Call Centers in India-An Overview of HR Practices

The software service industry put India on the world map, it is the turn of IT enabled services
(ITeS), which has taken the baton to keep the Indian flag high and flying. ITeS was the silver
lining
in the dark clouds of the Indian IT marketplace during the turbulent year of 2001 as it posted a
growth of 73 percent, from a turnover of Rs 4,100 crore in 1999-2000, to nearly Rs 7,100 crore in
2001-02.
The National Association of Software and Services Companies (NASSCOM), through a study,
has pointed out that outsourcing IT-enabled services/business process operations to India cut
the costs by as much as 40-50 percent for companies, which in turn generates free cashflows due to reduced investments in infrastructure and equipment. Total value of outsourcing
to India ($17.2 billion to 2004-05) is estimated to be 44 percent of the world-wide total. The
overall Indian IT industry (including domestic market) grew by 32 percent in financial year
2004-05 registering revenues of $22 billion, up from $16.7 billion in 2003-04. The target
projected for FY 09 is $50 billion.
The enormous growth of call centres is due to importance attached by companies to customer
care, telemarketing, telebanking, home shopping, etc., as well as due to market liberalization
of uti 1ities and growth of direct marketing. Call centre, originally conceived as separate and
individual distribution channel of the customer care system, have been transformed into an
integrated customer management system. With the integration of Internet technology in call
centres they are equipped to handle telephone, fax, Internet TV and enquiries 24 X 7.
There has been a mismatch between demand and supply of human resources in the industry
in India. Both employment generation and attention levels are high, inspite of 1,50,000 jobs
added to the ITeS/BPO in 2004-05. Demand for experienced professionals, expected supply
and attribution was between 25 and 40 percent. By 2008, the sector is expected to fall short
by 2,62,000 people out of a total requirement of about 10 lac people according to the Planning
Commission. ITeS-BPO companies were the largest recruiters in 2004-05. The industry is also
targeting new service lines like technical help desks, finance and accounting services,
engineering services, equity research etc. to widen its gamut of services and achieve further
growth.
All call centre operations require huge manpower which accounts for 55 percent to 60 percent of
their total cost. But in India, manpower cost is almost one-tenth of what it is overseas. Obviously,
a lot of overseas call centre operations are now moving grounds here. Thus, appropriate
management of HR in these variegated call centres becomes the most challenging job of this
sector.
Recruitment and Selection-Changing Trends
Recruitment is carried out by anyone of the three methods, i.e., walk-in-interviews, employee
refer. rals, or placement agencies. The skills, required for call centre job involves
communication skills, ability to understand, accent language skills, computer literacy, previous
BPO experience, and a high level of alertness. For selection, various tests such as written and
spoken English tests, groupdiscussions, telephone assessment, and one-to-one interviews are
conducted either by the company itself or by an assessment centre. These centres use a
comprehensive and standardized procedure in which multiple assessment, including
psychometric tests, are used to assess candidates and arrive at a credible level of behavioral
forecasting, since they have to work under constant pressure. But for
an outbound lead generation or sales program, the selection procedure includes tests on selling
skills (to measure assertiveness, persistence, drive, empathy, convincing capability),
achievementQrientation, and script delivery.

The experiences of most call centres show that only about 2 percent to 5 percent of the candi dates qualify from a single recruitment campaign. The process of recruitment is time-consuming
and costly, especially if it is done through placement agencies. Also, selection can prove to be
incor. rect, at times, since the first shortlisting is done by traditional methods, on the basis of
education, experience etc.
Most call centres are observed to have around 50 percent or more employees between age
group of 21-24 years and around 25 percent or more between age group of 25-30. This is mainly
due to easy availability of smart and enthusiastic youngsters, who desire to make a quick buck for
themselves and gain job experience.
As per the NASSCOM, survey 2005 the male-female ratio working in call centres is 35:65.
This itself indicates that call centres prefer women employees as they are presumed to have a
better temperament for the job and a high level of patience. Certain barriers like shift duties,
interaction with
'unknown foreign customers' and unbalanced leave options, however, become major restrictions
for
women applicants. But, there is a possibility that the number of women working in call centres will
go up exponentially, once the job gains greater social acceptance. However, the ratio is reversal
in IT, 65:35 (male: female).
The current salaries in the BPO sector for customer care representatives is Rs 8,00O-Rs 15,000
per month. Team leaders get Rs 17,000-Rs 26,000 per month, managers Rs 3 lacs-Rs 5.5 lacs
per annum, and training heads Rs 8lacs-Rs 12 lacs per annum, training managers Rs 5lacs-Rs 8
lacs per annum, and trainers Rs 2 lacs-Rs 5 lacs per annum. Specialized ITeS professionals with
MBA, B.E, B.Tech., CA. (CPA) etc. are paid higher salaries depending upon the expertise
required for the desired work profile. The salary paid also depends upon attendance regularity
and targets achieved. At times incentives may exceed salary as well. Though the salary structure
is very appealing initially to a fresher, gradually, the routine creates burden. In BPOs almost 200
personnel are being hired every working day of the year. There has been a shift away from hiring
freshers to professionals with more domain specific skill-sets, and business analysts with
programming skills.
Finishing Touches through Training
Communication of the right kind is an essential requirement in a call centre job. Usually, the train.
ing period lasts for more than a month, involving Voice and Accent Training and Customer Care
Training. According to the Mckinsey report, apart from Mumbai, Delhi, and Bangalore, the quality
of graduates applying for jobs in other cities is not as per ITeS requirement. India produces over
1,00,000 graduates every year but the quality of spoken English is not very good in small towns.
The training costs for an employee ranges from Rs 25,000 to Rs 50,000 for a two to five months
session and there is a constant pressure to learn the American/British accent through accent
training. Through training, an American/British style of work culture is also created.
Appraisal
A very high degree of surveillance is used through technology and management techniques to
appraise performances. It is based upon the number of calls handled, time given to each call,
repeat calls, punctuality and attendance, and team work. Employees are monitored constantly
and continuously by team leaders, which pressurizes the employees all the time. Quick
turnaround of feedback is most essential to the effectiveness of call monitoring. The evaluation
report also gives suggestions for improvement. Those who succeed in maintaining the standard
performance levels are given monetary incentives and also coupons to hotels, discotheques etc.
According to Nasscom, only 5 out of 150 employees become team leaders in a year, hence cash
incentives is one way of keeping employees happy.

