A STUDY ON EMPLOYEE ATTRITION

AND RETENTION IN BPO SECTOR

SUBMITTED BY:
Group no. 2(OXYGEN)
GROUP MEMBERS:
Abhay Singh
Amyn Sayani
Anirban Das
Jasmeet Kaur
Jnana Ranjan Pati
Pratibha Sharma
Vikash Verma
 ACKNOWLEDGEMENT

We would like to acknowledge and extend our gratitude to the following persons who have made the completion of
this project possible:
First of all we would like to thank our Faculty Coordinator
Prof. Mr. Abhay Anand Tiwari for his great help. Being our Project Coordinator he provided us very necessary and
important guidance and support until the submission of our project.
Secondly, we would like to thank all our Seniors and Friends for giving us proper guidance and support for
preparing the Project.
Again we would also like to thank ourselves (all our group members) for their dedicated effort to make this project a
success.
Lastly, we would like to be very thankful to the all the employees of IBM-Daksh for their good help to provide a
better coordination and control among all the activities related to completion of the project.
Therefore we are very much obliged to above people for their continuous effort in making the whole Project Activity
very much learning and Interesting.
GROUP-2
(OXYGEN)
SECTION-I
PREFACE

This report provides an opportunity to students to learn and expand their knowledge on employee attrition and
retention in overall all organization especially in BPO sector. They would be able to know the exact reason behind
this, methods taken to tackle it and hence take necessary steps for it. The report also helps the student to devote
his/her skill to analyze the problem to suggest alternative solutions, to evaluate them and to provide feasible
recommendations on the provided data.

The research is on the topic “A STUDY ON ATTRITION AND RETENTION OF EMPLOYEES IN BPO SECTOR”.
Although we have tried our level best to prepare this report an error free report, every effort has been made to offer
the most authenticate position with accuracy.

DECLARATION

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We hereby declare that the following documented Project Report titled “A STUDY ON ATTRITION AND RETENTION
OF EMPLOYEES IN BPO SECTOR” is an authentic work done by us.

The Study was undertaken as a part of the course curriculum of MBA Full Time Program of IILM institute for Higher
Education, GURGAON.

GROUP NO: 2

OXYGEN

SECTION-I

CONTENTS

Abstract………………………………………………………………………………………………………………………………
…7

Introduction………………………………………………………………………………………………………………………….
8

Purpose of the study……………………………………………………………………………………………………………..8

Employee Attrition………………………………………………………………………………………………………………..9

 High attrition rate: A big challenge…………………………………………………………………………….9

 Major worries for the industry……………………………………………………………………….11
 Costs due to person leaving……………………………………………………………………………12
 Benefits of attrition………………………………………………………………………………………..14
 Analyzing the impact………………………………………………………………………………………16
 Managing the problem………………………………………………………………………………………………17
 The attrition problem…………………………………………………………………………………………………17
 Addressing the problem…………………………………………………………………………………………….19
 About the BPO industry……………………………………………………………………………………………..20
 Causes……………………………………………………………………………………………………………………
….21
 Analyzing cause of attrition using a multilevel approach…………………………………………….22
 Maslow’s hierarchy of needs………………………………………………………………………….22

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  Recommendations…………………………………………………………………………………………..2
5
 The win-win model…………………………………………………………………………………………25
 Reducing
attrition………………………………………………………………………………………………………..28
 The challenge of employee attrition-How bad is it? .......................................................28
 Reducing end of career attrition………………………………………………………………………………….29
 Reducing early career attrition…………………………………………………………………………………….29
 Factors to consider in the cost of attrition……………………………………………………………………30
 Is attrition important to your organization…………………………………………………………………..31
 Is attrition always bad for an organization? .....................................................................34
 Attrition in Indian BPO industry…………………………………………………………………………………..35
 Tackling attrition head on…………………………………………………………………………………………….37
 What is the attrition rate in the ITes sector………………………………………………………………….39
 BPO attrition-The challenge of the year………………………………………………………………………40
 Why is attrition impacting on market growth? ...............................................................41
 Why are BPO providers experiencing higher attrition rates? ..........................................42
 What can BPO providers do about it? .............................................................................43

Employee Retention…………………………………………………………………………………………………………..45

 5 major things involved in retention

 Compensation…………………………………………………………………………………………………..46
 Growth and career…………………………………………………………………………………………….47
 Support……………………………………………………………………………………………………………..4
8
 Importance of Relationship in employee……………………………………………………………..49
 Organizational environment………………………………………………………………………………..50
 Managing employee retention………………………………………………………………………………….51
 How to increase employee retention………………………………………………………………………..52
 Employers and their key drivers to attract and retain talent………………………………………54
 Retention bonus……………………………………………………………………………………………………….54
 Hire right talent…………………………………………………………………………………………………………56
 Manager role in retention………………………………………………………………………………………….57
 Importance of employee retention……………………………………………………………………………58
 What makes employee leave? ......................................................................................59
 Employee retention strategies………………………………………………………………………………….59
 Innovative retention strategies for Indian BPO…………………………………………………………61
 Retention myths……………………………………………………………………………………………………….66
 Retention success mantras………………………………………………………………………………………..68
 10 reasons why organizations are not able to retain employees…………………………………74

Research: The critical findings……………………………………………………………………………………………….75

Summary……………………………………………………………………………………………………………………………..
79

Analysis of Data and Questionnaire………………………………………………………………………………………80

Limitations of the project……………………………………………………………………………………………………….88

Suggestions…………………………………………………………………………………………………………………………
…88

Conclusion……………………………………………………………………………………………………………………………
…89

Bibliography…………………………………………………………………………………………………………………………
…91

Appendix……………………………………………………………………………………………………………………………
…..92

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 ABSTRACT

Turnover is of considerable concern to managers because it disrupts normal operations and necessitates the costly
selection and training of replacements, the costly hiring and training the new employee to regain the lost customer
and supplier contacts. Employee retention is obviously one of the most important challenges in organizations’ ability
to keep employees in the organization and avoid unwanted turnover. Employees who have relatively low levels of
satisfaction are indeed the most likely to quit their jobs. In addition, organizational units with the lowest average
satisfaction levels tend to have the highest turnover rates. Not many companies seem to understand and focus on
retention until it's too late.

Key employee retention is critical to the long term health and success of company business. If companies are losing
critical staff members, they can safely bet that other people in their departments are looking as well. Managers readily
agree that retaining the employees ensure customer satisfaction, product sales, satisfied coworkers and reporting
staff, effective succession planning and deeply imbedded organizational knowledge and learning. How to create an
environment that makes employees want to stay. It's not always about money. Recognition programs, feeling valued
and the employees' senses of worth to their employers are some factors in motivation. For a variety of reasons,
managers also are interested in the satisfaction of members of their organization. It can affect employee commitment
to the job and organization, employees’ willingness to do more than is required, their creativity or flexibility. It can also
affect absenteeism and turnover.

Employee turnover or resign could disrupt normal operations and necessitates the costly selection and training of
replacements. Reducing employee turnover required the management efforts of companies.

INTRODUCTION

Attrition is a universal phenomenon and no industry is devoid of it, but the degree fluctuates from industry to industry
on the basis of their capacity to manage low attrition rate. Attrition not only affects the quality of service, but also
leads to increased expenditure on training and development, thereby affecting the overall organizational
performance. Several companies are trying out different ways to manage low attrition rate. Be it an IT sector, or BPO,
they are trying out their ways to manage lower rate of attrition by creating a healthy work environment, work-life
balance, corporate brand building and so on.

There is a famous Chinese proverb which says that

“If you want returns for 1 year, invest in crops.”
“If you want returns for 10 years, invest in trees.”
“But if you want returns for 100 years, invest in people”

Yes, it is the people who hold the attraction in today’s highly competitive world. With increasing attrition levels, it is

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necessary to have creative retention strategies.

PURPOSE OF THIS REPORT

Staff attrition (or turnover) and absenteeism represent significant costs to most organizations. It is odd, therefore, that
many organizations neither measure such costs nor have targets or plans to reduce them. Many organizations
appear to accept them as part of the cost of doing business - a sign of increasing job mobility and decreasing staff
loyalty perhaps, a matter to be regretted but just 'one of those things.' They add a sum in their budgets for 'temp staff'
and 'recruitment' and forget about it.

However, it seems to be one of the areas in which HR can make a difference - and one that can be measured in
quantifiable, financial terms against targets.

An attrition rate in call (or contact) centres has become legendary. Indeed, the attrition rates in some Indian call
centers now reach 80%. This is an extreme figure but the average attrition rates in Indian call centers are up around
30-40%.

However, it is interesting to note that the attrition rates in India - and the costs associated - are so high that they can
override the benefits of lower wage costs. While wages in call centres in Indian are less than one-eighth of those in
Northern Europe, it has been reported that Hewlett-Packard have found the cost per 'ticket' (the cost of processing a
query) has doubled "due to the inability of the staff to resolve customer queries efficiently because of language
barriers and inexperience." It is said that this increased cost has made HP's move from Ireland to India "completely
pointless," and that it can never recover the (substantial) costs of the move. It is further reported that GE Capital has
moved a call centre back to Australia "after staff attrition rates of 70% wiped away any potential cost savings."

The issue is not with the quality or education of the staff - and still less with the investment in technology. It is simply
attrition - people do not stay long enough to be taught or to learn the job. The staff may be cheaper but if they cannot
do the job, what's the point? Managing attrition is not just a 'nice thing to do' in Indian call centers. It is the route to
their survival.

Far from accepting attrition rates as part of the cost of doing business, it is surely something that all organizations
should address, and equally surely it is an area in which HR can take a lead - measure attrition, seek its causes, set
out solutions and target performance.

EMPLOYEE ATTRITION

Defining attrition: "A reduction in the number of employees through retirement, resignation or death"
Defining Attrition rate: "The rate of shrinkage in size or number"
HIGH ATTRITION RATE: A Big Challenge

Introduction: 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? 

Background: The IT enabled services (BPO) industry is being looked upon as the next big employment
generator. It is however no easy task for an HR manager in this sector to bridge the ever increasing demand and
supply gap of professionals. Unlike his software industry counterpart, the BPO HR manager is not only required to
fulfill this responsibility, but also find the right kind of people who can keep pace with the unique work patterns in
this industry. Adding to this is the issue of maintaining consistency in performance and keeping the motivation
levels high, despite the monotonous work. The toughest concern for an HR manager is however the high
attrition rate.

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In India, the average attrition rate in the BPO sector is approximately 30-35 percent. It is true that this is far less
than the prevalent attrition rate in the US market (around 70 percent), but the challenge continues to be greater
considering the recent growth of the industry in the country. The US BPO sector is estimated to be somewhere
around three decades old. Keeping low attrition levels is a major challenge as the demand outstrips the supply of
good agents by a big margin. Further, the salary growth plan for each employee is not well defined. All this only
encourages poaching by other companies who can offer a higher salary.

The much hyped "work for fun" tag normally associated with the industry has in fact backfired, as many
individuals (mostly fresh graduates), take it as a pas-time job. Once they join the sector and understand its
requirements, they are taken aback by the long working hours and later monotony of the job starts
setting in. This is the reason for the high attrition rate as many individuals are not able to take the pressures of
work.

The toughness of the job and timings is not adequately conveyed. Besides the induction and project training, not
much investment has been done to evolve a "continuous training program" for the agents. Motivational training
is still to evolve in this industry. But, in all this, it is the HR manager who is expected to straighten things out
and help individuals adjust to the real world. I believe that the new entrant needs to be made aware of the realistic
situation from day-one itself, with the training session conducted in the nights, so that they get accustomed to
things right at the beginning.

The high percentage of females in the workforce (constituting 30-35 percent of the total), adds to the high attrition
rate. Most women leave their job either after marriage or because of social pressures caused by irregular working
hours in the industry. All this translates into huge losses for the company, which invests a lot of money in training
them.

If a person leaves after the training it costs the company about Rs 60,000. For a 300-seater call centre facing the
normal 30 percent attrition, this translates into Rs 60 lakh per annum. Many experts are of believe that all these
challenges can turn out to be a real dampener in the growth of this industry. This only raises the responsibility of
"finding the right candidate" and building a "conductive work environment", which will be beneficial for the
organization. The need is for those individuals who can make a career out of this. 

All this has induced the companies to take necessary steps, both internally and externally. Internally most HR
managers are busy putting in efforts on the development of their employees, building innovative retention and
motivational schemes (which was more money oriented so far) and making the environment livelier. Outside, the
focus is on creating awareness through seminars and going to campuses for recruitment.

Major Worries for the Industry

 Reckless Start-ups- a vast majority of the 310 start-ups are headed for a dead-end (according to
Nasscom). Their capacity utilization is less than one of the three shifts. Many of these companies that
converted their empty basements and warehouses into BPO units or firms with $10 million-20 million VC
funds that ran out of cash without creating anything more than white elephants. They have driven down
prices to grab business, but have failed to deliver. They were always clueless about people, processes
or technologies- the three key elements of the BPO business.

 Poor Infrastructure- the industry has more to worry about than just reckless start-ups. Primary among
those is infrastructure. While telecom networks are state of the art, getting a connection still takes up to
three months. Unreliable power supply is forcing units to create their own back-ups. Roads are bad and
airports are in dire need of repairs and upgrades.

 High Attrition-another major problem is the high attrition and growth aspirations of the workforce. At least
60,000 of the 171,000 workforce change jobs every year. About 80% of them look for better leaders.
Team leaders want to upgrade to supervisors, quality professionals or operations heads. The HR
problem threatens to soon become grave. Good agents are becoming hard to find and with tardy

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 infrastructure, big moves to the much talked about smaller towns will take longer. This means costs will
rise making it difficult for small VC-funded companies to survive.

Attrition rates
US 42%
Australia 29%
Europe 24%
India 18%
Global Average 24%

* Source-Times News New York

Components to be taken into consideration, while calculating attrition rate:

HR professionals are requested not to drive their own formulas to calculate attrition rate. In terms of numbers,
attrition rate means:

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 joiners minus total number of resignations) multiplied by 100.

If calculating in monetary terms, it includes the following:

Costs Due to a Person Leaving

1. Calculate the cost of the person(s) who fills in while the position is vacant. Calculate the cost of lost
productivity at a minimum of 50% of the person's compensation and benefits cost for each week the
position is vacant, even if there are people performing the work. Calculate the lost productivity at 100% if
the position is completely vacant for any period of time.

2. Calculate the cost of conducting an exit interview to include the time of the person conducting the
interview, the time of the person leaving; the administrative costs of stopping payroll, benefit deductions,
benefit enrollments.

3. Calculate the cost of the manager who has to understand what work remains, and how to cover that
work until a replacement is found.

4. Calculate the cost of training your company has invested in this employee who is leaving.

5. Calculate the impact on departmental productivity because the person is leaving. Who will pick up the
work, whose work will suffer, what departmental deadlines will not be met or delivered late.

6. Calculate the cost of lost knowledge, skills and contacts that the person who is leaving is taking with
them out of your door. Use a formula of 50% of the person's annual salary for one year of service,
increasing each year of service by 10%.

7. Subtract the cost of the person who is leaving for the amount of time the position is vacant.

Recruitment Costs

1. The cost of advertisements; agency costs; employee referral costs; internet posting costs.

2. The cost of the internal recruiter's time to understand the position requirements, develop and implement
a sourcing strategy, review candidates backgrounds, prepare for interviews, conduct interviews, prepare
candidate assessments, conduct reference checks, make the employment offer and notify unsuccessful
candidates. This can range from a minimum of 30 hours to over 100 hours per position.

3. Calculate the cost of the various candidate pre-employment tests to help assess candidates' skills,

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 abilities, aptitude, attitude, values and behaviors.

Training Costs

1. Calculate the cost of orientation in terms of the new person's salary and the cost of the person who
conducts the orientation. Also include the cost of orientation materials.

2. Calculate the cost of departmental training as the actual development and delivery cost plus the cost of
the salary of the new employee. Note that the cost will be significantly higher for some positions such as
sales representatives and call center agents who require 4 - 6 weeks or more of classroom training.

3. Calculate the cost of the person(s) who conduct the training.

4. Calculate the cost of various training materials needed including company or product manuals, computer
or other technology equipment used in the delivery of training.

