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UNIVERSITY OF MUMBAI

A PROJECT ON
ATTRITION

SUBMITTED BY
Ayyangar Nisha Jagannathan
TYBMS Vth SEMESTER

PROJECT GUIDE
Mrs Swati Nalawade

YEAR (2007-08)
S.I.E.S (Nerul) college of Commerce
Sri Chandrasekarendra Saraswathy Vidyapuram,
Plot 1-C, Sector V, Nerul, Navi Mumbai-400706

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If employees are to be
products,
Their shelf lives are
getting shorter

“ATTRITION”

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ACKNOWLEDGEMENT

The successful completion of this project was a result of the kind co-operation &

guidance I have received from various persons & institution. Though I would like to

acknowledge them individually I mention below only few though the contribution from the

rest was of no less importance.

Firstly I thank the S.I.E.S (Nerul) college of Arts, Science and Commerce, and the staff

of the college for having given me this opportunity to do this project and providing me with

the required advice and guidance.

I specially thank my project guide ____________________ for sparing her valuable

time and effort to give me the necessary information and clearing my concepts regarding my

topic and completing this project successfully.

Finally I am grateful to my friends and many other Call center employees for providing

me with the information by responding to the survey conducted by me.

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CERTIFICATE

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DECLARATION

I, NISHA JAGANNATHAN OF S.I.E.S (NERUL) COLLEGE OF ARTS,

SCIENCE & COMMERCE HEREBY DECLARE THAT I HAVE COMPLETED

THE PROJECT ENTITLED ATTRITION IN PARTIAL FULFILLMENT OF

THE REQUIREMENT FOR THE THIRD YEAR OF THE BACHELOR OF

MANAGEMENT STUDIES COURSE FOR THE ACADEMIC YEAR 2007-

2008.

I FURTHER DECLARE THAT THE INFORMATION SUBMITTED BY

ME IS TRUE AND ORIGINAL TO THE BEST OF MY KNOWLEDGE.

DATE: STUDENT NAME:

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INDEX

Sr. no. CONTENTS Pg.No.


01. EXECUTIVE SUMMARY 08.
02. OBJECTIVE OF THE PROJECT 09.
03. METHODOLOGY OF STUDY 09.
04. DEFINING ATTRITION AND PROBLEM 10.
05. REASONS FOR ATTRITION 12.
06. HOW TO HANDLE ATTRITION? 16.
07. HOW TO SAVE HIGH ATTRITION RATES? 23.
08. HOW TO CURB ATTRITION? 27.
09. COST OF TURNOVER 36.
10. ARTICLE: ‘Attrition at Call Canters’ 47.
11. CASE EXAMPLE : 'I'll never work at a call 50.
centre again!'
12. WHY PEOPLE ARE LEAVING BPO’s? 53.
13. QUESTIONNAIRE ON ATTRITION 63.
14. CONCLUSION
15. BIBLOGRAPHY

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EXECUTIVE SUMMARY

Human Capital is the most crucial resource on which the Information Technology &

Information Technology Enabled Services (IT & ITES) industry in India depends. Next to the

location advantage that India has, the factor for the country's immense success in the overseas

markets, is its abundant & cost effective human capital which is one of the key asset that has

kept India sustain its edge in the ITES sector Human Resource (HR) professionals all over the

world, working in Call-Center or Contact Center or BPO industry are leaving no stone

unturned to formulate strategies to retain human capital, but nothing is working in their favor.

In spite of all their trials the average attrition rate in the BPO this sector is still very high.

In the best of worlds, employees would love their jobs, like their coworkers, work hard

for their employers, get paid well for their work, have ample chances for advancement, and

flexible schedules so they could attend to personal or family needs when necessary. And never

leave.

But then there's the real world. And in the real world, employees, do leave, either

because they want more money, hate the working conditions, hate their coworkers, want a

change, or because their spouse gets a dream job in another state.

So, what does that entire turnover cost? And what employees are likely to have the

highest turnover? Who is likely to stay the longest?

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OBJECTIVE:

The objective of this project is to understand the retention strategies adopted by

various Indian BPO companies (especially the call centers) and propose innovative strategies

that these companies can adopt to get a better solution to this Herculean problem that the BPO

industry is facing. Though the issues and options analyzed are with respect to Indian service

providers, the same may be applied to service providers across the globe as the issues and

options remain the same irrespective of place of operation.

METHODOLOGY OF STUDY:

To know about retention strategies adopted by various Indian BPO companies

(Especially the call centers) the Internet and print medium like magazine and newspaper were

used in which the interviews of HR managers were published. The reason behind choosing

call center segment of BPO is, Customer care based call center activities constitute for more

than one third of the total employment and revenue in BPO segment.

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DEFINING ATTRITION:

"A reduction in the number of employees through retirement, resignation or

death"

DEFINING THE ATTRITION PROBLEM:

Attrition is beginning to significantly affect offshore return on investment(ROI.) Just

as businesses faced a scarcity of talented IT resources during the dotcom era, organizations in

offshore countries such as India are experiencing similar pains. Skilled employees are hopping

from job to job and taking with them the customer knowledge and technical expertise that any

company needs. Their salaries are increasing, along with their perks, benefits, and bonuses.

Global outsourcing and the astounding amount of foreign direct

investment pouring into China, Russia, and India have created tremendous

opportunities and competition for talented IT professionals in those

countries. The downside of this increased competition is a rising rate of

attrition, particularly in India. Fiscal third-quarter 2005 (ended December

2004) results filed by Infosys, Wipro, Satyam, and TCS listed attrition rates

between 7.6% and 17.7%. while an April 2005 BusinessWeek article estimated an attrition

rate of 60%, with some Indian service providers experiencing up to 80% turnover.

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To put these attrition numbers into perspective, if a company has 100 programmers and

an attrition rate of 25%, then 25 of its IT staff will leave each year. Think about the time and

money it took to find, interview, hire, train, and coach those 25 people. Now think about

losing them and starting the hiring and training processes anew.

How do the hiring and training processes break down in terms of total costs in India?

The typical time for advertising, interviewing, screening, negotiating, and hiring a new

employee is about two weeks. Companies usually allot one week for programmers to become

familiar with the new business, two more weeks for technical training, and one last week for

customer training. Now imagine a 25% attrition rate and replacing 25 of these programmers

each year. Based on a yearly salary of $15,000 for the human resource person and $25,000 for

the programmer, it would cost an additional $63,000 annually in acquisition and employee

training costs. After considering these figures, it quickly becomes apparent why companies are

investing in strategies to prevent attrition.

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REASONS FOR ATTRITION:

It is not easy to find out as to who contributes and who has the

control on the attrition of employees. Various studies/survey conducted

indicates that every one is contributing to the prevailing attrition. Attrition

does not happen for one or two reasons. The way the industry is projected

and speed at which the companies are expanding has a major part in

attrition.

For a moment if we look back, did we plan for the growth of this

industry and answer will be “NO”. The readiness in all aspects will ease the

problems to some extent. In our country we start the industry and then

develop the infrastructure. All the major IT companies have faced these

realities. If you look within, the specific reasons for attrition are varied in

nature and it is interesting to know why the people change jobs so quickly.

Even today, the main reason for changing jobs is for higher salary and

better benefits. But in call centers the reasons are many and it is also true

that for funny reasons people change jobs. At the same time the attrition

cannot be attributed to employees alone.

• Organizational matters:

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The employees always assess the management values, work culture,

work

practices and credibility of the organization. The Indian companies do have

difficulties in getting the businesses and retain it for a long time. There are

always ups and downs in the business. When there is no focus and in the

absence of business plans, non-availability of the campaigns makes people

to quickly move out of the organization.

