Institute of Innovation Technology and Management

SUMMER PROJECT REPORT On ABSENTEESM AND HIGH TURNOVER RATIO IN BPOS

Submitted in partial fulfillment of the requirement of Bachelor of Business Administration (Computer Aided Management), Guru Govind Singh Indraprashtha University

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Submitted By: Name of the Student Enrollment No:

CERTIFICATE

This

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Project

Report

entitled

..................................... ............................................................. ...which is submitted by .... in partial fulfillment of the requirement of for the award of degree name in Department ...................................................... of University name, is a record of the

candidate own work carried out by him under my/our supervision. The matter embodied in this thesis is original and has not been submitted for the award of any other degree.

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ACKNOWLEDGEMENT It gives us a great sense of pleasure to present the report of the BBA CAM undertaken during Bachelor of Business Administration. We owe special debt of gratitude to Professor , Bachelor of Business Administration (Computer Aided Management), XYZ for his constant support and guidance throughout the course of our work. His sincerity, thoroughness and perseverance have been a constant source of inspiration for us. It is only his cognizant efforts that our endeavors have seen light of the day. We also take the opportunity to acknowledge the contribution of Professor , Head, Department of Computer Science & Engineering, College of Engineering, and XYZ for his full support and assistance during the development of the project. We also do not like to miss the opportunity to acknowledge the contribution of all faculty members of the department for their kind assistance and cooperation during the development of our project. Last but not the least, we acknowledge our friends for their contribution in the completion of the project. Signature: Name : Roll No.: Date :

INDEX

Title Page Certificate Acknowledgement Tables and figures Introduction Research Methodology Vision Mission Objective of the Project Scope of the Study Usefulness Of the study Methodology Data Analysis Suggestions/ Recommendation

Introduction
High rates of attrition and absenteeism are the biggest operational challenges faced by Business Process Outsourcing (BPO) companies and third party vendors in the country. Carrying out transactions over the telephone has a long history, beginning with operator services and later, reservations lines, particularly for airlines. But in the last 15 to 20 years, the introductions of information technologies and telecommunications advances have expanded the types of work it is possible to undertake, while reducing costs. Concurrently, ideas of 'service' and service relationships continue to be redefined as technology becomes increasingly ubiquitous, rendering the public more receptive to mediated service interactions. There are a variety of factors, which have led to the increase of telephone services, including the transformation of telephony by "the development of digital exchanges, intelligent telephone networks and their integration with computer data bases"; falling telephony costs and the introduction of toll-free numbers; the high degree of penetration and familiarity of telephone technology; and the ability to communicate complex information by phone in real time. In addition to technological progress and social advantages, another likely reason for the burgeoning of the call center industry in the early 1990s was a significant period of retrenchment in a number of
business

sectors, including a drive towards reducing costs and cutting staff-both of

which can be accomplished by centralizing services, reducing branch offices close to the customer, and taking advantage of lower cost real estate and labor costs in locations outside main business centers. Call centers, of course, permit all of these activities. Outsourcing centers that specialize in providing call center services for other companies are also expanding. Although most call centers in the UK are currently nationally oriented, there is a move towards pan-European call centers in areas such as hotels, travel, and computing. Still, despite its rapid rate of growth, the call center industry is relatively new. The "vast majority" of call centers in the UK have "existed for less than ten years" claims Cameron, while Michel notes that in Germany, 25% of call centers in the country were established before 1991, and 41% during what he terms the "call center boom" after 1995. A boom is perhaps an accurate

term. One estimate suggests a rate of growth between 20%-25% a year in Canada, while a 1996 Data monitor report gave a figure of 40% for call center market growth in Europe, a number anticipated to hold until the turn of the century. Similarly, as mentioned above, academic interest in call centers is also quite recent, with the bulk of reported research beginning in the late 1990s and beginning to accumulate in the last two years.