Lost Productivity Costs

As the new employee is learning the new job, the company policies and practices, etc. they are not fully
productive. Use the following guidelines to calculate the cost of this lost productivity:

1. Upon completion of whatever training is provided, the employee is contributing at a 25% productivity
level for the first 2 - 4 weeks. The cost therefore is 75% of the new employees’ full salary during that time
period.

2. During weeks 5 - 12, the employee is contributing at a 50% productivity level. The cost is therefore 50%
of full salary during that time period.

3. During weeks 13 - 20, the employee is contributing at a 75% productivity level. The cost is therefore 25%
of full salary during that time period.

4. Calculate the cost of mistakes the new employee makes during this elongated indoctrination period.

New Hire Costs

1. Calculate the cost of bring the new person on board including the cost to put the person on the payroll,
establish computer and security passwords and identification cards, telephone hookups, cost of
establishing email accounts, or leasing other equipment such as cell phones, automobiles.

2. Calculate the cost of a manager's time spent developing trust and building confidence in the new
employee's work.

Lost Sales Costs

1. Calculate the revenue per employee by dividing total company revenue by the average number of
employees in a given year. Whether an employee contributes directly or indirectly to the generation of
revenue, their purpose is to provide some defined set of responsibilities that are necessary to the
generation of revenue. Calculate the lost revenue by multiplying the number of weeks the position is
vacant by the average weekly revenue per employee.

It is clear that there are massive costs associated with attrition or turnover and, while some of these are not
visible to the management reporting or budget system, they are none the less real. The 'rule of thumb' appears to
be very inaccurate indeed and, while it depends upon the category of staff, it is probably better to estimate around
80% of salary as a truer rule of thumb - and this will be on the conservative side. 
What does this mean? Well it means that if a company has 100 people doing a certain job paid 25,000 and that
turnover or attrition is running at 10%, the cost of attrition is: 

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(Total staff x attrition rate %) x (annual salary x 80%)

 100 staff at 10% attrition means 10 people leave and are replaced each year.

 A replacement cost of 80% of a salary of 25,000 means the cost of each replacement is 20,000.

 The cost of turnover is therefore 10 x 20,000 or 200,000 a year.

 The on cost to the overall salary bill is 8%.

(Saving 8% of salary costs would make the average HR manager a hero.) 

Benefits Of Attrition

Attrition is not bad always if it happens in a controlled manner. Some attrition is always desirable and necessary
for organizational growth and development. The only concern is how organizations differentiate “good attrition”
from “bad attrition”. The term “healthy attrition” or “good attrition” signifies the importance of less productive
employees voluntarily leaving the organization. This means if the ones who have left fall in the category of low
performers, the attrition in considered being healthy.

There is also a flip side to the situation—the fact that good attrition is a pointer to the failure of the existing system
and processes in the organization in hiring the right employee, grooming and training him to be a productive
worker. NR Ganti, Chairman and Managing Director, SQL Star International, asserted that any attrition in any
form is bad for an organization. “It means that a wrong choice was made at the beginning,” he pointed out. The
only plus point is that the realization has initiated action that will lead to cutting loss.

Attrition rates are considered to be beneficial in some ways: 

 If all employees stay in the same organization for a very long time, most of them will be at the top of their
pay scale which will result in excessive manpower costs.

 When certain employees leave, whose continuation of service would have negatively impacted
productivity and profitability of the company, the company is benefited.

 New employees bring new ideas, approaches, abilities & attitudes which can keep the organization from
becoming stagnant.

 There are also some people in the organization who have a negative and demoralizing influence on the
work culture and team spirit. This, in the long-term, is detrimental to organizational health.

 Desirable attrition also includes termination of employees with whom the organization does not want to
continue a relationship. It benefits the organization in the following ways:

o It removes bottleneck in the progress of the company

o It creates space for the entry of new talents

o It assists in evolving high performance teams

 There are people who are not able to balance their performance as per expectations, lack potential for
future or need disciplinary action. Furthermore, as the rewards are limited, business pressures do not
allow the management to over-reward the performers, but when undesirable employees leave the
company, the good employees can be given the share that they deserve.

Some companies believe attrition in any form is bad for an organization for it means that a wrong choice was
made at the beginning while recruiting. Even good attrition indicates loss as recruitment is a time consuming and

5
costly affair. The only positive point is that the realization has initiated action that will lead to cutting loss.

Impact of attrition

Direct impact: A high attrition indicates the failure on the company’s

ability to set effective HR priorities. Clients and business get affected and
the company’s internal strengths and weaknesses get highlighted. New
hires need to be constantly added, further costs in training them, getting
them aligned to the company culture, etc.,—all a challenge.

Indirect impact: Difficulty in the company retaining remaining employees

and to what extent? Problem for the company in attracting potential
employees. Typically, high attrition also leads to a chronic or systemic
cycle—attrition brings decreased productivity, people leave causing
others to work harder and this contributes to more attrition. All this has a
significant impact on the company’s strength in managing their business
in a competitive environment.

Analyzing the impact

Productivity and profitability are both impacted, either negatively and

positively, according to the type of attrition. Even good attrition is indicative
of loss as recruitment is a time consuming and costly affair. “It is tantamount
to investment that has gone astray. Having said that, good attrition
minimizes the adverse impact on business while bad attrition accentuates
the loss,” stated Nair. The cost of hiring is sometimes not less than two to
three times the salary of the employee.

The impact on work progress is tremendous, particularly if a project is

underway and one of the key people leaves. “It leads to dip in entire
organizational efficiency, and a lot depends on how it is able to cover the
setback,” pointed out Rao.

Organizations should execute top of the line retention policies in the right earnest and consistency. They should
be more employee-centered and look for further ways to “bond” employees to their companies. “Company
performance is optimally aligned to the skills its employees possess. High attrition implies that certain necessary
skills are vulnerable or are not present due to employees being lost. This results in lower than optimal levels of
business performance. If the skills are constantly not available, the situation gets compounded into a crisis with
key projects, revenues, etc., getting affected. Business is then reduced to just managing crisis,” added Bhardwaj.
For example, a 2 percent attrition difference can make a significant difference in the ultimate business impact.

Managing the problem

There is no sure-fire solution to control attrition. The only way out is to manage it well. This can be done by having
cautious hiring with proper systems and processes in place to ensure that only the right talent are inducted into
the company. Those found lacking in particular skills or competence should be informed of the expectations from
them and put through a training process. Continuous skills up gradation opportunities should also be provided to
good employees for their growth and development. “Career management, ESOPs, increments, rewards, and
ambience are significant retention measures,” said Ganti, reminding that both kinds of attrition are unhealthy for
business. When productive people leave it is understandably bad, but even when desirable attrition happens
(after crossing six to seven months), it definitely impacts the business. It is loss of opportunity and investment
gone badly.

Consequently organizations like Calsoft have tried their best to ensure that attrition is kept below the industry
average. “Today an employee is clear on his needs and what he wants out of the job. This makes the function of

5
employee life cycle management more critical and one that requires more attention and focus. By carefully tuning
and aligning employee aspirations with the company’s overall objectives, to a large extent, attrition can be
substantially reduced,” stated Nair.

Constant analyses of the causes that lead to employee turnover will go a long way in curbing the problem from
the root stage. The top management should continuously focus on the issue and implement effective recruitment
and retention measures.

The Attrition Problem

According to NASSCOM data, the attrition rate for voice-based BPO’s is around 55-60 per cent and 15-20 per
cent for the non-voice based processes. The attrition rates and the retention have become the major threat and
the biggest challenge for the human resource professionals of the sector. In fact, the outsourcing industry is
expected to face a shortage of 2,62,000 professionals by 2012. The human resource professionals of the BPO
sector are focusing their strategies on tackling the disruption caused due to the shortage of the skilled manpower
as well as the unplanned or the undesired exists. 

The top reasons for employees to leave a BPO company are:

 Monotonous work (repetitive nature of work and the average number of calls)

 Physical strains because of long and odd working hours

 No growth opportunity/lack of promotion

 For higher Salary

 For Higher education

 No personal life

 Problems with peers and managers

 Policies and procedures

 Conducive work culture or environment

 Handling abusive calls

The high attrition costs increases the costs to the organization considerably. They have to combat the amount of
disruption due to unplanned exits. The more the people leave an organization, the more it is a drain on the
company’s resources like recruitment expenses, training and orientation resources and the time. The high attrition
rate also affects the productivity of the organization. The attrition cost has been estimated to be as high as 76 per
cent of the annual salary costs for the low-end BPOs. The voice-based processes, which are facing an attrition
rate of 60 per cent, are incurring the attrition costs of 27 per cent of the total operating costs.

The high attrition costs the BPO industry a huge amount of loss in terms of the expenses and the losses incurred
on recruitment process, the training and development of the hired. In the year 2004-05, such expenses amounted
to a loss of Rs. 300 crore and a total loss of 25 % of the annual revenue to the Indian BPO industry. Also, the
retention strategies like providing higher education opportunities to the employees, creating growth opportunities
for employees add to the burden of costs to the company.

Another problem being faced by the BPO industry is “Poaching”. Poaching refers to taking away the experienced
professionals by competitors by offering them better salary, benefits than the competitor. With the already
saturated market for the talented professionals, poaching is becoming a common practice by the organizations.
All these people costs are weakening the position of India as the low-cost destination in the worldwide BPO

5
industry.

Another point of view explaining the high attrition rates in the BPO industry comes from the psychologists who
argue that physical strains like sleep disorders, depression, odd working shifts, learning foreign accents,
constantly handling abusive calls and high stress levels are also the major reasons of the high attrition rates in the
BPO industry. There are also pressures from the society for not allowing the youngsters to work in night shifts.
This also discourages the youngsters from joining the BPO industry.

Addressing the Problem

Although a large number of youngsters are attracted to the BPO industry because of the high salary packages
offered by the MNC’s to graduates and even the under-graduates; also the sophisticated work environment, the
facilities like free meal and transportation etc.; failure to cope with the stress of the odd shifts, the monotonous
work, the compensation packages and the opportunities for higher education fails to sustain them in the
organizations.

For the Indian BPO industry to sustain its growth and position, the human resource professionals have to re-
formulate their strategies to check the problem of the attrition rate without losing their cost-effectiveness. BPOs
will have to change their mindset and the practice of- “No matter I have a high attrition rate, I can cope up if my
recruitment process is good” – to creating a synergy between the work life, growth opportunities, and the
requirements of the job to control the attrition in the organizations.

The HR professionals need to redesign the HR policies for the industry without comprising on the cost
competitiveness of the Indian BPO industry, to retain the employees in the organizations and to retain India’s
position as the low cost destination for business process outsourcing worldwide.

Attrition in the BPO industry is one of the biggest issues which the growing ITES industry in India is facing. The
effects of attrition are wide varying and impacts the firms in terms of losses (due to training and administration
cost, high recruitment cost), incompetent processes, inability to offer services for highly technical process

Attrition though a nuisance also has some associated benefits along with such as low cost of operation,
knowledge sharing amongst the firms benefiting the overall industry in increasing its competencies. Attrition
usually occurs on two fronts - people leaving the industry and people shifting jobs inside the industry. Both of
them have separate causes which have been identified in this report.

The report attempts to understand the underlying reasons for attrition by analyzing the BPO industry through
Maslow's Hierarchical model of Needs. The Maslow's framework helps in giving a better perception about the
motivation of the employees in the BPO industry and identifying gaps in their expectations which needs to be
filled up.

Finally, the report concludes by recommending a Win-Win Model which endeavors to satisfy the needs of both the
employer and employee. The model encloses the employee by 4 levels of strategies thus reducing the attrition
rate as well as minimizing the impact whenever it occurs.

It is a 4 stage framework consisting of-

1. Short Term Mitigation Plan

2. Short Term Contingency Plan
3. Long Term Mitigation Plan
4. Long Term Contingency Plan

Various measures have been identified within each level of strategy to help in managing attrition creating a win-
win situation for the industry as well as its stakeholders.

ABOUT THE BPO INDUSTRY

Business Process Outsourcing (BPO) is the delegation of one or more IT-intensive business processes to an

5
external provider that in turn owns administers and manages the selected process based on defined and
measurable performance criteria. Business Process Outsourcing (BPO) is one of the fastest growing segments of
the Information Technology Enabled Services (ITES) industry.

The Indian business process outsourcing industry, roughly around 4-5 years old, is growing at a phenomenal
pace. The number of BPO companies in Indian cities has mushroomed from a handful a few years ago to about
500 in 2004. 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, Indian BPO industry report). For a fresh college graduate, a call centre job pays
about 2.5 times as much as other job openings. And the boom shows all signs of continuing considering that the
cost per transaction in India is estimated to be the lowest at 29 cents compared to 52 cents in China.

Even after displaying impressive statistics about the growth and future, the BPO industry in India is bleeding with
heavy attrition. According to several recruitment firms in the country, attrition in the ITES (IT enabled services)-
BPO industry is close to 35-40 %. The worse news is that, this is only the reported figures and the actual figures
are much higher and can be as high as 80% annually. Nasscom in a report said the outsourcing industry was
expected to face a shortage of 262,000 professionals by 2012. This impediment is likely to affect the industry
severely in the long run by creating a man power shortage as well as bringing up the cost arbitrage on which the
Indian industry is playing at the moment.

Attrition cannot be blindly classified with a negative connotation. A healthy attrition rate in any industry is
necessary for new ideas and innovation to flow in as well as to facilitate the overall growth of the industry in terms
of knowledge sharing. But after a particular level the same boon becomes a bane.

Recruiters explain that the high attrition rates significantly increase the investments that are made on the
employees. The problem of losing funds in employee acquisition is more prominent in the high-end BPO
segment. Companies invest a lot of time and money in training a candidate for the first four months. But these
investments do not always get converted into actual profits. In case of the BPO industry, each agent level
recruitment roughly costs the company Rs. 5000/-. This is the amount which a company needs to pay the job
recruitment agency. Other than the direct cost, an associated cost of training and administrative service is also
involved. Each agent works is non-productive or partly productive in the organization for nearly the first 2-3
months. Hence an employee leaving the organization within the first 6 months is a bad investment for the
company. Also, as stated earlier the cost of attrition in the industry is 1.5 times the annual salary.

However, there is another perspective for attrition which is specific to the BPO industry in India. India at the
moment is working on low end Business Processes which do not require quite a lot of amount of high skills. The
reason for India's success has been primarily the low cost, high quality labor which India provides. Compared to
other competitors such as Philippines, South Africa, Ireland; India is the only country where we have a balance
between the cost involved and the quality provided till now. For Indian companies to remain successful in future
they would have to keep the cost low. Since the tasks performed by an agent are pretty standard and does not
require added skills, there is no benefit in retaining a highly experienced employee. At the floor level operation, a
non-experienced candidate could work with the same efficiency of a 2-3 year experienced employee after minimal
training. Hence the industry players consider the present attrition as a positive attrition which is serving the
industry by keeping the cost low

CAUSES

Attrition in the BPO industry is twofold. One part of the attrition is where the employee leaves the industry entirely.
The other section of attrition is where the employee joins another firm in the industry. Both the sections have
separate reasons which need to be identified.

The primary reason for people leaving the industry is due to the cause that the industry is viewed as a gap filler
occupation. There seems to be a flaw in the way the industry is structured. The industry has been mainly
dependent on youngsters who are taking out time to work, making money in the process also while thinking of
career alternatives. Hence for this group BPO is never a long term career but only as a part time job. The easy
availability of BPO jobs is only a source of easy money till the time there is no other source of funding. Also the

5
unfriendly working conditions, late night work shifts, high tension jobs acts as a deterrent for people to stick to this
industry for long time. In addition, the BPO jobs are not being taken with a positive spirit by the society on a large.
Research says that nearly 50 per cent of those who quit leave the industry.

Regarding the attrition between firms, the chief cause is the unavailability of resources in the job market causing a
great demand compared to the supply available. Presently there is no certified institute providing BPO specific
training and education. The scarce resource in the market leads to wide scale poaching and head hunting
amongst the competitors for the common pool. Due to the immaturity prevalent in the industry, the industry also
has not witnessed mature HR processes such as Work force planning being implemented by the firms. Usually
new projects in the BPO industry, requires a transition stage to be implemented within a short time. The lack of
preplanned recruitment leaves the firms with no option but to fulfill their immediate requirement by poaching
resources working on similar projects in other firms.

