RTN ST IN BPO

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RETENTION STRATEGIES IN BPO SECTOR

A PROJECT STUDY SUBMITTED IN PARTIALFULFILLMENT FOR THE REQUIREMENT OF THE

THREE YEAR POST GRADUATE DIPLOMA INMANAGEMENT (EVENING)

LAL BAHADUR SHASTRI INSTITUTE OF MANAGEMENT,DELHI


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INDEX

SR NO. TOPIC PAGE

1 EXECUTIVE SUMMARY 4

2 PROJECT OVERVIEW 7

3 WHAT IS BPO? 11

4 WHY INDIA? 23

5 RETENTION AN INTRODUCTION 32

6 IMPORTANCE OF RETENTION 36

7 THE A WORD 42

8 WHY PEOPLE ARE MOVING? 48

9 WHY EMPLOYEES STAY? 50

10 RESEARCH FINDINGS 53

11 EMPLOYEE BENEFIT INITIATIVES 61

12 INNOVATIVE INITIATIVES 68

13 RECOMMENDATIONS 71

14 LIMITATIONS 77

15 REFERENCES AND BIBLIOGRAPHY 79

16 ANNEXURE - QUESTIONNAIRE 82

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EXECUTIVE

SUMMARY

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EXECUTIVE SUMMARY

This project is a reflection of the findings of the survey that

was conducted to understand what different BPO Companies

are doing towards the retention of their employees.

The project overview encompasses the objective, rationale

and methodology adopted for the survey. Its a snapshot of

why and how the project was carried out.

The brief profile of the BPO Companies aims not only to

introduce the companies but also to impart a better

understanding of the BPO Sector as a whole. The companies

Vision, Mission, Values and Beliefs are mentioned in a

nutshell.

The introduction to retention provides the theoretical base to

build the project upon, and also to better understand the

significance of the subject, highlighting the need for the

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organizations today to be more proactive in retaining their

employees. The focus has been on why employees stay so

that precautionary approach adopted by different

organizations can be understood.

The survey has also brought out the attempts made by the

organizations towards building up of work environment

focusing on employees, their morale, motivation, satisfaction

and ability and willingness to be highly productive. At the

same time, several reward and recognition initiatives have

been developed to encourage desired employee behaviour

benefiting the organizations. The money factor has also been

considered to understand the organizations approach

towards developing their employee retention strategy

around compensation, bonus and incentives etc.

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PROJECT

OVERVIEW

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OBJECTIVE

This research was undertaken to understand the various

strategic initiatives adopted by different companies towards

the retention of their employees; with an ultimate objective

of analyzing the retention practices that are adopted by

some BPO Companies.

RATIONALE

Having recognized that human assets are the only true

differentiator that an organization has, the retention of these

valuable resources have become and area of major concern

for every organization. Be it any stage of business cycle or

economic condition; top performers, strategic employees

and the whole lot of the employees cargo who are capable

of taking the organization to the ambitious heights, are

always the focus of attention for their employees.

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METHODOLOGY

A 9-step approach was adopted which is as follows:

1. A clear understanding of the information required and

the approach to be adopted.

2. Development of the schedule of questions to be asked

keeping them precise yet capable of generating

relevant information.

3. Short-listing of the companies.

4. Identification of the key personnel to be interviewed for

acquiring relevant information.

5. Scheduling of personal and in depth interview with

these key personnel.

6. Collection of data

7. Processing of date and generation of information.

8. Analysis of the findings.

9. Recommendations.

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SOURCES OF INFORMATION

PRIIMARY SOURCE

o PERSONAL INTERVIEWS AND DISCUSSIONS

SECONDARY SOURCE

o WORLD WIDE WEB

o MAGAZINES AND JOURNALS

RESEARCH PLAN

DATA SOURCE:

o PRIMARY AND SECONDARY DATA

RESEARCH APPROACH:

o INTERVIEWS AND DISCUSSIONS

RESEARCH INSTRUMENT:

o QUESTIONNAIRE

CONTACT METHOD:

o VISITING HR PERSONNEL

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BUSINESS

PROCESS

OUTSOURCING

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WHAT IS BUSINESS PROCESS OUTSOURCING

(BPO)?

BPO is the act of transferring some of an organization's

repeated non-core and core business processes to an outside

provider to achieve cost reductions while improving service

quality. Because the processes are repeated and a long-term

contract is used, outsourcing goes far beyond the use of

consultants. If done well, BPO results in increasing

shareholder value. The main difference between BPO and

more traditional IT outsourcing is that BPO offers companies

a way of achieving transformational outcomes much more

quickly. In a typical BPO contract, a service provider takes

over a specific corporate function. Effective BPO

encompasses much more than just changing who is

responsible for performing the process. In BPO, the outside

provider not only takes on the responsibility to manage the

function or business process, but also re-engineers the way

the process has been traditionally done.

