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Introduction

1.1 Introduction of the topic
BPO! One reads the word and myriad of well-groomed youth on calls, fast money, and
phenomenal lifestyles seem to flash the mind in a jiffy. Thats just the start. One reads it
again, contemplates over it, dives into the unveiled afflictions, and gives it a second thought
and a completely differing depiction lazes the mind. Lopsided working hours, unimaginable
attrition rate, stress and burnout exhibit its ugly side. No matter how the seesaw balances
between the pros and cons, the fact remains conspicuous, loud and unchanged. BPO,
Business Process Outsourcing, is the mantra of employment the buzz of present, and the
promise of future! The last decade saw an upheaval in the growth and development of the
Indian economy, which was accompanied by the revolution in the technological front and a
radical change in the way businesses were done. Instead of being the jack of all trades, the
smart organizations have now redefined the way of working and now aim at being the master
of their core business. Outsourcing the non-core processes in order to concentrate on the core
ones is how the companies prefer to work now. BPO has become the obvious strategic choice
of the companies looking at the visible profits of cost reduction while improving the quality
of service, increasing shareholder value etc. (Shah and Sharma 2006). With the whirlpool of
opportunities the Indian Business Process Outsourcing sector seems to be on a happy ride. It
has emerged rapidly, and its exports have grown from $565 million in 2000 to about $7.3
billion in 2005 (Budhwar et al. 2006).
Attrition in BPOs has terrible effects on the organization. The high attrition costs increases
the costs to the organization considerably. They have to combat the amount of disruption due
to unplanned exits. The more the people leave an organization, the more it is a drain on the
companys resources like recruitment expenses, training and orientation resources and the
time. The high attrition rate also affects the productivity of the organization. Therefore, it is
extremely important to curb attrition not only for an individual firm but also for the industry
as a whole. Many researchers have worked enormously on the BPO sector, citing its
challenges, issues, and opportunities in and around employee performance, employee
satisfaction, employee turnover etc.






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EMPLOYEE ATTRITION
Defining attrition: "A reduction in the number of employees through retirement, resignation
or death".
Defining Attrition rate: "The rate of shrinkage in size or number"
HIGH ATTRITION RATE: A Big Challenge
Introduction: In the best of worlds, employees would love their jobs, like their coworkers,
work hard for their employers, get paid well for their work, have ample chances for
advancement, and flexible schedules so they could attend to personal or family needs when
necessary. And never leave.
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 in another state. So, what does that entire turnover
cost? And what employees are likely to have the highest turnover? Who is likely to stay the
longest?
The toughest concern for an HR manager is however the high attrition rate.
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 US BPO sector is estimated to be somewhere around three decades old. 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 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.
The toughness of the job and timings is not adequately conveyed. Besides the induction and
project training, not much investment has been done to evolve a "continuous training
program" for the agents. Motivational training is still to evolve in this industry. But, in all
this, it is the HR manager who is expected to straighten things out and help individuals adjust
to the real world. I believe that the new entrant needs to be made aware of the realistic
situation from day-one itself, with the training session conducted in the nights, so that they
get accustomed to things right at the beginning.
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 job either after marriage or because of
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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.
If a person 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 believe that all these challenges can turn out to be a real dampener in the
growth of this industry. This only raises the responsibility of "finding the right candidate" and
building a "conductive work environment", which will be beneficial for the organization. The
need is for those individuals who can make a career out of this.
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.
Major Worries for the Industry
Reckless Start-ups- a vast majority of the 310 start-ups are headed for a dead-end
(according to Nasscom). Their capacity utilization is less than one of the three shifts.
Many of these companies that converted their empty basements and warehouses
into BPO units or firms with $10 million-20 million VC funds that ran out of cash
without creating anything more than white elephants. They have driven down prices
to grab business, but have failed to deliver. They were always clueless about people,
processes or technologies- the three key elements of the BPO business.
Poor Infrastructure- the industry has more to worry about than just reckless start-ups.
Primary among those is infrastructure. While telecom networks are state of the art,
getting a connection still takes up to three months. Unreliable power supply is forcing
units to create their own back-ups. Roads are bad and airports are in dire need of
repairs and upgrades.
High Attrition-another major problem is the high attrition and growth aspirations of
the workforce. At least 60,000 of the 171,000 workforce change jobs every year.
About 80% of them look for better leaders. Team leaders want to upgrade to
supervisors, quality professionals or operations heads. The HR problem threatens to
soon become grave. Good agents are becoming hard to find and with tardy
infrastructure, big moves to the much talked about smaller towns will take longer.
This means costs will rise making it difficult for small VC-funded companies to
survive.