ANALYZING CAUSES OF ATTRITION USING A MULTILEVEL APPROACH

Attrition in the BPO industry needs to be tackled using a multi-level approach. Maslow's Hierarchy of Needs is a
multilevel model which primarily identifies the needs which are likely to act as factors of motivation for any human
behavior. We now analyze the current circumstances in BPO using Maslow's Hierarchy of Needs to develop a
better understanding of what are the expectations of any person from the industry at each level and how is it
being fulfilled presently. During this process the framework would also be used to identify gaps which when
handled appropriately can act as motivators for a person to carry on in this industry, thus bringing the present
attrition rate under control.

Maslow's basic needs are as follows: -

Physiological Needs

These are biological needs. They are the strongest needs because if a person were deprived of all needs, the
physiological ones would come first in the person's search for satisfaction.

For any person in the BPO industry, this basic need is satisfied by the compensation provided. Hence he looks
forward to a sufficient compensation structure which would take care of all of his basic physiological needs. This
needs to be continuously updated with time such that it fulfills all the physiological need of the person and his
family at every stage of his life. Presently the BPO industry has been providing a better than average salary in the
entry level but there is a general perception that it does not provide a proportionate rise in salary as the
experience increases.

GAP: The boom in the BPO sector has lead to exorbitant rise in salaries. Hence even after the high entry salary,
the industry workforce look forward to opportunities for making easy money. An absence in such arbitrage
opportunities leads to dissatisfaction of the physiological need.

Safety Needs

When all physiological needs are satisfied and are no longer controlling thoughts and behaviors, the needs for
security becomes active. Adults have little awareness of their security needs except in times of emergency or
periods of disorganization in the social structure (such as widespread rioting). Children often display the signs of
insecurity and the need to be safe.

There are two aspects of the security which would concern a person in the BPO business. One is the physical
security of the employee and their family. This need becomes particularly important for the weaker sex who
sometimes avoids BPO jobs because of the late night timings. The other aspect is the psychological fear of job
security. At the moment since the industry is growing and there is ample abundance of jobs, this is not an issue.
Also the Indian laws are not favorable to retrenchment. Hence the later is not an issue although physical security
is.

GAP: The companies presently provide the best of available security but with the industry growing rapidly there is

5
a need to maintain the same standards if we don't want this need to be a cause of attrition.

Needs of Love, Affection and Belongingness

The next higher class of needs which emerge is the need for love, affection and belongingness. Maslow states
that people seek to overcome feelings of loneliness and alienation. This involves both giving and receiving love,
affection and the sense of belonging.

This need of an individual gets highly affected by the BPO industry predominantly for people working in the night
shift. Night Shift causes separation from ones family, friends and relatives. Employees have been found
complaining about not being able to spend ample time with their family after working in night shift. The BPO
companies try to compensate for this by creating a fun-filled working environment and much stress is laid down
on developing friends and relationships inside the company. But there is a huge gap in expectation and fulfillment
which needs to be satisfied.

GAP: Lack of family and social interactions is one of the major concerns for the employees which need to be
dealt by the BPO companies. This issue needs to be dealt with the importance and sensitivity which it deserves.

Needs for Esteem

As per Maslow, after the first three classes of needs are satisfied, the need for esteem becomes dominant. These
involve needs for both self-esteem and for the esteem a person gets from others. Humans have a need for a
stable, firmly based, high level of self-respect, and respect from others. When these needs are satisfied, the
person feels self-confident and valuable. When these needs are left unfulfilled, the person feels inferior, weak,
helpless and worthless.

BPO industry unfortunately has been regarded by the Indian society as a low value industry with low end work
and which does not need high educational qualification. Hence a person working in this industry is viewed as a
person of less ability compared to others working in any other industry. This attitude has developed because of
the mass recruitment undertaken by BPO firms during the initial days, where not much focus was laid on selecting
highly capable person. This diminution in esteem sometimes leads to reasons for one to leave the industry. The
industry presently requires an image makeover. Some of the present firms are focusing on creating a positive
image of the industry by using the media in a positive manner, though much is yet to be done. Certain measure
such as change in Job Title is a positive step in this direction. Providing great working environment in terms of
infrastructure and facilities also acts as boost to ones esteem for the employees.

GAP: People working in this industry have an unsatisfied Esteem need because of the general perception about
the industry. As the industry matures, the industry's positioning needs to change from being a mere money maker
option to an industry which provides immense learning, high growth prospects and opportunities for foreign
experience.

Needs for Self-Actualization

When all of the foregoing needs are satisfied, then the need for self-actualization gets activated. Maslow
describes self-actualization as a person's need to be and do what the person was "born to do". These needs
make themselves felt in signs of restlessness. The person feels on edge, tense, lacking something, in short,
restless.

The BPO firms nowadays are trying to provide Career growth path and higher Educational Opportunities for
employees as a measure of retaining them. These steps are strides in fulfilling the discontented Self Actualization
needs of the employees. These are one of the few long term motivations provided by companies.

GAP: Though recently companies have been trying to cater to the self actualization needs of their employees,
this has been one of the major reasons for attrition. Industry workers are not able to envision the BPO industry as
a long term career option. They feel that a long term career in the BPO industry is not feasible.

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RECOMMENDATIONS

Owning to the nature of the industry we can predict that the attrition problem will remain a hurdle for BPO industry
in foreseeable future. The attrition in the BPO is consistent with what has been witnessed in any industry during
its growth phase.

The IT industry, manufacturing industry had seen similar high attrition during their growth stage which later
reduces as the industry matures. The need of the hour is not to be bogged down but to accept the problem and
see what we can do best in given scenario to reduce the impact. A win-win model needs to be devised for this,
satisfying the needs of both, the employer and the employee.

Needs of the employer: To get maximum returns from each employee, recover training and development costs,
minimize cost in terms of time in training new workforce, ensure that adequate no of people are there to carry on
the process (proper manpower planning)

Needs of the employee: Enriched job profile, better career path, challenging work environment, future prospects
of the job; in a nut shell a job that satisfies his overall needs as discussed earlier.

THE WIN-WIN MODEL

The Win-Win model is conceptualized on the supposition that the employees need to be enclosed from the
universe by strategies at each level such that the attrition and its impact can be reduced to the minimum. Plans
differentiate on the basis of tenure into short and long term as well as on the basis of usage into mitigation and
contingency.

Short Term Mitigation Plan

 Break Even Period

One of the objectives at this level should be on retention for a specified period of time (break even period) so as
to recover the cost incurred on the employee. This should be formally included as a process such that the
organizations include this in consideration while recruiting candidates. Here are few suggested steps to calculate
the minimum time period to recover the cost of employee.

Small Tenure Bonds

Once this period is calculated, strict actions can be taken to ensure that employees do not leave the organization
before completion of this min timeframe. One such measure is getting a bond signed between the employee and
the employer.

 80 - 20 Rule

The firms concentrate on 20 % of the roles/ employees who contribute to 80 % of the productivity. These
identified employees/roles need to be retained by special attention from the management's side.

Short Term Contingency Plan

This plan will focus on the work environment that enhances employee motivation for the job. It includes work
conducive and fun filled environment, informal work culture suiting to the needs of the young employees. This is
essential for compensating the affected social life owning to the nature of the job. Certain measures that can be
included-

 Having crèche in workplace would also help for the same

 Flexible Salary Structure
 Variable pay package based on performance

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  ‘Working from home' when required for a short term
 Added benefits like sponsored vacations
 Provide job rotation amongst department such as Quality, operation etc on a periodic basis such that
employees get bored with the same monotonous work

Long Term Mitigation Plan

The long term mitigation plans are steps taken by the management to minimize the impact of attrition such that
the firm does not face losses on the long term basis.

 Defining job roles would help in mitigating the effects of attrition.

 Clear documentation of the process and the jobs performed so that the process is not dependent upon
an employee.
 Succession planning for the critical positions in the organization for faster replacement.
 An assessment and certification can also be helpful in creating an employable talent pool with
benchmarked-requisite skill for frontline management.

Long Term Contingency Plan

The long term contingency plans are attempts by the industry to reduce the attrition as a whole.

 To minimize the training costs, 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.
 To reduce poaching of employees within the industry bilateral agreements between companies should
being signed. Basic norms are being put in place and code of ethics is being stressed upon by industry.
 A Common Database should be maintained by all the players of the industry to ensure that they are not
cannibalizing each other’s resources.
 The industry should look at Tier II and Tier III cities, where it can move its operations. These would
increase the resource pool as well as would minimize the attrition. Awareness needs to be spread in
these cities about the industry through advertisements.
 Focus should be on having education and ongoing learning for the workforce, sponsoring employees on
post-graduate programs and treating applicants and employees in the same way as one treats
customers.

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 The WIN-WIN MODEL

Reducing Attrition
Given the perceived weakness of our "case" for mentoring and induction, we need a different strategy to create
and adequately sustain the new employee support programs we know we need. Just as in business and other
non-educational sectors, in education we have begun to look for a clearer connection between our programs and
the "bottom line". The goal has been to collect and present local data which clearly show a monetary value for
better support of new employees. This is why the most recent strategy for gaining induction support has been to
demonstrate the true cost of employee attrition, which is the negative "flip side" of the more positive retention
factor. In other words, rather than trying to show the less tangible benefits of increased retention, we must show
the cost-effectiveness of decreased attrition.

The Challenge of Employee Attrition- How Bad Is It?

National projections suggest that, during the decade of 2000-2010 about 1/2 of all teachers nationally will need to
be replaced. While these national level data are alarming for educators, both educators and non-educators alike
would rather know their own district's attrition rate AND the actual cost of that attrition to the district and its
taxpayers. Clearly, locally specific staff and cost data are better for motivating local action.

All of this means that, for every local school district, the strategic starting point to increased new employee

5
support is to be able to clearly show two factors:
      1. The extent of your district's need to recruit and employ new staff during the next five to ten years.
      2. The actual total and per employee costs of employee attrition in your own district.

Districts need to use two ways to establish the first set of data on employment needs:

 End-of career attrition, largely a result of retirement , which is harder to control

 Early career attrition which are typically a result of controllable factors

Reducing End-of Career Attrition

Until recently, district efforts has most often been to offer early retirement packages as incentives to cause
attrition of the most senior staff members. The primary motivation has been to reduce the cost of these high
salary employees by replacing them with less expensive younger educators. Now that the problems are the
quality of teaching and having enough good teachers to staff our classrooms, the challenge has reversed to
"how can we keep people who might want to retire?”

The starting point for addressing these concerns is the development of a profile of the age of current employees
and extrapolating the numbers and dates for their eligibility for retirement. This is an important set of information
to know, since you want to target them with retention efforts, or at least, you must be able to replace them.
Improving the retention numbers at the end of the career requires a different set of strategies than does
increasing retention early in the career. Efforts should primarily focus on increased employee earnings that will
increase a pension later, affirmation of the value of elder staff contributions, and on providing new, invigorating
leadership responsibilities. Among other possibilities, appointment as a mentor, serving in mentoring roles, and
receiving a mentoring stipend fit these needs very well. However, it is incumbent that your district "sell"
involvement in mentoring as offering senior staff these benefits to make sure they are obvious to your target
audience.

Reducing Early Career Attrition

You also need to know how many employees are leaving before retirement age. This is a more critical factor to
quantify as it is one over which your district can assert considerable influence. Specifically, the district needs to
determine the total rate of employee attrition less the number retiring. The goals are to define and target a specific
group of people and to do so with a different set of strategies than the end-of-career people need. Since attrition
is the "flip side" of retention, the retention strategies we have discussed are still relevant to address attrition. What
is different here is the need to know the cost of attrition. These data can be quite powerful, for they are annually
repeating costs which are assumed to be necessary. These costs are so accepted as to have become almost
invisible expenses.

Your strategy should have three parts:

 Find out how bad early career staff attrition really is.

 Determine the total district and per employee cost of attrition.

 Present in a compelling way, a comparison of the cost of attrition and the cost of effective induction and
mentoring support for new employees.

If done carefully, you should be able to show that the district is spending MORE on attrition than the cost of a
quality induction and mentoring program. In other words, it costs more to do it wrong than it does to do it right!
This argument is all the more compelling because your district does not need new money to do an effective job of
supporting and keeping new staff. Induction will reduce the amount of money the district is already spending and
losing each year to attrition! Induction more than pays for itself every year. Further, while that cost savings alone
is enough a reason to do a quality induction program, there are many other reasons as well, like the improving
teaching and learning, saving supervisory time, and increasing school improvement momentum, all of which are

5
significant nonfinancial benefits in their own right.

Factors to Consider in the Cost of Attrition

Here are some things to consider that demonstrate clear financial costs. Your basic need is to know the cost to
the district when a new employee leaves teaching or is not rehired. What you want to identify are your district's
costs for factors such as:

 New employee recruitment, especially for recruiting the kind of diverse staff a great district wants

 Administrative time and costs for trips to job fairs & colleges, and time taken for screening applications,
interviewing, and meetings to make decisions

 Newspaper, journal, internet and other ads

 Technology specialist time for placing recruitment and job info on the district web site

 Brochure and flyer printing, folding, addressing, and mailing

 Personnel staff time processing applications, answering phones, dealing with certifications, and other
inquiries, etc.

 Cost of background checks

 New employee initial orientation

 New employee training during the first year or two? (both that just for new employees and all other
district training)

 Reduced student learning during the year or two that a new employee is learning to teach

 Reduced student learning when a first or second year employee leaves with what they have learned
from trial and error, and a different new employee is hired without that hard won experience and starts
over at the beginning again.

 Loss of instructional continuity when new employees leave or are not rehired because they are not as
successful as required

 Administrator time spent orienting, evaluating, coaching, developing, and supporting new employees
who are not retained

Employee attrition is a costly dilemma for all organizations.

Control attrition with effective communication - build strong, high-performance teams.

Is ATTRITION important to your organization?

Employee attrition costs 12 to 18 months’ salary for each leaving manager or professional, and 4 to 6 months' pay
for each leaving clerical or hourly employee. According to a study by Ipsos-Reid, 30% of employees plan to
change jobs in the next two years. Do the math and discover how much your company may pay for attrition.

Although employee turnover can help organizations evolve and change, an American Management Association
survey showed that four out of five CEOs view employee retention as a serious issue for organizational success.
If managers know the real causes of attrition, managers can control attrition and retain employees. Each retained
employee can save money and lead to better opportunities.

Employee Orientation

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New employees who attend a positive orientation program are 70% more likely to be with the company three
years later (Corning Glass).

Mergers/Acquisitions

Lee Hecht Harrison, a HR consulting firm, advises, "Far more employees will leave following a restructuring than
are laid-off or terminated as a result of downsizing. This lost talent and cost can be minimized through good
communication."

Exit Interviews

Exit interviews provide an excellent source of information of internal problems, employees' perceptions of the
organization, underlying workplace issues, and managers' leadership abilities.

Ineffective Managers

High employee turnover can be recognized and properly attributed to poor managerial performance, emotional
intelligence and ineffective leadership. Poorly selected or improperly trained managers can be expensive...

A Workforce Magazine article, "Knowing how to keep your best and brightest," reported the results of interviews
with 20,000 departing workers. The main reason that employees chose to leave was poor management. HR
magazine found that 95 percent of exiting employees attributed their search for a new position to an ineffective
manager.

Hire attitude; Train skills

We can help you hire and inspire appropriate employees ...

 Build positive, friendly, teamwork attitudes and commitment to customer services

 Help new employees feel comfortable as they participate as valued team members

 Provide periodic refresher courses to maintain team purpose and functionality

 Apply Expert Modeling to rapidly transfer expert skills within a workforce

Reduce Attrition: Managers and Professional Employees

We can help you adjust your company vision and manager's performance reviews to reflect employee turnover,
and provide mentoring and interpersonal training to inexperienced managers.

 Develop and communicate a strong strategic vision

 Provide relationship coaching and help people develop to their potential

 Reward managers for their relationship skills - not only on technical know-how and financial results

 People don’t leave jobs, they leave managers! Replace managers who will not develop relationship skills

Reduce Attrition: Clerical and Hourly Employees

We can help you communicate. Most employees want to know more about their work. We can explain each
process and help employees understand the importance of their work. Your employees will become more
knowledgeable about their effectiveness. Here are a few ways ...