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The next generation of Business Process Outsourcing has

emerged as a priority for businesses looking to better

options in managing their application portfolios. The first

wave offered low-cost, offshore development labor, but

today firms are demanding new, less risky options for

applications that are strategic, complex, or mission-critical,

while still taking cost into consideration. Outsourcing has

moved from a niche technology management tool to a

mainstream strategic weapon. Business Process Outsourcing

leverages process driven efficiencies in terms of

organizational excellence, responsiveness & branding,

financial efficiency and customer relationship. BPO is

emerging as a powerful and flexible approach that business

leaders can use to achieve a wide range of tactical and

strategic aims.

The most common business process that gets outsourced is

call centers. Call centers and Help Desks of many multi

national and fortune 500 companies are being outsourced to

low waged, English speaking countries such as Philippines

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and India. Countries like India with vast IT human resources

are also attracting outsourcing from American IT/Technology

companies to outsource their IT Help Desks. Many of these

help desks are state of the art with latest Help Desk software

and help desk hardware with technical savvy IT graduates

behind them answering your questions.

ADVANTAGES OF BPO

An important aspect of business process outsourcing is its

ability to free corporate executives from some of their day-

to-day process management responsibilities. Once a process

is successfully outsourced, they get more time to, explore

new revenue streams, accelerate other projects, and focus

on their customers.

By outsourcing their back office operations to third world

countries, companies have the following advantages:

Achieve cost reductions this is made possible through

process improvements, reengineering, and use of

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technologies that reduce and bring administrative and

other costs under control.

Key in on company's main business with the day-to-

day back office operations taken care of, the

management is free to impart more time to building the

company's core businesses

Obtain outside expertise Rather than recruiting and

training personnel, BPO ensures that domain experts

from another company provide the needed guidance

and skills.

Meet constantly changing customer demands many

BPO vendors provide the management with flexible and

scalable services to meet the customers changing

requirements, and to support company acquisitions,

consolidations, and joint ventures

Achieving revenue increases by outsourcing non-core

processes, companies can focus on increasing their sales

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and market share, develop new products, expand into new

markets, and enhance customer service and satisfactions.

WHAT IS OUTSOURCING?

Outsourcing could be defined as the shifting or delegating a

companys day to day operations or business process to an

external service provider, done in anticipation of a better

quality, lower rates and in a sense getting an edge over

ones competitors. When a companys operations or business

processes are outsourced to firms in foreign countries, often

to take advantage of cheap skilled labor, it is referred to as

offshore outsourcing or Offshoring.

Where functions previously performed by an organization are

supplied under contract from a third party.

Buying goods or services instead of producing or providing

them in-house.

While outsourcing is not exactly a new innovation, the shifts

that have occurred recently in this space are worth noting.

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As the need for e-learning moves higher up on the IT and

corporate training agendas, organizations are wont to take

on the IT management burden of implementing a learning

management system (LMS).

The concept of taking internal company functions and paying

an outside firm to handle them. Outsourcing is done to save

money, improve quality, or free company resources for other

activities. Outsourcing was first done in the data-processing

industry and has spread to areas, including tele messaging

and call centers. Outsourcing is the wave of the future.

A long-term, results-oriented relationship with an external

service provider for activities traditionally performed within

the company. Outsourcing usually applies to a complete

business process. It implies a degree of managerial control

and risk on the part of the provider.

The transfer of components or large segments of an

organizations internal IT infrastructure, staff, processes or

applications to an external resource such as an Application

Service Provider

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TYPES OF OUTSOURCING

Offshore outsourcing services can be mainly divided into

Technology services outsourcing and business process

outsourcing.

Technology Services Outsourcing

Companies that utilize technology require sophisticated,

quick-responding computer systems and software that are

flexible enough to respond to the increasing capabilities of

technology and the rapid changes in business models.

Selecting the right technology partner is an integral part of

many successful ventures. Following are the specific types of

technology services.

Electronic Commerce ("eCommerce")

Infrastructure ("Networks")

Software ("Applications")

Telecommunications

Website Development & Hosting

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Business Process Outsourcing

With globalization, enterprises have been challenged to find

the niches where they add the greatest economic value to

the world's economy. As a result, enterprises have looked for

ways to avoid making investments in employees and

infrastructures that do not have a high yield. As service

providers witnessed this development, they began to create

whole enterprises based on narrow business processes. The

term "BPO" (Business Process Outsourcing") was coined in

about 1995 and became popular a few years later,

accelerated by the explosion of Internet business.

Customer Contact (Customer Relations Management)

Equipment

Finance / Accounting

Human Resources

Logistics

Procurement / Supply Chain Management

Security

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Human Resources, is becoming another sought after

outsourcing area. Other areas of what is being outsourced

are Document, Utility, Insurance, Secretarial, Consulting,

Healthcare, Manufacturing, News and Media outsourcing.

ADVANTAGES OF OUTSOURCING

Proponents of outsourcing cite a variety of reasons for

"letting others do it. Here are some of the most important

Cost savings - By outsourcing functions that were

previously performed in house, companies are often able to

reduce their employee levels and related costs, such as

recruitment, supervision, salary and benefits. By outsourcing

a capital-intensive function, you can also reduce the costs of

equipment obsolescence and depreciation. A portion of your

cost savings will go to the outsourcer, but outsourcing

vendors have a tighter control of fringe benefits and run

leaner overhead structures. They also know how to deal with

vendors serving the function they are providing and

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therefore, are able to pass on to your company the benefits

derived from bulk purchasing and effective leasing.

