010 Dec 31st , 2010C Dec 1st ,2010  Dec 31st , 2010

Project Charter D M A I C

Direct Hiring Cost

CTQs*

Amount paid out to consultants for candidates getting selected.

Expenses incurred on advertisements, for the hiring.

Referrals amount paid out to the employees.

*CTQ- Critical To Quality

CTQ TreeD M A I C

Project YProject Y = Cost of Advertisement + consultancy + admin + logistics + infrastructure

No. of executives Hired in a year *100

SIPOC

Suppliers

Client & Management

Operations Team

HR Team

Inputs

OPS Team

Request Received

Newspaper, Referrals and JOB Site

Candidates Screening

Vendor

HR

Inputs

OPS Team

Request Received

Newspaper, Referrals and JOB Site

Candidates Screening

Vendor

HR

Process Request for Hiring

Approval from DPE /VP Operations

Information shared via JOB Portals, Referral Program and Advertisement

Interview Process

Background Verification

•Offer Rolled out

Process Request for Hiring

Approval from DPE /VP Operations

Information shared via JOB Portals, Referral Program and Advertisement

Interview Process

Background Verification

•Offer Rolled out

Outputs

Request Received

Request Approved

Applications Received

Short listed Candidates

Verification Done

On Boarding

Outputs

Request Received

Request Approved

Applications Received

Short listed Candidates

Verification Done

On Boarding

Customers

Management

HR OPS

HR Team

Referral/ JOB Sites OPS / HR

OPS / HRVendor / HR

OPSVendor / HR

D M A I C

Process MAP

Start

FTE requirement identified by Ops

mgr

Job requisition form filled by Ops mgr & sent for approval

Approval received from VP

Job notifications published in

newspaper for Hiring

Job sites updated with the Hiring

requirement details

Information floated within organization for Internal referrals

Applications received from

interested candidates

Scrutiny of applications by HR

team

Candidates called for Interview

Tying test conducted

Application form

shortlisted

Typing Test

cleared

Analytical test conducted

Analytical test

cleared

Manager round conducted

Manager round

cleared

Ref check done

Ref check

cleared

Candidate shortlisted & Joined

the Organization

End

EndNo

Yes

No

Yes

No

Yes

No

Yes

No

Yes

D M A I C Hiring Process

KPI Operational Definition Defect Def Performance StdSpecification Limit

OpportunityLSL (min) USL (min)

Direct Hiring Cost

Total direct cost incurred by the company from the point , hiring

request is raised candidates interview till the time he is on board for MO2

Candidates

Hiring cost exceeding the budgeted cost of Rs4k/MO2

Rs 4000 per MO2 candidate

NARs 4000 per

MO2 candidate

Hiring cost. Per MO2 candidate

KPI Data TypeData Items

NeededUnit

Plan to collect Data Plan to sample

What Database or Container will

be used to record this data?

Is this an existing

database or new?

If new, When will the

database be ready for use?

When is the planned start date for data collection?

 

Cost of Hiring Continues Monthly Hiring

Cost report Rs & count . Excel Existing N/A 1st Feb. Full Population of MO2

Data Collection Plan

D M A I C

Microsoft Office Excel 97-2003 Worksheet

Month Grade# Of Associates

HiredAvg. of

Cost/AgreementSum of Cost/ Agreement

Auditor A

Auditor B

Apr-2011 M02 415 6145.945753 2550567.488 Pass Pass

Aug-2011 M02 308 4174.122362 1285629.688 Pass Pass

Jul-2011 M02 412 4933.4326 2032574.231 Pass Pass

Jun-2011 M02 342 5279.648448 1805639.769 Pass Pass

May-2011 M02 391 4996.80226 1953749.684 Pass Pass

Nov-2011 M02 508 8715.008521 4427224.329 Pass Pass

Oct-2011 M02 420 6305.605914 2648354.484 Pass Pass

Sep-2011 M02 411 4606.361937 1893214.756 Pass Pass

Grand Total 3207 5798.863245 18596954.43 Pass Pass

For the purpose of data validation, the hiring cost data was checked by Auditor A and Auditor B and no discrepancy in the data found.