• Working environment:

Working environment is the most important cause of attrition.

Employees expect

very professional approach and international working environment. They

expect very friendly and learning environment. It means bossism; rigid

rules and stick approach will not suit the call center. Employees look for

freedom, good treatment from the superiors, good encouragement,

friendly approach from one and all, and good motivation.

• Job matters:

No doubt the jobs today bring lots of pressure and stress is high. The

employees

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leave the job if there is too much pressure on performance or any work

related pressure. It is quite common that employees are moved from one

process to another. They take time to get adjusted with the new

campaigns and few employees find it difficult to get adjusted and they

leave immediately. Monotony sets in very quickly and this is one of the

main reasons for attrition. Youngsters look jobs as being temporary and

they quickly change the job once they get in to their own field. The other

option is to move to such other process work where there is no pressure of

sales and meeting service level agreements (SLA). The employees move

out if there are strained relations with the superiors or with the

subordinates or any slightest discontent.

• Salary and other benefits:

Moving from one job to another for higher salary, better positions

and better

benefits are the most important reasons for attrition. The salary and

offered from MNC companies in Bangalore, Delhi and Mumbai have gone

up very high (Rs 15000 to Rs 18000 per month) and it is highly impossible

for Indian companies to meet the expectation of the employees. The

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employees expect salary revision once in 4-6 months and if not they move

to other organizations.

• Personal reasons:

The personal reasons are many and only few are visible to us. The

foremost

personal reasons are getting married or falling in love or change of place.

The next important personal reason is going for higher education. Most of

the BE, MCA and others appear for GATE examination or other

examinations and once they get cleared they quickly move out.

Health is another aspect, which contributes for attrition. Employees do get

affected with health problems like sleep disturbances, indigestion,

headache, throat infection and gynecological dysfunction for lady

employees. Employees who have allergic problems and unable to cope

with the AC hall etc will tend to get various other health problems and

loose interest to work.

• Poaching:

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The demand for trained and competent manpower is very high.

Poaching has become very common. The big companies target employees

of small companies. The placement agencies have good days for doing

more business.

The employees with 4-6 months experience have very good confidence

and dare to walk out and get a better job in a week's time. Most of the

organizations have employee referral schemes and this makes people to

spread message and refer the know candidates from the previous

companies and earn too.

• Employee’s advocate:

One of the main reasons why employees leave companies is because

of problems with their managers. An HR professional can be termed an

employee’s advocate and a bridge between top management and

employees at all levels. There is a huge gap between HR professionals and

employees in terms of understanding challenges and delivering

requirements. HR has not really understood the problems associated with

employees’ careers and jobs. The company’s overall plans and strategies

also depend on HR professionals as they voice employees’ problems and

requirements. The HR department should have genuine interest in the

employees’ welfare…it is responsible for making sure that their

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expectations are met. By doing this it is easier to meet the company’s

business targets.

HOW TO HANDLE ATTRITION?

Earlier the retention was the sole responsibility of HR Department

and at the most the department heads will be accountable for the

retention of talent. In companies the wheels have changed and multi

dimensional approach needs to be adopted. More of concerted efforts only

would help to retain the talent. Everyone has to contribute to hold the

employees little longer period. All the leading companies are trying several

methods to retain the talent and few of those innovative HR

practices(based on a survey) are:

• Providing stimulating work environment:

In terms of stated work pressure, only 17% have claimed ‘light pressure’.

This may point to a reasonably high-pressure environment in conventional

terms, not realized as most respondents have no other industry

experience. The atmosphere at the workplace however, was generally

positive. Almost half worked more than 45 hours per week.


BASE 100 BASE 100

Heavy pressure 17% Happy 57%

Moderate pressure 66% Neutral 39%


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Light pressure 17% Unhappy 4%
• Free transport and free food:

Majority of the breaks were for meals and there were no significant

problems faced in taking the breaks.


BASE 100
BASE 100 Tea/Coffee/Refreshment break 69%
Yes- Problem to break 8% Lunch Break 76%
No - Problem to take break 88% Break fast 7%
Refused 4% Dinner 15%

All other break reasons 3%

Not specified 9%

Almost 2/3rd employees travel more than 10 kms to work everyday. This is

a huge strain on quality time available with the family and ostensibly

results in stress in numerous ways compared with other industries. The

root cause is that most


BASE BPOs are located100
outside the city as government

lands have been allocated to the MNCs at better


Up to 10 km. 68% rates there.

11-19 km. 12%

> 20 km. 18 17%

Can’t say 3%
Although taxi / bus services are provided by most employers, as many as

30% workers travel crammed (more than 5 persons to a taxi). What’s

more, 79% waste more than 30 minutes of their productive lives everyday

waiting for commute. Interestingly, lower salary workers get no such

benefits.

• Good rewards and recognition programmes:

As many as 56% admitted to being asked to work overtime. 44%

refused the question implying that conditions are created such that all

probably are coerced into working overtime. The oppressive part was

further that as high as 41% claimed to not having been paid for overtime.

BASE 100
BASE 100
1-2 hrs. 29%
Paid 59%
>2 hrs. 27%
Not Paid 41%
Refused 44%

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• Recreation clubs, Canteens, Entertain programmes , fun

activities with in the work area:

Many companies have canteens though the quality of food is not great.

BASE 100

Yes – canteen at work place 87%

No – No canteen 13%

BASE 100 BASE 100

Yes – Health affected 16% Good – Canteen quality 41%

No – Health not affected 80% Average 51%

Can’t say 4% Poor 4%

Can’t say 4%

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• Other practices include:

- Promotions and salary increase on a regular basis.

- Better learning opportunities, Encourage enroll for distance learning

programmes.

- Regular holiday packages, gifts, outings etc.

All the above activities are being undertaken to a greater extent or

little more in all large Companies. Surprisingly the attrition rate is not

coming down in any of the companies, but it is going up and it may

increase in the coming days. This is a time to introspect as to what is

lacking in the approach. One thing is missing is attention to individual

needs. Employees have varied expectations and it is becoming difficult to

understand them and by the time you make an attempt to understand the

expectation changes and it is still becoming difficult to meet the

customized demands or expectations. To quote an example, if a friend

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leaves, another close friend will also leave and he will lure another 3-5

persons. Moving for higher education and marriage are the major reasons

for attrition. To tackle these will be impossible with any type of strategies

and approaches. The HR personnel have become silent spectators and

start hunting for new personnel to replace.

The broader approach is to bring sanctity in the recruitment process

like demand the relieving letter from the previous company, have non-hire

agreements with the companies in the particular area. It is not easy to

bring the entire company under a forum. Nasscom has attempted to bring

out certain guidelines on the matter and the impact is not felt yet. The

MNC culture, high salary level and benefits offered by them are the only

two major aspect of attrition and no one can halt them doing so.

• How Insights Can Help Build Strong Manager/Employee

Relationships:

The Insights Discovery System is based on perspectives and

attitudes relevant to understanding organizational and cultural

requirements and needs of people in relation to motivation and leadership.

The understanding of individual differences that Insights provides is

fundamental to improving communication, co-operation and building

effective and high morale teams. This understanding is what bridges the

gap between manager and employee.

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The Insights Discovery System generates reports that reveal

personal preferences or triggers of each individual - including issues that

cause stress. In essence, Insights can bring about a closer relationship

between employee and manager to enable both parties to better adapt,

connect and understand one another.