Quality of service - Because your company is the

outsourcer's customer, you will likely experience a "can-do

attitude," which may not always be exhibited by an in-house

staff.

More capital funds - Outsourcing reduces the need to invest

capital in non-core business functions, thereby freeing

capital to invest in profit-making aspects of the business.

State-of-the-art technology - Outsourcers have to spend

time and money on the most current equipment and on

employee training to remain competitive. By outsourcing

certain areas, you are assured of receiving the most efficient

services and the latest technological advances within that

particular function.

Price stability - By signing a contract to outsource, you will

likely be able to obtain stable pricing, eliminating the future

need to shop around. Stable pricing allows the company to

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budget operating expenses and capital purchases more

accurately, while potentially preventing the likelihood of

surprise expenses.

New business partners - Outsourcers clearly wish to be

viewed as your business partner. And as a business partner,

they share in the desire to keep your company operating at

its maximum potential. Through this business partner

arrangement, outsourcers are eager to introduce you to

other outsourcers to assist in that goal.

More time to focus on core business activities - You

cannot overlook this intangible benefit of outsourcing. If a

company is to be successful and profitable, management is

needed to spend time planning and directing the company's

business strategies and not wasting time worrying about

managing certain administrative or ancillary functions.

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WHY

I N D I A?

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Just as the Gulf has its natural resources in crude oil and

South Africa in diamonds, India's natural resource lie in its

abundant technically skilled manpower. India is the world's

second largest exporter of software (after the U.S.), and is

the source of management and technical talent for over 40

per cent of new start-ups in Silicon Valley. Thanks to its large

English-speaking scientific and higher education institutions,

specialist computer institutes, and low costs of software

talent, India has more software companies with ISO 9000

certification than any other country in the world.

There is more than enough evidence of the superlative role

that Indians play in the progress of the Net. The impact of

India's success abroad is also being felt. The stars of the

Indian Internet industry are the Web solutions and Webware

companies, many of whom have made the transition from

offshore turnkey and services companies to full-fledged e-

commerce service providers and Web strategy consultants.

IT heavyweights like Microsoft, Intel, Cisco and Compaq

always feature India prominently in their itineraries.

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Benefits of Outsourcing in India

India offers many advantages that make it the favorite

of 82 percent of US software export market (Nasscom).

Large pool of computer literate and English speaking

professionals

Well recognized Information technology skills

Wide gap between personnel costs in India and

developed countries.

Work practices largely comply with ISO and SEI CMM

standards. Three out of every four SEI-CMM 5

companies worldwide are located in India.

Quality standards meet the approval of the world. India

exports software to more than 95 countries.

India has a stable political environment and pro-IT

government.

Reliable satellite and submarine communication links

facilitate good broadband connectivity with the rest of

the world.

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According to the National Association of Software & Service

Companies, the Indian software industry lobby, almost half

the Fortune 500 companies now use Indian Software

services. With over 4 million highly trained English speaking

technical personnel (second only to the USA), heavy

government support and leading world class software

companies, India is set to become the software giant of the

new Millennium. Furthermore, a World Bank funded study in

the United States confirmed that vendors rated India as their

number one choice for outsourcing. Other industry sectors

have benefited greatly from their decision to outsource to

India: The U.S. and India have an average 12-hour time zone

difference, but this kind of use of datacom can provide a

virtual 24-hour office to a client in the U.S. Lately, this

concept has worked wonders for large projects and also for

projects involving remote software maintenance using video

conferencing. Offshore projects mean immense time and

cost savings.

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TOP 15 BPOS IN INDIA

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Top 15 BPOs in India

1 WNS

2 WIPRO BPO

3 HCL TECHNOLOGY BPO SERVICES

4 IBM DAKSH

5 EXL SERVICES

6 MPHASIS BPO (FORMERLY MSOURCE)

7 INTELENET GLOBAL

8 ICICI ONESOURCE

9 GTL

10 PROGEON

11 24/7 CUSTOMER.COM

12 DATAMATICS TECHNOLOGIES

13 HINDUJA TMT

14 TRANSWORKS

15 TRACMAIL

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Highlights of the Indian BPO Sector:

BPO 2002-03 2003-04 2004-05 2005-06 E

Exports ($bn) 2.5 3.6 5.2 7.3

Domestic($bn)

0.2 0.3 0.6 0.8

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Totalemployment

171,000 245,000 348,000 470,000

BPO employee base has grown at a CAGR of 52.6 per

cent, from 42,000 in 2001-02 to 348,000 in FY 2004-05.

As of March 2005, there were around 410 ITES-BPO

players in India, up from 285 in FY 2003-04.

Captive units continue to dominate the segment,

accounting for over 65 per cent of the value of work off-

shored to India.