Attrition rates
US 42%
Australia 29%
Europe 24%
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India 18%
Global Average 24%
* Source-Times News New York
Components to be taken into consideration, while calculating attrition rate:
HR professionals are requested not to drive their own formulas to calculate attrition rate. In
terms of numbers, attrition rate means:
Total Number of Resigns per month (Whether voluntary or forced) divided by (Total Number
of employees at the beginning of the month plus total number of new joiners minus total
number of resignations) multiplied by 100.
If calculating in monetary terms, it includes the following:
Costs Due to a Person Leaving
Calculate the cost of the person(s) who fills in while the position is vacant. Calculate
the cost of lost productivity at a minimum of 50% of the person's compensation and
benefits cost for each week the position is vacant, even if there are people performing
the work. Calculate the lost productivity at 100% if the position is completely vacant
for any period of time.
Calculate the cost of conducting an exit interview to include the time of the person
conducting the interview, the time of the person leaving; the administrative costs of
stopping payroll, benefit deductions, benefit enrollments.
Calculate the cost of the manager who has to understand what work remains, and how
to cover that work until a replacement is found.
Calculate the cost of training your company has invested in this employee who is
leaving.
Calculate the impact on departmental productivity because the person is leaving. Who
will pick up the work, whose work will suffer, what departmental deadlines will not
be met or delivered late.
Calculate the cost of lost knowledge, skills and contacts that the person who is leaving
is taking with them out of your door. Use a formula of 50% of the person's annual
salary for one year of service, increasing each year of service by 10%.
Subtract the cost of the person who is leaving for the amount of time the position is
vacant.
Recruitment Costs
The cost of advertisements; agency costs; employee referral costs; internet posting
costs.
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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. This can
range from a minimum of 30 hours to over 100 hours per position.
Calculate the cost of the various candidate pre-employment tests to help assess
candidates' skills, abilities, aptitude, attitude, values and behaviors.
Training Costs
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.
Calculate the cost of departmental training as the actual development and delivery
cost plus the cost of the salary of the new employee. Note that the cost will be
significantly higher for some positions such as sales representatives and call center
agents who require 4 - 6 weeks or more of classroom training.
Calculate the cost of the person(s) who conduct the training.
Calculate 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. Use the following guidelines to calculate the cost of this lost
productivity:
Upon completion of whatever training is provided, the employee is contributing at a
25% productivity level for the first 2 - 4 weeks. The cost therefore is 75% of the new
employees full salary during that time period.
During weeks 5 - 12, the employee is contributing at a 50% productivity level. The
cost is therefore 50% of full salary during that time period.
During weeks 13 - 20, the employee is contributing at a 75% productivity level. The
cost is therefore 25% of full salary during that time period.
Calculate the cost of mistakes the new employee makes during this elongated
indoctrination period.
New Hire Costs
Calculate the cost of bring the new person on board including 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.
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Calculate the cost of a manager's time spent developing trust and building confidence
in the new employee's work.
Lost Sales Costs
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. Calculate the lost
revenue by multiplying the number of weeks the position is vacant by the average
weekly revenue per employee.
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. The 'rule of thumb' appears to be very inaccurate indeed and, while it depends upon the
category of staff, it is probably better to estimate around 80% of salary as a truer rule of
thumb - and this will be on the conservative side.
What does this mean? Well it means that if a company has 100 people doing a certain job
paid 25,000 and that turnover or attrition is running at 10%, the cost of attrition is:

(Total staff x attrition rate %) x (annual salary x 80%)
100 staff at 10% attrition means 10 people leave and are replaced each year.
A replacement cost of 80% of a salary of 25,000 means the cost of each replacement
is 20,000.
The cost of turnover is therefore 10 x 20,000 or 200,000 a year.
The on cost to the overall salary bill is 8%.
(Saving 8% of salary costs would make the average HR manager a hero.)

Benefits of Attrition
Attrition is not bad always if it happens in a controlled manner. Some attrition is always
desirable and necessary for organizational growth and development. The only concern is how
organizations differentiate good attrition from bad attrition. The term healthy attrition
or good attrition signifies the importance of less productive employees voluntarily leaving
the organization. This means if the ones who have left fall in the category of low performers,
the attrition in considered being healthy.
There is also a flip side to the situationthe fact that good attrition is a pointer to the failure
of the existing system and processes in the organization in hiring the right employee,
grooming and training him to be a productive worker. NR Ganti, Chairman and Managing
Director, SQL Star International, asserted that any attrition in any form is bad for an
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organization. It means that a wrong choice was made at the beginning, he pointed out. The
only plus point is that the realization has initiated action that will lead to cutting loss.
Attrition rates are considered to be beneficial in some ways:
If all employees stay in the same organization for a very long time, most of them will
be at the top of their pay scale which will result in excessive manpower costs.
When certain employees leave, whose continuation of service would have negatively
impacted productivity and profitability of the company, the company is benefited.
New employees bring new ideas, approaches, abilities & attitudes which can keep the
organization from becoming stagnant.
There are also some people in the organization who have a negative and demoralizing
influence on the work culture and team spirit. This, in the long-term, is detrimental to
organizational health.
Desirable attrition also includes termination of employees with whom the
organization does not want to continue a relationship. It benefits the organization in
the following ways:
It removes bottleneck in the progress of the company
It creates space for the entry of new talents
It assists in evolving high performance teams
There are people who are not able to balance their performance as per expectations,
lack potential for future or need disciplinary action. Furthermore, as the rewards are
limited, business pressures do not allow the management to over-reward the
performers, but when undesirable employees leave the company, the good employees
can be given the share that they deserve.
Some companies believe attrition in any form is bad for an organization for it means that a
wrong choice was made at the beginning while recruiting. Even good attrition indicates loss
as recruitment is a time consuming and costly affair. The only positive point is that the
realization has initiated action that will lead to cutting loss.