 Compliments and thanks cost little and can bring great benefits

5
  Let employees know that their opinions are valuable

 Keep employees informed - don't let them hear important news through rumors

 Update employees with technical information

 Address staff by their first names

 Publicly praise what the employee has accomplished and say why it was important

 Criticize privately about what the employee can do better and explain how to do it better

 Create community with activities such as informal meals or events outside work

 Involve employees in organizational planning

 Titles cost little and remind employees that they are valuable

Is attrition always bad for an organization?

While organizations lament the challenges that they have to constantly encounter as a consequence of employee
turnover, the truth is that all attrition is actually not detrimental for an organization. It is in fact a myth that every
time an employee walks out of the door, the organization suffers. Some attrition is desirable and necessary for
organizational growth and development. The point is how to differentiate between what is commonly known as
“good attrition” from “bad attrition”. It is a thin line, which is not always easy to understand.

It benefits an organization when certain employees leave, whose continuation of service would have negatively
impacted productivity and profitability of the company. There are also some people who have a negative and
demoralizing influence on the work culture and team spirit. This, in the long-term, is detrimental to organizational
health. On the contrary, when the departure of certain employees creates a setback (most often temporary) in
terms of work continuity and progress, is commonly considered bad attrition. The time and investment lost in
hiring and developing these people along with the cost of finding a
replacement and bringing him up to the productivity level, all come
at a high price.

The term “healthy attrition” is used to signify the importance of less

productive employees voluntarily leaving the organization. Vikram
Bhardwaj, Managing Director, Redileon executive search believes
that the criteria is performance. “In the performance analysis of the
ones who have left, if the proportion of high performers leaving is
higher, the attrition is not good or healthy. Plain numbers and
attrition figures do not signify anything without a deeper analysis of
the above,” said Bhardwaj.

5
 "Any attrition in any form "High attrition implies that
is bad for an certain necessary skills
organization. It means are vulnerable or are not
that a wrong choice was present due to
made at the beginning" employees being lost"

- NR Ganti - Vikram Bhardwaj

Chairman and MD Managing Director
SQL Star International Redileon

"Good attrition minimizes "Typically when you walk

the adverse impact on out people, you are
business while bad setting an example.
attrition accentuates the Certain things cannot be
loss" compromised on"

- Dr J K Nair - Arun Rao

COO and Executive VP VP-HR
California Software Company AppLabs

Attrition in Indian BPO Industry

What is the biggest challenge for the BPO industry in India today? Well, it is a no brainer: Attrition!

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 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 growth rate of about 40-42 percent. On the hiring front, the industry absorbed about 74,000 people in 2003

5
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 (2003)

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 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 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 off shoring 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. This seemed to sum up the views of BPO fraternity at the Nasscom summit here.

Tackling Attrition Head-On

Industry experts feel, as the industry was still in its nascent strategy there was lot of strategies available to
reverse this trend and make it an attractive employer.

NASSCOM ITES-BPO forum has identified HR as one of the key challenges of the ITES-BPO industry and has

5
formed a special task force to address short-term challenges such as Attrition and also long-term challenges such
as ensuring availability of a skilled talent pool.

To arrest this trend, companies can look into various options like good rewards, bonding programme, flexible
working hours and stronger career path. With attrition rates ranging between 30-60 percent in the BPO industry,
HR specialists feel that a scientific and analytical approach should be implemented.

The tremendous turnover rate is undeniably one of the main problems faced by the BPO industry globally. HR
specialists at the Nasscom 2004 summit brainstormed on various approaches to handle this bugbear- either
declare war on attrition and tackle it head on, or adopt a more scientific analytical approach.

Pay cheques alone are not enough to retain employees. Management also needs to consider other aspects like
secure career, benefits, perks and communication. The attrition battle could be won by focusing on retention,
making work a fun place, having education and ongoing learning for the workforce and treating applicants and
employees in the same way as one treats customers.

Companies need to go in for a diverse workforce, which does not only mean race, gender diversity, but also
include age, experience and perspectives. Diversity in turn results in innovation and success. The 80:20 rule also
applies to recruitment, she quipped, since studies showed that 80 percent of the company's profit comes from the
efforts of 20 percent of the employees. So BPOs need to focus on roles, which have the most important impact.

According to experts, the cost of attrition is 1.5 times the annual salary. Age should not be a barrier for training
employees and could in fact bring in more stability to the company.

Update In November 2008

With the global financial meltdown it appears employees prefer to stick to their current jobs as much as possible.
In November 2008 BPO attrition fell to 30%. The attrition rates in few leading companies are,

 Infosys BPO 28%

 Wipro BPO 18%

 TCS BPO 21-22%

 Tesco HSC has seen a 6% drop in attrition

In 2007 the attrition rate was about 50-55%.

 Do you have any statistics that compare Attrition Rates across industries?

Sr. 0-3 4-7 8-12 13+ % change from Expected increase

Sector
No years years years years 2006 to 2007 in 2008

Pharma &
1 25.00% 10.00% 5.00% 2.00% -5.00% 6.00%
Chemicals

2 Manufacturing 8.58% 2.46% 2.46% 3.00% 5.00% -3.50%

3 Financial Services 20.00% 20.00% 20.00% 20.00%    

4 Hospitality 35.00% 25.00% 20.00% 7.50% 13.00% 20.00%

5 Ad & Media 40.00% 35.00% 20.00% 15.00% 17.00% 22.00%

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6 BPO 40.00% 30.00% 20.00% 10.00%    

7 Automobile 7.00% 3.00% 2.00% 2.00% No visible 14.00%

8 Auto Component 12.00% 15.00% 20.00% 12.00% 5.00% 6.00%

9 Banking 10.00% 5.00% 2.50% 2.50% 2.00% 2.00%

10 Infrastructure 16.00% 11.00% 7.00% 11.00% 9.00% 20.00%

11 IT & Telecom 32.00% 25.00% 10.00% 5.00% 5.00% 9.00%

Source: Emmay HR / BusinessWorld, 4 Feb

2008

What is the attrition rate in the ITeS sector?

BPOs in India are expected to employ around one million people by 2008, but the challenger is to find quality
human resources given the current attrition rate of around 35-40%. Currently it is about 35% in non-voice and
45% in voice call centers. However what the number doesn’t show is that more than 60% of those who leave a
particular BPO do not leave for a competitor, but leave the industry as a whole. Here lies the danger for this
sector and the challenge for HR consultants.

Agents want to become team leaders. Team leaders want to become supervisors. Supervisors want the job of the
CEO.

At an attrition rate of 40%, the cost of attrition in the industry is 1.5 times the annual salary.

Some of the reasons could be

 Many see this space to be an Internet sweatshop where all that the employees are required to do is just
mechanically input numbers into excel sheets or, worse still, answer phone calls in the same tone and
repeat the same lines at least 100 times a day/night.

 People who join a BPO usually do so to make a 'quick' buck. They are bound to quit because sooner or
later they will find something more attractive in terms of the job profile and/or pay.

 The industry has concentrated on hiring young, dynamic and these are looking for more than just a job.

 Talent in this space is generally overlooked, which leaves the deserving few disgruntled with top
management and hence fosters attrition.

To fix this problem BPO firms are trying to solve this big problem

 By hiring mature talent [i.e. people over 35 years in age].

 HR must realize that fatter pay cheques can never be a sure-shot way to retain employees. More
important aspects like a secure career, benefits, perks and communication cannot be overlooked at any
level.

 Employee retention must be the focus, which means that talent must be recognized and suitably

5
 rewarded.

 Hire outstation candidates (from small towns) and provided them with shared accommodation.

 Offer management diplomas and MBA courses.

 Only 5 out of 150 employees become team leaders in a year, hence a cash incentive is one way to keep
the employees happy. Daksh shells out about Rs 4,000 bonus per month to almost 85% of its
workforce.

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

 BPO must concentrate on becoming an 'employer of choice'. A comprehensive process framework and
access to proper infrastructure in the work place goes a long way in retaining employees, as a congenial
work environment is critical.

BPO Attrition – The Challenge of the Year

“Attrition has been recognized as the key challenge in 2008. The focus would now be on improving HR practices
to retain employees and promote loyalties.”

BPO Times.com

According to industry estimates, the attrition rates within the voice BPO sector are around 50% while the non-
voice BPO sector ranges between 20% – 30%. Service providers are competing with each other in order to attract
the best professionals on the market.

A study published in 2007 by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) reveals
that the market growth may slow down to 25 percent annually if the high attrition rate of 40% is not curbed on
time. Venugopal Dhoot, President, ASSOCHAM, says, "The impact of attrition would result in an increase in
expenditure incurred for training and development, loss of clientele, failure to attract more business based on high
output, inconsistent delivery and quality issues regarding loss of productivity, high turn-around-time, costly
recruitment process etc.". The report predicts that there will be a gap of 300,000 professionals by 2009.

Why is attrition impacting on market growth?

In a fast growing and dynamic market, attrition rates play a key role affecting the sustainability and future of the
market. But why does this happen? The high attrition rates lead to several direct and indirect costs which have a
clear impact on the service provider business case leading to a less viable outsourcing proposition.

Since day one of knowledge transfer, the understanding of the process specificities and complexities increase
over time, networks are established between the service provider staff and the client retained organization, the
productivity and quality increases. When a resource leaves, the service provider loses the progressively built
knowledge. Eventually someone new will come, the majority of times will be a poor hand over and the service
provider needs to go through the cycle again. The productivity decreases, quality is affected and relationships are
damaged.

Furthermore, the efforts of the service provider are aiming at recruiting the right skills from the market. This leads
to headhunt from the competitors to get the best resources available. Time, effort and money are spent in order to
find the right skills having a direct impact on the competitor’s attrition rates and leading to a snow ball effect. The
employees feel attracted by the higher salaries being offered by the competition and keep changing job
contributing for the increase of high attrition rates.

On the other hand, the department where the leaving employee worked is impacted. The lack of an experienced
resource results in an increased workload for the department which affects their own productivity. This has a
negative effect on the department morale, which also needs to build trust and relations with the new employee.

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Some Indian players mitigate this risk by hiring a permanent bench, however in smaller players or in Eastern
Europe, China or Latin America branches a bench is not feasible due to the lack of scale of FTE’s. A gap of 6-8
weeks until a new person was hired (with all the consequences this brings) is the typical timeline we are looking
at.

As the productivity, quality and morale decreases the service provider is forced to focus their efforts on recruiting
the right skills, providing the right training and achieving the minimum performance committed to the client with
less resources, rather than establishing activities which will improve the processes leading to a higher satisfaction
of the client. Eventually, an increase of scope or pursuit of new business and new clients will allow a growth of the
market.

If we think about it, a company with 20,000 employees facing attrition rates of 25% means that needs to recruit
about 5,000 new employees a year to face attrition! On the other hand, it is estimated that the market growth
averages 20% meaning that in a year this company would need about 4,000 new employees to cope with the
market trend. This means that in a year the 9,000 would need to be recruited.

Why are BPO providers experiencing higher attrition rates?

High competition within the market, routine work such as invoice processing or supplier payments, time shifts to
address business hours in Western countries, mismatch of expectations whilst many MBA and PhD individuals
are performing entry-level tasks or constant work pressure are some of the industry specificities which makes
BPO sector a leader in terms of attrition rates.

It is estimated that 60% of the employees leave an organization because they are offered higher salaries
elsewhere, while 40% leave due to stagnation in career graph, long duty hours, night shifts and non-conducive
HR policies. The service providers are themselves one of the causes for the stated high attrition rates, by offering
un-reasonably high pay packages in order to recruit the right talent.

In addition, the much hyped "work for fun" tag normally associated with the industry has in fact backfired, as many
individuals (mostly fresh graduates), take it as a first job. Once they join the sector and understand its
requirements, they are taken aback by the long working hours and later monotony of the job starts setting in.
Many individuals are not able to take these pressures of work. This mismatch of expectations is also a
consequence of attrition rates impact in the team.

The under resourcing of the team, poor hand over, recruitment of inappropriate skills and poor productivity leads
to increased volumes, long hours and dissatisfaction at work contributing again for further attrition.

What can BPO providers do about it?

While it is evident that the impact and costs of high attrition rates within the BPO industry are extremely high,
there is a general feeling of the industry to fight and decrease this phenomenon.

BPO players are investing more in their strategies to recruit and retain the best staff in the market. From my point
of view, there are a couple of fundamental initiatives which could reduce the high existent attrition rates:

 Recruitment of the right skills

HR Departments should have a clear definition of the job position as well as identifying the right skills needed to
perform the respective role. A clear expectations set should be established at the interviewing stage.

 Developing right skills in house

In case the right skills are not available in the market, then an intensive training and development program should
be established in accordance with each individual specific skill. This approach needs to take into consideration
the time lapse which will evolves until those skills are assimilated.

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  Clear career development paths

Being part of a world known brand is something commonly empathized by the suppliers to attract the cream of the
market. The mismatch of expectations leads individuals to believe reaching a high position within a short period of
time. In practice this does not happen in such a straight forward manner and only a couple of individuals see
themselves escalating the hierarchy.

 Job rotation

This is a known practice among BPO. The suppliers provide very similar work for different clients. It is a common
practice to rotate people across clients within the same horizontal (i.e. F&A; Insurance; CRM; HRO). Rotation
across horizontals also happens. From my point of view, this is not as effective considering that the skills required
for F&A processing are not the same as the ones required for HRO and so forth. Rotation across delivery centre’s
is something to be seen lately especially for global deals where the team is spread around the globe. Job rotation
is meant to reduce monotony, introduce a new challenge to the individual, proportionate awareness of company
dimension, and interact more effectively with colleagues physically distant.

 Benefits – Reward and Recognition Schemes

High rewards and innovative recognition schemes are established in the market as key differentiators of the
competition. Objective rewards (such as closing books on time; performing x number of invoices a day etc.) are
common. Also benefits such as transportation, world class work infrastructures, canteens, child support and
playgrounds, language courses and sport activities can be seen while visiting any facility of the main BPO
players. The major suppliers offer world class facilities where more than 30,000 people work equivalent to a
parallel city where everything can be found, from restaurants to swimming pools or even supermarkets.

 Process Documentation

In order to address the lost of knowledge from a particular individual leaving the company it is best practice in the
industry to have updated process documentation. The process and key stroke documentation is done during the
knowledge transfer phase. After this a FAQ is maintained which captures all the specifics of the process which
are not captured in the process documentation. This will then be included in the process documentation every 6
months. By having this approach suppliers try to capture all knowledge existent which can then be shared during
hand over with the new comers.

 Quality and Process Improvement Initiatives

The incentive for participating in quality and process improvement initiatives aims on the first hand at improving
quality and performance offered to the client. The flipside of this is to give individuals extra responsibility which is
often seen as a trust and role enhancement due to their high performance.

The above actions are crucial to fight the industry high attrition rates and ensure consistent service delivery
quality to their clients. This is the way to face the challenge ahead.

EMPLOYEE RETENTION

Employee retention is a process in which the employees are encouraged to remain with the organization for the
maximum period of time or until the completion of the project. Employee retention is beneficial for the organization

5
as well as the employee.

Corporate is facing a lot of problems in employee retention these days. Hiring knowledgeable people for the job is
essential for an employer. But retention is even more important than hiring. There is no dearth of opportunities for
a talented person. There are many organizations which are looking for such employees. If a person is not
satisfied by the job he’s doing, he may switch over to some other more suitable job. In today’s environment it
becomes very important for organizations to retain their employees.

The top organizations are on the top because they value their employees and they know how to keep them glued
to the organization. Employees stay and leave organizations for some reasons.

The picture states the latest statement that corporate believes in “Love them or Lose them”

The reason may be personal or professional. These reasons should be understood by the employer and should
be taken care of. The organizations are becoming aware of these reasons and adopting many strategies for
employee retention.

Employees today are different. They are not the ones who don’t have good opportunities in hand. As soon as they
feel dissatisfied with the current employer or the job, they switch over to the next job. It is the responsibility of the
employer to retain their best employees. If they don’t, they would be left with no good employees. A good
employer should know how to attract and retain its employees. Retention involves five major things:

                                             

 Compensation           Environment   Growth            

                                      

                 Relationship                                                       Support

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 Employee retention would require a lot of efforts, energy, and resources but the results are worth
it.