The domestic market for BPO also witnessed a

significant increase in demand with the estimated value

of work outsourced (by domestic clients) rising from

$300 million in FY 2003-04 to $600 million in FY 2004-

05.

Key drivers of growth in domestic demand for BPO

include the high degree of competition in the domestic

telecom and BFSI verticals with companies laying

increased emphasis on customer fulfillment and other

CRM activities.

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Integration of IT-BPO contracts is becoming more

common.

The BPO companies are gaining significant traction in

transaction processing, with more and more firms

balancing voice and non-voice business portfolios to

diversify revenue and raise seat utilization.

While the leading global services firms scramble to

ramp-up offshore operations in India, Indian vendors are

developing multi-location delivery capabilities. Apart

from India, firms are setting up facilities in China,

Eastern Europe, Ireland, and Philippines. Within the

country they are expanding to tier-II cities such as

Mysore, Nasik, Vizag, Jaipur, Chandigarh and

Trivandrum.

The year gone by was a period of significant market

activity for the BPO sector in India. Coupled with the

growing stock of firms expanding their offshore

initiatives in India, was the wave of consolidation as

several large M&A deals were scripted in the industry

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like GECIS-Oak Hill/General Atlantic Partners, Daksh-

IBM, e-serve-Citigroup, etc.

Emerging opportunity areas for the BPO sector:

The previous year witnessed a significant pickup in

global interest for HR BPO. Global potential for HR

outsourcing in 2004 was estimated at $10.8 billion --

offshore-able potential estimated to be over $5 billion.

Value of HR BPO offshored to India in FY 2004-05 was

$165 million, up 120 per cent from $75 million in the

previous year.

A new breed of high-end knowledge based BPO called

Knowledge Process Outsourcing emerged. This

comprises of vendors providing higher-end research

and analytic based services - in traditional service lines

as well as new business areas.

Areas with significant latent potential for KPO include

healthcare -pharmaceuticals and biotechnology, legal

support - intellectual property research, design and

development for automotive and aerospace industries,

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and animation and graphics in the entertainment

sector.

F&A (Finance and Accounting) outsourcing is emerging

as one of the fastest growing BPO segments. While

earlier, the majority of F&A outsourcing deals were

focused on transaction processing; now customers want

BPO solutions providers to manage almost the entire

business process.

Procurement outsourcing is an emerging area as more

and more firms are seriously investigating this option.

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RETENTION

AN INTRODUCTION

RETENTION

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It is no wonder that in todays aggressive business

environment, the challenge of sustaining a competitive

advantage preoccupies the minds of many business leaders.

Todays businesses are more dependent than ever before on

their top performer to innovate and provide services that

differentiate a company from its fierce competitors. In other

words, organizations are reliant upon their human assets to

survive and thrive. All this leads to understanding of one of

the pressing issues of business today: Retention of

Employees

Retaining talent was less of an issue in the past, but the

shifting tides of the unspoken employee / employer

relationship settings have created new currents in the

workplace. The old relationship demanded employees to:

Work hard

Be loyal

Give their all

In return, they would have:

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A job security

A home away from home

Regular salary increases

A good chance for a promotion

The new relationship setting is substantially different. It

implies that employees must now work harder, doing not

only their jobs, but the jobs of their former coworkers who

were right-sized. In return, job security is extinct. Salary

increases are modest at best, and the constant uncertainty

of change is almost guaranteed. Leaving no room to wonder

why employees loyalty is on the demise and talented

individual contributors and managers feel less bonded to

their organizations.

In this era, employees are more ambitious, equipped with

knowledge, well informed about the industry trends and

economic scenario, are willing to give what it takes to make

the organization reach to the sky, but it is equally crucial for

organizations to understand and appreciate that this calls for

a proactive stand to be taken by the organizations to keep

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these talented employees happy, productive and loyal. With

an ever-lasting dearth of talent I the labour force market, an

opportunist competitor, and an employee force clearer about

what they want in terms of their association with their

employer, it is imperative for organizations to think of

devising strategic initiatives to retain its true essence of

survival and success their employees.

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IMPORTANCE

OF

RETENTION

Though employee turnover is a matter of great concern to all

the organizations, but some amount of employee turnover is

healthy to keep the fresh blood coming into the organization

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system. However beyond a certain point it acquires a

manifold dimension, which needs a serious attention.

Employee retention is very crucial as today; it is well known

fact that an organization is an entity because of its

employees. Considerable time and efforts have gone into the

subject of employee retention at strategic level for its sheer

importance.

Lets look at various dimensions, which emphasize the

significance of retaining employees:

Cost of losing an employee:

o The loss to the firm when an employee leaves is

to the effect of 2 to 2 times his annual salary

(according to expert Robert Granno in his

Employee Retention Survey of 2001)

o Explicit costs are:

Loss of productivity

Funds required to refill the position

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Set up time for a new employee to work

efficiently.

o

Implicit costs are:

Cost of knowledge lost and information about

the company practices and other vital

functions now available to the new employer

the firms competitor.

Reduced productivity from departing

employee who is inevitable distracted during

his job search and therefore contributes less

during this period.

