A Study on Employee Attrition in BPO

Industry in Ahmedabad
Abstract: Employee turnover reflects a company’s internal strengths and weaknesses. New
hires need to be constantly added, further costs in training them, getting them aligned to the
company culture, etc. all pose a challenge. Organizations also face difficulties in retaining the
remaining employees as well as attracting potential employees. High attrition rates also lead to
a chronics or systemic cycle. All this has a significant impact on the strength of a company in
managing their business in a competitive environment. This study is conducted to find out
the main causes which increase the employee turnover in BPO companies and to find out
the way to control attrition. This study was conducted in BPO companies at Ahmedabad.

Introduction:
Voluntary turnover has become a problem for many organizations, regardless of the nature of
job, in today’ssociety. The costs of this turnover not only have an impact on organizations but
also would affect the morale. Prior research has examined the costs of an employee’s decision to
voluntarily leave an organization. There have been a plethora of research studies conducted over
the past 40 years by both academicians and practitioners on the causes and consequences of
voluntary turnover.

In the ITES/BPO sector, however voluntary turnover is reaching alarming proportions. It

becomes very important to study this questionable nature of large-scale attrition, as India houses a
large no of ITES/BPOs. An attempt has been made in this research to investigate on the employee
turnover of ITES/BPO sector in India. Analysts believe that India remains a vital destination for
outsourcing and expect its annual GDP to grow at 8-10% for the next decade. In addition,
outsourcing efforts to India are held up as an effective remedy for concerns about both Chinese
government policy and labour force issues, such as increasing costs and shortages.

National scenario of outsourcing:

The global sourcing market in India continues to grow at a higher pace compared to the IT-BPM
industry. India is the leading sourcing destination across the world, accounting for approximately
55% market share of the US$ 200-250 billion global services sourcing business in 2019-20.
The IT industry accounted for 8% of India’s GDP in 2020. According to STPI (Software
Technology Park of India), software exports by the IT companies connected to it, stood at Rs.
1.20 lakh crore (US$ 16.29 billion) in the first quarter of FY22.

The IT & business service industry’s revenue was estimated at ~US$ 6.96 billion in the first half
of 2021, an increase of 6.4% YoY. The export revenue of the IT industry is estimated at US$ 150
billion in FY21. According to Gartner estimates, IT spending in India is estimated to reach US$
93 billion in 2021 (7.3% YoY growth) and further increase to US$ 98.5 billion in 2022. The BPM
sector in India currently employs >1.4 million people, while IT and BPM together have >4.5
million workers, as of FY21.
India is the topmost offshoring destination for IT companies across the world. Having proven its
capabilities in delivering both on-shore and off-shore services to global clients, emerging
technologies now offer an entire new gamut of opportunities for top IT firms in India. Indian IT
& business services industry is expected to grow to US$ 19.93 billion by 2025.

In November 2021, Mr. Piyush Goyal, Minister of Commerce and Industry, Consumer Affairs,
Food and Public Distribution and Textiles, lauded the Indian IT sector for excelling its
competitive strength with zero government interference. He further added that service exports
from India has the potential to reach US$ 1 trillion by 2030.

Benefits of Outsourcing:

In rapid growth periods, the back-office operations of a company will expand also. This
expansion may start to consume resources (human and financial) at the expense of the core
activities that have made your company successful. Outsourcing those activities will allow
refocusing on those business activities that are important without sacrificing quality or service in
the back-office. Back-office functions that are complicated in nature, but the size of your
company is preventing you from performing it at a consistent and reasonable cost, is another
advantage of outsourcing.

Overhead costs of performing a particular back-office function are extremely high. Consider
outsourcing those functions which can be moved easily. Growth has resulted in an increased need
for office space. The current location is very expensive and there is no room to expand. Outsource
some simple operations in order to reduce the need for office space. Outbound telemarketing or
data entry.

Operations whose costs are running out of control must be considered for outsourcing.
Departments that may have evolved over time into uncontrolled and poorly managed areas are
prime motivators for outsourcing. In addition, an outsourcing company can bring better
management skills to your company than what would otherwise be available.