An employee may be highly competent but his or her style may be

different from that of the direct manager. The "Value to a Team" section of

an Insights report provides crucial information to a manager who tends to

evaluate all employees against one set of standards. Insights can help

managers recognize the value and uniqueness of each person's

contributions then reward them accordingly.

Insights also serve as a communication vehicle for discussions about

an employee's current and future interests. Insights help managers and

employees better identify what values (needs) are most important to each

individual and how these values impact the person's attitude towards

work. Values can range from an employee feeling stable and secure to

someone enjoying challenge.

The Insights Discovery System is a powerful workforce enhancement tool.

It can:

- Enhance the effectiveness, commitment and retention of an incumbent

workforce though increased understanding of human behavior

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- Motivate and retain employees whose basic monetary and material needs

may have been satisfied, but who are seeking their internal drives

- Improve HR planning and development

- Identify motivational and managerial issues related to interpersonal

style

- Reduce the impact of turbulence and organizational transition on

employee commitment and productivity.

HOW TO SAVE HIGH ATTRITION RATES?

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• How much would you invest to keep your employees focused

and happy?

This is the question on the minds of CEOs and managers worldwide as the

technology boom lifts and the employment market opens.

From the employer's perspective, employees are an investment. You

interview to make sure an individual has good work ethic, motivation, and

drive. Most of the time, employees are considered a financial investment.

Yet there's much more to it than that. There is a significant emotional

investment that is crucial to accelerating business strategies and reaching

organizational goals.

You probably know someone who owns an outdated, overused vehicle but

won't entertain the thought of trading it in even though they can afford to

upgrade. Why, you might ask, do they keep it? Well, the owner has

probably invested substantial time, money and care into keeping it in top

condition, not to mention the dependability that has taken them to

countless doctors appointments, baseball practices and events. It seems

senseless to throw it away. The cost of replacing the vehicle would be

enormous compared to the cost of upkeep on the old one. Even with

inanimate objects, we become accustomed to personality and quirks and

develop a common trust.

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When this same logic is applied to employees, we find the cost of replacing

employees comparable to that of investing in a new automobile.

Recruitment, hiring, benefits and administrative costs put an organization

upside down on the investment.

Thankfully, companies have come to realize that keeping employees is

more cost-effective than replacing them. Retaining valuable employees

has other benefits - retaining the vault of knowledge that's been

accumulated, skills learned and trust and relationships they have built with

customers and co-workers.

• People Are Not Easily Replaced

Even though today's pool of unemployed workers is deep,

organizations choose to spend more time and resources on retaining

existing employees than starting from scratch. Yes, there are financial

reasons behind this focus on retention. However, there are many other

contributing factors such as the effect attrition has on customer service,

corporate culture and employee morale and loyalty. All these factors can

and will be effected by turnover. Basically, when good people leave an

organization they take their training and knowledge and often times,

relationships with them.

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• Drivers of Turnover

Turnover is often driven by corporate restructuring and tight

competition for key talent. For many firms, surprise employee departures

can have a significant effect on the execution of business plans and may

eventually cause a parallel decline in productivity. This phenomenon is

especially true in light of current economic uncertainty and following

corporate downsizing when the impact of losing critical employees

increases exponentially.

When managers or supervisors are asked why good people leave, most

respond, "It’s about money." Or, they dismiss the departure matter-of-

factly by stating the employee "received a better offer." Contrary to

popular belief, research indicates that money is not even on the list of top

five reasons employees give when asked why they are leaving an

organization.

When viewed from the employees' perspective, a healthy organization is

one in which people are generally satisfied with the quality of their work

life. On most days they feel good about going to work. They feel

empowered to help shape decisions that affect them, they have the

resources and skills to satisfy customer needs and they are generally

confident in the abilities of the leadership team.

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From the organization's perspective, the organization is healthy if it is

viable as measured by profitability, competitive market position and

customer satisfaction. A healthy organization also responds well to the

need for change; it is adaptive and thereby ensures its future - meaning

that following a major upheaval or transition, the healthy organization

rebounds and employees remain committed.

Bottom line, it is the role of the manager, that most influences an

employee's decision to stay or depart from an organization. People will

leave if they don't like their manager - even when they are well paid,

receive recognition and have a chance to learn and grow. In fact, disliking

or not respecting the boss is the primary reason for talent loss. Research

shows the reasons for employee departures are (in descending order):

1. Employee/manager relationship

2. Inability to use core skills

3. Not able to impact the organization's goals, mission

4. Frequent reorganizations; lack of control over career

5. Inability to grow and develop

6. Employee/organization values misalignment

7. Lack of resources to do the job

8. Unclear expectations

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9. Lack of flexibility; no 'whole life balance'

10. Salary/benefits

It is very important to know that the above factors are often NOT the

ones mentioned in most attrition studies published by individual

organizations. Additionally, this information does not match the data

frequently obtained during an employee's exit interview when asked about

the reasons for departing. The rationale behind this discrepancy is that exit

interviews are frequently conducted by the departing employee's manager

or HR manager, hindering honest responses. Typically, employees are

hesitant to tell these company representatives the truth for fear of burning

bridges or getting a bad reference.

HOW TO CURB ATTRITION?

• Money is not everything

Although the importance of higher packages is slowly diminishing, among

fresher or laterals with less than three years of work experience, money is

still considered to be the highest priority. Employees want not only work

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recognition, but also extra perks." A number of professionals are looking at

more challenging jobs. "In several cases, faced with a choice between

more money and a challenging job, employees have opted for the latter as

it allows them to learn new technology and increase domain expertise."

People analyze the training programmes of prospective companies with

those of their current organization, which means that how an organization

grooms an employee is weighed to a greater extent. This is because they

know that developing next-level skills will keep them ahead in the job

market, and finally result in better compensation. They also look for a job

with higher levels of responsibility, better learning opportunities.

• Vision and objectives

The next level of communication, a crucial part of retention, starts

with acquainting employees with the company’s vision and objectives.

Organizations successful in retaining employees clearly pass on their goals

and achievements. Conducting regular meetings and updating employees,

especially new entrants, about the company’s status and achievements is

a must.” They should concentrate on leadership and brand building as

people prefer to be associated with a brand. Respect for the job should be

created by BPOs. The youth should feel proud to be a part of the billion-

dollar industry.

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Mentoring and handholding new recruits from day one to four months are

important tasks; during this period, they should be familiarized with the

culture of the company. It is at this time that new entrants experiment with

different options. Hence they should be exposed to the best values the

company has.” If they are informed about regular happenings in the

company, employees will be confident about the future and not try to look

for better options.

• Treat employees like Customers

Even while companies strive to understand which organizational, job, and

reward factors will contribute to holding back employees, industry experts

have found several loopholes at the top management and HR management

level. Companies should have a similar approach to employees and

customers. If a company strives to retain an employee in the same way it

tries to retain a customer, him leaving the organization could be out of

question.

Since software professionals have different priorities at different points of

time, organizations need to structure their offer-mix while recruiting new

hires, as well as promoting potential ones. Communication is the

foundation for the entire process of managing attrition. This

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communication begins right from recruitment. In cases of peer pressure,

an employee aims to join a well-known company. This could be achieved

by brand building, which attracts the right talent and helps in retention as

well.

Understanding an employee’s needs at various levels is a recommended

HR practice.

