Professional Documents
Culture Documents
RESOURCE MANAGEMENT
GROUP MEMBERS
1 Dhiraj Shrivastava 61
2 Tushar Khairnar 62
3 Mitesh Kambli 63
4 Kinchit Pandya 64
5 Neelima Chaudhary 65
6 Manisha Vaishnav 66
7 Vishal Sadakal 67
8 Pradeep Yadav 68
9 Gopalkrishnan Ganeshan 69
1
HUMAN
RESOURCE MANAGEMENT
ACKNOWLEDGEMENT
We are privileged to introduce this assignment for “HUMAN
RESOURCE MANAGEMENT”. Being a management student of M. B. A.
we need to acquire knowledge of each and every aspect of management
tactics. Keeping this objective in mind, this project has been written in a
paper and systematic manner. While all necessary information has been
covered and care has been taken to avoid information overload.
Date of Submission,
2
HUMAN
RESOURCE MANAGEMENT
CHAPTERIZATION
3
HUMAN
RESOURCE MANAGEMENT
1 Executive Summary 5
7 Objective of Study 32
12 Limitations 42
13 Recommendations 43-44
14 Conclusion 45
4
15 Bibliography & Webliography 46
HUMAN
RESOURCE MANAGEMENT
This study is our first step to understand the cause and effect of attrition.
In this report you will get to know about the reason of attrition. There are
certain reasons which we have found during our research process which
amazed us a lot. There are certain hidden facts that we had never thought of
but during the course of time we got to know about some very interesting
fact.
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
6
HUMAN
RESOURCE MANAGEMENT
in another state. So, what does all that turnover cost? Who is likely to stay the
longest?
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.
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.
7
HUMAN
RESOURCE MANAGEMENT
Attrition in India
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 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
8
HUMAN
RESOURCE MANAGEMENT
which the Indian industry is playing at the moment. 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.
Attrition in the BPO industry is two fold. 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
9
HUMAN
RESOURCE MANAGEMENT
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 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.
There are various reasons behind attrition. These reasons include odd
working hours, better opportunities, and untimely demise of an employee. In
the year 2005 this attrition rate was about 30 to 40 percent in India and in
2007 it leaped to 50 to 55 percent. But Last year it has seen a considerable
drop of 30 percent in this rate of attrition. The credit could be given to some
positive and unique steps taken by companies like Infosys and Wipro to hold
back good workers.
But the most unique step that these India based companies has taken to
stop this attrition is helping their employees to voluntarily participates in
various social works. Companies like Infosys, and Wipro are giving one year
to six months break to its employees so they can help various NGOs in
philanthropic work.
10
HUMAN
RESOURCE MANAGEMENT
Any worker who has been with Infosys for two years can avail this
voluntary offer. During this period their pay package will be 50 percent of
their current salary.
IT service enabled companies are now hoping that this kind of social
work will help its workers find extra enthusiasm in their regular work
because it will refresh their whole mental constitution.
Now, the world can take a cue from these steps taken by the Indian
companies and try to at least reduce the attrition rate.
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
11
HUMAN
RESOURCE MANAGEMENT
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 paper.
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.
12
HUMAN
RESOURCE MANAGEMENT
for a person to carry on in this industry, thus bringing the present attrition rate
under control.
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.
13
HUMAN
RESOURCE MANAGEMENT
GAP: The companies presently provide the best of available security but with
the industry growing rapidly there is a need to maintain the same standards if
we don't want this need to be a cause of attrition.
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.
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.
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.
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.
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.
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
15
HUMAN
RESOURCE MANAGEMENT
to be devised for this, satisfying the needs of both, the employer and the
employee.
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.
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
16
HUMAN
RESOURCE MANAGEMENT
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 -
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.
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.
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.
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.
18
HUMAN
RESOURCE MANAGEMENT
19
HUMAN
RESOURCE MANAGEMENT
20
HUMAN
RESOURCE MANAGEMENT
Articles on Attrition
(Literature Review)
Article No:-1
“Surviving the Attrition Syndrome”, the author Anil Verma explains that,
in the current scenario where every organization wants to be at its
competitive best, high attrition rate could really act as a threat to its success.
Many authors worldwide and specialists in this field have been suggesting
umpteen strategies to combat attrition. The article highlights that it is
generally observed that software firms, in particular, suffer from this so called
Attrition syndrome. Why is so much importance being attached to Attrition?
In this article we try to understand the concept and try to evolve some
strategies to combat this problem. The author also states that the most
important strategies are career development, effective talent management,
empowerment, leadership development, succession planning and respectful
treatment of employees.