A large project needs to be undertaken that requires skills that your staff does not possess. On-site
outsourcing of the project will bring people with the skills you need into your company. Your
people can work alongside of them to acquire the new skill set. A company needs to embark on a
replacement/upgrade project on a variety of custom built equipment. Your engineers do not have
the skills required to design new and upgraded equipment. Outsourcing this project and requiring
the outsourced engineers to work on- site will allow your engineers to acquire a new skill set.

Literature Review:

In the year 2006, ArunaRanganathan Cornell University, USA and SaroshKuruvilla Cornell
University, USA has done a detailed study on the factors the problem of high turnover in the
high-tech BPO sector in India, where relatively well-educated employees are performing a
variety of primarily low skill, low cost jobs. We highlight the various approaches employers are
taking to solve the turnover problem. As we will argue,some of these strategies are fairly
traditional, focusing on various instrumental incentives to promote employee retention, while
some others are new and rather radical, particularly the articulation of an organizational and
work culture tailor-made for the particular demographic profile of BPO employees :young,
upper middle class, well-educated graduates. Based on anecdotal evidence and interviews with
industry personnel. (a) the recent and rapid growth of the industry and the fact that firms are
experimenting with a whole variety of retention strategies, and (b) the inability of firms to
develop an integrated organizational culture that permits a focus on both longer term
organizational performance ,as well as retention.

In the year 2008, S Sudha, has done a detailed study on the factors involving the attrition in
BPO industry in India. According to her findings, among the listed problems one of the major
hurdles the industry is facing is attrition. The companies are finding itevry hard to retain their
employees. The organization should have constant touch with its employees to know their
satisfaction and dissatisfaction.

In the year, 2012 K R SreeRekha, under the guidance of Dr. T.J.kamalanabhan has done a
detailed study on the factors involving employee attrition in BPO in India. According to their
findings from the research it was found that In India over the past few years, the ITES/BPO
sector has been growing in leaps and bounds. Based on the gaps identified from the literature,
the study seeks to examine the influence of the intervening variables such as organizational
commitment on turnover intentions of employees .Applying mediation multiple regression
technique, an empirical examination was conducted .The results based on 208 employees’
responses from 5 organizations, indicated that antecedents of turnover in the conceptual model
of the present study were significantly associated with employee turnover intention mediated
by organizational commitment. Results of the mediated regression analyses found that
organizational commitment is a significant mediator between organizational justice,
satisfaction and organizational support viz a viz turnover intentions. The findings suggest that
organizations need to focus on how to foster commitment, enhance job satisfaction and to
provide support to facilitate employee retention. Finally, the implications for organizational
research, managerial practice and the need for future research are discussed.

Importance of Study:

As it is highlighted as one of the major sectors, it is facing a lot of problems relating to stress,
health problems, work place issues, etc. Hence research is under taken in leading ITES
Companies Tech Mahindra/Arise Solution/ Aegis Ltd./Vodafone in Ahmedabad to find out the
major reasons for attrition.

Scope of study:

The study is confined to only one company in Ahmedabad. The employees working in this
Industry are in the age group of 21-50 who work as customer care executives in voice/non
voice process and handle more than 100 calls/chats in 8-9 hours of working. The research gives
insights on the stress level, work environment, team work and Job satisfaction level. The
finding is about the major factors involved in employee attrition.

Objective of study:

This study is a learning process as post graduate students and the main objective is to understand
how research is carried out along with the various processes involved. This study is based on
actual findings limited to four BPO companies located in Ahmedabad and it shows the main
factor which is responsible for employee attrition in BPO industry.
Research Methodology:
The study has been based on primary data collection. Primary research consists of a collection of
original primary data collected by the researcher. It is often undertaken after the researcher has
gained some insight into the issue by reviewing secondary research or by analyzing previously
collected primary data. It can be accomplished through various methods, including
questionnaires and telephone interviews in market research, or experiments and direct
observations in the physical sciences, amongst others. We have followed the questionnaire
method. A questionnaire is a research instrument consisting of a series of questions and other
prompts for the purpose of gathering information from respondents. Although they are often
designed for statistical analysis of the responses. We have followed both open ended and closed
ended questions. First we have formulated open ended questions and collected samples and then
we have formulated closed ended questions from those. For the study we have collected random
sampling from sampling technique.