• Firing

Sometimes, firing can look like attrition. Looking at firing and attrition

together in a different light, firing can be an excellent tool to contain

attrition. Attrition can simply be defined as employee leaving his current

job due to reasons like, job pressure, health problems, personal reasons,

inefficient boss, lack of job security etc. All the above reasons are

interlinked and can be the reasons for good workers to quit. If the team

has under-performers who despite given sufficient support and training is

unable to perform, but they continue to be part of the team damage the

morale of the team. A performer will not want to be part of the team, which

has non-performers because he will have to compensate for the non-

performer, thereby increasing his job output/pressure. A continuous job

pressure results in health problems. Having frequent health problems not

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only reduces his performance, but also affects him financially. At this

juncture, the performer realizes that he is working with an inefficient

manager who is not capable of “cleaning up” the team by firing non-

performers. With the above, the performer employee feels insecure and

resigns. Firing non-performers can be an efficient tool to contain attrition.

• Consider feedback

It is important to take feedback from employees through different means

and work with the HR department to iron out differences. As industry

experts point out, feedback can be got in two ways—during the employee’s

tenure, and through exit interviews. Inputs can be secured from existing

employees through various employee relationship management tools. The

Wipro Listens and Responds initiative at Wipro aims to capture the

concerns and grievances of its employees. “The feedback we get through

this tool will be analyzed, and action will be taken on it. Our employees are

very excited that their feedback is being taken seriously,” says Sahoo. Exit

interviews help management learn the reasons why employees leave the

company; based on their revelations, the organization can address the

problems of existing employees, thereby curb attrition.

• Spend Time Developing and Benchmarking Incentives

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Whenever the demand for a professional in a particular field heats up, the

perks associated with the job start to pile up. Standard perks for an India-

based "fresher" (a new entrant in the IT services industry with little work

experience) typically include free transportation, educational assistance,

healthcare benefits, performance-based bonuses, onsite cafeteria, stock

options, and interest-free loans to absorb the cost of relocation or maybe

to finance the purchase of a two-wheeler. According to Wipro's web site, its

employees even have access to an agency that will handle such "domestic

chores" as paying bills, thereby giving IT workers more free time.

An important part of designing incentives is aligning them with market

benchmarks. As far as salaries, HR firm Hewitt Associates reports that India

showed the largest overall salary increase in the Asia-Pacific region in

2004. Salaries in India grew by 11.6% overall, while China trailed with a

6.4%–8.4% hike, the Philippines showed a 7.4%–7.7% increase, and Korea

saw wages jump by 6.4%–6.8%. Salary increases for middle managers in

India were even more dramatic: Nasscom, India's software association

found that salaries for middle managers rose by as much as 30% in the

last two years. These salaries are often paired with expansive benefit

packages that include standard entry-level benefits as well as special

services such as help finding and buying a home or enrolling children in

school.

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Captive centers and IT service providers have to offer innovative

compensation and benefits—or risk losing valued employees to

competitors. Nonstop evaluation and benchmarking are "need to do"

activities for IT managers.

• Subsidize Education and Certification

In the United States, many companies reimburse employees for advanced

degrees or certifications that relate to their area of expertise. Until

recently, the opposite was true in India, but that trend has begun to

change as businesses have discovered that a significant portion of their

attrition problems stem from employees leaving to pursue a master's

degree. Several offshore service providers have teamed with universities

to offer their workers management-level master's courses at a subsidized

rate, and watched attrition rates drop as a result.

For example, Cognizant Technology Solutions, an IT service firm with

17,000 employees, partially reimburses Indian staff that pursues master's

degrees at BITS, a higher-education institution located in Pilani, India.

Business process outsourcing (BPO) player 24/7 Customer, in association

with the Indian Institute of Management Bangalore, launched a

management-education seminar series called "Beyond Knowledge,"

through which 24/7 aims to educate employees about the BPO industry

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and discuss related careers. Multiple providers have followed the lead of

Cognizant and 24/7.

In several offshore countries, advanced degrees are considered crucial to

social standing. It's important for U.S. firms with little international

experience to recognize this desire among employees and design

programs accordingly.

• Change Locations

The high prices and resource crunch in top-tier Indian cities such as

Bangalore and Mumbai have led many companies to execute alternative

location strategies. Many vendors are sending work to tier-two cities

(Hyderabad or Chennai) or even tier-three cities (Noida or Chandigarh),

where labor and real estate costs as well as attrition may be cut in half.

Such benefits come at a price: The infrastructure quality lags that of more

advanced cities, and the search to find qualified people may take longer.

Another option to combat the rising attrition rates in India is to locate in

other countries. Sykes Enterprises, for example, disclosed that it is

relocating the customer contact management work at its Bangalore, India,

facility because the center delivered an inadequate return and a limited

competitive advantage. The Tampa-based company thinks the work is

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better suited for the other Asia-Pacific offshore centers in its portfolio, such

as China. Sykes expected to incur total charges of approximately $0.8–

$1.5 million for its plan to relocate work.

• Rotate Employees

Employees who don't feel challenged by their work often leave. In

response, companies such as TCS have programs that rotate employees

into different disciplines about every two years and expose them to new

locations, projects, and technologies. L&T InfoTech, a software solutions

provider with 4,000 employees and six development centers in India, has

implemented a similar program.

Offshore employees are asking for a clear career path with increased

responsibility and frequent recognition of achievement. Established U.S.

and European multinational companies have long had learning programs

that set expectations for performance goals such as learning a particular

tool or proprietary software. Companies practicing off shoring need to

provide new challenges and opportunities for skills development through

training or job rotation. It may become the only reason your best

employees stay with you.

37
• Combat Poaching by Encouraging Referrals

Rather than going through a prolonged posting process and screening a

deluge of résumés, some companies poach employees directly from their

competitors and offer to double salaries or buy out contracts on the spot to

scale up quickly. Poaching is generally a bad idea, as it drives up salaries

and discourages employee loyalty.

An employee referral program can serve as an alternative and effective

recruiting strategy. Satisfied employees can be a company's best sales tool

and add a personal touch that a print or radio campaign lacks. A Voice &

Data survey of the top 15 Indian outsourcing companies with 1,000-plus

employees found that referrals constituted 23% of new hires. For some

companies, the number was even higher, at 40%. The study also observed

that recruits hired through employee referral programs are "stickier"; that

is, they stay with companies longer than non-referrals.

• Just Ask: Are Your Employees Satisfied?

Retention is inextricably linked to employee satisfaction, so it pays to

periodically survey employees —hopefully before their exit interviews—

about job satisfaction issues, and act on the data gathered. The aim is to

determine why some employees depart and some remain with the
38
company, and to define the traits of productive, successful employees.

Many companies examine the reasons employees leave, which don't reveal

as much as the reasons they stay.

An important aspect of implementing a retention program understands

that it should not be one-size-fits-all. If incentives are meant to keep

employees happy, then they truly have to be designed with the employee

in mind. Too often, employers and employees disagree on what constitutes

a good incentive. For example, a company might reward a father with

three young children a monetary bonus as thanks for working overtime for

five months straight. To the father, however, days off might have been

more attractive, since they would have allowed him to spend time with his

family.

Knowing your employees and personalizing rewards makes a difference.

The global workforce has different, individualized needs, and organizations

should tailor incentives for their employees if they want to retain them. If

your company doesn't bother, don't be surprised if workers head for the

door as soon as year-end bonuses are handed out or stock options vest.

• Spend More Time Recruiting

39
With huge projects ramping up within exceedingly short windows, it can be

hard to convince management to allot more time to the recruiting process.

However, it's difficult to retain good employees if the company doesn't

have a process to hire the right people in the first place. Simple measures,

such as incorporating skills tests that relate directly to the job in question,

can help companies to determine whether the applicant is indeed an

expert programmer or merely an intermediate programmer. Having

employees interview candidates also may increase the chances of success,

as these employees can better identify potential personality clashes that

HR personnel may not spot.

