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BPO: Attrition, not language the big hassle
Priya Ganapati |
April 21, 2004 17:36 IST
English is not the only language that Indian Business Process Outsourcing companies are capable of doing business in.
A survey commissioned by the Indo American Chamber of Commerce and carried out by Ernst & Young, shows that 13 per cent of third party BPO vendors surveyed are already supporting foreign languages.
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"Indian call centers are offering services in languages like Spanish, French and German. It is something that some call centers are building up as it will help them offer their services to a larger set of clients and markets," said Ranjan Biswas, partner, Ernst & Young.
The survey interviewed 23 third party BPO vendors located at key cities across India and was released during the Global Offshore Outsourcing Summit 2004 that started in Mumbai on Tuesday. The two-day summit discusses the emerging global outsourcing landscape and the various issues that Indian BPO players face. The Ernst & Young survey focuses on the third party BPO service providers as opposed to captive units set up by large companies as in the case of GE or American Express.
The large third party BPO vendors have been in business for over three years. Considering the fact that the industry itself in India has been seeing rapid growth only in the last few years, Ernst & Young, said that these vendors have come of age.
Its survey has revealed that 48 per cent of the participants have more than three years of experience in the industry and over 30 per cent of them service Fortune 500 clients. The large vendors in the sample had an average of nine Fortune 500 clients.
Not surprisingly, these vendors have been able to post growth in excess of 50 per cent, in line with the industry growth rate.
Much of this growth has been possible because of the quick ramp up that the companies have been able to achieve in hiring.
On an average the survey participants had an employee strength of over 1700.
Twenty-two per cent had over 3000 employees and 78 per cent had facilities in more than one city. Thirty-five per cent operate from tier II cities as well.
Yet extremely high attrition and absenteeism plague the industry.
Human resources is largely considered the most critical input for the exploding BPO business. What sets the industry leaders apart is the ability to ramp up quickly without compromising on quality or delivery schedule.
However, severe competition from within the industry has forced third party vendors to attract the right kind of people.
Compounding the challenge are the following factors, said Ernst & Young.
Most employees are fresh college graduates who are attracted by higher pay rather than career building opportunities. There is a constant requirement to ramp up within extremely short timeframes of 30-90 days.
There are also health related issues and lifestyle changes where employees work night shifts.
"Our survey revealed that vendors are trying to complement hiring strategies with brand building activity in order to increase their chances of hiring the best talent," says Biswas.
Yet the survey threw up the fact that attrition averages 40 per cent for voice based process and 25 per cent for non-voice based processes.
There is also the problem of absenteeism. On a daily basis, 2-8 per cent of the employees in the voice segment remain absent.
"This is a new thing that is coming up. So far the focus has been on high attrition. Now it shifts to absenteeism. For large BPO players, a five per cent daily rate of absenteeism can be quite disastrous," said Biswas.
Ernst & Young's survey captured some of the strategies used by vendors to retain employees. These include providing higher incentives and bonuses, offering faster career progression, providing cross-functional training and rotation, sponsoring employees on post-graduate programs and offering a relaxed work environment.
Also to counter the attrition related problems, most vendors keep a buffer of 10-15 per cent. Employees that form the buffer are usually undergoing training programs and are not billed to the clients.
In terms of client participation in hiring, 62 per cent clients participated in the hiring for specific processes while only 25 per cent participated in the initial hiring.
Over the last one year, concerns have been raised over quality control used by Indian BPO vendors.
On its part, the industry is striving for quality certifications and best practices like ISO 9000, COPC, Six Sigma and eSCM. Eighty-three per cent of the third party vendors surveyed invest significantly on an ongoing basis in obtaining these certifications.
And to measure client satisfaction, 65 per cent of the respondents had formal processes in place, which they hope will help them grow rapidly.The key strategies for future growth are moving up the value chain to meet the growing requirements of clients; enhancing the service delivery model; acquiring new customers and expanding the services portfolio," said Biswas.