The study consists of scope, limitations; methodology followed by detailed data analysis and
interpretation and finally concludes with findings and suggestions.

Analysis of the study:

For this research we have taken an population sample of 41 people who work in various positions
in a bpo industry starting from a consultant to team lead and managers. While the questions asked
to them were industry specific , the variations in the answers have leads us to more determination
of the consequences and behavioral preferences and after effects of the people. Here a total of 8
questions have been asked to obtain the behavioral preferences .The people are segregated based
on their age group start from 18-25 , 25-31, 32-38, and 39-45.Based on the above input thesurvey
is taken . The Questions of the survey are as follows

Q1) What do you like about your organization?

Q2) How motivated are you to see your company succeed?
Q3) How satisfied are you with your involvement in decisions that affect your work?
Q4) Did you face any kind of discrimination or verbal abuse at work?
Q5) Are you appreciated for the work you do?
Q6) Do you see value addition of skills in you after accepting this job?
Q7) Does the management take into considerations your queries and problems?
Q8) Would you recommend a friend in applying for job in your company?

Results

1)The employees age we find here in maximum in the age group of 18-31.This gives us an idea
that the BPO industry comprises of a young population which thrives on BPO and IT services.
 Frequency
age Count Percentage
18-25 18 43.90%
25-31 20 48.78%
32-38 3 7.32%
Grand Total 41 100.00%

2)As per our finding the employees look for 4 factors that determine their motivation to work
with an organization .These 4 factors have been classified as employee recognition, salary ,
growth prospect,work culture.

Row
Labels Frequency Count Percent
Employee
recognitio
n 6 14.63%
Growth
prospect 6 14.63%
Salary 12 29.27%
Work
culture 17 41.46%
(blank) 0.00%
Grand 100.00
Total 41 %
3)The motivation plays an important role and the success of the company directly affects the
morale of the employees .The employees were asked to rate the success of company based on
their motivation from very low to very high.

Row Labels Count of How motivated are you to see your company succeed? Percent
High 8 19.51%
Low 3 7.32%
Neutral 26 63.41%
Very high 3 7.32%
Very low 1 2.44%
(blank) 0.00%
Grand Total 41 100.00%

4)Work satisfaction plays a pivotal role in employee’s overall psyhce in attrition. The kind of
work that you do acts as inspiration or motivation to do the same kind of work. And when you are
appreciated for the work you do it overall boosts morale . Here we see people having motivation
to do work though work is repetitive in nature.
Row Labels Count of Are you appreciated for the work you do? Percent
No 14 34.15%
Yes 27 65.85%
(blank) 0.00%
Grand Total 41 100.00%
5)Management interaction plays an important role to resolve internal conflicts and support
employees in getting the work done. It also plays role in understanding the employees needs and
wants from time to time and acts accordingly.A friendly management is key to organization
success.Most BPOs in ahmedabd region have a really friendly workplace and that is reflected in
their management.
Row Count of Does the management take into considerations your Perce
Labels queries and problems? nt
46.34
No 19 %
53.66
Yes 22 %
(blank) 0.00%
Grand 100.0
Total 41 0%

6) Skill value addition is another thing that employees look forward in the job .In a typical BPO
setup the value addition rtakes long period as work can be repetitive in nature but can also be
challenging . From the survey we find people have found value addition in skill in working with
BPOs
Row Labels Count of Do you see value addition of skills in you after accepting this job? Percent
Maybe 11 26.83%
No 12 29.27%
Yes 18 43.90%
(blank) 0.00%
Grand Total 41 100.00%

Interpretation

From the above results following concusions can be made .The BPO industry
consists of young and dynamic makeup place mostly as it is customer centric in
nature. The BPO organization plays a big role as an employer as it caters to the
needs of the employees with overall management that focus on achieving the
goals of the organization with value addition of skills in the employees. Further
though the work can be repetitive in nature but the appreciation for the work that
is being done encourages the morale of the employees.This overall translates in
the transforming success in the workplace which in turns helps in overall
development of the organization and develop a better work culture.