21
HUMAN
RESOURCE MANAGEMENT
Article No:- 2
The article “HR Issues in BPO” authored by Anandan Pillai explains that, in
recent times, BPOs in India are facing a serious problem of employee
attrition. Repetitive low-end jobs, physical and psychological problems and
few career growth opportunities are the major reasons cited for the high
attrition rate. This disadvantage has increased the operating costs of BPO
entities and is considered to be a threat to the growing industry. The
competitive advantage of India would be lost, if such a critical problem is not
addressed well and soon. He further highlights that in this era of
globalization, the company is responsible for communicating to the
employees, where it wants to go and how it plans to achieve its corporate
strategy. The high rate of attrition can be effectively curtailed, if companies
succeeded in infusing creativity in the ‘routine’ job and communicated the
company’s larger objectives and customer goals to each employee.
22
HUMAN
RESOURCE MANAGEMENT
battle for head hunting had become fierce and the organizations adopted all
possible means to recruit the available talent pool.
The article discusses the costs incurred and the consequences faced by the
industry which were caused due to employee attrition.
The topic of attrition is receiving daily media attention, and the complexity of
the issue can be confusing to businesses that are interested in investigating off
shoring work to India. The article “India: An Attractive BPO Destination
Marred by Alarming Attrition—Insights into the Causes, Impact and
Mitigation Actions” by Dinesh Goel and Prabhash Thakur examines the
varied and often complex causes of attrition in the context of the rapidly
growing Indian off shoring industry and also suggests how some industry
participants are attempting to proactively address this problem that threatens
the long-term sustainability of India as an offshore destination. The article
provides an insight into the likely scenario in the next few years.
The objective of the article is to study the problems of attrition in call center
industry in India, to study the retention in that industry and to develop a
model which would help in curbing the problem of attrition in the call center
industry.
24
HUMAN
RESOURCE MANAGEMENT
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 are 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.
25
HUMAN
RESOURCE MANAGEMENT
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.
26
HUMAN
RESOURCE MANAGEMENT
Type : Private
Number of Location : 35
Employees : 32,000
27
HUMAN
RESOURCE MANAGEMENT
Values:
Discipline.
Trust.
Care.
Value Delivery.
28
HUMAN
RESOURCE MANAGEMENT
The Intelenet growth story involves rapid growth from just 25 employees at a
single site to over 32,000 employees across 35 centres in India and overseas
in just 7 years, making it the 2nd largest employer in the Indian BPO space.
Our solutions extend across all strata of BPO, technology and consulting and
can be applied across diverse industries spanning banking & finance,
insurance, retail, telecom, information technology, travel and hospitality.
Blackstone has been a leader in the field of private equity investing since
1987 with investments in over 100 companies and a superb record in
financing companies. Blackstone’s support is testimony to the strength of the
Intelenet brand, the management team and the potential of the global BPO
29
HUMAN
RESOURCE MANAGEMENT
industry and will provide Intelenet with the necessary thrust to help augment
its growth trajectory and vision.
Blackstone has been a leader in the field of private equity investing since
1987 with investments in over 100 companies and a superb record in
financing companies. Blackstone’s support is testimony to the strength of the
Intelenet brand, the management team and the potential of the global BPO
industry and will provide Intelenet with the necessary thrust to help augment
its growth trajectory and vision.
Company applies the following six key steps toward any outsourcing
initiative:
30
HUMAN
RESOURCE MANAGEMENT
Location
Intelenet currently operates 35 state-of-the-art centres across India, USA, UK,
Australia, Mauritius, Philippines and Poland. With 100% redundancy, these
facilities continually provide clients with 99.99% uptime.
31
HUMAN
RESOURCE MANAGEMENT
32
HUMAN
RESOURCE MANAGEMENT
(4) To find out possible measures that can be taken to control attrition.
33
HUMAN
RESOURCE MANAGEMENT
Interview Method:
1. Personal interviews
2. Telephone interviews
Structured interview:
34
HUMAN
RESOURCE MANAGEMENT
The method which we have used for the purpose of finding attrition is the
form of:
Unstructured interview:
(i) More information and that too in greater depth can be obtained.
(ii) Interviewer by his own skill can overcome the resistance, if any, of the
respondents; the interview method can be made to yield an almost perfect
sample of the general population.
(v) Personal information can as well be obtained easily under this method.
35
HUMAN
RESOURCE MANAGEMENT
(vii) The interviewer can usually control which person(s) will answer the
questions.
SECONDARY DATA:
Internet
36
HUMAN
RESOURCE MANAGEMENT
1) Monetary factors:
Employee’s primary objective of working in the company is to earn money.
If the company does not focus on the remuneration factor, then the
employee may opt to work in other organization, if they are offered more
remuneration compare to the current amount which they are earning.
In BPO sector the working schedule is fluctuating i.e. the employee has to
work in morning shift and sometimes in night shift. They do not get proper
schedule which disturbs their living style.
4) Lack of respect:
Employee working in the organization desires that they should get their due
respect from their subordinates as well as from senior executives.
5) Career growth:
Every person desire to take their career path at the peak level and if they get
the job in the desired organization in which they want to work then they
will leave their current job to enhance their career.