Compensation
Compensation constitutes the largest part of the employee retention process. The employees always
have high expectations regarding their compensation packages. Compensation packages vary from
industry to industry. So an attractive compensation package plays a critical role in retaining the
employees.

Compensation includes salary and wages, bonuses, benefits, prerequisites, stock options, bonuses,
vacations, etc. While setting up the packages, the following components should be kept in mind:

Salary and monthly wage: It is the biggest component of the compensation package. It is also the most
common factor of comparison among employees. It includes
 Basic wage
 House rent allowance
 Dearness allowance
 City compensatory allowance

Salary and wages represent the level of skill and experience an individual has. Time to time increase in
the salaries and wages of employees should be done. And this increase should be based on the
employee’s performance and his contribution to the organization.

Bonus: Bonuses are usually given to the employees at the end of the year or on a festival. 

Economic benefits: It includes paid holidays, leave travel concession, etc.

Long-term incentives: Long term incentives include stock options or stock grants. These incentives help
retain employees in the organization's startup stage. 

Health insurance: Health insurance is a great benefit to the employees. It saves employees money as
well as gives them a peace of mind that they have somebody to take care of them in bad times. It also
shows the employee that the organization cares about the employee and its family. 

After retirement: It includes payments that an Employee gets after he retires like EPF (Employee
Provident Fund) etc. 

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Miscellaneous compensation: It may include employee assistance programs (like psychological
counseling, legal assistance etc), discounts on company products, use of a company cars, etc.

Growth and Career

Growth and development are the integral part of every individual’s career. If an employee can not foresee
his path of career development in his current organization, there are chances that he’ll leave the
organization as soon as he gets an opportunity.

The important factors in employee growth that an employee looks for himself are:

Work profile: The work profile on which the employee is working should be in sync with his capabilities.
The profile should not be too low or too high.

Personal growth and dreams: Employees responsibilities in the organization should help him achieve
his personal goals also. Organizations can not keep aside the individual goals of employees and foster
organizations goals. Employees’ priority is to work for themselves and later on comes the organization. If
he’s not satisfied with his growth, he’ll not be able to contribute in organization growth.

Training and development: Employees should be trained and given chance to improve and enhance
their skills. Many employers fear that if the employees are well rained, they’ll leave the organization for
better jobs. Organization should not limit the resources on which organization’s success depends. These
trainings can be given to improve many skills like:

 Communications skills
 Technical skills
 In-house processes and procedures improvement related skills
 C or customer satisfaction related skills
 Special project related skills

Need for such trainings can be recognized from individual performance reviews, individual meetings,
employee satisfaction surveys and by being in constant touch with the employees.

Support
Lack of support from management can sometimes serve as a reason for employee retention. Supervisor
should support his subordinates in a way so that each one of them is a success. Management should try
to focus on its employees and support them not only in their difficult times at work but also through the
times of personal crisis. Management can support employees by providing them recognition and
appreciation.

Employers can also provide valuable feedback to employees and make them feel valued to the
organization.

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The feedback from supervisor helps the employee to feel more responsible, confident and empowered.
Top management can also support its employees in their personal crisis by providing personal loans
during emergencies, childcare services, employee assistance programs, counseling services; et al.
Employers can also support their employees by creating an environment of trust and inculcating the
organizational values into employees. Thus employers can support their employees in a number of ways
as follows:

 By providing feedback
 By giving recognition and rewards
 By counseling them
 By providing emotional support

Importance of Relationship in Employee Retention Program

Sometimes the relationship with the management and the peers becomes the reason for an employee to
leave the organization. The management is sometimes not able to provide an employee a supportive
work culture and environment in terms of personal or professional relationships. There are times when an
employee starts feeling bitterness towards the management or peers. This bitterness could be due to
many reasons. This decreases employee’s interest and he becomes de-motivated. It leads to less
satisfaction and eventually attrition.
A supportive work culture helps grow employee professionally and boosts employee satisfaction. To
enhance good professional relationships at work, the management should keep the following points in
mind.

Respect for the individual: Respect for the individual is the must in the organization. 

Relationship with the immediate manager: A manger plays the role of a mentor and a coach. He
designs and plans work for each employee. It is his duty to involve the employee in the processes of the
organization. So an organization should hire managers who can make and maintain good relations with
their subordinates. 

Relationship with colleagues: Promote team work, not only among teams but in different departments
as well. This will induce competition as well as improve the relationships among colleagues.

Recruit whole heartedly: An employee should be recruited if there is a proper place and duties for him
to perform. Otherwise he’ll feel useless and will be dissatisfied. Employees should know what the
organization expects from them and what their expectation from the organization is. Deliver what is
promised.

Promote an employee based culture: The employee should know that the organization is there to
support him at the time of need. Show them that the organization cares and he’ll show the same for the
organization. An employee based culture may include decision making authority, availability of resources,
open door policy, etc.

Individual development: Taking proper care of employees includes acknowledgement to the

employee’s dreams and personal goals. Create opportunities for their career growth by providing
mentorship programs, certifications, educational courses, etc. 

Induce loyalty: Organizations should be loyal as well as they should promote loyalty in the employees
too. Try to make the current employees stay instead of recruiting new ones.

Organization Environment

It is not about managing retention. It is about managing people. If an organization manages people well,
employee retention will take care of itself. Organizations should focus on managing the work environment

5
to make better use of the available human assets.

People want to work for an organization which provides

 Appreciation for the work done

 Ample opportunities to grow
 A friendly and cooperative environment
 A feeling that the organization is second home to the employee

Organization environment includes

 Culture
 Values
 Company reputation
 Quality of people in the organization
 Employee development and career growth
 Risk taking
 Leading technologies
 Trust

Types of environment the employee needs in an organization

 Learning environment: It includes continuous learning and improvement of the individual,

certifications and provision for higher studies, etc.
 Support environment: Organization can provide support in the form of work-life balance. Work
life balance includes:

o Flexible hours
o Telecommuting
o Dependent care
o Alternate work schedules
o Vacations
o Wellness
 Work environment: It includes efficient managers, supportive co-workers, challenging work,
involvement in decision-making, clarity of work and responsibilities, and recognition.

Lack or absence of such environment pushes employees to look for new opportunities. The environment
should be such that the employee feels connected to the organization in every respect.
In this section we are going to study about various topics related to employee retention, why is it needed,
basic practices, myths, etc. in detail.

Managing Employee Retention

The task of managing employees can be understood as a three stage process:

1. Identify the cost of employee turnover

2. Understand why employee leave
3. Implement retention strategies

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Identify the cost of employee turnover:
The organizations should start with identifying the employee turnover rates within a particular time period
and benchmark it with the competitor organizations. This will help in assessing the whether the employee
retention rates are healthy in the company. Secondly, the cost of employee turnover can be calculated.
According to a survey, on an average, attrition costs companies 18 months’ salary for each manager or
professional who leaves, and 6 months’ pay for each hourly employee who leaves. This amounts to major
organizational and financial stress, considering that one out of every three employees plans to leave his
or her job in the next two years.

Understand why employees leave:

Why employees leave often puzzles top management. Exit interviews are an ideal way of recording and
analyzing the factors that have led employees to leave the organization. They allow an organization to
understand the reasons for leaving and underlying issues. However employees never provide
appropriate response to the asked questions. So an impartial person should be appointed with whom the
employees feel comfortable in expressing their opinions. 

Implement retention strategy:

Once the causes of attrition are found, a strategy is to be implemented so as to reduce employee
turnover. The most effective strategy is to adopt a holistic approach to dealing with attrition. An effective
retention strategy will seek to ensure:

 Attraction and recruitment strategies enable selection of the ‘right’ candidate for each
role/organization

 New employees’ initial experiences of the organization are positive

 Appropriate development opportunities are available to employees, and that they are kept aware
of their likely career path with the organization

 The organization’s reward strategy reflects the employee drivers

 The leaving process is managed effectively.

How To Increase Employee Retention

Companies have now realized the importance of retaining their quality workforce. Retaining quality
performers contributes to productivity of the organization and increases morale among employees.

Four basic factors that play an important role in increasing employee retention include salary and
remuneration, providing recognition, benefits and opportunities for individual growth. But are they really
positively contributing to the retention rates of a company? Basic salary, these days, hardly reduces
turnover. Today, employees look beyond the money factor.

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Employee retention can be increase by inculcating the following practices:

1. Open Communication: A culture of open communication enforces loyalty among employees. Open
communication tends to keep employees informed on key issues. Most importantly, they need to
know that their opinions matter and that management is 100% interested in their input.
2. Employee Reward Program: A positive recognition for work boosts the motivational levels of
employees. Recognition can be made explicit by providing awards like best employee of the month
or punctuality award. Project based recognition also has great significance. The award can be in
terms of gifts or money.
3. Career Development Program: Every individual is worried about his/her career. He is always keen
to know his career path in the company. Organizations can offer various technical certification
courses which will help employee in enhancing his knowledge.
4. Performance Based Bonus: A provision of performance linked bonus can be made wherein an
employee is able to relate his performance with the company profits and hence will work hard. This
bonus should strictly be productivity based.
5. Recreation facilities: Recreational facilities help in keeping employees away from stress factors.
Various recreational programs should be arranged. They may include taking employees to trips
annually or bi-annually, celebrating anniversaries, sports activities, et al.
6. Gifts at Some Occasions: Giving out some gifts at the time of one or two festivals to the employees
making them feel good and understand that the management is concerned about them.

Employers And Their Key Drivers To Attract And Retain Talent

The Following table describes the Key Drivers to Attract And Retain Talent.

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 Employers Key Drives To Attract And Retain Talent

o Early responsibilities in career

o Flexible and transparent organizational culture
o Global opportunities through a variety of exposure and
Procter and Gamble India diverse experiences
o Performance Recognition

o Strong global brand

o Value-based environment
American Express (India) o Pioneer in many people practices

o Learning and growth opportunities

o Competitive rewards
o Opportunity to grow, learn and implement
NTPC o Strong social security and employee welfare
performance- oriented culture

o Strong values of trust, caring fairness, and respect

within the organization
o Freedom to operate at work
o Early responsibility in career
Johnson & Johnson o Training and learning opportunities
o Visible, transparent and accessible leaders
o Competitive rewards
o Innovative HR programs and practices

o Performance-driven Rewards
o Its belief in “Growing our own timber”
o Comprehensive development and learning programs
o Flat organization, where performance could lead to
Glaxo Smith Kline very quick progression
Consumer Healthcare o Challenging work context
o Competitive rewards
o Exhaustive induction and orientation program

o Organization philosophy and culture

o Job stability
Tata Steel o Freedom to work and innovate

o Company brand
o Open , transparent, and caring organization
o Management according to the managing with respect
to guiding principles
Colgate Palmolive India o Training and development programs
o Structured career planning process
o Global career opportunities

Wipro o Company’s brand as an employer

o Early opportunities for growth
o High degree of autonomy
o Value compatibility

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 o Innovative people program

o Company brand image

o Work ethics
o Learning and growth opportunities
Indian Oil Corporation o Challenging work assignments
o Growing organization

o The group brand equity

o Strong corporate governance and citizenship
o Commitment to learning and development
TCS o Best in people practices
o Challenging assignments
o Opportunity to work with fortune 500 clients

Retention Bonus

Higher attrition rates within a particular industry have forced companies to use some innovative strategies
to retain employees. Retention Bonus is one of the important tools that are being used to retain
employees. Retention bonus is an incentive paid to an employee to retain them through a critical
business cycle. Retention bonuses are becoming more common in the corporate world because
companies are going through more transitions like mergers and acquisitions. They need to give key
people an attractive incentive to stay on through these transitions to ensure productivity.

Retention bonuses have proven to be a useful tool in persuading employees to stay.

A retention bonus plan is not a panacea. According to a survey, non-management employees generally
receive about 10 percent of their annual salaries in bonuses, while management and top-level
supervisors earn an additional 50 percent of their annual salaries. While bonuses based on salary
percentages are the generally used, some companies choose to pay a flat figure. In some companies,
bonuses range from 25 percent to 50 percent of annual salary, depending on position, tenure and other
factors. Employees are chosen for retention bonuses based on their contributions to management and
the generation of revenue. Retention bonuses are generally vary from position to position and are paid in
one lump sum at the time of termination. However, some companies pay in installments as on when the
business cycle completes. A retention period can run somewhere between six months to three years. It
can also run for a particular project. A project has its own life span. As long as the project gets
completed, the employees who have worked hard on it are entitled to receive the retention bonus. For
example, the implementation of a system may take 18 months, so a retention bonus will be offered after
20 months. 
Although retention bonuses are becoming more common everywhere, some industries are more likely
than others to offer them. Retail/wholesale companies are the most appropriate to implement stay-pay
bonuses, followed by financial service providers and manufacturing firms. Companies of all sizes use
retention bonus plans to keep knowledge employees retained in the company. To retain its key senior
employees post merger with EDS Corporation, Mphasis is providing cash component based retention
bonus plan for its employees. This is mainly to retain good employees and provide them a cash incentive
to keep them motivated.

Hire Right Talent

Employee retention starts with recruitment. Early departures arise from the wrong recruitment process.
Here are a few ways to ensure how to hire the right talent for a particular job.

 Hire appropriate candidates. Hire candidates who are actually suitable for the job. For this the
employer should understand the job requirements clearly. Don’t hire under qualified or clearly

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 overqualified candidates.
 Provide realistic job preview at the time of hiring: Mostly employees leave an organization
because they are given the real picture of their job responsibilities at the time of joining. Attrition
rate can be reduced if a right person is hired for a right job.
Realistic preview of the job responsibilities can be given to the employment seekers by various
methods like discussions, trial periods, internships etc.
 Clearly discuss what is expected from the employee: Before joining the organization, tell the
candidate what is expected from him. Setting wrong expectations or hiding expectations will
result in early leaving of employees.
 Discuss what the expectations of the employees are: Ask employees what they expect from
the organization. Be realistic. If their requirements can be fulfilled only then promise them. Or tell
them beforehand that their requirements cannot be fulfilled. Don’t show them an unrealistic
picture.
 Culture fit: Try to judge individual’s capability to adapt to the organization’s culture. A drastic
change in the culture may give a culture shock to the candidate.
 Referrals: According to the research, referred candidates stay longer with the organization.
There is a fear of hampering the image and reputation of the person who referred the candidate.

Manager Role in Retention

When asked about why employees leave, low salary comes out to be a common excuse. However,
research has shown that people join companies, but leave because of what their managers’ do or don’t
do. It is seen that managers who respect and value employees’ competency, pay attention to their
aspirations, assure challenging work, value the quality of work life and provided chances for learning
have loyal and engaged employees. Therefore, managers and team leaders play an active and vital role
in employee retention.

Managers and team leaders can reduce the attrition levels considerably by creating a motivating team
culture and improving the relationships with team members. This can be done in a following way:

 Creating a Motivating Environment: Team leaders who create motivating environments are likely
to keep their team members together for a longer period of time. Motivation does not necessarily
have to come through fun events such as parties, celebrations, team outings etc. They can also
come through serious events e.g. arranging a talk by the VP of Quality on career opportunities in the
field of quality. Employees who look forward to these events and are likely to remain more engaged.
 Standing up for the Team: Team leaders are closest to their team members. While they need to
ensure smooth functioning of their teams by implementing management decisions, they also need to
educate their managers about the realities on the ground. When agents see the team leader
standing up for them, they will have one more reason to stay in the team.
 Providing coaching: Everyone wants to be successful in his or her current job. However, not
everyone knows how. Therefore, one of the key responsibilities will be providing coaching that is
intended to improve the performance of employees. Managers often tend to escape this role by just
coaching their employees. However, coaching is followed by monitoring performance and providing
feedback on the same.
 Delegation: Many team leaders and managers feel that they are the only people who can do a
particular task or job. Therefore, they do not delegate their jobs as much as they should. Delegation
is a great way to develop competencies.
 Extra Responsibility: Giving extra responsibility to employees is another way to get them engaged
with the company. However, just giving the extra responsibility does not help. The manager must
spend good time teaching the employees of how to manage responsibilities given to them so that
they don’t feel over burdened.
 Focus on future career: Employees are always concerned about their future career. A manager
should focus on showing employees his career ladder. If an employee sees that his current job offers

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 a path towards their future career aspirations, then they are likely to stay longer in the company.
Therefore, managers should play the role of career counselors as well.