The broadest definition in the call center literature is, states "a call center or BPO is any communications platform from which firms deliver services to customers via remote, real-time contact". Callaghan and Thompson apply a similarly inclusive definition, stating that call centers may be "broadly defined as workplaces that integrate telephone and computer technologies". While these definitions usefully highlight the centrality of communication technology integration in the call center field, it leaves the boundaries of the industry somewhat ambiguous. Taylor and Bain narrow the definition by specifying the types of technologies used: "we define a call center as a dedicated operation in which computer-utilizing employees receive inbound-or make outbound-telephone calls, with those calls processed and controlled either by an Automatic Call

Distribution (ACD) or predictive dialing system. The call center is thus characterized by the integration of telephone and VDU technologies." We define Business Process Operation (BPOs) in the following way: i. ii. Employees are engaged in specialist operation which integrate telecommunications and information systems technologies; Their work is controlled by automatic systems which virtually simultaneously distribute work, control the pace of that work and monitor their performance; iii. They are in direct contact with the customer through dealing with in-bound calls, making out-bound calls or a combination of the two. Absenteeism is very high in BPOs. Employees tend to be very irregular to the duty due to various reasons. The professional counseling services to such irregular employees on one to one basis will help to bring down the absenteeism. The counselor can educate and explain the importance of attending duties to earn the salary and also to meet the organizational goals. Each individual are unique and the problem they face are also different in nature. Only the professional counselors can understand, analyze and provide long lasting solutions for the individuals. High Turnover in BPOs Industry Fundamental changes are taking place in the work force and the workplace that promise to radically alter the way companies relate to their employees. Hiring and retaining good employees have become the chief concerns of nearly every company in every industry. Companies that understand what their employees want and need in the workplace and make a strategic decision to proactively fulfill those needs will become the dominant players in their respective markets. The fierce competition for qualified workers results from a number of workplace trends, including:

A robust economy Shift in how people view their careers

Changes in the unspoken "contract" between employer and employee Corporate cocooning A new generation of workers Changes in social mores Life balance

Concurrent with these trends, the emerging work force is developing very different attitudes about their role the workplace. Today's employees place a high priority on the following:

Family orientation Quality of life issues Autonomy

This is not an exhaustive list, one can add or delete any of the below mentioned strategies. Secondly, the need of the hour is to have "right basics". Every individual is different, his needs are different, and his emotions, his problems are different.

The quality of the supervision an employee receives is critical to employee high turnover. People leave managers and supervisors more often than they leave companies or jobs. It is not enough that the supervisor is well liked or a nice person, starting with clear expectations of the employee, the supervisor has a critical role to play in retention. Anything the supervisor does to make an employee feel unvalued will contribute to turnover. Frequent employee complaints center on these areas.

Lack of clarity about expectations, Lack of clarity about earning potential, Lack of feedback about performance, Failure to hold scheduled meetings, and Failure to provide a framework within which the employee perceives he can succeed.

The BPO commission tracks employees in a centralized database as a check and balance against employee poaching. Once an individual works for a BPO, the individual is not eligible to work for another call center for 6 months. This combats high turnover rates that are present in highly saturated markets like India.

Objective of the Study

The main aim of the study is to investigate Business Process Operations (BPOs) and determine its absenteeism and high turnover ratio and how these strategies contribute in achieving the corporate objectives. The objectives of the study are the following. 1) To distinguish performance strategies within BPOs and the role that knowledge and knowledge management plays in achieving goals and competitiveness 2) To evaluate the degree of importance of knowledge management for BPOs Industry. 3) To contribute to knowledge performance research and to develop theories that may help companies to effectively implement knowledge management

Scope of the study

Defined as the process of creating, capturing and using knowledge to enhance BPOs Industry, knowledge management (KM) concerns the exploitation and development of the knowledge (both tacit and explicit) assets of a BPOs Industry. Embracing the idea generally points to furthering the BPOs Industry objectives, with the need of systems for the creation and maintenance of knowledge repositories, and to cultivate and facilitate the sharing of knowledge and organizational learning. As knowledge becomes important, its management becomes equally important as well especially for companies that operate in a global scale.

Managerial Use fullness of Study

The managerial usefulness of study address is the means to which BPOs Industry implements its System and their strategies in measuring its outcomes. As well, the study will explore how BPOs Industry utilizes System as a strategic tool in achieving the competitive advantage. The following research questions will be answered.

1) To what extent does absenteeism help in improving the competitiveness of BPOs Industry? 2) What is the System in place? What are its limitations? 3) How important is System to BPOs Industry? 4) What area of System is considered more important? 5) How does System specifically help BPOs Industry in the conduct of its business?

Research Methodology
Theoretically, this dissertation is situated within a strand of research which is concerned with how, why, and when BPOs Industry arrangements for absenteeism and high turnover ratio. It will be argued, in particular, that configurations of employment and management practices should be contingent on the function of human capital in the BPOs Industry value-adding process, such as managing organizational systems, performing specialized technical functions, or carrying out physical work. The goal of this approach is not only to describe configurations contingent on some independent variable but also to explore and explain the link between the independent variable and the dependent configurations and to make recommendations with regard to the BPOs Industry of configurations for different workforce functions.