Impact of attrition
Direct Impact: A high attrition indicates the failure on the companys ability to set effective
HR priorities. Clients and business get affected and the companys internal strengths and
weaknesses get highlighted. New hires need to be constantly added, further costs in training
them, getting them aligned to the company culture, etc.,all a challenge.
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Indirect impact: Difficulty in the company retaining remaining employees and to what
extent? Problem for the company in attracting potential employees. Typically, high attrition
also leads to a chronic or systemic cycleattrition brings decreased productivity, people
leave causing others to work harder and this contributes to more attrition. All this has a
significant impact on the companys strength in managing their business in a competitive
environment.

The Attrition Problem
According to NASSCOM data, the attrition rate for voice-based BPOs is around 55-60 per
cent and 15-20 per cent for the non-voice based processes. The attrition rates and the
retention have become the major threat and the biggest challenge for the human resource
professionals of the sector. In fact, the outsourcing industry is expected to face a shortage of
2,62,000 professionals by 2012. The human resource professionals of the BPO sector are
focusing their strategies on tackling the disruption caused due to the shortage of the skilled
manpower as well as the unplanned or the undesired exists.
The top reasons for employees to leave a BPO company are:
Monotonous work (repetitive nature of work and the average number of calls)
Physical strains because of long and odd working hours
No growth opportunity/lack of promotion
For higher Salary
For Higher education
No personal life
Problems with peers and managers
Policies and procedures
Conducive work culture or environment
Handling abusive calls
The high attrition costs increases the costs to the organization considerably. They have to
combat the amount of disruption due to unplanned exits. The more the people leave an
organization, the more it is a drain on the companys resources like recruitment expenses,
training and orientation resources and the time. The high attrition rate also affects the
productivity of the organization. The attrition cost has been estimated to be as high as 76 per
cent of the annual salary costs for the low-end BPOs. The voice-based processes, which are
facing an attrition rate of 60 per cent, are incurring the attrition costs of 27 per cent of the
total operating costs.
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The high attrition costs the BPO industry a huge amount of loss in terms of the expenses and
the losses incurred on recruitment process, the training and development of the hired. In the
year 2004-05, such expenses amounted to a loss of Rs. 300 crore and a total loss of 25 % of
the annual revenue to the Indian BPO industry. Also, the retention strategies like providing
higher education opportunities to the employees, creating growth opportunities for employees
add to the burden of costs to the company.
Another problem being faced by the BPO industry is Poaching. Poaching refers to taking
away the experienced professionals by competitors by offering them better salary, benefits
than t than the competitor. With the already saturated market for the talented professionals,
poaching is becoming a common practice by the organizations. All these people costs are
weakening the position of India as the low-cost destination in the worldwide BPO industry.
Another point of view explaining the high attrition rates in the BPO industry comes from the
psychologists who argue that physical strains like sleep disorders, depression, odd working
shifts, learning foreign accents, constantly handling abusive calls and high stress levels are
also the major reasons of the high attrition rates in the BPO industry. There are also pressures
from the society for not allowing the youngsters to work in night shifts. This also discourages
the youngsters from joining the BPO industry.
Analyzing the impact
Productivity and profitability are both impacted, either negatively and positively, according
to the type of attrition. Even good attrition is indicative of loss as recruitment is a time
consuming and costly affair. It is tantamount to investment that has gone astray. Having said
that, good attrition minimizes the adverse impact on business while bad attrition accentuates
the loss, stated Nair. The cost of hiring is sometimes not less than two to three times the
salary of the employee.
The impact on work progress is tremendous, particularly if a project is underway and one of
the key people leaves. It leads to dip in entire organizational efficiency, and a lot depends on
how it is able to cover the setback, pointed out Rao.
Organizations should execute top of the line retention policies in the right earnest and
consistency.






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1.2 ABOUT THE BPO INDUSTRY
Business Process Outsourcing (BPO) is the delegation of one or more IT-intensive business
processes to an external provider that in turn owns administers and manages the selected
process based on defined and measurable performance criteria. Business Process Outsourcing
(BPO) is one of the fastest growing segments of the Information Technology Enabled
Services (ITES) industry.
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 is 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.
Attrition cannot be blindly classified with a negative connotation. A healthy attrition rate in
any industry is necessary for new ideas and innovation to flow in as well as to facilitate the
overall growth of the industry in terms of knowledge sharing. But after a particular level the
same boon becomes a bane.
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. Each agent works is non-productive or partly
productive in the organization for nearly the first 2-3 months. Hence an employee leaving the
organization within the first 6 months is a bad investment for the company. Also, as stated
earlier the cost of attrition in the industry is 1.5 times the annual salary.
However, there is another perspective for attrition which is specific to the BPO industry in
India. India at the moment is working on low end Business Processes which do not require
quite a lot of amount of high skills. The reason for India's success has been primarily the low
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cost, high quality labor which India provides. Compared to other competitors such as
Philippines, South Africa, Ireland; India is the only country where we have a balance between
the cost involved and the quality provided till now. For Indian companies to remain
successful in future they would have to keep the cost low. Since the tasks performed by an
agent are pretty standard and does not require added skills, there is no benefit in retaining a
highly experienced employee. At the floor level operation, a non-experienced candidate could
work with the same efficiency of a 2-3 year experienced employee after minimal training.
Hence the industry players consider the present attrition as a positive attrition which is
serving the industry by keeping the cost low.
CAUSES
Attrition in the BPO industry is twofold. 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 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.Regarding the attrition between firms, the chief
cause is the unavailability of resources in the job market causing a great demand compared to
the supply available. Presently there is no certified institute providing BPO specific training
and education. The scarce resource in the market leads to wide scale poaching and head
hunting amongst the competitors for the common pool. Due to the immaturity prevalent in
the industry, the industry also has not witnessed mature HR processes such as Work force
planning being implemented by the firms. Usually new projects in the BPO industry, requires
a transition stage to be implemented within a short time. The lack of preplanned recruitment
leaves the firms with no option but to fulfill their immediate requirement by poaching
resources working on similar projects in other firms.
Atttrition in Indian BPO industry
What is the biggest challenge for the BPO industry in India today? Well, it is a no brainer:
Attrition!
The business process outsourcing (BPO) industry in the country which is expected to employ
around one million people by 2008 is facing the challenge of finding quality human resources
given the current attrition rate of around 50 percent.
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Analysts say attrition rates vary by 20%-40% in some firms, while the top ones averages at
least 15%. Nasscom in a report said the outsourcing industry was expected to face a shortage
of 262,000 professionals by 2012.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 said in its Indian BPO
industry report.