Importance Of Employee Retention

Now that so much is being done by organizations to retain its employees, why is retention so important?
Is it just to reduce the turnover costs? Well, the answer is a definite no. It’s not only the cost incurred by a
company that emphasizes the need of retaining employees but also the need to retain talented
employees from getting poached.

The process of employee retention will benefit an organization in the following ways:

1. The Cost of Turnover: The cost of employee turnover adds hundreds of thousands of money to a
company's expenses. While it is difficult to fully calculate the cost of turnover (including hiring costs,
training costs and productivity loss), industry experts often quote 25% of the average employee
salary as a conservative estimate.
2. Loss of Company Knowledge: When an employee leaves, he takes with him valuable knowledge
about the company, customers, current projects and past history (sometimes to competitors). Often
much time and money has been spent on the employee in expectation of a future return. When the
employee leaves, the investment is not realized.
3. Interruption of Customer Service: Customers and clients do business with a company in part
because of the people. Relationships are developed that encourage continued sponsorship of the
business. When an employee leaves, the relationships that employee built for the company are
severed, which could lead to potential customer loss.
4. Turnover leads to more turnovers: When an employee terminates, the effect is felt throughout the
organization. Co-workers are often required to pick up the slack. The unspoken negativity often
intensifies for the remaining staff.
5. Goodwill of the company: The goodwill of a company is maintained when the attrition rates are
low. Higher retention rates motivate potential employees to join the organization.
6. Regaining efficiency: If an employee resigns, then good amount of time is lost in hiring a new
employee and then training him/her and this goes to the loss of the company directly which many a
times goes unnoticed. And even after this you cannot assure us of the same efficiency from the new
employee.

What Makes Employee Leave?

Employees do not leave an organization without any significant reason. There are certain circumstances
that lead to their leaving the organization. The most common reasons can be:

 Job is not what the employee expected to be: Sometimes the job responsibilities don’t come
out to be same as expected by the candidates. Unexpected job responsibilities lead to job
dissatisfaction.
 Job and person mismatch: A candidate may be fit to do a certain type of job which matches
his personality. If he is given a job which mismatches his personality, then he won’t be able to
perform it well and will try to find out reasons to leave the job
 No growth opportunities: No or less learning and growth opportunities in the current job will
make candidate’s job and career stagnant.
 Lack of appreciation: If the work is not appreciated by the supervisor, the employee feels de-
motivated and loses interest in job.
 Lack of trust and support in coworkers, seniors and management: Trust is the most
important factor that is required for an individual to stay in the job. Non-supportive coworkers,
seniors and management can make office environment unfriendly and difficult to work in.
 Stress from overwork and work life imbalance: Job stress can lead to work life imbalance
which ultimately many times lead to employee leaving the organization.
 Compensation: Better compensation packages being offered by other companies may attract

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 employees towards themselves.
 New job offer: An attractive job offer which an employee thinks is good for him with respect to
job responsibility, compensation, growth and learning etc. can lead an employee to leave the
organization.

Employee Retention Strategies

The basic practices which should be kept in mind in the employee retention strategies are:

1. Hire the right people in the first place.

2. Empower the employees: Give the employees the authority to get things done.
3. Make employees realize that they are the most valuable asset of the organization.
4. Have faith in them, trust them and respect them.
5. Provide them information and knowledge.
6. Keep providing them feedback on their performance.
7. Recognize and appreciate their achievements.
8. Keep their morale high.
9. Create an environment where the employees want to work and have fun.

These practices can be categorized in 3 levels: Low, medium and high level.

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INNOVATIVE RETENTION STRATEGIES FOR INDIAN BPOs

Retention of key employees is critical to the long term health and success of any organization. It is a
known fact that retaining your best employees ensures customer satisfaction, increased product sales,
satisfied colleagues and reporting staff, effective succession planning and deeply embedded
organizational knowledge and learning.

Employees’ retention matters as organizational issues such as training time and investment, lost
knowledge, insecure employees and a costly candidate search are involved. Various estimates suggest
that losing a middle manager in most organizations costs up to five times of his salary.

The BPOs in India face an enormous challenge in reducing attrition rate and this being a nascent industry
needs to draw parallels, examples from other industry practices and as well as develop innovative
employee retention initiatives as highlighted below. This has been classified into 3 groups:

1. The corporate level

2. Managerial/supervisory level
3. Employee recognition initiatives

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Corporate level retention strategies:

Relevance of retention strategies in the Indian BPO industry vis-à-vis critical to its existence for the
following reasons.

1. To bring stability in business and increase customer service process

2. NASSCOM has estimated that the Indian ites industry will gross over $5.7 billion by 2005 (based
on a conservative year-on-year growth of 65% by NASSCOM)
3. Staff/employee satisfaction translates directly into money quite quickly in the BPO industry to
other industries.
4. To reduce the pressure on the recruiting process
5. Recent acquisition deals both domestic and overseas by BPOs makes it even more critical to
stabilize their back end operations to service new customers

Before we proceed it’s important to understand the underlying reasons for high attrition rates, which are
pretty steep and are around 40-50%. Currently it is about 35% in non voice and 45% in voice call centers.
About 80% of them look for better careers within the same industry. Agents want to become team
leaders. Team leaders want to become supervisors. Supervisors want the job of CEO. Based on the
experts view in the BPO industry, literature and data available, the following trends are seen as below.

There are varied reasons for the same the major reasons for attrition rate are:

- Money- 10%
- Night shifts- 35%
- Monotonous/boring job- 30%
- Others- 25%

As seen above from the above data, hr strategies at the corporate level of the BPO industry indeed have
a huge challenge before them and their approach has to be productive and they have to develop
innovative employee retention initiatives as mentioned here on.

 A satisfied employee knows clearly what is expected from the everyday at work. Changing
expectations keeps people on the edge and creates unhealthy stress. This creates insecurity
and makes the employee feel unsuccessful. An employee’s deliverables at work must be
continuous to him clearly and thoroughly.
 The quality of supervision an employee receives is critical to employee retention. Frequent
employee complaints center on these areas.
a. Lack of clarity about expectations
b. Lack of clarity about benefits pertaining to performance based incentives
c. Lack of feedback about performance
d. Failure to provide a framework within which the employee perceives he can succeed.
 The ability of the employee to speak his or her mind freely within the organization is another key
factor. Have meetings or dinner once a month, to share the company’s vision, the industry
growth and where they see themselves in this scheme of things.
 The perception of fairness and equitable treatment is important.
 When an employee is failing at work, refer to W. Edward Deming’s question, “what is about work
system that is causing the person to fail?” Most frequently, if the employee knows that what
they are supposed to do, then the answer is time, tools, training, treatment, or talent. The
easiest to solve, and the ones most affecting employee retention, are tools, times, training. The
employee must have tools, time and training necessary to do their job well – or they will move to
an employer who provides them.
 Another important factor is focus on the process than on the person especially when the
employee is not failing at work.
 A common complaint or lament during an exit interview is that the employee never felt senior

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 managers knew he/she existed.
 The senior managers to be involved in the recruitment process If the recruitment team has
identified potential and cultural fit candidates.
 Involve the advisors or team leaders in the interviewing panels.
 In company presentations to potential candidates, encourages the employees to share their
experiences.
 Your staff members must feel rewarded, recognized and appreciated. Frequently saying thank
you goes a long way. Monetary rewards, bonuses and gifts make the thank you even more
appreciated. Understandable raises, tied to accomplishments and achievements help to retain
stuff.
 Select the right people in the first place through behavior-based testing and competency
screening.
 Draw lessons from the Indian army, for their command and control leadership where the troops
are highly skilled, motivated and morale is high. The comparisons as drawn as both (BPO and
army) have large numbers of employees and army’s style of leadership may not relevant to
BPOs but it must be understood and gathered that military organizations are team oriented with
continuous training. Troops expand their skill and experience capabilities they never dreamed
possible, produces a highly motivated and efficient organization. Learning opportunity and
responsibility is the key.
 Offer an attractive, competitive, benefits package.
 Provide opportunities for people to share their knowledge via training sessions, presentations,
mentoring others and team assignments.
 Demonstrated respect for employees at all the time. Treat the employees well and provide
dignity of job; follow the maxim of Mr. Marriott that “Ladies and Gentleman serve the Ladies and
Gentleman”.
 If a key employee resigns, it should be taken up on a priority basis and kept confidential as fas
as possible and the senior management should meet the employee to discuss his reasons for
leaving and evaluate if his issues bear merit and whether they can be resolved.
 Exit interviews: outsource this process to external consultants to get a realistic and unbiased
feedback. This can be a great source of information regarding the shortcomings in a
management system.
 People want to enjoy their work. Make work fun. Engage; employ the special talents to each
individual.
 BPOs should Endeavour to implement 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
dependents.
Work-life balance policies would have a positive impact on:
a. Attractive high caliber recruits
b. Retaining skilled employees
c. Reduce recruitment costs
d. Improve employee morale
e. Maintaining a competitive edge.
 Listen to the employee’s ideas, never ridicule them.
 Offer performance feedback and praise good efforts and results.
 Implement organizational culture measurement tools like adversity quotient (aq).
 Recognize and celebrate the success.
 Staff adequately so overtime is minimized for those who don’t want it and people don’t wear
themselves out.
 Get them involved in social causes and fund drives like tsunami, disaster relief. Provide a
meaning or a cause to their lives.
 Nurture and celebrate organization traditions like diwali, holi, Christmas.
 Communicate goals, roles and responsibilities so that people know what is expected of them

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 and feel a part of a crowd.
 According to research by the Gallup organization, encourage employees to have good, even
best, friends at work.
 Encourage humor and lighter in workplace deal with stress which will ensure that the
employees are happy which gets reflected in their services especially critical in voice based
transaction.
 Feeling valued by their manager in the work place is a key to high employee motivation and
morale.
 Reach out to the families of the potential candidates with sustained and focused messages in
the media about the excellent prospects in the BPO industry. There is an example of this
instances- Late Rai Bahadur Mohan Singh Oberoi, chairman of the Oberoi group in efforts to
makes sure that many women joined his company went to educational institutions and elicited
women’s parents to come to the hotel. He told them “I will walk you and show what your
daughters will do with us, please help us to train them”.
 Excellent career growth prospects:-

Encourage and groom employees to take up higher positions/openings. If not fulfilled then they
will look outside the organization.

Look for the talents within the organization and encourage them. For instance, if a person has
the potential to be a trainer, groom and develop the employee.

 Night shifts:
a. Have people from other walks of life to talk about their experiences. Other professions like
Army, Medicine, and shop floor workers also have to work in night shifts.
b. Have doctor to advice and guide them about their biological clocks and ways and means to
deal with them.
c. Dietary advice: do’s and don’ts
d. Create the passion that they are doing a yeomen service to the nation by bringing the
much-required foreign exchange.
e. They are helping people (clients) to make their life easier.
f. Special lights in the office/workers to ensure their bodies get Sufficient vitamin D.
g. One distinct disadvantage of night shifts is the sense of disorientation with friends and
family members. Concentrate on this problem and develop innovative solutions and ways to
deal with it.
 Focused training and development programs- for associates and team leaders
 A session on transactional analysis during the induction period so that both are made aware of
the causes for communication breakdowns and conflicts which affect their mental behavior and
stress which needs to be tackled at the earliest in the right manner.
 Those who are working on services verticals – like banking and financial services to be imparted
training/knowledge of Vedic math, which would help them, calculate the figures quickly without
using calculators.
 Creativity and innovation- It’s all about attitude. A job can be as monotonous or exiting as you
think/believe it to be, as it is all a state of mind. Look for excitement in the job process as it is not
just answering the queries or solving the problems of customers but learning more about the
customer through his voice accent or visualizing his environment/culture.
 Encourage the best performers to share their experiences with others and mentor others.
 Meditation room or deep breath exercises for associates and team leaders – the emphasis is
that they should never be in the stress mode or upset while attending calls of a customer.
 Hire outstation candidates (from small towns like Amravati, Latur, Nasik etc) and provide them
with shared accommodation.

It is HR’s job; though not HR’s job alone, to champion and shepherd effective human resource

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 management practices at both the strategic and day-to-day levels. That is, to be effective, human
resource management practices must be grounded in two ways. First, they must reflect
companywide commitments as to how it will manage and relate to its employees. Secondly, HR must
implement these commitments so that the ideals of the enterprise and deeds of its agents are
congruent.

HR must play a key role in the development and execution of the business strategy of an
organization. It should evolve from a transactional support role to partnering in the organization’s
business strategy.

Retention Myths

The process of retention is not as easy as it seems. There are so many tactics and strategies used in
retention of employees by the organizations. The basic purpose of these strategies should be to increase
employee satisfaction, boost employee morale hence achieve retention. But sometimes these strategies
are not used properly or even worse, wrong strategies are used. Because of which these strategies fail to
achieve the desired results. There are many myths related to the employee retention process. These
myths exist because the strategies being used are either wrong or are being used from a long time.
These myths prevent the employer from successfully implementing the retention strategies. Let us learn
about some of these myths.

1. Employees leave an organization for more pay: Money may be the motivating factor for some but for
many people it is not the most important factor. Money matters more to the low-income-employees
for whom it’s a survival issue. Money can make an employee stay in an organization but not for long.
The factors more important than money are job satisfaction, job responsibilities, and individual’s skill
development. The employers should understand this and work out some other ways to make
employees feel satisfied. When employees leave, management tries to retain them by offering more
money. But instead they should try to figure out the main reason behind it. Issues that are mainly the
cause of dissatisfaction are organization’s policies and procedures, working conditions, relationship
with the supervisor and salary, etc. For such employees, achievement, growth, respect, recognition,
is the main concern.

2. Incentives can increase productivity: Incentives can surely increase productivity but not for long term.
Cash incentives, volume work targets and speed awards are old management beliefs. They can
generate work speedily and in volumes but can’t boost employee commitment. Rather speed can
hamper the quality of work produced. What really glues employees to their work and organization is
quality work, meaningful responsibilities, recognition, respect, growth opportunities and friendly
supervisors.

3. Employees run away from responsibilities: It is a myth that employees run from responsibilities. In-
fact employees feel more responsible if they are given extra responsibilities apart from their regular
job. Employees look for variety, greater control on the processes and authority to take decisions in
their present job. They want opportunities to learn and grow. Management can assign extra
responsibilities to their employees and appreciate them on the completion of these tasks. This will
induce a sense of pride in the employee and will improve the relationship between the management
and the employee.

4. Loyalty is a thing of the past: Employees can be loyal but what they need is an employer for whom
they can be loyal. There is no reason for the employee to hop jobs if he’s satisfied with the employer.

5. Taking measures to increase employee satisfaction will be expensive for the organizations: The
things actually required improving employee satisfaction like respect, career growth and
development, appreciation, etc. can’t be bought. They are free of cost. An employer or management
that reacts well to the employee’s ideas and suggestions is enough for the employees to be retained.

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Retention success Mantras

Transparent Work Culture

In today’s fast paced business environments where employees are constantly striving to achieve
business goals under time restrictions; open minded and transparent work culture plays a vital role
in employee retention.

Companies invest very many hours and monies in training and educating employees. These companies
are severely affected when employees check out, especially in the middle of some big company project
or venture. Although employees most often prefer to stay with the same company and use their time and
experience for personal growth and development, they leave mainly because of work related stress and
dissatisfactions.

More and more companies have now realized the importance of a healthy work culture and have a gamut
of people management good practices for employees to have that ideal fresh work-life. Closed doors
work culture can serve as a deterrent to communication and trust within employees which are potential
causes for work-related apathy and frenzy.

A transparent work environment can serve as one of the primary triggers to facilitate accountability, trust,
communication, responsibility, pride and so on. It is believed that in a transparent work culture employees
rigorously communicate with their peers and exchange ideas and thoughts before they are finally
matured in to full-blown concepts. It induces responsibility among employees and accountability towards
other peers, which gradually builds up trust and pride. More importantly, transparency in work
environment discourages work-politics which often hinders company goals as employees start to
advance their personal objectives at the expense of development of the company as a single entity.