Vision:
BPOs empowers the worlds leading organizations to maximize the benefits of the borderless economy for optimized business value.

Mission
BPO enhance their strategic capabilities by optimizing quality, cost, and critical front- to backoffice processes.

Methodology Adopted
According to the most recent, employers are losing ground when it comes to keeping workers on the job. Unscheduled absenteeism rates have risen to their highest level since 1999. What continues to be of most concern is that almost two out of three employees who dont show up for work arent physically ill. For most companies, the responsibility for managing absenteeism has fallen primarily on immediate supervisors. These supervisors are often the only people who are

aware that a certain employee is absent. They are in the best position to understand the circumstances surrounding an individuals absence and to notice a problem at an early stage. Therefore, their active involvement in the companys absence procedures is pivotal to the overall effectiveness and future success of an absence policy or program. In addition to ensuring that work is appropriately covered during the employees absence, there are a number of other critical actions that supervisors need to take to manage absenteeism. They should:

ensure that all employees are fully aware of the organizations policies and procedures for dealing with absence, be the first point of contact when an employee phones in sick, maintain appropriately detailed, accurate, and up-to-date absence records for their staff, (e.g., date, nature of illness/reason for absence, expected return to work date, doctors certification if necessary),

identify any patterns or trends of absence which cause concern, conduct return-to-work interviews, and Implement disciplinary procedures where necessary

The training of supervisors in how to best manage absenteeism should include instruction on how to conduct effective and fair return-to-work interviews. Recent national surveys indicate that these interviews are regarded as one of the most effective tools for managing short-term absenteeism. The return-to-work discussion will enable the supervisor to welcome the employee back to work, in addition to demonstrating managements strong commitment to controlling and managing absenteeism in the workplace. The interview will enable a check to be made that the employee is well enough to return to work. Measures rate that employees leave an organization [No. of Separations during Month Average No. of Employees during the Month] x 100 (Note: Define what status of employee you will monitor.

The ability of the employee to speak his or her mind freely within the organization is another key factor in employee retention. Does your organization solicit ideas and provide an environment in which people are comfortable providing feedback? If so, employees offer ideas, feel free to criticize and commit to continuous improvement. If not, they bite their tongues or find themselves constantly "in trouble" - until they leave. Talent and skill utilization is another environmental factor our key employees seek in our workplace. A motivated employee wants to contribute to work areas outside of his specific job description. How many people could contribute far more than they currently do? You just need to know their skills, talent and experience, and take the time to tap into it. As an example, in a small company, a manager pursued a new marketing plan and logo with the help of external consultants. An internal sales rep, with seven years of ad agency and logo development experience, repeatedly offered to help. His offer was ignored and he cited this as one reason why he quit his job. In fact, the recognition that the company didn't want to take advantage of his knowledge and capabilities helped precipitate his job search.

Primary Data

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.

High Turnover rates US Australia Europe India 42% 29% 24% 18%

Global Average 24% BPOs absenteeism rate from our 5% acceptable rate to 9.5% Some of the reasons are typical: fever, migraine, family emergencies and most call center agents have medical certificates for it. What do suggest for reducing absenteeism in the call center and maintain our absenteeism at 5% or lower? Allotting money for attendance incentive programs to no avail just don't get the agents' buy in. Some companies use pay incentives, some allow only a certain number of absences before a call center agent is put on probation or fired.