COSTS OF TURNOVER

The impact of employee turnover on company performance is often

understated by organizations. This describes how the cost of turnover is

can be calculated using some basic organizational parameters. The

purpose of this document is to provide talent cost of turnover calculator

with insight into how costs are calculated and the reasons why certain

costs were include or excluded form the calculator. The calculator should

only be used as a guide in understanding the impact of turnover on a

company. If the desire is to understand the true cost of turnover then it is

suggested that a greater degree of analytical work is undertaken.

The key areas used in the calculation of turnover are:


40
• Administration and sourcing costs

These include the administration of the termination and recruitment

functions together with the costs associated with interviewing, testing and

attracting applicants.

• New Hire costs

Once a person has been employed an organization generally spends

significant resources in the induction and administration of bringing them

into the organization.

• Lost productivity

The hidden costs associated with lost productivity of employees prior

to leaving the organization and new less skilled employees are one the

largest components of the total cost associated with turnover.

• Dysfunctional and avoidable turnover

Determining the level of dysfunctional and avoidable attrition

provides a perspective on the scope of control that a company has to

41
manage their turnover costs. Determining the cost of turnover is the first

step in the process of developing a management plan. To deal with an

attrition issue effectively the reasons for turnover and an understanding of

the demographics of turnover need to be understood.

Undoubtedly, the financial costs of turnover have attracted the attention of

academics and practitioners alike. Besides the more familiar costs

associated with the administration of terminated employees the economic

costs such as productivity losses need to be included in any calculation. In

particular, departure of employees - especially experienced or talented

ones - may threaten overall firm productivity or client retention.

Furthermore, personnel losses may endanger the firm’s future

opportunities in the marketplace or the morale of their remaining work

force. Human resource accounting experts Cascio, Hom and Griffeth define

exit expenses as having two main components - direct and indirect costs. A

company incurs both direct and indirect costs that result in losses in

production dollars and overall production volume, as well as increased

administrative costs. Direct Costs are actual dollars spent each time an

employer has to attract, select, and induct a replacement for an employee

who leaves the organization. Indirect costs are those expenditures

attributable to turnovers affects on production - that is costs for incomplete

or disrupted work, loss of quality, etc.

42
The cost of turnover can be calculated by measuring the time taken to

administer each activity plus the direct costs such as advertising costs. The

turnover costs calculated using the calculator represent dollars spent. The

potential loss of revenue if these dollars were invested elsewhere or

through lost productivity is not calculated. Therefore, the figures are an

indication of the minimum costs that the organization is subjected to when

an individual leaves the company.

• Administration & Sourcing costs

The most visible cost of turnover is incurred by organizations in the

area of recruitment administration and sourcing. The time associated with

processing terminated employees and recruits places a burden on

organizations where staff turnover is excessively high. The assumption is

that this is largely an administrative task conducted by people at 80% of

the average company salary. In addition the direct costs to a company for

recruitment agency and advertising costs are highly transparent.

1. Process Administration:

43
Resignation Administration -

The time taken to administer a resignation will include activities such

as: conducting exit interviews & processing of administrative tasks. The

time taken to perform these activities is ideally measured as a result of

analyzing the processes involved.

Recruitment Administration -

A large amount of time is often spent in administering the recruitment

process. Writing the job ad, posting it onto job boards, organizing

agencies and reference checking all require the use of organizational

resources, whether internal staff or outsourced. The hours spent

involved in these activities does need to be factored into the cost of

turnover.

2. Sourcing Costs:

Agency expenses -

The cost of sourcing a successful applicant from an agency may be one

of the largest single direct costs associated with recruitment.

Advertising costs -

The cost associated with posting job ads to job boards or traditional

media such as newspapers can be significant. The average cost per

vacancies is used within the calculation.

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3. Interview Costs:

Interview -

A core component of recruitment administration is the cost associated

with interviewing applicants. Interviews make use internal resources.

The more interviews held and the greater the number of candidates

interviewed the larger the costs associated with these activities.

Testing -

Companies are making greater use of psychometric and aptitude

testing in their recruitment processes. These tests can be costly to

administer and as such need to be factored into the overall attrition

costs.

Travel -

Companies may pay the costs associated with bringing an applicant to

the interview location. Although this may not be done for every

candidate an average is used in the I4 calculator.

45
• Cost of New Hire

The two costs measured in this area are the administrative tasks

associated with inducting a new hire into the organization and the

associated induction training. When measuring the cost of attrition

sometimes the total cost of training that an individual has received whilst

in the employment of an organization is included. However, as all learning

undertaken by employees will be used back on the job an add value to the

business it is inappropriate to count it as a cost of attrition. Also, where

particular jobs have high training, often there is a corresponding lower rate

of pay which acknowledges the investment that the organization is making

in the individual, eg. Youth wages. One aspect of training directly

associated with turnover, however, is the induction of new staff to the

organization. High staff turnover will necessitate greater levels of

resources being made available to induct new employees. It is the

opportunity costs of these resources that must also be calculated.

1. Induction Administration

The process of induction into an organization can involve a

substantial amount of time. The activities included here would include the

46
processing of new hires into organization systems (HR) and introductions

to fellow employees.

Induction Fixed Costs -

The fixed costs associated with inductions include the cost of materials

such as induction kits and staff manuals.

Induction Training -

Any initial training received by an employee on joining the company. This

includes the costs of the materials, presenters and the opportunity costs

associated with the new employee taking time off work to participate.

Relocation Expenses -

Similar to travel these cost are incurred by companies in an effort to

source the best talent for alternate locations. An average cost needs to be

captured as part of the calculation process.

• Productivity Losses

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The most detrimental aspect of staff turnover is lost productivity.

Evidence has found that leavers often miss work or are tardy before they

depart. Deery and Iverson argue that according to progression-of-

withdrawal models the productivity of leavers may deteriorate before they

depart.

Turnover is commonly viewed as belonging to a family of withdrawal

behaviors that physically distance employees from unpleasant work

settings. Serving a common psychology function, withdrawal actions

reduce the time spent in an adverse environment and thus reduce job

dissatisfaction.

Studies have shown that employees leaving a company will have a greater

level of absenteeism prior to leaving. Excessive sick leave is not only

costly, but is also an early warning signal that an individual may be

considering resigning from the organization. Not only does staff take more

sick leave but Hom and Griffeth state that their overall productivity

decreases as well. Furthermore, resignations may disrupt other employees’

work if their work depends on the leavers or they must assume the

leavers’ duties.

The second effect of loss of productivity occurs when new hires join the

organization. They will not have the networks, understanding of

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organizational processes or product/service knowledge to be effective.

Studies have shown that a new hire will generally take between 3- 8

months to become effective in their new role. The longer period is

associated with more senior roles.

• Excluded costs

Not all the costs associated with turnover have been included in the

i4 attrition calculator. Costs that cannot be accurately measured or

assumed have been excluded. These costs, although hidden, may be the

most critical in terms of organizational impact. Examples of hidden costs

are included below to highlight the organizational impact of attrition.

• Employee Demoralization

Turnover may erode the morale and stability of those who remain

employed. Their morale suffers because they lose friends and may

interpret motives for quitting as social criticisms about the job. A belief

that a leaver has a “better” job elsewhere may change employees’

perceptions of their jobs. As a result stayers may denigrate their present

position in the light of superior alternatives and begin contemplating other

employment. This phenomenon may lead to a cycle of attrition whereby

employees leaving a company prompt other to do the same.