Attrition and Manpower Shortage

One of the biggest challenges that BPO companies face today is that of high attrition rates.
According to NASSCOM, as of March 2003, the attrition rate is 35 percent in non-voice call
centers and 45 percent in voice call centers. Job-hopping has become an increasingly
popular practice amongst starry-eyed contact center agents, who search for higher salary
packages. About 80 percent of employees look out for better opportunities and higher
positions in the same industry. The reason for the high rate of attrition is mainly due to lack of
comfort, lack of enrichment potential in terms of career growth, non-standard working hours,
adjusting to western work culture. The problem of high attrition rates in the BPO and IT
industry is set to become more acute as manpower shortages are expected to increase as
per Nasscom and Mckinsey study report of 2005. India needed at least 6,30,000 IT
professionals in 2004 but was short of 1,75,000. The shortage will increase to 3.6 million
by 2012. This of course, spells a boom for the IT training industry and more challenges for the HR
managers of BPOs.
Coping HR Shortage
As more and more BPOs grapple with their biggest problem, a high attrition rate, call centres
are doing a re-thinking about the kind of employees they want. The preferred kinds of
employees usually demanded are S-types or submissive types personalities, who are most
likely to stick to the job. Aggressive youngsters with lots of enthusiasm are now being
replaced with mild and conservative ones. A study conducted by Team Value Profiling
Services (TVPS) among Indian BPOs reveals that enthusiastic employees are not cut out for
monotonous tasks and get bored and even the most attractive pay packets are not enough to
hold them back. Many call centres also resort to PreEmployment Screening (PES) service
providers, mostly MNCs operating in the security and risk analysis fields-with mini call centrelike apparatus and technology aids. The BPO sector is processing more and more sensitive
information of the job applicants with respect to their educational and professional
qualifications, employment details, and reference checks. While the checks are openly done
for junior and middle management, for senior positions, behavioral patterns are scrutinized
through psychometric analysis.
Hiring mature talent, possibly people over 35 years of age can curb the problem related to
attrition. Outstation candidates from small towns could become a good asset to the industry,
especially if they are provided with shared accommodation. Attractive bonus payments without
linking to performance/targets can be a good option for stabilizing workforce. Specialized
diplomas and MBA courses are being introduced for those who aspire to upgrade their
knowledge base.
Outsourcing HR Activities
The outsourcing of HR activities has several potential risks as well as benefits. It enables the
internal HR staff to focus on strategic activities that adds more value to the business. It enables a
decentralized structure that supports innovation and flexibility, alleviating the bureaucratic burden
of centralized administration. It also helps HR professionals to play an important role in corporate
downsizing efforts.and facilitates access to new ideas and approaches outside the organization.
The most frequently mentioned factors discouraging HR outsourcing were perceived to be higher
cost, lower quality, and fear of losing control. If companies depend too much on vendors then
they can lose strength in core competencies. A company should not be totally dependent on a
vendor. If a vendor tailors its needs to a client then he also depends on the company. This
creates bilateral interdependence, thereby increasing the risk for, both, the company and the
vendor.
Contract with a vendor to outsource some activity can also expose a company to the possibility
that confidential information might leak to competitors. This risk is exacerbated when the
interface between the outsourced activity and other internal functions is complex, requiring the
company to reveal proprietary information to ensure a good fit. In order to protect itself from
various risks, a company should rely on detailed legal documents with vendors. If an environment
of trust is built between parties, it facilitates outsourcing. Companies need to examine their

