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e 2, Number 1, Dec - Jan (2011), IAEME ISSN 0976 6502(Print), ISSN 0976 6510(Online) Volume 2, Number 1, Dec - Jan (2011), pp. 01-14 IAEM IAEME, http://www.iaeme.com/ijm.html
IJM
ABSTRACT
According to the study conducted by NASSCOM and Everest India, the Indian BPO sector has been growing at more than 35 percent over the past three years and currently estimated at US$ 26-29 billion and could grow nearly five-fold to reach US$50 billion in size by 2012. The IT enabled services (BPO) industry is being looked upon as the next big employment generator. It is, no doubt, one of the toughest task for an HR manager in this sector, to bridge the ever increasing demand and supply gap of professionals. He has to find the right kind of people who can keep pace with the unique work patterns in this industry. Adding to this is the challenge of maintaining consistency in performance and keeping the motivation levels high, despite the monotonous work. The toughest concern for an HR manager in India is, however, the high attrition rate which is approximately 30-35 percent at present. In this regard an earnest attempt has been made by taking 120 respondents from the BPO sector in NCR to study the various challenges. The statistical tools like factor analysis, means are being used. It concluded that attrition is the most challenging factor for all HR managers. Key Words: Outsourcing, HR Challenges, Performance management, Talent management, Work life balance, Leadership, Succession Planning
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online) Volume 2, Number 1, Dec - Jan (2011), IAEME
ATTRITION:
Attrition stands for a gradual reduction in work force without firing of personnel, as when workers resign or retire and is not replaced. Business Dictionary states, Attrition is Unpredictable and uncontrollable, but normal, reduction of work force due to resignations, retirement, sickness, or death. As per the Longman Dictionary of Contemporary English. Attrition happens when people leave a company or course of study and are not replaced. As per The American Heritage Dictionary of the English Language, Attrition is a gradual, natural reduction in membership or personnel, as through retirement, resignation, or death. Dr. Paul Carr and Dr. Michael Hartsfield in their article Attrition as an HR Challenge (The Icfai Journal: HRM Review, March 2008) state that Attrition can be conceptualized in many forms but the two prominent forms of attrition are: attrition due to employees leaving an organization; and employees retiring from an organization.
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online) Volume 2, Number 1, Dec - Jan (2011), IAEME
market (around 70 percent), but keeping the recent growth of the industry in the country in view, the challenge continues to be greater.
REVIEW OF LITERATURE
Ranjit Shastri (2004) writes that while the steady supply of new recruits has helped fuel the growth of call centers in India, attrition has held the industry back and a major cause of attrition is the poor people skills of team leaders and senior management. Niharika opines that continued high growth in an industry can be an issue because it strains systems and governance processes that need time to mature and to be institutionalized. Indian BPO industry is currently facing the challenges arising out of its stupendous growth. Santoshi Sen Gupta and Aayushi Gupta (2008), study the challenges posed to BPO organizations at various levels and find that at the lower management level, the major challenges include meeting targets, dealing with customers and maintaining work life balance; at middle level management the major challenges are to motivate employees and handle attrition and absenteeism while at upper management level, clients demands, motivation, competition and costs are the major challenges. While studying the causes of high attrition rate, Aashu Calappa, VP-HR, ICICI OneSource, says that accountability puts employees under stress but companies are now making efforts to help their employees cope with stress because it is an occupational hazard. Prashant Chawla, COO, Integreon, a Mumbai-based KPO (2006), says that there are three types of stress an employee may experience tight deadlines, repetitive nature of the job and late night shifts. Anupama D.Raina, (2006) mentions main reasons for attrition are: health problems (43% respondents), physical strain, no time for personal life, long working hours, odd shifts (42.35% respondents), long transit time, insufficient leaves and slow growth, digestive problems (37% respondents) etc. Prof. M.Scalem & Adarsh Ravindranathan, (2006) evaluate that major factors leading to high attrition rate are: Poaching, hiring policies and HR systems, Monotony of the job, lack of career movement and growth aspirations and nature of training. R.Raman (2006) mentioned reasons for Drag Attrition as insecurities, vulnerabilities, very few chances of promotion, no scope for skill up gradation, stress, chronic fatigue, health problems, loss of personal life etc. where as for Drive Attrition are employers policy, policy for terminating the employee, no entitlement for national holidays. Ramiya.bhas (2008) tries to find out the