• Impaired Quality of Service


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Turnover also hinders the delivery of service and retention of

customers. Attrition among service personnel impairs customer service

because understaffed branches delay or withhold service. Unlike

experienced leavers, new employees may also provide less competent or

less personalized service because they do not know the clients and can’t

meet customer expectations through lack of knowledge and experience.

If satisfied employees make customers feel well treated, disgruntled

employees may provide careless service before they leave. Turnover also

interrupts the transmission of service values and norms, which are the

essential underpinnings of high quality service, to successive generations

of employees. Customers' perceptions, attitudes and intentions seem to be

affected by what employees’ experience, both in their specific role of

service employees and their more general role of organizational

employees. It has been found that there is a high correlation between

employee turnover and customer turnover. Therefore, the cost of

decreased customer satisfaction and loyalty should be taken into account

when considering staff turnover.

• Turnover reason & cost impact

Just as attrition can lower productivity, incur financial costs, and

undermine stayers' morale, turnover can have the opposite ramifications

under certain circumstances or for certain firms. That is that the exit of

50
marginal performers may improve overall firm productivity, while new

replacements for leavers can infuse companies with new ideas and

technology. Though turnover is obviously costly, personnel shrinkage -

especially among administrative staff - can nonetheless reduce overhead

costs. Further resignations may create more job and empowerment

opportunities for employees who remain in firms.

• Functional and Dysfunctional Turnover

Departing from conventional beliefs, some academics point out that

turnover can prevent stagnation and complacency, facilitate change and

innovation, and displace poor performers. Turnover is not inherently

negative. Although it creates personnel costs, the organizational

consequences of turnover are dependent on who leaves and who stays.

The departure of good performers is construed as dysfunctional turnover -

representing a loss to the organization - for their replacements are likely to

be of lower caliber. The departure of poor performers is viewed as

functional turnover - because they are apt to be replaced by better

performers. Research into whether high performers or low performers

leave tends to have found mixed results. A meta-analysis conducted by

McEvoy and Cascio found that generally it is the poor performers that will

leave their place of work. There are two possible explanations for this:

firstly, terminated staff has on average a lower tenure than current staff

and so have not had the time or opportunity to develop the skills

51
necessary to perform well; or the current performance management

systems which exist are encouraging high performers to stay and poor

performers to quit.

• Avoidable and Unavoidable

Further differentiation should occur between organizationally

avoidable turnover and organizationally unavoidable turnover. For

example, organizations cannot control (that is, it is unavoidable) turnover

caused by an employees death, or by an employee’s quitting to follow a

relocating spouse. It is important to identify carefully those exits that are

avoidable and those that are unavoidable. After all, leavers whose

departures are unavoidable resemble stayers more than they resemble the

leavers whose departure is avoidable; they do not resign because they are

unhappy with their jobs or the organization.

Despite the appeal, determining whether exits are avoidable or

unavoidable may prove difficult because employees may falsify reports of

their reasons for leaving, they may not wish to burn their bridges behind

them.

The cost of attrition is only calculated on the level of avoidable

turnover. There is no benefit in including the cost of unavoidable turnover

since a company has no control over these events and can therefore not

put in place action plans to minimize the negative consequences of staff

turnover.

52
Article -

‘Attrition at Call Canters’

The evolving BPO industry has got the perplexing issue of

managing human resources, says BHIMA RAO

Attrition of employees in the call centre industry is mind-boggling and it is

creating havoc for the industry and especially for the HR department. The

attrition rate varies from minimum 30 per cent to a maximum 90 per cent

per annum. The software also saw this rate till the incident of September

11, 2001. I wonder why the attrition rate was not so high in any other new

industry like telecom, retail stores, banking etc. Who has to introspect, how

much responsibility should be borne and are we collectively contributing

directly or indirectly for the attrition.

Attrition is not a new problem and it has existed earlier and will continue to

exist in any industry. But there is a limit for every thing. The call center

53
industry is new and every one is in a great hurry to make some thing or do

some thing, become someone in the sun rise industry. The government,

promoters, management team, employees, consultants, media and so

many others play a major role in developing any new industry and extend

helping hand for stabilization and finally growth of the industry.

Our country is fortunate to be identified as one of the best places for BPO

and the beginning is really good. Now the growth of BPO industry is mainly

depending on the cost effectiveness and quality of the manpower. All other

factors are being taken care by the government through liberalized laws,

providing infrastructure like telecom and we are best in the IT. The cost

effectiveness will depend mainly on controlling the running cost and

quality is dependent on the manpower employed. Attrition of employees

increases the cost of recruitment and training. It has impact on

maintaining the quality and competent manpower to meet the standards

set by international customers.

• Four reasons why youngsters quit BPOs

What drives young people to quit call centres and data processing

units as fast as they join them? As industry attrition rates (how soon people

quit jobs) climb as high as 80 percent in some companies, human resource

executives in various BPO firms tried to pinpoint the reasons that make

54
young people between the ages of 22 and 26 shuffle jobs in months. They

were participating in a seminar on key HR issues for the BPO industry in

Bangalore today. This is what they came up with.

1. BPO not seen a long term career

"This industry is still not being accepted for a long term career," said

Mphasis BPO Services' hief human resources officer Manab Bose.

2. High aspirations that the industry cannot meet

BPO employees have high aspirations. They want to see 'wealth' in this

lifetime and have low respect for authority. This is because most BPO

employees have immense family support.

3. Good talent is prone to poaching

ICICI OneSource President and CEO Raju Bhatnagar said the pulls of the

market (poaching by competitors) cannot be countered easily. BPO firms

try to pick the best talent, he explained, and good talent is prone to be

poached or to shifting jobs. He suggested that firms should instead look at

the average person, train and retain him/ her for the longer haul.

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4. Employees face pressure at home and at work

Philips Software CEO Bob Hoekstra felt BPO employees are in a piquant

situation, having to handle pressure both from their customers and at

home.

"There is an enormous conflict in age group [in terms of the fact that]

youngsters are serving mature customers, and they are prone to make

mistakes," he said.

CASE EXAMPLE

'I'll never work at a call centre again!'

Subhash Mukherjee | November 18, 2004

The BPO/ITES sector is only expected to grow larger, and more profitable,

over the next few years. Most young people are eager to jump on the

money-making BPO bandwagon.

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But is working for a BPO all that it's made out to be?

No, says Subhash Mukherjee (name changed on request), who recently

quit his job at a call centre.

This, in his own words, is his story:

I am 20 years old. I was recently hired by a call centre in Kolkata to work

for an overseas-based company. I was earning Rs 7,500 per month.

My workday began with calls I had to answer for five hours continuously,

without a break. As soon as I was through with one call, the next one would

be waiting. There was no time for me to even say a few words to the

person sitting next to me. After five hours of constantly answering calls, I

would get a 20-minute break. Then, I would take calls again for another

three hours. Without a break. I would take around 350 calls a day.

One day, I reached breaking point. After taking 156 calls at a stretch, my

throat started to hurt terribly. I paused to take a breath and, in the

process, I missed a call. The calls that are directed to us were constantly

monitored by a machine. Immediately, it alerted my supervisor to the fact

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that I had missed a call. My supervisor came and asked me why I was in

the 'wrap mode'.

What this means is that my dialer shows a red bar when the person on the

other end of the line hangs up without getting a response. The red bar is

an indication that I did not take the call -- that the call was not 'live'. At

that moment, I just wanted to pick up my bag and leave. Permanently.

Instead, I stayed calm for the duration of my hours at work.