D M A I CEffectiveness & Efficiency

Microsoft Office Excel 97-2003 Worksheet

D M A I CGraphical Summary

P value<0.05, hence data is not normal, also the above graphical summary clearly depicts that the variation is very high as the StDev=3637.6, the median is 5000 against the target of 4000.

D M A I CNormality Test

Since the P value <0.05, hence the data is not normal.

D M A I CRun Chart

In the above Run Chart Clustering and Trends have P value <0.05, hence the data is clustered and has a trend and the data is not random and not stable

D M A I C

The above box plot clearly depicts that the Median stands at 5000 against the target of 4000And 64% of MO2 hiring was done over the budgeted cost.

Budgeted Cost per

MO2

Median

D M A I C

Defect per Opportunity 1

No. of Opportunities 3207

Total Defects 2020

DPU 0.6299

DPMO 629872

Sigma Level 1.17

The sigma level stands at 1.17 sigma, which is not a good sign.

Factors identified through brainstorming.

D M A I C

Organizing Potential Causes

D M A I C

S.No. Y(Hiring Cost) Continues Test's

1 Potential X's Data Type Centering Variance

2 Location Discrete Moods Median Test for Equal Variance

3 Process Type Discrete Moods Median Test for Equal Variance

4 Gender Discrete Man Whitney Test for Equal Variance

5 Source Discrete Moods Median Test for Equal Variance

6

Horizontal Discrete Moods Median Test for Equal Variance

D M A I C

One-Sample T: Cost As per Agreement

Test of mu = 4000 vs not = 4000

Variable N Mean StDev SE Mean 95% CI TCost As per Agreement 3207 5798.9 3637.6 64.2 (5672.9, 5924.8) 28.01

Variable PCost As per Agreement 0.000

The Mean of the sample lies at 5798.9 against the target of 4000,This clearly indicates that the process has a centering issue.

Test for Centering

Location VS Hiring Cost

It’s clearly evident from the above graph that the maximum hiring is done in Pune, Mumbai and Gurgaon location.

Mood Median Test: Cost As per Agreement versus Location

Mood median test for Cost As per Agreement

Chi-Square = 98.51 DF = 4 P = 0.000

Individual 95.0% CIs

Location N<= N> Median Q3-Q1 --------+---------+---------+--------

Bang 117 79 7500 1000 (----*CHN 24 0 5000 0 *

GGN 177 249 9000 4000 *

MUM 258 352 9000 4000 *

PUN 473 291 7500 4000 *

--------+---------+---------+--------

6000 7200 8400

Overall median = 7500

Pvalue<0.05, which means there is a significant difference in the medians of hiring cost of different locations.

D M A I C

D M A I C

The above test for variance shows that the P value<0.05, which indicates that there is significant differenceIn the variance of different locations.

Location VS Hiring Cost

D M A I CRelationship between Hiring Cost & Gender

Mann-Whitney Test and CI: Hiring Cost Female, Hiring Cost Male

N MedianCost As per Agreement-F 969 5000.0Cost As per Agreement-M 2238 5000.0

Point estimate for ETA1-ETA2 is -0.095.0 Percent CI for ETA1-ETA2 is (-391.9,0.0)W = 1483990.5Test of ETA1 = ETA2 vs ETA1 not = ETA2 is significant at 0.0035The test is significant at 0.0033 (adjusted for ties)

The P value<0.05, which signifies that there is a significant difference in the median of Female and Male hiring cost.

D M A I C

Relationship between Gender and Hiring Cost

The p value<0.05, which clearly indicates tat that there is a significance difference in the variance of two subgroups.