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online) Volume 2, Number 1, Dec - Jan (2011), IAEME
reasons for employee attrition other than compensation or salary and accordingly one of the top reasons for talent attrition is external equity of compensation. According to McKinsey & Co., the industry leaders who are setting best practices in human resource management and retention actually pay less than the laggards and are leveraging effective people management practices rather than higher compensation to keep their teams intact. This is especially true in case of large players; where they continue to employ 2,000 personnel every quarterto bring down the sourcing cost effectively. The BPO companies have tied-up with colleges to train the talent while they are doing their college degree. This has proved to be an effective model for cost reduction as well as manpower retention. Mr Anupam Prakash (2005) recommended a change in the workforce profile through a change in the education system. Mr Dan Sandhu, CEO, Vertex India (2005), felt attrition in BPOs was not 'the problem' but the output of other problems in a company. He emphasizes the importance of bringing change in the candidate's attitude to match the company's value structure. Girish Suryavanshi, Associate VP, Mphasis (2006) said that though India is still a preferred outsourcing destination, there is a need to improve infrastructure growth in the cities where BPOs have a large presence. In the light of above stated facts, the relevance and significance of current research paper is enhanced as its findings will help HR managers of BPO sector who continuously strive to maintain balance between the demand and supply of competent employees for their organizations. In order to understand the cause behind this rat race, it is necessary to understand the major challenges HR managers face due to competitive environment and their direct or indirect impact on the rate of attrition in the industry.
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online) Volume 2, Number 1, Dec - Jan (2011), IAEME
RESEARCH OBJECTIVE
To identify the factors highlighting the challenges in respect to HRM practices in BPO sector To analyze the nature of relationship between HRM challenges and demographic characteristics of the respondent.
RESEARCH METHODOLOGY
The study is based on the primary data collected by way of administering a structured questionnaire to the HRM practitioners of various BPO organizations in Delhi and NCR regions. The BPO organizations were purposely sampled from both the categories: Domestic BPOs and Multinational BPOs. The practitioners approached were of all ranks and all departments of HRM: recruitment, training, salary administration, strategy management etc. The questionnaire was sent to 150 practitioners but the usable responses received were only 120 resulting into a response rate of 80 percent.
with the various dimensions of Attrition and highlight the importance that attrition is the most important issue and a challenge for HR managers as the total Eigen value is 7.965. Factor 2: Interpersonal Relations: This challenge has four issues related to
Interpersonal Relations. All deal with the various dimensions of Interpersonal Relations 5
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online) Volume 2, Number 1, Dec - Jan (2011), IAEME