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1.3 Organizations Profile
IBM Daksh India is one of the most important business process outsourcing companies in
India. It has been playing a significant role in the process transformation and management
sections of one of the leading IT firms of the world, IBM since 2004

Fig 1.1 Logo of IBM
In April 2004, IBM Corporation acquired Daksh e-Services to form IBM Daksh. Today, IBM
Daksh India serves as the global destination for managing business processes for all clients of
IBM. In India, there are 14 service delivery centers of IBM Daksh India, spread across the
major cities of New Delhi, Bangalore, Mumbai, Pune, Kolkata, and Chandigarh. There are
two other global service delivery centers of IBM Daksh India in Manila and Philippines.
There are more than 20,000 employees associated with the company.


The name of IBM-Daksh have now been changed to IBM- Global Process Services, is an
integral part of the companys Globally Integrated Enterprise model. The new name reflects
IBM's position as a leading global provider of innovative business process services for clients
seeking to cut costs, improve operation efficiency and take advantage of the opportunities in
the global economy.

A report published by the Yankee group stated that in the US, '67% of online transactions
were being abandoned due to inadequate customer support'. And with this, an idea was born.
The year - July 1999. In no time, the entrepreneurial drive and the realization of opportunity
within India became the two most important factors towards the inception of what would be
the largest BPO service provider in India - IBM Global Process Services. A core team of 4
members sprung into immediate action to put together a sturdy business plan which got them
their first client and the first round of funding.
It was not a company that was created but a whole new enterprise, a potentially new industry
that had no history and no business model to follow. All it had was sound leadership, a
focused vision and an undying passion.

IBM Global Process Services now stands for:
A leading Continuous 'BPO' player.
A strong platform of corporate governance.
A critical growth engine for IBMs BPO business and an integral part of IBM global
service delivery network .
The winner of multiple globally recognized awards in the domain of employee and
customer satisfaction.
A strong platform of quality built around Six Sigma and COPC across the enterprise.
14 service delivery locations spread across 9 cities in India and Philippines.
A profitable organization since inception.
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2010 milestones
IBM Global Process Services completes a decade of operations
Emerges #1 ITeS company in Business Today - Indicus - PeopleStrong Survey of
India's Best Employers
IBM Global Process Services's Voice of Customer Analytics (VOCA) service a Joint
Runner-Up in the Process (Internal) Innovation category of the NASSCOM
Innovation Awards 2010
Launch of regional delivery center in Cairo, Egypt.
Services offered:
The primary service of IBM Daksh India is to provide business process outsourcing services
to clients across the globe. Their main clients are from industries related to insurance,
banking, financial services, e-commerce, retail, telecom, technology, travel, and hospitality.
Apart from this, they also offer some value added services like -
Inbound customer service
Outbound voice-based services
Telemarketing
Invoice processing
Transaction processing
Innovative software developed:
In order to provide the best services to their fullest satisfaction, IBM Daksh India has
developed certain software tools. The use of these softwares would provide world-class
performance and improvements in client servicing by the BPO. These software tools have
enhanced the growth of the business of the outsourcing firm. Some of these software tools
are:
Sensei Learning and Evaluation Tool
Performance Evaluation Grid
IBM SIMPRO
Reporting Process Automation
SPADE
Advanced Support Group
Dynamic Roster Change Management System
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Performance
Within a short span of time, IBM Daksh India has succeeded in achieving a series of awards
and also gained much prestigious recognition in the business world. Some of them are:
Frost & Sullivan Contact Center Outsourcing Vendor of the Year, 2007
Most respected BPO Company in India (Businessworld magazine)
Ranked 1 among Global Outsourcing 100, in the 2007 listing of the International
Association of Outsourcing Professionals for the World's Best Outsourcing Service
Providers.
16










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1.4 Objective
Staff attrition (or turnover) and absenteeism represent 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.' They add a sum in their budgets for 'temp staff' and
'recruitment' and forget about it.
However, it seems to be one of the areas in which HR can make a difference - and one that
can be measured in quantifiable, financial terms against targets.
An attrition rate in call (or contact) centres 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%.
The issue is not with the quality or education of the staff - and still less with the investment in
technology. It is simply attrition - people do not stay long enough to be taught or to learn the
job. Managing attrition is not just a 'nice thing to do' in Indian call centers. It is the route to
their survival.
Far from accepting attrition rates as part of the cost of doing business, it is surely something
that all organizations should address, and equally surely it is an area in which HR can take a
lead - measure attrition, seek its causes, set out solutions and target performance.
Therefore the main objectives of this report are:
To understand the present level of attrition in the organization.
To identify the reasons for high attrition rate of employees.
Analyzing the impact of attrition.
To propose various retention Schemes.