D M A I C

The test clearly indicates that there is s significant difference in the median of different sub groups, also contact center and Industry specific BPO are two horizon where maximum hiring at MO2 level is done.

Mood Median Test: Cost As per Agreement versus Horizental

Mood median test for Cost As per AgreementChi-Square = 355.86 DF = 7 P = 0.000

Horizental N<= N> Median Q3-Q1BizAps 4 0 1798 0Contact Center 719 988 7500 6000F&A 312 16 5000 2000Industry Specific BPO 635 460 5000 5000Legal Services 12 0 2500 1178Research & Analytics 21 14 5000 5611Support 19 2 5000 2999Technology Services 4 0 3447 3234VSGA Support 1 0 5000 *

Individual 95.0% CIsHorizental ---------+---------+---------+-------BizAps *Contact Center (--*F&A *Industry Specific BPO *Legal Services (----*--)Research & Analytics (-----------------*--------------)Support (-----------------*Technology Services (----------*--------)VSGA Support ---------+---------+---------+------- 3200 4800 6400

Overall median = 5000

Desired Median@4000

D M A I C

The above test for variance shows that the P value<0.05, which indicates that there is significant differenceIn the variance of different process type.

D M A I CMood Median Test: Cost As per Agreement versus Source

Mood median test for Cost As per AgreementChi-Square = 1261.86 DF = 5 P = 0.000

Source N<= N> Median Q3-Q1Advertisement 1 0 0 *Campus Recruitment 20 0 0 3000Institute 14 0 0 0Job_Portal 483 0 1848 171Link 655 268 5000 5000Placement Consultants 386 1212 9000 3000Walkin 167 0 0 0ABC Carrier website 1 0 0 *

Individual 95.0% CIsSource +---------+---------+---------+------AdvertisementCampus Recruitment *----------)Institute *Job_Portal *Link *Placement Consultants *Walkin *ABC Carrier website +---------+---------+---------+------ 0 2500 5000 7500

Overall median = 5000

The above test indicates that the medians of the sources used for hiring are not same.

D M A I C

Test for Equal Variances: Cost As per Agreement versus Source

95% Bonferroni confidence intervals for standard deviations

Source N Lower StDev Upper Advertisement 1 * * * Campus Recruitment 20 1178.71 1663.07 2723.56 Institute 14 * 0.00 * Job_Portal 483 196.92 212.83 231.34 Link 923 1827.35 1933.98 2052.94Placement Consultants 1598 2912.63 3041.68 3181.91 Walkin 167 * 0.00 * ABC Carrier website 1 * * *

Bartlett's Test (Normal Distribution)Test statistic = 2130.32, p-value = 0.000

Levene's Test (Any Continuous Distribution)Test statistic = 144.40, p-value = 0.000

This test shows proves that there is a significant difference in the variance of the different sub groups

D M A I CProcess Type VS Hiring Cost

Bartlett's Test (Normal Distribution)Test statistic = 1080.78, p-value = 0.000

Levene's Test (Any Continuous Distribution)Test statistic = 110.25, p-value = 0.000

The above test for variance shows that the P value<0.05, which indicates that there is significant differenceIn the variance of different process type.

D M A I C

Mood median test for Cost As per Agreement

Chi-Square = 1860.43 DF = 4 P = 0.000

Individual 95.0% CIs

Process Type N<= N> Median Q3-Q1 --------+---------+---------+--------

Complex Data 470 4 5000 3111 *

F&A 319 15 5000 2719 *

Simple Data 514 2 2500 702 *

Support 31 6 5000 3202 (------------*

Voice 393 1453 8000 2000 (-*----)

--------+---------+---------+--------

4000 6000 8000

Overall median = 5000

Mood Median Test: Cost As per Agreement versus Process Type

Targeted Median

Pvalue<0.05, which means there is a significant difference in the medians of hiring cost of different Process Typesle.Processes in voice domain are majorly responsible for the increase in hiring cost.