Disruption in the customer relationships.

Talent is only differentiator:

o In a global marketplace driven by ideas and

changed by the technology, brainpower is the real

source of competitive advantage. It is well

recognized fact that no organization can seems to

survive and differentiate itself on technology, the

competitors soon follow the pursuit at the same

time in a market economic set up, and price as

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well cannot be a true differentiator with out

cutting margins for the ones own bottom line

profits. Thus it is these talented employees who

stand to offer an organization a USP or an edge on

their competitors.

A shift in the employee mindset:

o Today the employees overall expectations have

changed, if their work isnt challenging,

meaningful and focused on growth and

development they would move on to associating

themselves with the firms which offers them all of

this which had been missing in its present firm.

Blind loyalty to an organization is a thing of the

past. Workaholics are there but they are a minor

segment of work force who is striving for a

work/life balance, demanding a quality life outside

the office premise as well.

o Employees needs a boss who is understanding,

allows opportunities for employee development,

provides guidance, is fair in his dealings and

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attempts at synergizing employees goals with the

organizations goals and objectives. A discrepancy

in these expectations from a boss leads to

employees accepting an attractive offer coming

his way with the hope of working for a boss who

matches his expectations.

Risk of losing employees at the time of

downsizing:

o In the on-going era of recession, it has been

observed that the downsizing survivors the

workers who remain in their jobs after the cutback

announcements and departures begin to flow

out the door 6 to 2 months after the initial layoffs.

Overworked and downtrodden, they hold little

hope for the company and themselves within it

and, in turn, look elsewhere and leave. This

phenomenon is also referred to as the Second

Wave of departures and it often includes the kind

of talent that a downsized company cant afford to

lose: the best and the brightest.

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Employees always have an option:

o Employees always competitors offering an

attractive job profiles in an attempt to lure these

employees to join them. With such lucrative offers

at hand at all times, employees are under no

compulsion to work for an organization where

they are not satisfied.

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THE

A

WORD

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ATTRITION

A rubbing away or wearing down by friction.

A gradual diminution in number or strength

because of constant stress.

A gradual, natural reduction in membership or

personnel, as through retirement, resignation, or

death.

Repentance for sin motivated by fear of

punishment rather than by love of God.

Total Number of Resigns per month (Whether

voluntary or forced) divided by (Total Number of

employees at the beginning of the month plus total

number of new joinees minus total number of

resignations) multiplied by 100.

The business process outsourcing (BPO) industry in the

country which is expected to employ around one million

people by 2008 is facing the challenge of finding quality

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human resources given the current attrition rate of around

50 percent.

Analysts say attrition rates vary by 20%-40% in some firms,

while the top ones averages at least 15%. Nasscom in a

report said the outsourcing industry was expected to face a

shortage of 262,000 professionals by 2012.

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 said in its Indian BPO industry report.

Mercer India said the industry should look beyond the

traditional areas of recruitment and some thought should be

given to employ physically challenged people and

housewives. The reasons for the high rate of attrition was

due to various factors like salary, work timings, other career

options, adding that there is always the danger of costs

increasing while billing rates decline.

With 245,100 people employed at the end of March 31, 2004

against 171,100 last year, the industry witnessed a hiring

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growth rate of about 40-42 percent. On the hiring front, the

industry absorbed about 74,000 people in 2003 despite the

attrition rate of 45-50 percent being a matter of concern.

Attrition rates in IT-enabled business process outsourcing

sector have come down from the 30-33 per cent being

witnessed of late to about 25 per cent now, according to

statistics compiled by the National Human Resource

Development Network.

ATTRITION RATES %

US 42%

AUSTRALIA 29%

EUROPE 24%

INDIA 18%

GLOBAL AVERAGE 24%

*SOURCE-TIMES NEWS NEW YORK (2005)

If you compare attrition rates for a Voice and Non-voice

process, then attrition rates are significantly lower in a non-

voice process. As the industry moves up the value chain and

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becomes a full-scale BPO player, attrition rates will further

decrease.

For BPO service providers, moving up the value chain is

critical, given the attrition rates in the industry, which are on

an average higher in low value-added segments (in call

centers) as compared to higher value-added segments like

engineering.

It will not be possible for the industry to arrive at a blanket

agreement on poaching but bilateral agreements between

companies are being signed. Basic norms are being put in

place and code of ethics is being stressed upon by industry.

Companies are being encouraged to adopt responsible

behavior in order to ensure that the industry does not

become a victim of its own actions. Industry needs to go

aggressive but not cannibalistic.

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 ITES-BPO industry. India

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has one of the largest pool of English speaking graduate

workforce. The challenge for the industry is not in

employment but employability. The industry is also hiring

professionals from outside the industry in order to meet its

steady supply of manpower.

Honest corporate managers will tell you that to make

offshoring work; you need at least a 300% to 400% wage

spread between American software writers, engineers,

accountants, and call-center employees and their Indian and

Chinese counterparts. Labor costs have to be very, very low

overseas -- not just lower -- to compensate for time-shifting,

managing over such long distances, and decreased

productivity.