37
HUMAN
RESOURCE MANAGEMENT
6) Role Stagnation:
7) Increase in favoritism:
8) Lack of appreciation:
Employee should be given credit for their efficient work which will
increase the productivity of employee as well as of the company which will
be beneficial to the organization. If they are not getting the appreciation for
their work then they will lose interest and will try to find job in another
company.
“Lack of challenges in job”, this basically deals with the higher authority of
the organization. They want challenges in their job as they are having
higher qualification and they are also experienced. If they are not satisfied
with their job then they will joined another firm.
38
HUMAN
RESOURCE MANAGEMENT
A candidate before joining the organization has some expectations from the
job. But it sometimes may not reach to the expectation which he/she
expected, which may result in leaving the job and join another organization.
39
HUMAN
RESOURCE MANAGEMENT
Direct impact: A high attrition indicates the failure of the company’s ability
to set effective HR priorities.
Clients and business get affected and the company’s internal strength and
weakness gets highlighted. New hires need to be constantly added, further
costs in training, getting them aligned to the company’s culture.
40
HUMAN
RESOURCE MANAGEMENT
Attrition Cost: One of the best methods for calculation of cost of turnover
takes into account expenses involved to replace an employee leaving an
organization. These expenses are:
Recruitment Costs:
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 the person(s) who conduct the training.
3. Calculate the cost of various training materials needed including company
or product manuals, computer or other technology equipment used in the
delivery of training.
When the new person is hired that includes 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.
41
HUMAN
RESOURCE MANAGEMENT
Lot of time is spent in developing trust and building confidence in the new
employee's work, also in making them aware about the new technology and
working process of company.
Replacing qualified employees:
It is very difficult to replace the existing employee with the new employee as
he requires proper training and development skills to perform the job, also
there is a mismatch with the normal cycle.
Loss of productivity
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, but due to the attrition the company is not able to
achieve their objective.
2. Special Days:
In this the company should arrange the different activities in the organization
itself such as Sports day, Traditional day etc. So that the employee get the
opportunity to show their talent & they personally feel that the organization is
really doing something for us.
The company should offer the attractive & the competitive benefits to the
employee such as loan schemes, personal health care etc. so that the employee
can get all the benefits from the company. The company should also provide
the good packages to the employee according to their work experience &
qualification.
6. Performance Incentives:
Bonuses and incentives are paid after every quarter if the employee sustains in
the organization and he gets extra rewards if his performance exceeds the
target assigned to him.
43
HUMAN
RESOURCE MANAGEMENT
Chap 13 - Recommendation
There should be periodic review of the policies of the company in respect of
its salary structure, allowances, performance appraisal, rewards system,
recruitment, future manpower requirements and other benefits to its
employees/members. After this, it should take necessary actions to keep
these policies according to current industry standards.
2] Give salaries on time. Provide them facilities like ‘Pick & Drop’.
Provide them free Life Insurance. Provide free medi-claim facility for the
family of every employee. Sometimes, rewards must be family picnics, shop
till you drop.
7] Titles cost little and remind employees that they are valuable.
Give them good designations as per their eligibility keeping in mind “Right
person must be placed in the Right place.”
45
HUMAN
RESOURCE MANAGEMENT
10] The companies should appoint mentors for new higher to help
them in their problems, queries. Mentors should be bright and able to
understand the dynamics of power and politics in the organization and should
be willing to share this knowledge to new hires.
Chap 14 - Conclusion
Human beings are complex personalities. They differ from person
to person. This difference is the result of their attitudes, perceptions, values,
norms etc. that they inculcate in the process of socialization – with family,
society, peer group etc. Hence it is very difficult to predict a common
behavior for surety. This indicates the significance for understanding
employees well.
46
HUMAN
RESOURCE MANAGEMENT
and that of an organization, all depends upon the task master the manager. If
every manager realizes this, there is no doubt that the organization would
break off all its boundaries and emerge successful. In this context it is
important that the managers take the following into consideration:
1. Leading people.
2. Developing them.
3. Empowering them.
4. Maintaining them.
Therefore we can say that Attrition is a serious problem that the organizations
face today. This can be reduced if both the management and the managers
realize this. The managers should take in a lead role here. They should be
committed to tune and mould people in such a way that they best fit the
organization. In fact it becomes the duty of every individual manager to
understand his subordinates well. Managers should understand that their duty
is not only restricted to bossing over employees but in understanding
employees, leading them, developing them, empowering them and
maintaining them. If this realization bestows on every manager, the
organization is sure to succeed. This will help in reducing the attrition level to
certain extends.
• www.google.com
• www.bpoindia.org
• www.intelenetglobal.com
47
HUMAN
RESOURCE MANAGEMENT
48
HUMAN
RESOURCE MANAGEMENT
49
HUMAN
RESOURCE MANAGEMENT
50