D M A I C

Further Analyzing the data, it has been observed that out of 2020 defects occurred, maximum defects occurred in Horizontals “Contact Center” &

“Industry Specific BPO” which has the maximum number of hiring defects.

   

Mood median test for Cost As per AgreementChi-Square = 355.86 DF = 7 P = 0.000   

   

Horizental N<= N> Median Q3-Q1BizAps 4 0 1798 0Contact Center 719 988 7500 6000F&A 312 16 5000 2000Industry Specific BPO 635 460 5000 5000Legal Services 12 0 2500 1178Research & Analytics 21 14 5000 5611Support 19 2 5000 2999Technology Services 4 0 3447 3234VSGA Support 1 0 5000 *   

Individual 95.0% CIsHorizental ---------+---------+---------+-------BizAps *  

Contact Center (--*F&A *Industry Specific BPO *Legal Services (----*--)  

Research & Analytics (-----------------*--------------)Support (-----------------*Technology Services (----------*--------)VSGA Support  

---------+---------+---------+------- 3200 4800 6400   

Overall median = 5000  

* NOTE * Levels with < 6 observations have confidence < 95.0%

Mood Median Test: Cost As per Agreement versus Horizental

D M A I C

After analyzing all the possible factors and results obtained by conducting various test’s it was found that :

1)Out to total defective hiring of 2020, maximum of which is done in Horizontal “Contact Center” i.e. 1092 hiring defects,

having an avg. hiring cost of Rs 9226.2)In Contact Center, Process type “Voice” has the most number

of hiring defects i.e. 984 3)Total hiring done via “Placement Consultants” under

horizontal “Contact Center in Voice processes is 881 having an avg. hiring cost of Rs.9925.

Test Findings

Action Plan needs to be developed to ensure that the hiring cost does not exceed the budgeted limit.

D M A I C

As per the QFD done, the priority is to design new and affective referral policy across different locations.

D M A I C

D M A I C

Control Plan

People on bench should be given the priority over any other references. Campus hiring and referral hiring should be given priority over external hires. For hiring an external resource approval from OPS VP and HR VP is required. If external resource is to be hired & the cost for the same is exceeds the allotted cost, approval needs to be obtained from the OPS VP.

D M A I C

After conducting FMEA, Risk Treatment Plan is developed along with the responsibilities and time line assigned.

Factors having the highest Risk Priority Number (RPN) are prioritized first.

Microsoft Office Excel Worksheet

FMEA

D M A I C

Control Chart showing pre and post Improvement

Pre Improvement

Post Improvement

D M A I C

Box Plot showing pre & post Hiring Cost.

The Box Plot above clearly shows the shift in the median from 5000 (Pre Improvement) to 3422 (Post Improvement)

45004200390036003300300027002400

Median

Mean

34603440342034003380

1st Quartile 2909.0

Median 3422.03rd Quartile 3970.0Maximum 4500.0

3413.9 3456.1

3381.0 3464.5

595.5 625.4

A-Squared 37.56P-Value < 0.005

Mean 3435.0StDev 610.1Variance 372206.5

Skewness 0.02623Kurtosis -1.21290N 3207

Minimum 2400.0

Anderson-Darling Normality Test

95% Confidence I nterval for Mean

95% Confidence I nterval for Median

95% Confidence I nterval for StDev95% Confidence I ntervals

Summary for Post Imp Hiring Cost

Pre Improvement Post Improvement

Std Dev 3637.6 610.1

Mean 5798.9 3535

Median 5000 3422

Graphical Summary Showing Post Improvement

Defect per Opportunity 1

No. of Opportunities 3207

Total Defects 747

DPU 0.23293

DPMO 232928

Sigma Level 2.23

There is a significant improvement in the sigma level, from 1.17 sigma (Pre Improvement) to 2.23 Sigma Post Improvement)

Post Improvement Sigma Level