7th National HR Conference18th December 2010

Innovative Strategies of Employee Retention in BPO Sector

‘Business Excellence through Innovative HR Practices’

Paper Presentation By-Mrs. Arjita Jain, Assistant Professor

NCRD’s Sterling Institute of Management Studies, Navi Mumbai

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Introduction

BPO is the fastest-growing segment of outsourcing industry. BPO is a delegation of one or more IT-intensive business processes to an external provider that, in turn, administers and manages the selected process based on defined and measurable performance criteria.

BPO means delegating the ownership, administration, and operation of a process to a third party.

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Objective

The paper provides an insight into various problems and challenges faced by BPOs in India.

The paper highlights the acute problem of employee attrition in BPOs and required retention strategies for Indian BPOs.

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Process being Outsourced

Companies Generally Outsource Four Types of Processes: Processes that Link to Suppliers

(Supply Chain Management) Processes that Link with Customers

(Sales, Marketing, and Customer Care), Production Processes (R&D, Contract

Manufacturing) and Support Processes (Finance, HR).

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Transaction Providers handle a Single Process (for eg. Payroll), at their sites and with their people. They are accountable for the transactions only, and they are paid per transaction. This form of outsourcing is easiest to manage.

Niche Providers handle Several Processes (for eg. Employment, which includes hiring and staffing). They may work at their site (or the company’s) and they may take on some of company’s staff. They are accountable for the outcomes of those processes , so they are paid based on their outcomes.

Types of BPO Providers

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Comprehensive Providers handle the Transactional and Administrative Processes of a Function (for eg. HR). They work globally, they aim to increase process effectiveness, and they are generally paid based on outcomes. This is the newest form of BPO and it involves the most change because the providers introduce new and better practices and processes.

Types of BPO Providers

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Outsourcing and Offshoring

Outsourcing is the transfer of an organizational function to a third party.

When this third party is located in

another country it is called as Offshore Outsourcing/ Offshoring.

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Major Uncertainties for the BPO Industry

Reckless Start-Ups

Poor Infrastructure

High Attrition

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Attrition in Indian BPO Industry

According to the findings of the Hay Group’s report ‘BPO Special Sector Survey 2008’, Attrition Rate in BPO is 7.8 % points higher than other industries in India.

According to this general staff turnover in India is 15.7 %, but at BPO company’s attrition is country’s highest 23.5 %, followed by Communications (22 %) and Retail (18 %).

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Why People are Leaving BPOs?

Drive Attrition is caused due to the employer.

Drag Attrition is caused due to the

employee.

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Drive Attrition Employer’s Policy-Policies of terminating the employee at

the end of the contract period for employment.

The Quality policy of the BPO - Retain only the most productive employee and to terminate employees which are non-productive. Employees are terminated at regular intervals.

The 24×7 Work Culture -A BPO company operates 24 hours a day and 365 days a year. The companies do not have a particular day as weekly off for its employees. The employees are not even entitled for national holidays declared by Government of India, as the company works with client’s calendar. The call agents can avail leave (which should not affect the schedule) only with prior consent, and any unauthorized absence is a sufficient reason for terminating an employee.

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Drag Attrition

Drag Attrition is basically due to the host of insecurities associated with the taking up a career with a BPO company.

Scope of the job of a Entry Level Executive / Call Center Agent/ Customer Care Representative is limited.

Lack of well-defined career path for Entry Level Executive .

The nature of job is highly stressful. The working hours are artificially created which affect the natural rhythm of human body. The symptoms of chronic fatigue, gastrointestinal problems, peptic ulcer, insomnia and even depression are caused due to change of 24-hour biological rhythm of the body; hence Drive attrition rate shoots up.

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Common Reasons for Attrition

Desire to Pursue Higher Education Role Stagnation Low Brand Image associated with BPO Jobs Lack of Work-Life Balance Poor Relationship with Team Leader /

Manager Lack of Clarity about Expectations Lack of Effective Appraisal System Poaching

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Innovative Retention Strategies for BPOs

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Implementing a Well-Defined Career Path for Employees at Each Level:

BPO firms are required to define a concrete corporate hierarchy to set the quality for a proper career path for every employee in the BPO.

Encouraging Employees to Pursue Higher Education: Pursuing higher education while working in a BPO should be made a viable option for all employees working in BPO firms. Few BPOs encourage and offer support services to pursue higher education.

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Bolstering the Feeling of Importance Among Employees:

BPO firms have employees leaving their firms because of their misconception that they are very insignificant entities when one looks at the larger organizational picture.

Helping the Employee Maintain a Work-Life Balance: Majority of employees in BPOs works in shifts/ odd hours. Helping them in setting work-life balance by offering flexi-hours can be very useful.

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Improving Superior-Subordinate Relationship:

A pleasant working environment motivates employees and their immediate superiors have a major role to play in this. With right kind of leadership development approach BPOs can develop good relationship with its entire workforce.

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Redefine BPOs Core HRM Function:

Acquisition → Development → Motivation → Maintenance/ Retention

BPO are directly working of the fourth HRM function that

is retention, ignoring the other three. While conducting the recruitment, it is in the hands of HR to bring the right kind of people.

HR needs to identify the employees who would stick with the company and not get the employees solely based on the qualifications and communication skills. After recruiting the right candidates they should be trained and developed and feedback should be given on a regular basis .

In case of employees leaving, a good Exit-feedback system should be in place so as to cover the reason for which the employees leave.

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Re-structuring the Performance Appraisal System:

Employee motivation levels go down when they are penalized in performance appraisal systems, which are based on pure numbers in many BPO firms. There has to be a human element in these appraisals and they should be made more objective rather than subjective.

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Three Rs of Retention Respect Recognition Reward

Implementing the right mix of three Rs result into- Increased Productivity Reduced Absenteeism A Pleasant Work environment (for both

employees and employer) Improved Profits

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Conclusion

The HR professionals in BPOs are needed to be flexible in their approach of developing, motivating and retaining their talent pool. ERM (Employee Relationship Management) in BPOs should be based on employee feedback received through employee surveys A BPO should implement the right mix of three Rs that will create a hard-to leave workplace. The BPO management should skillfully communicate BPO policies to their employee.

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