I fielded all my calls till 1 am. But I had made up my mind -- I would quit this

job with its inhuman pressures and its lack of empathy for employees. Workplaces like this

have only one goal -- to make money. This job expects you to work even if you are feeling ill;

even if your throat hurts. You cannot take even a 10-second break; the dialer throws calls at

you continuously and you have to start pitching (taking them) immediately. If you do not

respond to the person at the other end of the line, s/he might hang up. That shows on your

machine. You have to ask for permission to go to the toilet. Often, your request is denied by

your supervisor.

You repeat the same five sentences 350 times a day. Isn't it pathetic?

When I started out, there was no pressure. Gradually, though, the stress

grew beyond the levels of human tolerance. Working at the call centre was

a great learning experience for me. Now, it was time for a break. When I

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worked, I had no time to watch a film, no time to read a book, no time to

meet friends, no time to swim. For the last few months that I worked at the

call center, I had time only for two meals a day. As a result, I lost my

appetite. I would return home at 2.30 am and go to sleep at 4 am. I would

get up at noon and go back to work at 3.30 pm. Now that I have quit, I can

go out with my friends. I can spend time rediscovering myself. With the

approximately Rs 65 per hour that I made, I can buy a few books and have

some fun. Maybe that will take away the pain that came with this job. But,

believe me; the money could in no way make up for the pain!

I'll never work at a call centre again. Nothing is worth the ordeal I

went through.

Subhash Mukherjee quit his job in mid-October. He is now

pursuing an Economics degree at the Kolkata State University.

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Explained below are suggestions for the above story as well as for any other call center

organization.

WHY PEOPLE ARE LEAVING BPO’s?

In spite of the salaries and facilities being high (especially for a graduate who

starts his / her career with a BPO company) the average attrition rate is very high in this

industry There are numerous reasons for the attrition to be high which can be categorized into

two broad classifications. The first can be coined as

“Drive Attrition” which caused due to the employer; the second one can be termed as

“Drag Attrition” which caused due to the employee.

The reasons for Drive Attrition are due to employer’s policy / policies of

terminating the employee at the end of the contract period for employment. Also the quality

policy of the BPO companies guides them to retain only the most productive employee and

hence makes them to terminate employee at regular intervals. 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 clients 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 as employee.

Drag Attrition is basically due to the host of insecurities and vulnerabilities

60
associated with the taking up a career with a BPO company. The job of a call center agent (to

start off) can be compared to a telemarketing or a telephone operator. Hence the scope to take

up any other job (in case needed) or change of field is ruled out, as the experience gained in a

call center will not be an iota of importance. Many others quit, as the chance to climb up the

corporate ladder is bleak. Only a few very get promoted to the cadre of team leader and as

soon as promotions are announced the many of frustrated employees quit Further BPO

company work does not provide any scope for skill up gradation for the employee. The

employer trains the employee to speak good English and nothing else, which adds to the Drive

attrition rate. Also the nature of job in a typical BPO company is psychologically very

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.

Listing out the reasons for non retaining of human capital include lack of growth

opportunity for the employees, lack of time based promotion, poaching of employees by other

competitive BPOs for higher salaries, employees quitting to pursue higher education, loss of

employees personal life, employees physical stress and health reasons, uneasy relationship

with peers or managers.

Present Strategies Adopted To Retain Human Capital

Companies have different kinds of strategies adopted to tackle the problem of

retaining human capital. It ranges from cash incentives to career concern for the

employee. As only 5 out of 150 employees become team leaders in a year, companies like

Daksh services and Global Vantedge believe that cash incentives are a great way to get

61
employees to stay on. Companies like GE, Wipro Spectramind Offer management diplomas

and MBA courses to their employees, as most fresh graduates want to study further. Further,

they also give innovative incentives like

scholarships. If an employee leave in between, they he or she has to discontinue the course.

Exl Service.com and ICICI one source hires outstation candidates (Mainly Non-Metros)

and put them in shared company accommodation. Also as an incentive the company picks up

the utility bills. If the employee leaves he or she loses the apartment.

Also for leading call centers like 24/7 customer and MsourceE non metro talent currently

constitutes nearly 25-35 per cent of total hiring, and the main reason for this to happen is to

reduce attrition rate.

Many companies like HCL Tech BPO Services, GTL, Tracmail, and Vertex India use

various psychometric tests to get people who can work at night and can handle the monotony.

They also believe that giving career counseling and planning career paths to its employee help

to control attrition. Some of the BPO firms have adapted to the strategy of employing

housewives and retired school teachers. They believe that this would help in controlling

attrition, as they feel that the tendency and the potential of the employed to get shifted would

reduce drastically, where as some other BPO majors like Wipro’s Spectramind believes that

recruiting the undergraduates itself is a strategy to control attrition. Spectramind removed the

graduation prerequisite for their employees in order to keep human resource level from

waning Leaving alone the legal and mandatory benefits such as provident-fund and gratuity,

other strategies that are designed by the BPOs for providing benefits to the professionals

include;

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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; BPOs provide transportation facility to all the

employees from home till office at subsidized rates or even at zero cost. Lunch is also

provided free of cost.

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, gym and Concierge facilities; The recreation facilities include

pool tables, chess tables and coffee bars. BPOs 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 employees undertake for purposes such

as travel related expenses like Hotel bills, Air tickets etc

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Cellular Phone / Laptop; Cellular phone / Laptop are provided to the employees on the basis

of business need.

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 are given once in a year.

Loans; Many BPO companies provide loan facility on different occasions like, during the

times of medical emergency, at the time of their wedding, also new recruits are provided with

interest free loans to assist them in their initial settlement at the work location.

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 is high as 22% of the

salary.

Regular Get together and other cultural programs: BPOs also 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 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.

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Wedding Day Gift; Employee is given wedding day gift voucher worth 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; Some BPOs also give ESOP scheme to their employees to

make them more loyal to the company they work.

In spite of these benefits that are given through innovative strategies, people still leave BPOs

at a faster rate and retaining them has become a real challenge for the HR managers.

Now, the actual question, What types of retention strategies are required to solve this problem

and retain the Human capital, which is a crucial resource in the high growth IT-ITES industry

in India .

Strategies Suggested For Retaining Human Capital in BPOs

BPO service providers moving into value creation and value enhancement processes

of clients; The BPO service providers must look at value creation and value enhancement

in the process or activity that they do and this would be the one of the best strategy for the firm

to control attrition. Although a majority of players face high attrition rates there is a certain

class of players who have a much lower rate of attrition than the industry

average, and these operators operate in the niche segment in areas like research and analysis.

Office Tiger has set up its shop in India at Chennai. The attrition experienced by

Office Tiger, a US$20 million annual turn over company stands at 8%, much lower in

comparison to the rest of the BPO industry

The major reason being that, Office Tiger offers specialized services such as business research

for banking industry and analytics to its clients, where there is a lot of value addition

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happening. Indian BPO’s can adopt this strategy, the main reason being that the Indian

software giants like Infosys, Wipro and Satyam have already proven their potential in the

world’s software market segment for the credibility and creative ability of Indian work force.

Hence Indian brain is acknowledged world over for the spectacular creativity and capability

for problem diagnosis & solving.

Hence if the Indian BPOs have a better edge over the other players in the world in moving

towards the value creation and value enhancement processes of its clients. This would mean

that BPOs have to go for specialized services segment or in other words move towards the

KPO (Knowledge Process Outsourcing) where the stress is laid on as business research

areas and this would for sure reduce the attrition rate drastically.

Changing perception of employees from life style to career; The perception of the

employee about the BPO has to change from being a life style to a career option. One

way of doing this is to re-construct the organization structure. The chances to climb the

corporate ladder should be made to look bright. In the present day the options that a BPO

employee has in climbing up the corporate ladder is as shown in Figure1.1a.