High attrition rate, price wars, poor infrastructure and lack of

data protection laws could derail India's booming outsourcing

industry.

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WHY

PEOPLE

ARE

MOVING?

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Is it only MONEY that matters or anything else as well??

Below are few reasons for a BPO professional to change

his/her job.

No growth opportunity/lack of promotion

For higher Salary

For Higher education

Misguidance by the company

Policies and procedures are not conducive

No personal life

Physical strains

Uneasy relationship with peers or managers

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WHY

EMPLOYEES

STAY?

Career growth, learning and development

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Exciting and meaningful work, making a difference and

a contribution

Participation in decision making process

Great interpersonal relationship with peer groups

An understanding and nurturing Boss- Subordinate

relation

Transparent systems

Recognition for work well done

Respect and dignity for work and employees across all

levels

Autonomy and sense of control over work

Flexible working hours

Fair pay and benefits

Inspiring leadership

Pride in organization, its mission and quality of product

Great work environment and settings

Job security

Scope for work-life balance

Cutting edge technological support

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Access to knowledge and databank

These findings provide any organization with a clear scope

and a framework to formulate the retention strategy specific

to employees of a particular organization.

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RESEARCH

FINDINGS

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The organizations surveyed adopted the following

approaches:

GENPACT

Genpact takes a three-pronged approach to people

management--hiring right, training right, and rewarding

right. The approach aims to achieve three goals critical to

the success of Genpact:

Get the right people on board

Continuously deepen and widen the knowledge pool

Retain the knowledge within the company

Genpacts rewards philosophy is to provide career-path to

make dream careers, fulfill aspirations to retain

people and knowledge and provide continuous

improvement in professional value

Genpact identifies and grooms talent early across all levels

of the organization through various programs. Programs

such as Session C identify talent for future growth. Also

Genpacts variable compensation programs reward

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outstanding performance, which on average works out to

30 percent of the total compensation.

Conventional monetary and career growth is complemented

by rewards on a personal level. The rewards are based on

empowerment at the lowest level, cheers and spot

recognitions to reward people, internal job rotations and

global placements, performance management through

career development and succession planning, training to

provide global certifications and professional and leadership

development, mentoring, flexible working hours

Empowerment is a key reward at Genpact. This is achieved

through idea generation and implementation programs such

as EnerGE and LEAN that engage and empower employees in

deciding how operations run. EnerGE and LEAN programs

encourage and reward employees that suggest and

implement process improvements.

SAFFRON

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Saffron implements work-life balance initiatives to reinforce

the retention strategies. Innovative and practical employee

policies pertaining to flexible working schemes, granting

compassionate and urgency leave, providing healthcare for

self, family and dependants, etc.

Work-life balance policies would have a positive impact on:

Attracting high calibre recruits

Retaining skilled employees

Reduce recruitment costs

Improve employee morale

Maintain a competitive edge

Employee Satisfaction Survey is institutionalized to ensure

that the voice of employees is formally captured. The results

of these surveys are discussed by the management team

and action plans formulated.

Besides entertainment and other welfare activities, Saffron

conduct various motivational outdoor activities like nature

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camping, sports events etc. Employees are rewarded for

quality performance through incentives and recognition.

WNS

WNS opted for a competency-based framework for selection

and promotion of its key personnel. About 700 people have

been put through this programme, which targets customer

service associates and goes up to service delivery managers.

The idea is to fill up a majority of the leadership positions

from within WNS instead of importing talent from outside. It

is also an attempt to keep out bias in the system and

increase transparency. The programme is performance-

driven and puts in place a scientific process, which matches

employees knowledge, skills and attributes with the role

requirements. WNS now has a more scientific and robust

basis for selection of employees. It ensures a better person-

role fit that benefits the employee and the organization.

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Apart from compensation, developing managerial talent from

within the organization is considered to be an important

retention tool. Skills of the middle management level would

be critical as operations are ramped up. Identifying talent

and building capabilities to enable them to handle larger

teams and develop new skill-sets that drive business dealing

capability is needed.

VERTEX

VERTEX has implemented a number of employment

retention strategies based on the feedback of an employee

satisfaction survey. On the other side, VERTEX continuously

has incentive programs such as a pay-for-performance

programme. There is also a perfect attendance week, at the

end of which there is a lottery and the winner wins exotic

prizes.

VERTEX is also recruiting 40-50 years old people, housewives

and disabled people for part-time jobs to control high

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attrition rates and increase stability. It brings in domain skills

as well as access to new customers.

In addition for professionally qualified employees like CA and

MBA, an individual can choose from managing quality, get

into training, Six Sigma process, problem solving equations,

relationship management, HR and workflow activities or

business development.

WIPRO

In WIPRO Innovation Trip is a new concept people

management. Innovation Trip adds excitement and

effectiveness to the training by combining it with visit to

places, which will inspire executives to implement the topics,

that employee, learned.

Innovation Trip facilitates this by provoking the power of

imitation, seeing those things in action that have been

formed by practical implementation of skills learned.