Employees comprise the most vital assets of the company. In a work place where employees are not
able to use their full potential and not heard and valued, they are likely to leave because of stress and
frustration. In a transparent environment while employees get a sense of achievement and
belongingness from a healthy work environment, the company is benefited with a stronger, reliable work-
force harboring bright new ideas for its growth.

Quality Of Work

The success of any organization depends on how it attracts, recruits, motivates, and retains its workforce.
Organizations need to be more flexible so that they develop their talented workforce and gain their
commitment. Thus, organizations are required to retain employees by addressing their work life issues. 
The elements that are relevant to an individual’s quality of work life include the task, the physical work
environment, social environment within the organization, administrative system and relationship between
life on and off the job.

The basic objectives of a QWL program are improved working conditions for the employee and increase
organizational effectiveness. 

Providing quality work life involves taking care of the following aspects:
Occupational health care: The safe work environment provides the basis for the person to enjoy
working. The work should not pose a health hazard for the person. The employer and employee, aware
of their risks and rights, could achieve a lot in their mutually beneficial dialogue. 

Suitable working time: Organizations are offering flexible work options to their employees wherein
employees enjoy flexi-timings for dedicating their efforts at work. 

Appropriate salary: The appropriate as well as attractive salary has always been an important factor in

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retaining employees. Providing employees salary at par with the other counterparts of above that what
competitors are paying motivates them to stick with the company for long. 

QWL consists of opportunities for active involvement in group working arrangements or problem solving
that are of mutual benefit to employees or employers, based on labor management cooperation. People
also conceive of QWL as a set of methods, such as autonomous work groups, job enrichment, and high-
involvement aimed at boosting the satisfaction and productivity of workers. It requires employee
commitment to the organization and an environment in which this commitment can flourish. 

Providing quality at work not only reduces attrition but also helps in reduced absenteeism and improved
job satisfaction. Not only does QWL contribute to a company's ability to recruit quality people, but also it
enhances a company's competitiveness. Common beliefs support the contention that QWL will positively
nurture a more flexible, loyal, and motivated workforce, which are essential in determining the company's
competitiveness.

Supporting Employees

Organizations these days want to protect their biggest and most valuable asset and they want to do this
in a way that best suits their organizational culture. Retaining employees is a difficult task. Providing
support to the employees acts as a mantra for retraining them. Employers can also support their
employees by creating an environment of trust and inculcating the organizational values into employees.

The management can support employees directly or indirectly. Directly, they provide support in terms of
personal crises, managing stress and personal development. Management can support employees,
indirectly, in a number of ways as follows: 

 Manage employee turnover: Employee turnover affects the whole organization in terms of

productivity. Managing the turnover, hence, becomes an important task. A proactive approach can
be adopted to reduce attrition. Strategies should be framed in advance and implemented when the
times arrives. Turnover costs should also be taken into consideration while framing these strategies.

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 Become employer of choice: What makes a company an employer of choice? Is the benefit it
offers or the compensation packages it gives away to its employees? Or is it measured in terms of
how they value their employees or in terms of customer satisfaction? Becoming an employer of
choice involves following a road map which tells where to go as a brand.

 Engage the new recruits: The newly hired employees are said to be least engaged in the
organization. Keeping them engaged is an important task. The fresh talent should be utilized to
maximum before they start feeling bored in the organization.

 Optimize employee engagement: An organization’s productivity is measured not in terms of

employee satisfaction but by employee engagement. Employees are said to be engaged when they
show a positive attitude toward the organization and express a commitment to remain with the
organization. Employee satisfaction also comes with high engagement levels. So, organizations
should aim to maximize the engagement among employees.

 Coaching and mentoring: Employees whose work performance suffers due to poor interpersonal
relationships or because of lack of interpersonal skills should be provided proper coaching by their
superiors. Planed coaching sessions help an individual to work through issues, maximize his
potential and return to peak performance.

Feedback

Feedback acts as a channel of communication between the employee and his manager. The amount of
information employees receive about how well or how poorly they have performed is what we call
feedback. It is a dialog between a manager and an employee which acts as a way of sharing information
about the performance. It suggests where the employee performance is effective and where performance
has to improve.

Managers can provide either positive feedback or negative feedback to employees. This feedback helps
the employee assess his performance and identify the improvement areas.

Positive feedback communicates managerial satisfaction. Positive recognition for good performance

boosts up morale of employees and results in performance improvement to a higher productivity level. It
is believed that positive feedback is the only type of feedback that generates performance above the
minimum acceptable level. 

Negative feedback obviously communicates manager’s dissatisfaction. However, negative feedback

sometimes make employee to put more efforts to improve his performance. But such times are very rare.
Moreover this improvement is short term. 

Some managers do not provide any kind of feedback to their employees. Due to no feedback, employees
may assume that they are performing productively or they may feel that the manager is satisfied with their
performance. Studies reveal the performance tends be same or even decreases if no feedback is
provided.

Thus, feedback is necessary because:

 It builds trust and enhances communication between manager and employee.

 It gives managers and employees a way to identify and discuss skills and strengths.
 Positive feedback leads to employee retention and motivation.
 It helps in identifying performance areas that need improvement and specific ways to improve

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 them.
 It acts as an opportunity to enhance performance by identifying resources for skill development.
 It is an opportunity for managers and employees to assess and identify career and advancement
opportunities.
 It helps employees to understand the effectiveness of their performance and contributes to their
overall knowledge about the work.

Managers have tendency to ignore good performances of their employees. Providing no feedback may
demotivate employees and may lead to employee absenteeism. Input from manager’s side is necessary
as it help employees to improve their performance and increase productivity.

Communication Between Employee and Employer

Communication is a process in which a message is conveyed to the receiver by the sender. The
message may be or may not be in a common format or language that both the sender and receiver
understand. So there is a need to encode and decode the message in the process. Encoding and
decoding also helps in the security of the message. The process of communication is incomplete without
the feedback.

Communication is the solution to almost everything in this world. Same applies to employee retention
also.

Straight-from-the-shoulder communication is what the employees need from their employers. Employees
look for organizations where communication and process are transparent. Nothing is hidden and shared
with the employees.

5
There are 3 categories of employees:

 A: Who will leave their current employer in 3 years of their employment

 B: Who have a probability of leaving their current employer in next 3 years
 C: Who will stay with their current employer in the next 3 years

Category A: These are the employees who lack communication with their employers.

Category C: These are the employees who have proper, well structured communication with
their employers.

Communication is also the way to win the employees trust in the organization. Employees trust
the employers who are friendly and open to them. This trust leads to employee loyalty and finally
retention. Employers also feel that the immediate supervisors are the most authenticated and
trusted source of information for them. So the organizations should hire managers who are active
communicators.
Communication mediums

 Open door policy: Organizations should support open door policies so that the
employees feel comfortable and are able to express their doubts and feeling to their
employers.
 Frequent meetings and Social gatherings
 Emails, Newsletters, Intranet and many more

5
 So there should be effective communication across the organization and this communication
should be two-way. Communication alone can lead to unimaginable heights of employee
retention.

10 reasons why organizations are not able to retain employees

1. People don't get integrated. Most organizations have an orientation program which is more
of data-dump or focused on compliance trainings being completed. The focus should be
more on enabling employees to form networks within themselves.
2. Performance goals are unclear. In a fast growing team or business the focus is on getting
the thing done today, but rarely are performance goals thought through and employees told
as to which resources to approach for help.
3. Development is always tomorrow's job. Culturally Indians are focused on learning. If learning
adds value only to the job and not to the overall career goals of the individual then the
organizations seems too transactional for the employee.
4. The personal touch is missing. How comfortable are managers building personal bonds with
their subordinates? A lot of managers shy away fearing a bond will make delivering hard
messages difficult. I would argue that it's the other way round! Knowing employees on
personal level makes a manager know their strengths and weaknesses. Work allocation and
employee development become easier.
5. Reward systems are not transparent. Most employees who get salary increases because
they have a rare skill at a particular point of time think they got their raise for excellent
performance. Can you share details about how they have been compensated?
6. Perceived equity of reward systems is low. Like it or not, employees discuss salary details
and if there is any perceived lack of equity then you have an issue!
7. Goal setting process is not scientific. Most organizations impose a normal curve fitment, but
do not train managers to set realistic goals or goals that tie up with organizational or
functional goals. This also leads to point number 6.
8. External equity is missing too. Don't do an annual compensation survey when the market
moves every 3-4 months. If your practitioners feel that externally comparable professionals
are being valued more, then they will leave.
9. No communication around total value. If you offer benefits apart from only monetary terms
do you communicate that to employees too? Things like being a global or niche industry
leader, value of the brand of the organization, should also be made explicit.
10. No career planning. Are people aware of the ways in which they can grow in the
organization? Who are the role models within the organization? Do they know what they
have to do to gain the competencies to move to various levels?

RESEARCH: The critical findings

The increase in defecting employees that plagues many organizations led Integral Training Systems, Inc.,
a national consulting and training firm, and Behavioral Technology, a company specializing in employee
retention, development and selection to tackle the attrition dilemma. This aggressive project included
attrition and retention research they substantiated with a review of industry practices and behavioral
science literature. Seven of their many critical findings are outlined below:

1. THE COSTS OF ATTRITION CAN BE STAGGERING, BUT OFTEN UNSEEN-What does it cost
when a talented employee defects to the competition? Some cost factors are obvious, such as
productivity losses due to a vacant position. However, there are often unseen costs, such as reduced
productivity from the departing employee—who is inevitably distracted and contributes less during his
or her job search (sometimes called “short-timer’s disease”).
Using conservative calculations, one technical company in California’s Silicon Valley estimates it costs
them an average of $125,000 when just one employee leaves. Other companies estimate attrition
costs them annual productivity losses of 65% to 75% for each vacated position. Another organization
with a national sales force of hundreds estimates they have to scramble to make up for over $1 million

5
 in potentially lost sales when just one salesperson leaves. To add insult to injury, this figure does not
even take into consideration departing employees’ attempts to woo past customers to their new
employers. Multiply these costs by the number of employees who leave in one year, and the financial
impact is dramatic.

2. THE REASONS EMPLOYEES STAY ARE NOT THE SAME AS WHY THEY LEAVE Most
organizations do not have a handle on the actual reasons why employees stay—or the actual reasons
why they leave. Although many organizations attempt to capture the causes of attrition through exit
interviews, such interviews barely scratch the surface of the real reasons employees leave. They
inevitably fail to differentiate between factors that make the new job attractive to the departing
employee and the reasons why they were prompted to consider leaving in the first place. For example,
many employees report “better compensation” as a primary reason for leaving. In many cases,
however, the ITS and BT research revealed these same employees were not originally dissatisfied with
their compensation. Instead, other reasons—such as the lack of professional development
opportunities—prompted their job search. Truth is, departing employees often do not report negative
reasons associated with their old job (possibly from fear of retribution), but instead report what is
attractive in the new job. Because of this phenomenon, organizational data from typical exit interviews
fails to surface the real causes of attrition. This is just as true when an employee is actively recruited by
the competition. Our work in retention shows attractive candidates receive calls from recruiters all the
time! What causes the sudden shift that makes an employee act on a recruiter’s call at a particular point
in time? We consistently found that something deteriorated in their work situation that caused them to
take the current recruiter’s call more seriously. When organizations unknowingly misdiagnose the
situation and fail to surface the most critical factors contributing to attrition, their solutions obviously fall
short. This bad diagnosis leads to improper prescriptions, no relief and certainly no cure.

3. THE MANAGER'S ROLE IN ATTRITON IS PARAMOUNT BUT UNDERPLAYED-Most managers

we interviewed lamented the loss of talented contributors. However, when asked to diagnose the
reasons why employees leave, the average manager pointed to a variety of external organizational
factors—such as compensation—and failed to take any personal responsibility. They typically did not
acknowledge any factors within their control that contribute to attrition. Certain factors that are the
responsibility of “the overall corporation”—such as inequitable pay scales or excessively rigid policies
that dilute employee autonomy—certainly can aggravate attrition. However, we discovered a large
number of factors that contribute to employee retention are within the manager’s circle of influence. The
bottom line is, managers need to take personal accountability in retaining top talent. To do this, they
need more awareness, more tools and more guidance than ever before. And because their widened
span of control has decreased their “face time” with individual employees, each contact must maximize
any opportunity to influence employee motivation and commitment.

4. PREVENTION IS THE BEST MEDECINE-Losing key employees, even in small numbers, can be
devastating. That’s why it’s important to track not only overall attrition ratios, but also the level of
performers who leave. When we set out to determine the degree to which managers rank retention as a
high ongoing priority, we were not surprised to find that the only time many managers think about
retention is when they receive a resignation. And although most managers attempt to talk departing
employees out of leaving, we found most employees resist those attempts. And in the few instances
when the manager is successful in persuading the employee to stay, he or she often leaves within six
to nine months anyway. (The exception is when a clear salary inequity is remedied, and the employee
is satisfied with everything else about the work situation.) Clearly, the solution lies in tying retention to
critical business activities so that managers see it as integral to business success and survival. Treating
retention as an ongoing priority enables managers to focus on proactive measures to sustain long-term
employee commitment rather than on reactive attempts to reverse surprise resignations.

5. RETENTION HAS OFTEN UNRECOGNIZED IMPACT ON THE CUSTOMER-Managers are well

aware of the impact on their function when a valued employee leaves. However, even managers of
customer-contact functions, such as sales or customer service, often fail to demonstrate sensitivity to
the impact attrition has on customers. When key employees leave customer-contact functions,

5
customers often experience:

 discontinuity in the relationship

 a negative impact on their own productivity
 time wasted reorienting the new employee to their operation and the way they work

When the relationship represents a value-added partnership, the change in account managers or
service providers can set the relationship back months—and gives competitors a weighty advantage.
This is especially true if the transition to new account personnel is not well managed. At a certain point,
regular changes in account personnel show organizational instability and create the impression that the
organization does not care about the account relationship. In the case of development or support
functions, we also found managers generally lack an awareness of the negative impact departing
employees have on internal customers. Truth is, a top performing employee’s departure can have a
“ripple effect” on the organization and its clients that creates problems for months.

6. MISGUIDED THINKING: ATTRITION IS INEVITABLE-Some level of attrition is unavoidable; in fact,

a certain degree of attrition is desirable to compensate for poor hiring decisions. However, human
resource and senior line managers often question whether they can really increase retention ratios. The
answer is a definitive yes, with evidence to support it. The attrition rate for one organization’s division
was 18.5% overall and 25% in one of the most critical occupation groups. After working with us and
making retention a priority for every manager, the attrition rate dropped to 11.7% overall and 15% in the
critical group (even with a reduction in employee compensation happening at the same time!). Another
organization looked at retention risk analysis and intervention in a critical technical division because
they feared attrition would rise in the near future. Two interesting findings emerged from our research
with this group. The first was that this division was already following a number of the retention
prescriptions we provide our clients (one of the few divisions in the entire company to do so). More
striking, however, was the fact that as a result of following these prescriptions, the group’s retention
rates were more than 10% higher than the rest of the company's, thus validating the efficacy of our
model. Another company in the Northwest1 began with an attrition rate of 17%. After following the
same prescriptions, they reduced their attrition rate to 3%, bringing their retention rate up to 97%. As
the evidence suggests, attrition is not an unbeatable foe. Instead, it is a challenge that can be
overcome with the right strategies and tools.

7. WORLD-CLASS RETENTION REFLECTS A MULTI-FACTORED SOLUTION-The scenario in many

organizations is the same. A senior line manager or HR professional raises the red flag of attrition,
recognizing its potentially devastating impact on the company’s strategic position. Someone scrambles
to pull some sort of training or tools together that focus on only a few of the factors required to reduce
attrition. The result? The organization experiences mediocre results—or no results at all. This multi-
factored retention solution is like the story of the blind men and the elephant. Never having seen an
elephant, three blind men were brought over to a young elephant to let them experience it. Each man
touched a part of the elephant. The first one touched a leg and said; “Now I understand. An elephant is
like a tree trunk.” The second man touched the tail and said, “No. You are wrong. An elephant is like a
snake.” The third man touched an ear and said, “You are both quite mistaken. An elephant is like the
leaf of a big palm tree.” None of the men were capable of controlling the elephant because their
understanding was only partial. This also is true for many organizations that try to tackle only one factor
of the attrition dilemma.