18








Literature Review

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Literature Review

2 Literature review
With the boat of success steaming ahead in the global markets, India has already become the
most privileged destination for Business Process Outsourcing. The word which one would
simply lisp in the beginning of this century has become the most pronounced and sought after
term. Generating revenues, fostering employments, elevating the living standards, an eternal
inventory of opportunities simply showcase a phenomenon which is no less than the
renaissance for our Indian markets. Many researchers have talked about BPOs in their works,
highlighted its capability as money making sector, showcased its doom of high employee
turnover, sketched out its strengths, weaknesses, opportunities and threats, and also chalked
out its dynamics of HR. Other researchers have extensively worked on various perceived
attitudes of employees like their satisfaction, motivation, its influence on their tenure, their
loyalty, commitment etc. This chapter deals with finding the reasons for attrition in one of the
well known organization named IBM-Daksh in the bpo industry.,and collaborates the
findings to tackle the problem of attrition.
Henry Ongori, Department of Management, University of Botswana, Botswana. .Accepted
22, May 2007
Employee turnover as a term is widely used in business circles. Although several studies
have been conducted on this topic, most of the researchers focus on the causes of employee
turnover but little has been done on the examining the sources of employee turnover, effects
and advising various strategies which can be used by managers in various organisations to
ensure that there is employee continuity in their organisations to enhance organizational
competitiveness. This paper examines the sources of employee turnover, effects and forwards
some strategies on how to minimize employee turnover in organizations.
Organizations invest a lot on their employees in terms of induction and training, developing,
maintaining and retaining them in their organization. Therefore, managers at all costs must
minimize employees turnover. Although,there is no standard framework for understanding
the employees turnover process as whole, a wide range of factors have been found useful in
interpreting employee turnover Kevin et al. (2004). Therefore, there is need to develop a
fuller understanding of the employee turnover,more especially, the sources- what determines
employee turnover, effects and strategies that managers can put in place minimize turnover.
With globalization which is heightening competition, organizations must continue to develop
tangible products and provide services which are based on strategies created by employees.
These employees are extremely crucial to the organisation since their value to the
organization is essentially intangible and not easily replicated Meaghan et al. (2002).
Therefore, managers must recognize that employees as major contributors to the efficient
20

achievement of the organizations success Abbasi et al. (2000). Managers should control
employee turnover for the benefit of the organization success. The literature on employee
turnover is divided into three groupings: sources of employee turnover, effects of turnover
and the strategies to minimize turnover.







21








Research Methodology












22


Research Methodology

3 Research methodology
Research methodology is a way to systematically solve the research problem. It explains the
way in which the data are collected for the research project.
Objective
The main aim of the research is to find out the reasons for employee attrition in the
organization and to draw out some retention schemes which would be helpful for the
organization. While doing so we will get in-depth knowledge about the factors that leads to
attrition.
Organization: IBM-Global process services(formerly IBM-daksh)
Research type: Descriptive
Research in common parlance refers to a search for knowledge. In fact, research is an art of
scientific investigation. It comprises defining and redefining problems, formulating
hypothesis or suggested solutions, collecting, organizing and evaluating data, making
deductions and reaching conclusions and at last carefully testing conclusions to determine
whether they fit the formulating hypothesis.

Descriptive Research
Descriptive research studies deal with collecting data and testing hypotheses or
answering questions concerning the current status of the subject of study.
It deals with the question WHAT IS of a situation.
It concerns with determining the current practices, status or features of situations.
Another aspect of descriptive research is that data collection is either done through
asking questions from individuals in the situation (through questionnaires or
interviews) or by observation.







23








Preparation of research instrument
and
data collection

24


Preparation of research instrument
and
data collection

4 PREPARATION OF RESEARCH INSTRUMENT AND DATA COLLECTION
This chapter describes how the questionnaire was developed and what steps were taken in the
data collection process.
4.1 Preparation of research instrument
The research instrument used in the research is a questionnaire. The questionnaire has been
prepared regarding the attrition of employees in the organization.
We have taken 11 questions and an attempt has been made so that employees find it useful to
answer those questions.
The following things were kept in mind while designing the questionnaire:
We are targeting at the employees of an organization named IBM-Global Services,the
leading organization in bpo industry in the country;
No employee wants to run into unnecessary trouble just for somebodys research;
We have made best attempts to make sure that each question is interesting to the
respondents and they give their best possible answer to every question.
Our plan was to record the responses of the employees and then analyze the same using SPSS
Statistics to get a mean, median, mode, correlation and regression results.
Once all of the participants have completed the study measures and all of the data has been
collected, the researcher must prepare the data to be analyzed. Organizing the data correctly
25

