Managing Attrition in BPO Abstract Managing attrition is not just a 'nice thing to do' in the BPO industry.

It is the route to their survival. Staff attrition (or turnover) represents 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'. An attrition rate in call centers 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%. It is interesting to note that the attrition rates in Indian BPO industry - and the costs associated - are so high that they can override the benefits of lower wage costs. In this paper, we have made an endeavor to highlight attrition issue faced by BPO industry. We try to find out the various reasons for this problem, and have proposed some ways in which this issue can be addressed. Introduction The business process outsourcing industry in India is growing at a phenomenal pace. Exports were worth $ 5.2 billion in 2004-05, growing at 44.5 per cent, and are projected to have 41 per cent growth in 2005-06 to $ 7.3 billion. (Source: NASSCOM) 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 despite the attrition rate of 45-50 percent being a matter of concern. The size of the Indian BPO market is likely to be around $ 9-12 billion by 2006, and will employ around 400,000 people. (Source: ICRA) Business process outsourcing (BPO) has been basically facing two significant issues of late. One is the growing number of employees in its rolls (as discussed above). And second, the abnormally high attrition rate. The attrition rate, which hovers around 40% now, is unlikely to come down in near future. 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.

Nevertheless in ITES, the proportion of persons employed in BPO industry are over 50 % as shown in the table below: FY2001 23,600 21,400 45,000 FY2002 35,000 35,000 70,000 FY2003 68,000 38,000 106,200 FY2008E 570,000 530,000 1,100,000
Source: IDC,

BPO Other IT-enabled Total

Table: Employment in the IT-enabled Services Sector in India

NASSCOM

It is interesting to note that the attrition rates in Indian BPO industry - and the costs associated - are so high that they can override the benefits of lower wage costs. According to NASSCOM, the outsourcing industry was expected to face a shortage of 262,000 professionals by 2012. In fact GE Capital has moved a call centre from India back to Australia "after staff attrition rates of 70% wiped away any potential cost savings". Various Costs Associated With Employee Attrition There are various costs associated with employee attrition. For example, if a new hire 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 the belief that all these challenges can turn out to be a real dampener in the growth of this industry. BPO employees' changing jobs costs the industry millions of dollars in recruitment and training. Moreover, companies run the risk of inefficiency, impacting client agreements and business development efforts. These costs can be classified as the following: Recruitment Costs These include: The cost of advertisements; agency costs; employee referral costs; Internet posting costs. 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. Training Costs These include: The cost of orientation in terms of the new person's salary and the cost of the person who conducts the orientation.

 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. It includes the costs associated with the low productivity of the new employee. Lost Sales Costs These costs are the lost revenue which occurred as a result of project loss due to key employee attrition. Reasons for Attrition According to NASSCOM, the cost of attrition in the Indian BPO industry is 1.5 times the annual salary. So it becomes all the more necessary for BPO industry to explore into the reasons for this high attrition rate. The main reasons which have led to this problem are: Improper Work Timings Family Pressure Health problems due to imbalance in work-life pattern Peer Pressure Lack of growth options within the company Other Career options like pursuing further education, joining other sectors. Salary (at lower levels) 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 high percentage of females in the workforce (constituting 30-35 percent of the total), adds to the high attrition rate. Most women leave their jobs 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. 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 pass-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 inexperienced middle and frontline management is also one of the key causes of attrition. Strategies to Address Attrition We propose the following solutions to tackle the acute problem of attrition in BPO industry. BPO companies are still grappling with the issue of keeping agents motivated in a rather monotonous job. To resolve this problem the high achievers in the company should be moved up the hierarchy (refer figure) as systematically as possible, to keep them motivated.

Figure: BPO Personnel Hierarchy: Typical Case

Source: NASSCOM

The Indian BPO companies have realized the importance of employee retention and are looking for ways and means to keep a check on employee attrition. For this, some measures that can be adopted by the BPO firms are: Besides the induction and project training, a "continuous training program" should be launched for the employees, which should also involve motivational training. BPO companies can look beyond the traditional areas of recruitment and some thought could be given to employ physically challenged people and housewives. This would also earn the companies good reputation with compliance of CSR objectives. Companies need to go in for a diverse workforce, which does not only mean race, gender diversity, but also includes age, experience and perspectives. Diversity in turn results in innovation and success. Age should not be a barrier for training employees and could in fact bring in more stability to the company. Better Customer-Agent Communication should be encouraged by adopting a mix of various media like e-mail, phone and fax. Today BPOs deploy voice-call, e-mail, webchat and fax to "collaborate" or interact with customers. However, even after tapping all these media, BPOs have largely failed to deliver uninterrupted agent-customer communication. The customer-agent interaction is still plagued by various bottle-

necks, which directly result in customer dissatisfaction. This has a direct bearing on employee attrition. A fun factor could be brought in this operation, which becomes boring and repetitive after some time. This can be done by blending all the media. That way an agent can switch between answering queries over the phone, e-mail or fax. It will lure employees to stay in the organization for a longer period by giving them exposure, experience and education. It also addresses a professional's most important need: the need to grow. Besides, it will help remove the monotony and boredom from an employee's job as he would be performing all the processes, as opposed to being restricted to just one. Besides these, some innovative employee retention techniques already being employed in some BPO firms are stated below: Shift rotation - It is said that "Permanent night birds fly away faster". To retain them, suitable day-shift opportunities should be provided from time to time Flexi Timing Monthly Party Shop till you drop - Tie-up with a shopping mall for an evening outing and distributing prizes based on that. Housing Cash Incentives (good rewards) Career Guidance Bonding Techniques Pressure Relievers Flexible Working Hours Stronger Career Path Growth Opportunities (within the company) Education (learn while you earn) Another strategy that BPOs are employing is the go-ahead to indulge in "small talk" between customers and agents. BPOs such as Amex, HCL, Convergys, Spectra-mind and EXL are some of the few companies that have reaped dividends from implementing this strategy. In small talk the agent is not restricted to just fixing the problems of the customer. It rather gives the agent sufficient room to discuss things other than business. For BPOs, small talk helps in striking a good agent-client rapport. A happy customer means an

agent who feels elated at a job well done. For BPO companies, it is a win-win situation being successful in retaining both employees and clients. Housing Education Cash Incentives Career Concerns

Hire outstation Offer management candidates diplomas and MBA As only 5 out of Use various filters (preferably noncourses as most 150 employees like psychometric metro) and put them fresh graduates become team tests to get up in shared company want to study leaders in a year, people who can accommodation. As further. Also give cash incentives work at night and an incentive, pick up incentives like are a great way handle the utility bills. If the scholarships. If they to get employees monotony. Career employee leaves, he leave in between, to stay on. The counseling and or she loses the they have to bonus planning career apartment discontinue the performance paths also helps course boost Who is doing it Who is doing it exl Service.com Who is doing it Who is doing it HCL Tech BPO GE, Wipro Daksh eServices, GTL, Spectramind Services, Global Tracmail, Vertex Vantedge India BPO Industry - Positive Outlook As the industry moves up the value chain, attrition rates are expected to decline. 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. High attrition rate, price wars, poor infrastructure and lack of data protection laws could derail India's booming outsourcing industry. 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. Companies which have not been able to tackle this image could take a cue from ICICI OneSource, which gives employees who have been with the company for more than 18 months an option to switch to positions in other ICICI group companies. The system works as a big assurance for BPO employees that the skills they have learnt such as customer friendliness and rapid response to customer problems have wider applications and market demand. Conclusion 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. 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. A better agent-client interaction using latest technologies would also help in establishing a good rapport with the employees as well as customers, resulting in winwin situation for the company.