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Using Innovation Trip, leaders, managers and bright staff can

take away the culture of innovation from various places and

apply it back to their companies. Innovation Trip will

energize their staff, unleash the true needs of their

customers with customer-centric innovation methodologies

(without actually asking them) and enhance process

innovation as teamwork in their organizations to better serve

their customers abroad.

WIPRO encourages the best performers to share their

experiences with others and mentor others.

The emphasis is to create the desire to learn, enjoy and be

passionate about the work they do. Meditation Room or deep

breath exercises for Associates & Team Leaders are there to

emphasize that they should never be in the stress mode or

upset while attending calls of a customer.

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EMPLOYEE

BENEFIT

INITIATIVES

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Employee Benefits Provided By Majority Of the BPO

Companies

Group Medi-claim Insurance Scheme: This

insurance scheme is to provide adequate insurance

coverage of employees for expenses related to

hospitalization due to illness, disease or injury or

pregnancy in case of female employees or spouse of

male employees. All employees and their dependent

family members are eligible. Dependent family

members include spouse, non-earning parents and

children above three months

Personal Accident Insurance Scheme: This

scheme is to provide adequate insurance coverage

for Hospitalization expenses arising out of injuries

sustained in an accident. This covers total / partial

disablement / death due to accident and due to

accidents.

Subsidized Food and Transportation: The

organizations provide transportation facility to all the

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employees from home till office at subsidized rates.

The lunch provided is also subsidized.

Company Leased Accommodation: Some of the

companies provides shared accommodation for all

the out station employees, in fact some of the BPO

companies also undertakes to pay electricity/water

bills as well as the Society charges for the shared

accommodation. The purpose is to provide to the

employees to lead a more comfortable work life

balance.

Recreation, Cafeteria, ATM and Concierge

facilities: The recreation facilities include pool

tables, chess tables and coffee bars. Companies also

have well equipped gyms, personal trainers and

showers at facilities.

Corporate Credit Card: The main purpose of the

corporate credit card is enable the timely and

efficient payment of official expenses which the

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employees undertake for purposes such as travel

related expenses like Hotel bills, Air tickets etc

Cellular Phone / Laptop: Cellular phone and / or

Laptop are provided to the employees on the basis of

business need. The employee is responsible for the

maintenance and safeguarding of the asset.

Personal Health Care (Regular medical check-

ups): Some of the BPO'S provides the facility for

extensive health check-up. For employees with above

40 years of age, the medical check-up can be done

once a year.

Loans: Many BPO companies provide loan facility on

three different occasions: Employees are provided

with financial assistance in case of a medical

emergency. Employees are also provided with

financial assistance at the time of their wedding. And,

The new recruits are provided with interest free loans

to assist them in their initial settlement at the work

location.

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Educational Benefits: Many BPO companies have

this policy to develop the personality and knowledge

level of their employees and hence reimburses the

expenses incurred towards tuition fees, examination

fees, and purchase of books subject, for pursuing

MBA, and/or other management qualification at

India's top most Business Schools.

Performance based incentives: In many BPO

companies they have plans for, performance based

incentive scheme. The parameters for calculation are

process performance i.e. speed, accuracy and

productivity of each process. The Pay for

Performance can be as much as 22% of the salary.

Flexi-time: The main objective of the flextime policy

is to provide opportunity to employees to work with

flexible work schedules and set out conditions for

availing this provision. Flexible work schedules are

initiated by employees and approved by

management to meet business commitments while

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supporting employee personal life needs .The factors

on which Flexi time is allowed to an employee

include: Child or Parent care, Health situation,

Maternity, Formal education program

Flexible Salary Benefits: Its main objective is to

provide flexibility to the employees to plan a tax-

effective compensation structure by balancing the

monthly net income, yearly benefits and income tax

payable. It is applicable of all the employees of the

organization. The Salary consists of Basic, DA and

Conveyance Allowance. The Flexible Benefit Plan

consists of: House Rent Allowance, Leave Travel

Assistance, Medical Reimbursement, Special

Allowance

Regular Get together and other cultural

programs: The companies organizes cultural

program as and when possible but most of the times,

once in a quarter, in which all the employees are

given an opportunity to display their talents in

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dramatics, singing, acting, dancing etc. Apart from

that the organizations also conduct various sports

programs such as Cricket, football, etc and regularly

play matches with the teams of other organizations

and colleges.

Wedding Day Gift: Employee is given a gift voucher

of Rs. 2000/- to Rs. 7000/- based on their level in the

organization.

Employee Referral Scheme: In several companies

employee referral scheme is implemented to

encourage employees to refer friends and relatives

for employment in the organization.

Employee Stock Option Plan

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INNOVATIVE

INITIATIVES

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ICICIOneSource, one of the Indias largest third-party BPO

outfits, offers employees whove been with the company for

18 months the opportunity to move across the ICICI group.

Of course, they need to be suitably qualified and pass all the

necessary tests, but the opportunity works as a huge

incentive. Not only does it help retain trained talent within

the group, it also sends the critical message down the line

that employees are being trained in skills that have a market

value.