can save a lot of time and prevent mistakes. Most researchers choose to use a database or
statistical analysis program (SPSS) that they can format to fit their needs in order to organize
their data effectively. A good researcher enters all of the data in the same format and in the
same database, as doing otherwise might lead to confusion and difficulty with the statistical
analysis later on. Once the data has been entered, it is crucial that the researcher check the
data for accuracy. This can be accomplished by spot-checking a random assortment of
participant data groups, but this method is not as effective as re-entering the data a second
time and searching for discrepancies. This method is particularly easy to do when using
numerical data because the researcher can simply use the database program to sum the
columns of the spreadsheet and then look for differences in the totals. Perhaps the best
method of accuracy checking is to use a specialized computer program that cross-checks
double-entered data for discrepancies (as this method is free from error), though these
programs can be hard to come by and may require extra training to use correctly.
Descriptive statistics describe the data. They do not draw conclusions about the
data. Descriptive statistics are normally applied to a single variable at a time. They can tell
the researcher the central tendency of the variable, meaning the average score of a participant
on a given study measure. The researcher can also determine the distribution of scores on a
given study measure, or the range in which scores appear. Finally, descriptive statistics can
be used to tell the researcher the frequency with which certain responses or scores arise on a
given study measure.
Correlation is one of the most often used (and most often misused) kinds of descriptive
statistics. It is perhaps best described as a single number that describes the degree of
relationship between two variables. If two variables tend to be correlated, that means that
a participants score on one tends to vary with a score on the other. For example, peoples
height and shoe size tend to be positively correlated. This means that for the most part, if a
given man is tall, he is likely to have a large shoe size. If short, he is likely to have a smaller
shoe size. Correlation can also be negative. For example, the temperature outside in
Fahrenheit may be negatively correlated with the number of hot chocolates sold at a local
coffee shop. This is to say that as the temperature goes down, hot chocolate sales tend to go
up. Although causality may seem to be implied in this situation, it is important to note that
on a statistical level, correlation does not imply causation. A good researcher knows that
there is no way to assess from correlation alone that a causal relationship exists between two
variables. In order to assert that X caused Y, a study should be experimental, with control
26

groups and random sampling procedures. Determining causation is a difficult thing to do,
and it is a common mistake to assert a cause-and-effect relationship when the study
methodology does not support this assertion.

4.2 Data collection
Data is defined as raw facts that need to be processed so that information is produced. For
achieving useful results it is necessary to collect accurate data. If the is not correct, it is
worthless to do survey. Thus for getting the useful results of research it is very necessary to
consider methods of collecting data and the quantity of information they be expected to
produce.
The data has been collected in two forms:
Primary data
Secondary data

4.2.1 Primary data:
A data that is collected very first time to a specific purpose directly from the field of enquiry
by engaging trained investigators, not have been use for any other purpose.

Questionnaire
Personal interview


4.2.2 Secondary data
Secondary data are such numerical information, which have been already collect by some
agency for a specific purpose and are subsequently compiled from the source of application
in a different connection.
Websites
Published articles


4.3 Sampling technque:

Convenience Sampling
27


4.4 Sampling Unit

100 employees of the organization.









































28























Questionnaire





29




Questionnaire



QUESTIONNAIRE
Dear respondents,
This survey plays a very important role in making the project complete. So please try to fill
up this questionnaire seriously
We have 5 scales of measurement i.e.
1-Strongly agree
2- Agree
3 - Neutral
4 - Disagree
5 - Strongly disagree
Please tick which one is applicable for you:
Employee turnover/resign is a major concern for your organization.
1
2
3
4
5
High percentage of females in the workforce adds to the high attrition rate.
1
2
3
4
30

5


Some attrition is always desirable and necessary for organizational growth and
development.
1
2
3
4
5

BPO firms should provide career growth and higher educational opportunities for
employees as measure of retaining them.
1
2
3
4
5

An employee gets sufficient promotional opportunities to enhance his position.
1
2
3
4
5

High discipline at work place.
31

1
2
3
4
5

As job becomes repetitive, the employees find less challenge in it and hence seek
for some other job.
1
2
3
4
5

The families of BPO employees are not fully supportive for this industry.
1
2
3
4
5


Non availability of appropriate training of employees lead to increase in
attrition.
1
2
3
32

4
5

Bad selection leads to attrition.
1
2
3
4
5

What do you think, the reasons for an employee leaving the organization?
(Rate the following from 1 to 17; 1 being the top most priority and 17 being the
least)
Monetary factors
Lack of good working condition
No flexible work schedules
Lack of respect
Very few supportive colleagues
Organization is more concern towards business
Increase in favoritisms
Employee needs pride in where they work and what they do
Lack of appreciation
Lack of challenges in job
The job or workplace was not expected
The mismatch between job and person
Too little coaching and feedback
Lack of support
33

Stress from overwork and work-life imbalance
Loss of trust and confidence in senior leaders
Less frequency in giving rewards





What would be the major concerns for an organization after the employee quits.
(Rate the following from 1 to 8; 1 being the top most priority and 8 being the
least)
Loss of productivity
Replacing qualified employees
Poor retention creates a revolving door culture within the organization
lowering morale and confidence.
Cost of overtime or temporary help
Recruiting costs
Interviewing costs
Time spent in orientation
Cost of training the employee
PERSONAL INFORMATION:
NAME:
AGE:
SEX:
DESIGNATION:
Thank you for giving your valuable time for us which we really appreciate.