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

A BPO survey report by the Indo-American Chamber of Commerce and Ernst & Young says that attrition averages 40 per cent for voice and 25 per cent for non-voice services and that absenteeism ranges from 2 per cent to 8 per cent on a daily basis. The survey report, which was released at the Global Offshore Outsourcing Summit 2004 here today, says that vendors typically maintain an average employee strength buffer of 10 per cent to 15 per cent to counter these problems. The survey studies the capabilities and processes of the Indian third party BPO vendors who claim to provide world-class services to global corporations, and outlines the various challenges these vendors are facing, Our experience with global clients indicates that a cost saving is only one of the factors, and perhaps the relatively less critical one, in the evaluation of potential third party vendors. More critical to the outsourcing decision is the partnering capability of the vendor," says the report. According to the report, partnering capabilities are represented by vendor qualities such as such as process expertise and knowledge base, organizational stability and commitment to future growth, compliance with international standards with respect to business continuity, quality and security, capability to manage transition risks and ability to provide and scale-up quality human resources. Information Security certifications (BS 7799 and ISO 17799) are essential to maintain client confidentiality, ensuring end-user privacy and preventing misuse of client information (key objectives for vendors), says the report. The survey shows that 52 per cent of the respondents and 85 per cent of the large vendors have complied with the current global security standards. Some of the large vendors in the sample have multiple security certifications. Service Quality certifications (ISO 9000, COPC, Six Sigma and eSCM) are critical for companies. Partnering involves both service capabilities and an ability to adapt to the client's culture, collaboration with the client to mitigate outsourcing risks, and demonstration of flexibility in engagement models to meet the client's need for management control over the outsourced processes. The survey states that 62 per cent of the respondents have participated in business case development and transition planning for offshore outsourcing.

To facilitate the client in maintaining process control over outsourced processes, 17 per cent of the vendors operate out of a near shore facility while 26 per cent said they were open to this option required by the client. To provide the client with better management control over outsourced processes, the Complete Outsourcing Model and Build Operate and Transfer (BOT) model evoked considerable interest among the vendors. While only 13 per cent of the respondents have actually entered into BOT contracts, 52 per cent expressed a willingness to enter into such deals. Companies are extremely concerned about business disruption. Recognizing this requirement, 90 per cent of the respondents have a Business Continuity Plan in place. Over 78 per cent of the vendors have service facilities in more than one location, while 26 per cent have facilities at overseas locations.

Analysis of the Study

The main direct impacts of absenteeism on productivity are: 1. Time spent by members (others) waiting for replacements. 2. Time spent moving replacements to and from other work locations. 3. Lost time by supervisory personnel in reassignment of work activities and locating Replacements. The study team estimated that, on average, these direct effects result in a total of 12 man-hours of paid time wasted, for each worker absent. Thus, each 1% increase in daily absenteeism produces a 1 1/2% increase in labor costs, as illustrated by the following computation for a hypothetical 100- man job: Added cost Non-productive man-hours Due to 1% = = absenteeism Productive man hours if no absences 1 man absent (1% x 100 men) x 12 man hours = 12 = 0.015 = 1 1/2 % 100 men x 8 hours 800 Or a 15% increase in direct labor cost for 10% absenteeism. Therefore, a reduction in Average absenteeism from 10% to 5% would decrease labor costs by 7 1/2 %. For turnover, the principal cost effects are: 1. All of the absentee-costs plus: 2. Payroll and clerical (administrative) costs associated with terminating and hiring. 3. Workers non-productive time (portions of the first and last day). 4. Disruption of other workers on the job site. The study team estimated that these effects, on average, result in 24 man hours of paid time wasted for each resignation. 1,560 terminations (quits plus firings, not including reductions in force), yielding the following Statistics: Turnover rate = 1560 terminations = 4.5 or 450% for total job 350 man/day Turnover rate = 450% x 253 working days/year = 253%/year per year Added cost 1560 terminations Due = non-productive man-hours = x 24 hrs lost/term. = 0.029 = 2.9% to turnover productive man-hours if no 350 men x 8 hrs/man turnover day x 450-workdays

Thus, reducing the 253 % 1 year turnover rate by one-half would have decreased labor costs by About 1 1/2 % The evidence indicates that there are steps available to contractors and owner management to Substantially reduce the levels of absenteeism and turnover in construction. If one assumes that an absentee rate of 10% and an annual turnover rate of 250% can each be cut in half a reasonable assumption the computations presented above indicate there would be a savings of about 9% in direct labor costs with the lion's share attainable by improving worker attendance. Many indirect effects not considered here would further increase the potential savings.

QUESTIONNAIRE

Question Corporate Plan/Department Plan Who has ultimate responsibility for managing absenteeism? Is there a Corporate Champion? Is there a section within the Corporate Plan that states that a key goal is to reduce employee absenteeism? Is the reduction of absenteeism, a key goal within the Departmental Plan? Is this objective set out in the Personal Development Plan of the Head of Department and his/her managers? Are targets set and how is this monitored? Policy Does an absence policy exist? How widely is it publicized? Does this policy include the roles and responsibilities of staff? What are the trigger points? How is absence reported, for example, on the first day of absence does the employee contact HR or their Line Manager? What happens then? Recording Who records the absence and how? Is this process consistent? How is duplication avoided? The Absence Process Is there a defined process? Is the process legally compliant? What is stated in the employment contract? Does the organization undertake preemployment screening? Where the potential employee has a history of high levels of absence is this recorded and taken into account prior to appointment?