Some anecdotal evidence lies in a report from one of the nation’s leading financial services companies.
In an attempt to stem the outflow of critical managers and individual contributors, they contracted with a
reputable training firm they had worked with in the past. Although the firm admitted it didn’t have
expertise in employee retention, it conducted sessions for senior managers, hoping to help them deal
effectively with the problem. Unfortunately, but also predictably, the firm addressed only a fragment of
the retention solution. The kickback from managers was strong, because they sensed it was only a
partial solution that would not effectively address their issues. A litmus test for a retention solution is to

5
assess its scope and depth. A one-dimensional solution is bound to fail.

SUMMARY

In this project report we have tried to define what exactly attrition and retention mean and what are its
impact on organization. We have also analyzed its merits and demerits and steps to overcome the
problem. Then we have discussed about its impact on market growth and should a HR manager do to
retain its employee. We also came across various myths and success mantras which we have put in
this report. We found out the reason behind the BPO providers experiencing high attrition rate and what
they should do about it. Comparison between different sectors with attrition rate is also done before
coming onto any sort of conclusion.

Finally we have analyzed the cause of attrition and the way to handle it by using a multilevel approach
i.e. Maslow’s Hierarchy of needs.

ANALYSIS OF DATA AND QUESTIONNAIRE

We have assigned values for every scale respectively for simple calculation.

We have 6 scales of measurement i.e.

1) Strongly agree

2) Somewhat Agree

3) Neutral

4) Somewhat Disagree

5) Strongly disagree

6) Don’t know

We have given weight-age for every scale starting from 6 to 1 in descending order i.e.

Strongly agree = 6, somewhat agree = 5, strongly disagree = 4, somewhat disagree = 3, neutral=

2, and Don’t know = 1.

Then we count the total vote in each dimension and multiplied with the scale value.

E.g. Let say for question no.1, we have following responses

STRONGLY AGREE = 46

SOMEWHAT AGREE = 38

NEUTRAL = 3

5
SOMEWHAT DISAGREE = 5

STRONGLY DISAGREE = 2

DON’T KNOW = 6

Hence, value of this dimension is:

(46*6)+ (38*5) + (3*2) + (5*3) + (2*4) + (6*1) = 501

Similarly, we plot graph of all the questions of these sectors according to their dimensions:

DIMENSION VALUE
600

500

400
DIMENSION VALUE
300

200

100

0
1 2 3 4 5 6 7 8 9 10

We had earlier given the questionnaire to the employees working at IBM-Daksh present in Phase
V, Udyog Vihar, Gurgaon. So after they filled up the questionnaire we grouped it under Microsoft
excel and started to analyze them. Now coming on to each question individually we have the
following interpretations to be made:

Question-1

5
 50
45
40
35
Strongly Agree
30 Some what Agree
25 Neutral
20 Strongly Disagree
Disagree
15
Don't Know
10
5
0
Employee turnover/Resign is a major concern for your organization.

INTERPRETATION: Most of the respondents at IBM-Daksh strongly agree (46%) to the fact that
employee turnover is a major concern for their organization as it brings down the morale and
confidence of the whole team.

Question-2

40

35

30

25 Strongly Agree
Some what Agree
20 Neutral
Strongly Disagree
15 Disagree
Don't Know
10

0
High percentage of females in the work force adds to the high attrition rate

INTERPRETATION: Respondents at IBM somewhat believe that high percentage of females in

the work force results in high attrition rate. This is because they feel that female employees could
not adjust themselves to the timings of the job, leave their job soon after they get married or get
any good job with good salary package.

Question-3

5
 35

30

25
Strongly Agree
20 Some what Agree
Neutral
15 Strongly Disagree
Disagree
10
Don't Know
5

0
Some attrition is always desirable and necessary for organizational growth and development

INTERPRETATION: 28% of the respondents feel that some attrition is always desirable and
necessary for organizational growth and development because some of the employees are there
in organization those are less productive and hence become liability for the organization. So by
removing them organization won’t be in problem rather they would be benefitted as they need not
to spend any more on them.

Question-4

40

35

30
Strongly Agree
25
Some what Agree
20 Neutral
Strongly Disagree
15
Disagree
10 Don't Know
5

0
BPO firms should provide career growth and higher educational opportunities for employees as measure of retaining them

INTERPRETATION: 34% of the respondents strongly feel that BPO firms should provide career
growth and higher educational opportunities for their employees as a measure of retaining them.
This would be a reason for the employee to stay at the organization as it gives them the scope

Question-5

5
 35

30

25 Strongly Agree
20 Some what Agree
Neutral
15 Strongly Disagree
Disagree
10
Don't Know
5

0
An employee gets sufficient promotional opportunities to enhance his position

INTERPRETATION: Most of the employees at IBM think that they get sufficient promotional
opportunities to enhance their position at the work place. This in turn motivates them to work
more and prove their talent to the higher authorities.

Question-6

60

50

40 Strongly Agree
Some what Agree
30 Neutral
Strongly Disagree
20 Disagree
Don't Know
10

0
The work schedule is exploitative

INTERPRETATION: 49% of the respondents strongly agreed to the fact that the work schedule
that they are into are very much exploitative which make them feel harassed and hence force
them to quit the job.

Question-7

5
 60

50

40 Strongly Agree
Some what Agree
30 Neutral
Strongly Disagree
20 Disagree
Don't Know
10

0
As job becomes repetitive, the employees find less challenge in it and hence seek for some other job

INTERPRETATION: 52% of the respondents feel that the employees leave the job and seek for
other one after finding less challenge in the BPO jobs which is of more repetitive kind.

Question-8

50

45

40

35
Strongly Agree
30
Some what Agree
25 Neutral
Strongly Disagree
20
Disagree
15 Don't Know

10

0
The families of BPO employees are not fully supportive for this industry

INTERPRETATION: According to the respondents, families of BPO employees are not

supportive of the fact that they work in BPO industry with late night shifts. They also feel that
there is little respect and recognition present in their job as they have to listen abuses from
different customers at work every day and have very less scope of innovation.

Question-9

5
 70

60

50
Strongly Agree
40 Somewhat agree
Neutral
30 Strongly Disagree
Disagree
20 Don't Know

10

0
Training of employees lead to increase in attrition

INTERPRETATION: This is in fact true and we have already discussed earlier that training of
employees lead to increase in attrition. Moreover 63% of respondents also agreed to this point.
The reason that they gave is after completion of training process, employee gain some
knowledge and become eligible for some other higher post and hence quit the organization.

Question-10

45

40

35

30
Strongly Agree
25 Somewhat agree
Neutral
20 Strongly Disagree
Disagree
15
Don't Know
10

0
Bad Selection leads to high attrition.

INTERPRETATION: According to 39% of respondents, poor selection of candidates leads to high

attrition because if you don’t select the right candidate for the given job then surely there would
be a mismatch and he\she would finally leave the job. At the time of recruitment, the HR
professionals should be very particular in choosing the right candidate.

5
Question-11

When asked about the reasons for an employee leaving an organization, the respondents ranked
the parameters as per the following according to their preference:

1. Lack of respect
2. No flexible work schedules
3. Stress from overwork and work-life imbalance
4. Lack of good working condition
5. The mismatch between job and person
6. Lack of challenges in job
7. Monetary factors
8. Organization is more concern towards business
9. The job or workplace was not expected
10. Lack of support
11. Employee needs pride in where they work and what they do
12. Less frequency in giving rewards
13. Very few supportive colleagues
14. Increase in favoritisms
15. Lack of appreciation
16. Loss of trust and confidence in senior leaders
17. Too little coaching and feedback

INTERPRETATION: By going through this rating we can learn that employees leave BPO sector
for lack of respect both inside and outside the organization. Maximum of them also quit their job
for absence of flexible work schedules and stress from overwork. Some of them also feel
mismatch between the job as they find no challenges in it.

Question-12

When asked to rate on the factors on which the organization are most concerned when an
employee quits, maximum respondents ranked the parameters as per the following according to
their preference:

1. Cost of training the employee

2. Time spent in orientation

3. Replacing qualified employees

4. Loss of productivity

5. Poor retention creates a “revolving door” culture within the organization lowering morale and
confidence.

6. Cost of overtime or temporary help

7. Recruiting costs

8. Interviewing costs

INTERPRETATION: According to respondents’ organization are more concerned about the cost
and time that they have put in the employee on training. Then they would be more worried about
replacing them with the right candidate which would prove asset to the organization.

5
 LIMITATIONS OF THE PROJECT

1. The first and biggest limitation is that the sample size or the people that we have used could
never be enough as it could never represent the full population. Because, the people who
are very computer savvy would always support this kind of concept. Secondly, new or
younger generation is much more supportive for these concepts. So, biasness could easily
creep in.

2. It is difficult to use methods like ANOVAs test, chi test etc on this project because first of all
these test are difficult to implement as they are purely numerical in nature. Secondly, it is not
easy to convert theoretical questions into numerical questions.

3. The organizations are very reluctant to give us the internal data of their employees. So exact
information could not be made out from them.

SUGGESTIONS

Few suggestions that would help in retaining employees-

1. An employee would work tirelessly for the company if he is being made aware that he is
an important part of the team.
2. Constant constructive feedback along with appreciative feedback to the employees. Be
specific in your feedback.
3. Award them with recognition if an employee has done something valuable. Don’t wait for
too long.
4. Be in touch with your employees and help them when in need. Don’t wait till the last
moment.

An organization should be aware of the needs of the employees before it can launch its retention
plans for them.

CONCLUSION

Employee attrition is a very big problem not only in India but outside India too. Attrition rate is
increasing day by day and it’s especially the software industry which is affected the most. Why an
Employee leaves a company is the question asked by most of the employers. Companies even
hire Private HR professionals to study the company's work and find out why an employee is
dissatisfied.

HR department does the recruiting of new employees and then send them for training so that
they can understand work and work culture and become better professionals. Each and every
company faces employee turnover problem whether big or small. An employee leaves his
present job for another job to get better pay package and good working conditions.
Every Company calculates Employee attrition rate and takes measures to reduce it. The facts
and figures are not made public as it may tarnish the image of the company in front of its own
employees and its loyal customers.

A survey has found out that there are various reasons for Employee Attrition-

1. Higher Pay Package in another company

2. Good working Conditions
3. Opportunities for growth in new company
4. Change of Place problem

5
 5. A better Boss in new company
6. Brand Image of the new company

Employee attrition costs a lot to the company. There are various costs which are borne by the
company at the start when the employee is under training period. Costs such as-

1. Conveyance Cost
2. Cost of lodging of the new employee
3. Trainers cost
4. Cost of venue where training will be conducted
5. Materials to be supplied during training process

A company has a training period of 3 to 6 months. During this time an employee is not fruitful for
the company. If an employee leaves the company when he starts working, company suffers a big
loss in terms of money as well as workforce. Every company takes measures to hold the talented
workforce by means of perks, Increments, Bonus and extra facilities. No one wants to lose good
brains to their competitors.

Now the question is how to reduce employee attrition. What should a company do to hold on the
talent?
There are various companies like TATA's and Reliance who do a lot to reduce attrition rate.
Flexible working conditions have been given to employees who have problem working 10 – 5.
Private hospitals for employees where they can get their regular health check up done without
spending much money. Free overseas tour once in a year when a target is achieved. Few
Companies are getting more and more work savvy and just want to get their work done by hook
or by crook. The mentality needs to be changed. Target for completion of a work should be there
but that should not hamper an employee’s personal life. Companies should conduct various
seminars on how to balance personal and professional life. An employee can be productive if and
only if his personal life is balanced. Make employees a part of your work culture family and see
the difference. Attrition rate cannot become completely obsolete but it can surely be minimized.

BIBLIOGRAPHY

BOOKS REFERRED:

5
Keeping good people by Roger E. Herman

Managing employee retention: A strategic accountability approach by Jack J. Phillips

Recruiting and retaining call center employees by Jack J. Phillips, Natalie L. Petouhoff

Retaining your employees: using respect, recognition and rewards for positive results by Barb
Wingfield

From turnover to teamwork by Bill Marvin

Handle with care: motivating and retaining employees by Barbara A. Glanz

WEBSITE REFERRED:

http://timesascent.in/index.aspx?
page=article&sectid=64&contentid=20081015200811131346302515b929edd

http://www.palan.org/doc/freebies/Does%20Employee%20Training%20lead%20to
%20attrition.pdf

http://www.chrmglobal.com/Articles/25/1/Innovative-Retention-Strategies-for-Indian-BPOs.html

http://www.recrion.co.uk/solutions/attrition/the-actual-cost-of-employee-attrition-rates/

http://www.fractalanalytics.com/newsletter/july/agent-retention-in-bpo-industry.html

APPENDIX

QUESTIONNAIRE

Dear respondents,

We the students of IILM, Gurgaon are working on a live project titled “EMPLOYEE ATTRITION
AND RETENTION IN BPO SECTOR” for which we are conducting this questionnaire. This survey
plays a very important role in making the project complete. So please try to fill up this
questionnaire seriously.

Please tick which one is applicable for you:

1. Employee turnover/resign is a major concern for your organization.

 Strongly agree
 Somewhat Agree
 Neutral
 Somewhat Disagree

5
  Strongly Disagree
 Don’t know
2. High percentage of females in the workforce adds to the high attrition rate.
 Strongly agree
 Somewhat Agree
 Neutral
 Somewhat Disagree
 Strongly Disagree
 Don’t know
3. Some attrition is always desirable and necessary for organizational growth and
development.
 Strongly agree
 Somewhat Agree
 Neutral
 Somewhat Disagree
 Strongly Disagree
 Don’t know
4. BPO firms should provide career growth and higher educational opportunities for
employees as measure of retaining them.
 Strongly agree
 Somewhat Agree
 Neutral
 Somewhat Disagree
 Strongly Disagree
 Don’t know
5. An employee gets sufficient promotional opportunities to enhance his position.
 Strongly agree
 Somewhat Agree
 Neutral
 Somewhat Disagree
 Strongly Disagree
 Don’t know
6. The work schedule is exploitative.
 Strongly agree
 Somewhat Agree
 Neutral
 Somewhat Disagree
 Strongly Disagree
 Don’t know
7. As job becomes repetitive, the employees find less challenge in it and hence seek for
some other job.
 Strongly agree
 Somewhat Agree
 Neutral
 Somewhat Disagree
 Strongly Disagree
 Don’t know
8. The families of BPO employees are not fully supportive for this industry.
 Strongly agree
 Somewhat Agree

5
  Neutral
 Somewhat Disagree
 Strongly Disagree
 Don’t know
9. Training of employees lead to increase in attrition.
 Strongly agree
 Somewhat Agree
 Neutral
 Somewhat Disagree
 Strongly Disagree
 Don’t know
10. Bad selection leads to attrition.
 Strongly agree
 Somewhat Agree
 Neutral
 Somewhat Disagree
 Strongly Disagree
 Don’t know
11. What do you think, the reasons for an employee leaving the organization?
(Rate the following from 1 to 17; 1 being the top most priority and 17 being the least)
a) Monetary factors
b) Lack of good working condition
c) No flexible work schedules
d) Lack of respect
e) Very few supportive colleagues
f) Organization is more concern towards business
g) Increase in favoritisms
h) Employee needs pride in where they work and what they do
i) Lack of appreciation
j) Lack of challenges in job
k) The job or workplace was not expected
l) The mismatch between job and person
m) Too little coaching and feedback
n) Lack of support
o) Stress from overwork and work-life imbalance
p) Loss of trust and confidence in senior leaders
q) Less frequency in giving rewards
12. What would be the major concerns for an organization after the employee quits.
(Rate the following from 1 to 8; 1 being the top most priority and 8 being the least)
a) Loss of productivity
b) Replacing qualified employees
c) Poor retention creates a “revolving door” culture within the organization
lowering morale and confidence.
d) Cost of overtime or temporary help
e) Recruiting costs
f) Interviewing costs
g) Time spent in orientation
h) Cost of training the employee

PERSONAL INFORMATION:

i. NAME:

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 ii. AGE:
iii. SEX:
iv. DESIGNATION:

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