34



Data analysis

Descriptive Table
Mean Standard deviation
Employee turnover - a major
concern
1.83 1.04500
High percentage of female leads
to attrition
1.82 1.03845
Attrition is desirable for the
organizational growth
2.38 1.30097
Organization should provide
career growth for retention
2.48 1.19325
Promotional opportunities
enhances the position of
employees
2.12 1.13066
Repetitive jobs leads employee
to seek another job
2.22 1.14221
Less family support for this kind
of job
1.64 .82290
Training leads to attrition 1.96 1.02415
Bad selection 1.67 1.18964

Table 1
35



From the above table, we interpret that
i) People strongly agree that Employee attrition is a major concern for the organization as it
brings down the morale and confidence of the whole team.
ii) Respondents at IBM strongly agree that high percentage of females in the work force
results in high attrition rate. This is because they feel that female employees could not adjust
themselves to the timings of the job, leave their job soon after they get married or get any
good job with good salary package.
iii) The respondents agree that some attrition is always desirable and necessary for
organizational growth and development because some of the employees are there in
organization those are less productive and hence become liability for the organization. So by
removing them organization wont be in problem rather they would be benefitted as they
need not to spend any more on them.since standard deviation is lowest, that means people
have similar responses.
iv) People agree that BPO firms should provide career growth and higher educational
opportunities for their employees as a measure of retaining them. This would be a reason for
the employee to stay at the organization as it gives them the scope. Here, the standard
deviation is the highest which shows people have varied responses.
v) Most of the employees at IBM agree that they get sufficient promotional opportunities to
enhance their position at the work place. This in turn motivates them to work more and prove
their talent to the higher authorities.
vi) Respondents agree that the employees leave the job and seek for other one after finding
less challenge in the BPO jobs which is of more repetitive kind.
vii) According to the respondents, they strongly agree that families of BPO employees are
less supportive of the fact that they work in BPO industry with late night shifts. They also
feel that there is little respect and recognition present in their job as they have to listen abuses
from different customers at work every day and have very less scope of innovation.
viii) People strongly agree that training leads to attrition. The reason that they gave is after
completion of training process, they gain some knowledge and become eligible for some
other higher post and hence quit the organization.
.
ix) According to the respondents, they strongly agree that poor selection of candidates leads
to high attrition because if you dont select the right candidate for the given job then surely
there would be a mismatch and he\she would finally leave the job. At the time of recruitment,
the HR professionals should be very particular in choosing the right candidate.
36

x) By going through this rating we can learn that employees leave BPO sector for lack of
respect both inside and outside the organization. Maximum of them also quit their job for
absence of flexible work schedules and stress from overwork. Some of them also feel
mismatch between the job as they find no challenges in it.
Xi) According to respondents organization are more concerned about the cost and time that
they have put in the employee on training. Then they would be more worried about replacing
them with the right candidate which would prove asset to the organization.






















37

Correlation Matrix

Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Q2 -.019
Q3 -.138 .021
Q4 .115 .062 0.070
Q5 .103 .010 .079 -.051
Q6 .032 .017 .283** .011 .144
Q7 .128 -.006 -.050 .034 -.029 .160
Q8 .088 -.140 .034 .016 .022 -.036 -.065
Q9 -.021 .344** -0.016 -.022 .255* -.013 -.061 .105

Table 2
**-correlation is significant at 0.01 level (2-tailed)
*-correlation is significant at 0.05 level (2-tailed)






38

From the above table, we come to know that
There is a strong correlation between repetitive job leads employee seek another job
and attrition is desirable for the organizational growth.
A strong correlation exists between bad selection leads to attrition and high
percentage of female employees leads to attrition.
A good correlation exists between bad selection leads to attrition and promotion
growth enhances the position of the employees.
A weak correlation exists in all other areas, so the organizations need to take care in
those areas also.



















39












Suggestions

40


Suggestions

Suggestions

Few suggestions that would help in retaining employees-
Hiring the right people. This is easier said than done, as now-a-days there are so
many ways in which employees make the HR managers believe that they are the right
choice for the job. But if you grill the employee a bit more during the interview,
chances are that he/she can make revelations which can be an indicator for you if the
candidate is worth investing in. So HR managers should carefully fact-find as to why
the candidate needs the job. Sustained questions may give you an insight about the
candidate's behavior. Also a thorough employee background check is necessary to be
sure about the employee's credentials.
Keeping your staff well informed. Communication is an important part of any
organization as it lets employees understand their roles in a better way. If you are
planning to start out any new projects or you have reviewed company policies, make
sure that you communicate it to all your employees. This helps in keeping rumors at
bay.
Promotion: promotion is one of the ways which helps in retaining employee
Retention bonus: Retention bonus is an incentive paid to an employee to retain them
. Retention bonuses are becoming more common in the corporate world because
companies are going through more transitions like mergers and acquisitions. They
need to give key people an attractive incentive to stay on through these transitions to
ensure productivity.
ESOPS: It is one of the retention tool used by the companies to retain their
employees.
Permanent disability insurance: If an organization provides such type of insurance
,it will definitely help in retention of the employees as it gives a sense of security.
Personal accident insurance: It also gives a sense of security which helps in
retention
Involving employees in important decisions. This can benefit the organization as
well, as may be the employees come up with a solution to the problem, you thought
never existed. When you involve your employees and take their opinions, the
employees feel valued and this can really boost the employee performance.
Taking feedbacks frequently. Don't wait for the employee to knock on your door
and say, "I need to talk to you". Instead reach out to them by conducting one-to-ones
and assuring them that whatever they discuss will remain truly confidential. This can
help in cases where female employees are facing harassment from their immediate
superiors but think that the person is far too important for the company to complain
41