Yes

No

N/A

Comments

Question Certification Is a standardized form used to record absence stating the reason, length of time and condition? At what point is the self-certification form completed? After how many days is a doctors note required? When is the matter referred to Occupational Health? Payment What are the qualifying periods and amounts, which are paid? Does management have a say in this? Long Periods For long periods of absence or recurrent absence, does line management, HR or Occupational Health get involved? Is a return to work interview undertaken? Return to Work When staff return to work are they offered restrictive duties or is there a phasing-out period? Disciplinary Procedures Is there a Dismissal Policy in place to deal with recurring and frequent absence? Are staff that have excessive absences subject to sanctions? Is this contained in the contract of employment?

Yes

No

N/A

Comments

Question Training Does the organization have training regarding positive absence management? Who organizes this training? Is there a Stress Committee? Does the organization hold stress workshops? Is a confidential advice line provided to staff? Is confidential counseling available where stress or harassment is identified as a problem? Management Information What kind of information is reported to Senior Management? Do reports go to meetings of the Personnel Committee and to the Board? Can trends be identified and is benchmarking undertaken in comparison to other sectors? Do the reports benchmark departmental absences throughout the year? How does management deal with departments who exceed sickness targets? Are departments that have reduced their levels of sickness rewarded and how is this done?

Yes

No

N/A

Comments

Suggestions & Recommendations

A variety of steps have been found to be effective in decreasing absenteeism and turnover ratio in BPOs jobs. Those which are most appropriate will vary with the circumstances of each job its size, duration, remoteness, type of work, demand in the locale, labor practices in the area, etc. Serious consideration of the following actions is recommended with recognition that some may already be in effect and others may not fit a given job situation: Screen applicants. Examine work histories. Reject those who are poorly qualified or who have a history of job hopping. Keep attendance records for all employees. Monitor to identify trouble spots. Establish a clear Policy of firing chronic absentees, and communicate this to all employees when they are hired. Maintain good communications with employee. Sense worker moods, understand their concerns, provide feedback from management, and prompt action where appropriate; to show that worker concerns are heard. Bulletin boards, newsletters, tool-box meetings, and suggestion boxes are all helpful, but face-to-face communication on the job by top contractor supervision is indispensable. Use the latest behavioral-science techniques for organizational effectiveness, including: Train supervisors in motivation and interpersonal skills.

Create small work groups with as much autonomy as possible. Communicate goals for the organization and for each work unit (including attendance Goals) Keep craftsmen informed of how their accomplishments compare with the job's goals: Be creative in developing incentives for employees to stay with the job and have good Attendance. Emphasize attendance rather than absenteeism. Bumper stickers, job posters, and Helmet decals can be used to stimulate interest. Awards to each individual after periods of Perfect attendance by an entire crew can develop peer pressure to improve attendance. Bonuses to workers who remain until job completion may be helpful in reducing turnover during the critical final stages To make periodic reports on absenteeism and turnover mutually develop goals for improvement and actions to achieve them. Encourage and support innovative efforts by team leader in communicating with and Motivating the workforce. Assure that contractors have well-planned and well-executed safety programs. Mutually with team leader, identify and alleviate irritants ("dissatisfies") within the control of Owners that may contribute to absenteeism and turnover among contractor employees Examples: parking lots in disrepair or unreasonably located, undue limitations on smoking, Unnecessary limitations on contractor's starting and quitting times, inadequate areas for eating lunch, and insufficient facilities for checking in and out. Recognize that active involvement in discouraging absenteeism and turnover is in their Self-interest. Modify referral procedures to discourage absenteeism and turnover. Example: For a Pre-determined period (say, 30 days) prohibit referral to another job of any worker who has Quit a job without good cause or who was fired for excessive absenteeism. The survey suggests that most workers would support such action so long as it is administered fairly and equality.

References/ Bibliography
www.scribd.com/ www.auditnet.org/docs/ICQs/Absenteeism www.counselingoutfitters.com/vistas www.balfronhigh.org.uk www.encyclopedia.com www.bpoindia.org/research/understanding-hr-issues.shtml www.thehindubusinessline.com www.sourcingline.com www.articlesbase.com/.../bpo-workforce-absenteeism