and highlight the importance that Interpersonal Relations is an important issue and a challenge for HR managers as the total Eigen value is 5.195. Factor 3: Talent Management: This challenge has five issues related to Talent Management. All deal with the various dimensions of Talent Management and highlight the importance Talent Management is an important issue and a challenge for HR managers as the total Eigen value is 4.157. Factor 4: Leadership: This challenge has four issues related to Leadership. All deal with the various dimensions of Leadership and highlight the importance that Leadership is an important issue and a challenge for HR managers as the total Eigen value is 3.310. Factor 5: Performance Management: This challenge has five issues related to performance management. All deal with the various dimensions of Performance Management and highlight that Performance Management is the one of the important issues and a challenge for HR managers as the total Eigen value is 3.007. Factor 6: Work Life Balance: This challenge has five issues related to Work Life Balance dealing with its various dimensions and highlighting the importance that Work Life Balance is an important issue and a challenge for HR managers as the total Eigen value is 2.695. Factor 7: Changing Employee Expectations: This challenge has six issues related to the various dimensions of Changing Employee Expectations and highlight the importance that Changing Employee Expectations is an important issue and a challenge for HR managers with the total Eigen value 2.243. Factor 8: New Industrial Approach: This challenge has eight issues related to the various dimensions of New Industrial Approach and highlight that the New Industrial Approach is an important issue and a challenge for HR managers with the total Eigen value 2.087. Factor 9: Compensation: This challenge has four issues related to the various dimensions of Compensation and highlight the importance that Compensation is an important issue and a challenge for HR managers with the total Eigen value 1.961. Factor 10: Succession Planning: This challenge has three issues related to the various dimensions of Succession Planning and highlight the importance that Succession
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online) Volume 2, Number 1, Dec - Jan (2011), IAEME
Planning is an important issue and a challenge for HR managers with the total Eigen value 1.7
RELATIONSHIP
BETWEEN
HRM
CHALLENGES
AND
1 2 3
Male Female Professional Non-professionals 21-25 years 26-30 years 31-35 years 36 years and above
36.66% 63.33% 86.66% 13.33% 6.66% 41.60% 35.00% 16.66% 16.66% 51.66% 25% 6.66% 5% 56.66% 30% 8.33%
Experience of Less than I year respondents in the 1-5 years present organization 6-10 years Above 10 years Total experience of respondents Less than I year 1-5 years 6-10 years Above 10 years
Out of the total sampled respondents, 36.66% are males while 63.33% are females. An analysis done on the basis of the qualification of the respondents reveals that 86.66% are professionally qualified while 13.33% are not professionally qualified. While studying the age of the respondents, it has been observed that 6.66% are very young
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online) Volume 2, Number 1, Dec - Jan (2011), IAEME
belonging to the age group of 21-25 years, 41.60% belong to the age group of 26-30 years, 35% belong to the age group of 31-35 years, 13.33% are of 36-40 years while 3.33% are of the age group of 41-45 years. On studying the experience of the respondent in the present organization, it has been observed that 16.66% have less than one year, 51.66% have 1-5 years, 25% have 6-10 years and 6.66% have been with the organization for more than ten years. On studying the total experience of the respondents, it has been observed that only 5% have total experience of less than one year, 56.66% have 1-5 years, 30% have 6-10 years and 8.33% have more than ten years of total experience in the field.
Performance Management Gender 2.95 Male Mean 3.28 Female Mean 3.16 Total Mean
Work life Changing Employee New Industrial Succession Inter-personal Balance Expectations Approach Compensation Planning Leadership Talent Management Relationship Attrition 3.11 2.82 3.25 3.25 3.2 3.02 2.82 3.23 3.52 3.12 3.12 3.17 3.55 3.5 3.14 3.09 3.33 3.51 3.12 3.01 3.2 3.44 3.39 3.1 2.99 3.29 3.52
On comparing the mean values of all the ten listed challenges within the gender groups, we find that female HR professionals perceive performance management (mean=3.28), work life balance (x =3.12), changing employee expectations (mean=3.12), compensation (mean=3.55), succession planning (mean=3.50), leadership (mean=3.14), talent management (mean=3.09) and interpersonal relationship management (3.33) more challenging while they perceive new industrial approach (mean=3.17) and attrition (mean=3.51) as less challenging. In contrast to this, male HR professionals perceive new industrial approach (mean=3.25) and attrition (mean=3.52) more challenging and find performance management (mean=2.95), work life balance (mean=3.11), changing employee expectations (mean=2.82), compensation (mean=3.25), succession planning (mean=3.20), leadership (mean=3.02), talent management (mean=2.82) and interpersonal relationship management (3.23) as less challenging.