about. Conducting employee surveys also helps the organization to take a
retrospective view of itself. Make the employees believe that whatever issues that
they are facing would be looked into.
Having flexibility. Be flexible in your approach when it comes to accommodating
employee's requests for leaves, vacations, etc. Because apart from being employees,
they have a personal life as well. This promotes goodwill among the employees.
Having a decent compensation package. Well not all employees leave because of
money, but most of them do! Having a fair compensation package plays an important
part in job satisfaction.
Hiring mature talent. Many young people do not take work so seriously.
Better employee retention schemes should be developed. Cash incentives can be
used to satisfy the employees. But money is not the only way to retain employees.
Talent must be appreciated. Diplomas and courses for future growth should be
offered.
Hire candidates who actually need the job. Not the people who are taking up jobs on
a temporary basis.
Choose appropriate people for night shifts. Shift timing is a major issue for
employee attrition
















42








Limitations and conclusion

43




Limitations and conclusion

7.1 Limitations

The first and biggest limitation is that the sample size or the people that we have used
could never be enough as it could never represent the full population. Because, the people
who are very computer savvy would always support this kind of concept. Secondly, new
or younger generation is much more supportive for these concepts. So, biasness could
easily creep in.

The organizations are very reluctant to give us the internal data of their employees. So
exact information could not be made out from them.

7.2 Conclusion
Employee attrition is a very big problem not only in India but outside India too. Attrition rate
is increasing day by day and its especially the software industry which is affected the most.
Why an Employee leaves a company is the question asked by most of the employers.
Companies even hire Private HR professionals to study the company's work and find out why
an employee is dissatisfied.
HR department does the recruiting of new employees and then send them for training so that
they can understand work and work culture and become better professionals. Each and every
company faces employee turnover problem whether big or small. An employee leaves his
present job for another job to get better pay package and good working conditions.
Every Company calculates Employee attrition rate and takes measures to reduce it. The facts
and figures are not made public as it may tarnish the image of the company in front of its own
employees and its loyal customers.
A survey has found out that there are various reasons for Employee Attrition-
Higher Pay Package in another company
Good working Conditions
44

Opportunities for growth in new company
Change of Place problem
A better Boss in new company
Brand Image of the new company
Employee attrition costs a lot to the company. There are various costs which are borne by the
company at the start when the employee is under training period. Costs such as-
Conveyance Cost
Cost of lodging of the new employee
Trainers cost
Cost of venue where training will be conducted
Materials to be supplied during training process
A company has a training period of 3 to 6 months. During this time an employee is not
fruitful for the company. If an employee leaves the company when he starts working,
company suffers a big loss in terms of money as well as workforce. Every company takes
measures to hold the talented workforce by means of perks, Increments, Bonus and extra
facilities. No one wants to lose good brains to their competitors.
Now the question is how to reduce employee attrition. What should a company do to hold on
the talent?
There are various companies like TATA's and Reliance who do a lot to reduce attrition rate.
Flexible working conditions have been given to employees who have problem working 10
5. Private hospitals for employees where they can get their regular health check up done
without spending much money. Free overseas tour once in a year when a target is achieved.
Few Companies are getting more and more work savvy and just want to get their work done
by hook or by crook. The mentality needs to be changed. Target for completion of a work
should be there but that should not hamper an employees personal life. Companies should
conduct various seminars on how to balance personal and professional life. An employee can
be productive if and only if his personal life is balanced. Make employees a part of your work
culture family and see the difference. Attrition rate cannot become completely obsolete but it
can surely be minimized.





45







Bibliography

46

Bibliography

8 Bibliography
BOOKS REFERRED:
Roger E. Herman, Keeping Good People, Paperback OakHill Press, 1999 Edition.
Jack J. Philllips, Managing Employee Retention: A Strategic Accountability
Approach, Copyright Butterworth-Heinemann, 2003 Edition.
Jack J. Phillips & Natalie L. Petouhoff, Recruitng and Retaining Call Center
Employee, ASTD Paperback Press, 2001 Edition.
Barb Wingfield, "Retaining Your Employees: Using Respect, Recognition, and
Rewards for Positive Results", Cri-sp Learning, 2001 Edition.
Bill Marvin, From Turnover to Teamwork, Wiley publishing, 1994 Edition.
Barbara A. Glanz, Handle With CARE: Motivating and Retaining Employees, Mc-
Graw Hill Companies, 2002 Edition

WEBSI TE REFERRED:
http://timesascent.in/index.aspx?page=article&sectid=64&contentid=2008101520081113134
6302515b929edd
http://www.palan.org/doc/freebies/Does%20Employee%20Training%20lead%20to%20attriti
on.pdf
http://www.chrmglobal.com/Articles/25/1/Innovative-Retention-Strategies-for-Indian-
BPOs.html
http://www.recrion.co.uk/solutions/attrition/the-actual-cost-of-employee-attrition-rates/
http://www.fractalanalytics.com/newsletter/july/agent-retention-in-bpo-industry.html