`Attrition, absenteeism bug BPO cos'

Our Bureau

Mumbai , April 21

HIGH rates of attrition and absenteeism are by far the biggest operational challenges
faced by Indian third-party business process outsourcing (BPO) vendors.

A BPO survey report by the Indo-American Chamber of Commerce and Ernst & Young
says that attrition averages 40 per cent for voice and 25 per cent for non-voice services
and that absenteeism ranges from 2 per cent to 8 per cent on a daily basis.

The survey report, which was released at the Global Offshore Outsourcing Summit 2004
here today, says that vendors typically maintain an average employee strength buffer of
10 per cent to 15 per cent to counter these problems. The survey studies the capabilities
and processes of the Indian third party BPO vendors who claim to provide world-class
services to global corporations, and outlines the various challenges these vendors are
facing,

``Our experience with global clients indicates that costs saving is only one of the factors,
and perhaps the relatively less critical one, in the evaluation of potential third party
vendors. More critical to the outsourcing decision is the partnering capability of the
vendor," says the report.

According to the report, partnering capabilities are represented by vendor qualities such
as such as process expertise and knowledge base, organisational stability and
commitment to future growth, compliance with international standards with respect to
business continuity, quality and security, capability to manage transition risks and ability
to provide and scale-up quality human resources.

Information Security certifications (BS 7799 and ISO 17799) are essential to maintain
client confidentiality, ensuring end-user privacy and preventing misuse of client
information (key objectives for vendors), says the report. The survey shows that 52 per
cent of the respondents and 85 per cent of the large vendors have complied with the
current global security standards.

Some of the large vendors in the sample have multiple security certifications. Service
Quality certifications (ISO 9000, COPC, Six Sigma and eSCM) are critical for
companies.

Partnering involves both service capabilities and an ability to adapt to the client's culture,
collaboration with the client to mitigate outsourcing risks, and demonstration of
flexibility in engagement models to meet the client's need for management control over
the outsourced processes. The survey states that 62 per cent of the respondents have
participated in business case development and transition planning for offshore
outsourcing.

To facilitate the client in maintaining process control over outsourced processes, 17 per
cent of the vendors operate out of a near shore facility while 26 per cent said they were
open to this option required by the client. To provide the client with better management
control over outsourced processes, the Complete Outsourcing Model and Build Operate
and Transfer (BOT) model evoked considerable interest among the vendors.

While only 13 per cent of the respondents have actually entered into BOT contracts, 52
per cent expressed a willingness to enter into such deals.

Companies are extremely concerned about business disruption. Recognising this

requirement, 90 per cent of the respondents have a Business Continuity Plan in place.
Over 78 per cent of the vendors have service facilities in more than one location, while
26 per cent have facilities at overseas locations.