proficiency relative to vendors on a case-by-case basis to decide whether should any activity be
outsourced. Activities that directly contribute to its strategic, competitive advantage, or those
which are highly interdependent should not be outsourced. A company can outsource a function
when there is great uncertainty about the future value of that activity's output. Thus, companies
need to weigh each of the factors mentioned above to form an overall assessment.
HR Outsourcing in India
Indian companies think that it is economical to manage all their HR processes internally. Conse quently, there is not much emphasis on outsourcing. Typically, very small companies, which do
not have the competency to staff a full-fledged HR department, and very large companies who
wish to outsource all routine HR processes so that they can concentrate on core issues, are the
ones that resort to HR outsourcing in a significant way. Besides, many multinational companies
are fast adopting these practices. Some of the key companies, which have gone ahead for
manpower hiring outsourcing practices, are Cisco, GE, Honeywell, Sun, i2, LG Soft India,
Escosoft, and Legato Systems. While LG Soft India has outsourced its PF management, Escosoft
has outsourced processing, execution of training programmes, and survey conduction. LG Soft
India has been able to save a lot in terms of reducing paperwork and interaction with government
agencies. Xansa India, is planning to take a plunge in HR outsourcing business and offer services
to its parent organization. Many companies do not believe that HR outsourcing is necessary,
Aptech, is one such as it feels that HRD is strategically linked to its business.
The basic reasons hampering the growth of HR outsourcing in India are confidentiality and cost
factors. Many companies outsource only a bit of their requirements because of the above two
factors. Besides, the fear of losing jobs, losing control over confidential data, ethics and quality of
the outsourcing vendors, security breaches and lack of overall confidence in the vendor deter
many organizations; companies are also reluctant because they may not have an adequate grip
over the cost-benefit equation of outsourcing. Companies need to be convinced before they can
outsource select HR activities.
Adding to this are issues like cultural mindset and psychological acceptance. An in-house HR
person handles certain situations like building employee incentive programmes and taking care of
recognition for employees studies which outsourcing agency cannot handle well. At times, many
employees want someone in-house to resolve their work-related problems or disputes. All this is
possible only if there is an in-house HR team, that interacts with the employees on a daily basis.
Quality is another roadblock. Companies are not sure about the end result that they will receive
from their vendors. There are also issues in terms of the pricing of outsourcing. There are no
standard benchmarks available, so pricing varies a lot from vendor to vendor for similar services.
Reference checks help a lot in such cases. However, customers generally end up feeling that
they are not getting value for their money.
Summary and Implications for Managers
An organization's human resource policies and practices represent important forces for shaping
employee behavior and attitudes. In this chapter, we specifically discussed the influence of
selection practices, training and development programs, and performance evaluation systems.
Selection
Practices
An organization's selection practices will determine who gets hired. If properly designed, they
will identify competent candidates and accurately match them to the job and the organization.
The use of the proper selection devices will increase the probability that the right person will
be chosen to fill a slot.Although employee selection is far from a science, some organizations
fail to design their selec~ tion systems so as to maximize the likelihood that the right personjob fit will be achieved. When errors are made, the chosen candidate's performance may be
less than satisfactory. Training may be necessary to improve the candidate's skills. At worst,
the candidate will prove unacceptable and a replacement will need to be found. Similarly,
when the selection process results in the hiring of lessqualified candidates or individuals who
don't fit into the organization, those chosen are likely to feel anxious, tense, and

uncomfortable. This, in turn, is likely to increase dissatisfaction with the job.

Training and Development Programs
Training programs can affect work behavior in two ways. The most obvious is by directly
improving the skills necessary for the employee to successfully complete his or her job. An
increase in ability improves the employee's potential to perform at a higher level. Of course,
whether that potential becomes realized is largely an issue of motivation.
A second benefit from training is that it increases an employee's self-efficacy. As you'll remember
from Chapter 6, self-efficacy is a person's expectation that he or she can successfully execute the
behaviors required to produce an outcome.89 For employees, those behaviors are work tasks
and the outcome is effective job performance. Employees with high self-efficacy have strong
expectations about their abilities to perform successfully in new situations. They're confident and
expect to be successful. Training, then, is a means to positively affect self-efficacy because
employees may be more willing to undertake job tasks and exert a high level of effort. Or in
expectancy terms individuals are more likely to perceive their effort as leading to performance.

Performance Evaluation
A major goal of performance evaluation is to assess accurately an individual's performance
contribution as a basis for making reward allocation decisions. If the performance evaluation
process emphasizes the wrong criteria or inaccurately appraises actual job performance,
employees will be over-rewarded or under rewarded. As demonstrated in Chapter 6, in our
discussion of equity theory, this can lead to negative consequences such as reduced effort,
increases in absenteeism, or a search for alternative job opportunities.