Training and higher education opportunities are also

significant carrots companies dangle in front of their

employees. e-Serve, Citigroups captive BPO center, tied up

with ICFAI in 2004 to offer a three-year

MBA programme for its employees.

Classes are held on weekends and the top 10 students will

have their fee reimbursed by the organisation. Intelenet

and OneSource, too, offer on-site education programs,

apart from the regular on-the-job training.

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In most cases, the courses are loyalty rewards and offered to

employees whove lasted at least six to 12 months.

Intelenet has promised to reimburse the fees of all students

who graduate from its on-site MBA course by Narsee Monjee

Institute of Management Studies only, of course, if they

are still employed with the organisation.

More than a quarter of Wipros 33,000 employees are

women. They have the flexibility to work from home and

relocate to Wipro offices in other cities.

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RECOMMENDATION

S

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Though, it is impossible to scrap problems totally, there are

certain ways by which BPO managements can tackle

attrition. Since the BPO environment is unique, these

companies need to develop innovative ways to tackle them.

Human Resources department of a BPO must address these

issues, and along with the management need to evolve

strategies to retain employees at all levels.

At the time of Recruitment

Select the right people through competency screening.

Use psychometric tests to get people who can work at

night and handle the monotony.

Offer an attractive, competitive, benefits package.

Make clear of performance enhanced incentives and

other benefits. Keep these promises, later.

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BPOs can set up offices in smaller towns, or recruit from

there, where opportunities are few.

At the office

An employees work must be communicated to him

clearly and thoroughly. The details of the job, its

importance, the way it should be done, maximum time

that can be allotted to complete it etc., must be made

clear. If there are changes to any of these, let the

employee know at the earliest

Give the employees necessary tools, time and training.

The employee must have the tools, time and training

necessary to do their job well - or they will move to an

employer who provides them.

Have a person to talk to each employee at regular

intervals. Listen and solve employee complaints and

problems, as much as possible. Fairness and impartial

treatment by seniors is important. Help employees

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manage stress, both at work and if possible, off work

too. Give them special concessions, when in need. Treat

the employees well & provide dignity of job.

The quality of the supervision an employee receives is

critical to employee retention. Frequent employee

complaints arise on this issue.

Provide the employees a stress free work environment.

People want to enjoy their work. Make work and work

place cheerful and fun-filled as possible.

Make sure that employees know that their work is

important for the organisation. Feeling valued by their

employer is key to high employee motivation and

morale. Recognize their strengths and help them to

improve those they lack.

Employees must feel rewarded, recognised and

appreciated. Giving periodical raise in salary or position

helps to retain staff.

Offer excellent career growth prospects. Encourage &

groom employees to take up higher positions/openings.

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If they dont get opportunity for growth within the

organisation, they will look elsewhere for it.

Work-life balance initiatives are important. Innovative

and practical employee policies pertaining to flexible

working hours and schemes, granting compassionate

and urgency leave, providing healthcare for self, family

and dependants, etc. are important for most people.

Work-life balance policies would have a positive impact

on retaining skilled employees, as well as on attracting

high-calibre recruits.

Implement competency models, which are well

integrated, with HR processes like selection &

recruitments, training, performance appraisal and

potential appraisal.

Night shifts

Have doctors to advise them about health problems and

the ways and means to deal with them. Provide dietary

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advice: - Dos and Donts. Help them to maintain their

health.

Organise programs where people from other

professions, who have night shifts talk to BPO

employees about their experiences. Other organisations

like Army, Railways, Hospitals and various government

services etc., also have night shifts.

Organise training, counseling and development

programs for employees. Tell them that their work is

important. Encourage the best performers to share their

experiences with others and guide others. The

emphasis is to create the desire to learn, enjoy and be

passionate about the work they do.

If needed, provide special lights in the office/workplace

to ensure that their bodies get sufficient vitamin D.

One distinct disadvantage of night shifts is the sense of

disorientation with friends and family members.

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Concentrate on this problem and develop innovative

solutions and ways to deal with it. Additional holidays

for work on national holidays and festivals, holidays for

family functions etc., can go a long way.

LIMITATIONS

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As its related to human behaviour and needs, the survey has

its own limitations in terms of its implications. One retention

strategy may not work with the various organizations. It

leaves an onus on HR to examine and analyze the

organisations needs and recruit people according to it.

There is a constant need to innovate the HR practices to

keep the employees hooked to the organization as the

evolving nature of BPO sector can pose a serious threat to

the organization workforce.

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REFERENCES

AND

BIBLIOGRAPHY

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In-depth interviews and discussions with HR personnel

Magazines and journals

World Wide Web

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ANNEXURES

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QUESTIONNAIRE

What do you feel are the major causes for employeesleaving your organization?

How are the retention techniques identified andfinalized upon?

How would you differentiate your employee retentionpatterns from your competitors?

What are the practices adopted by your firm in order toretain the employees?

Are there any innovative retention practices adopted byyour firm?

What are the various employee benefits initiatives yourfirm has in practice?

Do you have any exit interview or any other tool tofacilitate organizational exit and to identify the cause

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