Some modification done to this corporate ladder in increasing the number of levels,

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can give a prospective picture to the path ahead for a call center agent, and also will

aid to change the perception from life style to career, which will control attrition to a

reasonable extent. The modified version is shown in figure below.

Change the employable target audience and also in a way become socially

responsible; Neither age nor physical appearance is a hurdle for call center employment.

So the BPO firms should take in those who are physically handicapped, and hence in a

way become socially responsible. This could be the best adopted strategy for Indian BPO

companies, the reason being that two percent of Indian population are physically

challenged (www.indiastat.com), this would mean that two percent of One billion, which

is a real big number. Also there are many schools in India, who give formal education to

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the physically challenged. So the Indian BPO’s can definitely look this as a viable

strategy for bringing down the rate of attrition. Also this strategy will make target

employees to be more committed and loyal to work, as they would look at this job as a

career and would not shift jobs very frequently. Another reason for not shifting jobs

would be that any other job would not give them a salary comparable to BPO company

standards

Make employees feel that the company cares this can be done through effective

communication; proper communication is the first step toward creating pleasant

environment for the employees and also a way to show that the employer cares and they

just may stay. The employees should be well aware of what's happening with the

company. At any time, all of the employees should have a pretty good idea of how

business has been, and they should be aware of what issues the company is attempting to

address. The people should also be kept up to date with important events affecting the

company. The managers should listen to the employees when they have ideas for

improvement. They may have some ideas to improve productivity, and when they do

come up with one, let everybody know where it came from.

Clarity in expectations; employees should be very clear about the appraisal system,

companies expectations from employees/team-members, parameters to measure their

performance, consequences of failure in meeting the expectations, rewards awarded if

they exceed the expected level of expectation

Giving employees a choice of rewards; Rewards are as different as the people who

receive them and it doesn't make sense to give rewards that recipients don't find

rewarding. For example, some people prefer more pay, while others prefer more time off.

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A promotion might be more rewarding to one person, while a job-sharing arrangement

might be more rewarding for another. Some people are excited about sports events, others

about movies. Some employees would love a dinner in a romantic restaurant, others a

book by their favorite author. Food, fun, education, improved work environment, gifts,

travel, family-oriented activities - the options are endless. How can one know what will

be rewarding to employees? Best thing to do is to “Ask them”. Smart organizations are

also letting employees choose their own rewards from reward menus and catalogs.

Personalizing rewards shows that a company cares enough to discover what "interests"

each employee, rather than just distributing generic items.

Adding value; the key employees seek frequent opportunities to learn and grow in their

careers, knowledge and skill. With out which will feel they will get stagnated. A

careeroriented,

valued employee must experience growth in value for him/herself within the

organization.

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QUESTIONNAIRE ON ATTRITION

AIM: To find out the reasons for increasing rate of attrition in BPO industry, and suggestions

from the respective employees to be implemented which will help to reduce the attrition rate.

Employee Attrition Survey

1. Occupation: ________________________

2. Work environment: ________________________

(Excellent, Good, Satisfactory, Bad)

3. I feel I am a valued part of my office: ________________________

(Strongly agree, somewhat agree, neutral, somewhat disagree, strongly disagree.)

4. Promoting respect and fair treatment

among all staff is a high priority of this office: ________________________

(Strongly agree, somewhat agree, neutral, somewhat disagree, strongly disagree.)

5. Communication among staff in this office is effective: ________________________

(Strongly agree, somewhat agree, neutral, somewhat disagree, strongly disagree.)

6. I have a clear sense of the future direction of this office: ________________________

(Strongly agree, somewhat agree, neutral, somewhat disagree, strongly disagree.)

7. My office’s atmosphere is generally friendly: ________________________

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(Strongly agree, somewhat agree, neutral, somewhat disagree, strongly disagree.)

8. Morale in this office is high: ________________________

(Strongly agree, somewhat agree, neutral, somewhat disagree, strongly disagree.)

9. There is a spirit of cooperation among staff in this office: ________________________

(Strongly agree, somewhat agree, neutral, somewhat disagree, strongly disagree.)

10. This office has policies that are supportive of its staff: ________________________

(Strongly agree, somewhat agree, neutral, somewhat disagree, strongly disagree.)

11. My workload and expected completion times

are reasonable: _____________________________

(Strongly agree, somewhat agree, neutral, somewhat disagree, strongly disagree.)

12. I receive constructive feedback about the quality

of my work: ________________________

(Strongly agree, somewhat agree, neutral, somewhat disagree, strongly disagree.)

13. I feel encouraged by my office to pursue professional

development opportunities: ____________________________

(Strongly agree, somewhat agree, neutral, somewhat disagree, strongly disagree.)

14. This office reasonably accommodates personal needs: ____________________________

(Strongly agree, somewhat agree, neutral, somewhat disagree, strongly disagree.)

15. I feel heard when I communicate with others

in my office: ____________________________

(Strongly agree, somewhat agree, neutral, somewhat disagree, strongly disagree.)

16. I like my job: ____________________________

(Strongly agree, somewhat agree, neutral, somewhat disagree, strongly disagree.)

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17. What is the extent of work pressure at your work place? ____________________________

1. Heavy pressure

2. Moderate Pressure

3. Light Pressure

18. How long do you travel to work everyday? ____________________________

1. Up to 10 km

2. 11-19 km.

3. > 20 km.

4. Can’t say

19. Do you face any problem when to wish to take a break? ____________________________

1. Yes- Problem to break

2. No - Problem to take break

3. Refused

20. Do you work overtime?

If yes, then for how many hours? _______________________

1. 1-2 hrs.

2. >2hrs.

3. Refuse

21. Are you paid for the hours you work overtime?

________________________

1. Yes

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2. No

22. Which is the break where you consume much time? ________________________

1.Tea/Coffee/Refreshment break

2.Lunch Break

3.Break fast

4.Dinner

5.All other break reasons

6.Not specified

23. Is your work a reason for your health problems? ________________________

1. Yes.

2. No.

24. Do you have canteen at your work place? ________________________

If yes, then how is the quality of the food ?

1. Good

2. Average

3. Poor

4. Can’t say

25. I think often about seeking employment elsewhere: ____________________________

(Yes, No.)

26. Suggestions, if any.

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CONCLUSION:

The strategies suggested in the project are not exhaustive to retain the human capital of

BPOs. These are just the basics and if implemented in a proper way can give good results.

The organization has to maintain quality of service, which they attain by inculcating the right

philosophy and principles in our staff. Training programmes are thus very important. It is a

challenge to create passion for work in people and that applies for HR people too. Secondly,

they have to battle with attrition, which is highest in the BPO employees. Besides a good

salary, the company needs to give people fancy designations, career paths, and empower them,

which will lead to better productivity. They should also have a succession plan for at least the

top two levels. They have to attract the right talent, because there is a dearth of trained

personnel. The parameters of judging talent are different for various roles; soft skills have

assumed immense significance today. People are in a sensitive state of mind; a customer care

executive cannot afford to be rude with their customer. To curb the high attrition rate, the

success mantra for a BPO is not just offering a fat pay packet, but chalking out long-term

development and career growth for employees, along with giving them a sense of

empowerment. A company should always innovate, keep their employees busy with various

projects. So that the functioning of an organization is not plagued by somebody’s sudden exit,

it is important to keep a databank of apt substitutes ready. They should try to chat with the

employees trying to understand who is not happy and may leave the organisation. They should

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try to address their problems and grievances and always keep the replacements ready. This

may encourage retention strategies , thus reducing attrition rate .

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