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online) Volume 2, Number 1, Dec - Jan (2011), IAEME
On comparing the mean values of all the ten listed challenges within the qualification group, we find that professionally qualified HR professionals perceive performance management (mean=3.16), work life balance (mean=3.19), changing employee expectations (mean=3.03), compensation (mean=3.49), succession planning (mean=3.40), leadership (mean=3.13), talent management (mean=3.02) and attrition (3.57) as highly challenging while they perceive new industrial approach (mean=3.16) and interpersonal relationship management (mean=3.27) as lesser challenging. In contrast to this, HR professionals without professional qualification perceive new industrial approach (mean=3.44) and interpersonal relationship management (mean=3.44) as highly challenging and find performance management (mean=3.13), work life balance (mean=2.62), changing employee expectations (mean=2.88), compensation (mean=3.12), succession planning (mean=3.31), leadership (mean=2.88), talent management
(mean=2.81) and attrition (3.19) as lesser challenging. Table 4 Showing Means of Ten Challenges in relation to Age of respondents
Perforamce Management 3.25 3.46 2.88 2.95 3.16 Worklife Balance 3.63 3.14 3.02 3.05 3.12 Changing Employee Expectations 3 3.3 2.93 2.45 3.01 New Industrial Approach 3.38 3.6 3.31 3.35 3.44 Succesion Talent Inter personal Planning Leadership Management Relationship Attrition 3.25 2.38 2.38 3.25 3.88 3.22 3.3 3.3 3.14 4 3.02 2.86 2.86 3.12 3.07 2.9 2.75 2.75 4.05 3.1 3.1 2.99 2.99 3.29 3.52
Age of Respondents 21y-25y Mean 26 y-30y Mean 31y-35y Mean 36y and Mean above Total Mean
On comparing the mean values of all the ten listed challenges within the age groups, we find that very young HR professionals perceive work life balance (mean=3.63) and leadership (mean= 3.25).New industrial approach (mean=3.60) and
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online) Volume 2, Number 1, Dec - Jan (2011), IAEME
interpersonal relationship (mean=4.05) are the highest challenges for the senior HR professionals of the age group 36-40 years while changing employee expectations
(mean=2.45),succession planning (mean=2.70), leadership (mean=2.90) and talent management (mean=2.75) are least challenging for them. In contrast to this, young professionals of age group 26-30 years perceive as the highest challenge in performance management (mean=3.46), changing employee expectations (mean=3.30), compensation (mean=3.60), succession planning (mean=3.96), talent management (mean=3.30) and attrition(mean=4.00). In contrast to this, professionals of middle age group from 31-35 years of age find (mean=3.02), performance management (mean=2.88) , work life balance
interpersonal relationship management (mean=3.12) and attrition (mean=3.07) as least challenging Table 5 Showing Means of Ten Challenges in relation to experience of respondents in the same organization
Changing New Performance Work life Employee Industrial Succession Talent Inter-personal Management Balance Expectations Approach Compensation Planning Leadership Management Relationship Attrition 3.29 3.38 3.33 3.38 3.33 3.38 3.38 3 3.05 3.76 3.44 2.57 2.86 3.16 3.19 2.73 3.29 3.12 3.23 2.4 2.71 3.01 3.24 2.83 3.86 3.2 3.56 3.2 3.71 3.44 3.77 2.9 2.14 3.39 3.11 2.93 2.86 3.1 3.29 2.37 3 2.99 3.27 3.2 4.57 3.29 3.74 2.93 3.29 3.52
Experience in Present Organization Mean less than one year 1y-5y 6y-10y above 10y Total Mean Mean Mean Mean
On comparing the mean values of all the ten listed challenges within the experience groups, we find that HR professionals with experience less than one year in the same organization perceive work life balance (mean=3.38), changing employee expectations (mean=3.33) and leadership (mean= 3.38) as the biggest challenges while managing interpersonal relationship (mean=3.05) is the least challenging for them. For the senior HR professionals of experience more than 10 years in the same organization, while new industrial approach (mean=3.86), compensation (mean=3.71) and
interpersonal relationship management (mean=4.57) are the biggest challenge, succession planning (mean=2.14), leadership (mean=2.86) are the least challenging. The group of professionals who have been working in the same organization for 1 y-5years perceive
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International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online) Volume 2, Number 1, Dec - Jan (2011), IAEME
performance management (mean=3.44), succession planning (mean=3.77), talent management (mean=3.29) and attrition (mean=3.74) as the most challenging while professionals with 6y 10years of work experience in the same organization do not perceive any challenge as biggest as compared to their counterparts. They find 7 challenges out of 10 as least: performance management (mean=2.57), work life balance (mean=2.73), changing employee expectations (2.40), new industrial approach (mean=2.83), compensation (mean=3.20), talent management (mean=2.37) and attrition (mean=2.93). Table 6 Showing Means of Ten Challenges in relation to Total experience of respondents
Performance Management 3.67 3.44 2.53 3.2 3.16 Work life Balance 4 3.13 2.97 3 3.12 Changing Employee Expectations 3 3.31 2.67 2.2 3.01 New Industrial Approach 3.33 3.31 2.75 4 3.2 Succession planning 3.67 3.82 2.72 2.7 3.39 Talent Management 2.33 3.4 2.33 3 2.99 Inter personal Relationship Attrition 3.33 3.5 3.15 3.87 3.19 2.97 4.6 3.1 3.29 3.52
Total Experience Less than 1 Mean 1-5 years Mean 6-10 years Mean Above 10 years Mean Total Mean
On comparing the mean values of all the ten listed challenges within the experience groups, we find that HR professionals with experience less than one year perceive performance management (mean=3.67), work life balance (mean=4.00), compensation (mean=3.67) and leadership (mean= 3.67) as the biggest challenges while talent management (mean=2.33) is the least challenging for them. For the senior HR professionals of experience more than 10 years while new industrial approach (mean=4.00), compensation (mean=3.71) and interpersonal relationship management (mean=4.60) are the biggest challenge, changing employee expectations (mean=2.20), succession planning (mean=2.70) and leadership (mean=2.50) are the least challenging. The group of professionals who have total experience of 1 y-5years perceive changing employee expectations (mean=3.31), succession planning (mean=3.82), talent
management (mean=3.40) and attrition (mean=3.87) as the most challenging while professionals with 6y 10years of work experience do not perceive any challenge as biggest as compared to their counterparts. They find 6 challenges out of 10 as least: performance management (mean=2.53), work life balance (mean=2.97), new industrial
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International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online) Volume 2, Number 1, Dec - Jan (2011), IAEME
approach (mean=2.75), compensation (mean=3.25), talent management (mean=2.33) and attrition (mean=2.97).
Qualification of respondents:
Professionally qualified respondents find attrition as the most challenging while those who are not professionally qualified new industrial approach and interpersonal relationships as most challenging.
Age of Respondents:
Very young and young professionals find attrition as the most challenging while middle age professionals find new industrial approach as most challenging while senior professionals find interpersonal relations as most challenging.
Total Experience:
Professionals who have experience less than 5 years find that attrition, work life balance and succession planning are most challenging while who have experience more than 5 years find managing inter personal relations and compensation as the most challenging tasks.
CONCLUSION:
As per our current research, 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 "conducive 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 can be the driving force for the
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International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online) Volume 2, Number 1, Dec - Jan (2011), IAEME
companies to take necessary steps. HR managers need to put 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.
REFERENCES
1. The American Heritage Dictionary of the English Language, (2009) Houghton Mifflin Company. 2. The Evolution of BPO in India 2005, Price Waterhouse Coopers. 3. Carr Paul and Hartsfield Michael 2008 Attrition as an HR Challenge(The Icfai Journal: HRM Review). 4. Shank John K., Spiegel Eric A. (1998), Strategic Value Analysis for Competitive Advantage an Illustration from the Petroleum Industry, Mckinsey Quarterly, First Quarter, Issue10, pp 3239. 5. Prakash S. and Chowdhury R (2004), Managing Attrition in BPO, In search of Excellence, Cool Avenues. 6. Employee Satisfaction Survey: Key Factors that create high levels of stress2005, Data Quest, pp. 22-28. 7. Pillai Anandan, (2006)Hr issues in BPO, HRM Review, Journal of ICFAI Business School, Research Centre, Ahmedabad 21-29. 8. Raman R. (2006) Strategies to retain human capital in Business Process Outsourcing (BPO) industry Kohinoor Business School, Khandala, Working Paper . 9. Sharma Sanjeev, (2007)Retention Strategies in ITES- BPO Industry 10. Saxena Shabnam & Suneja Neelam (2008)BPO Industry in India: HR Challenges in IT-Enabled Services IMS Journal, Volume 5, No. 1 Jan.-June. 11. Survey of Global HR Challenges: Yesterday, today and tomorrow
PricewaterhouseCoopers.
WEBSITES
www.businessdictionary.com/definition/attrition.html www.sourcingline.com/resources/employee-attrition-in-india www.timesofindia.indiatimes.com/Tech/Enterprise-IT/Services-Apps/New-trends-inglobal-outsourcing/articleshow/6119450.cms www.chrmglobal.com/Articles/295/1/Role-of-HR-in-BPO.html 13
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online) Volume 2, Number 1, Dec - Jan (2011), IAEME
www.nasscom.in www.financialexpress.com/news/attrition-rate-in-bpo-companies-is-7.8-pointshigher-than-other-industries-in-india-hay-group/355924/
www.bpovoice.com Survey report: Outsourcing Challenge 2009 www.coolavenues.com/knoe/hr/s1php www.bpoindia.org/research/retention-strategies-call-center-industry.shtml www.pwc.com www.bpoindia.org/research/attrition.shtml. www.dqindia.ciol.com
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