2009

SUBMITTED TO: PROF. ABHAY

ANAND TIWARI

IILM Institute for Higher Education,

Gurgaon
4/21/2009
 ACKNOWLEDGEMENT

We would like to acknowledge and extend our gratitude

to the following persons who have made the completion
A STUDY ON EMPLOYEE
of this project possible:
ATTRITION
First AND
of all we would like RETENTION
to thank IN
our Faculty Coordinator
Prof. Mr. Abhay Anand Tiwari for his great help. Being
our Project Coordinator he provided us very necessary
and important guidance and support until the submission
of our project.
Secondly, we would like to thank all our Seniors and
Friends for giving us proper guidance and support for
preparing the Project.
Again we would also like to thank ourselves (all our
group members) for their dedicated effort to make this
project a success.
Lastly, we would like to be very

SUBMITTED BY: thankful to the all the

Group no. employees of IBM-Daksh for
2(OXYGEN)
GROUP MEMBERS: their good help to provide a
Abhay Singh
Amyn Sayani
Anirban Das
Jasmeet Kaur
Jnana Ranjan Pati
Pratibha Sharma
Vikash Verma
better coordination and control among all the activities
related to completion of the project.
Therefore we are very much obliged to above people for
their continuous effort in making the whole Project
Activity very much learning and Interesting.
GROUP-2
(OXYGEN)
SECTION-I
PREFACE
This report provides an opportunity to students to learn and
expand their knowledge on employee attrition and retention in
overall all organization especially in BPO sector. They would be
able to know the exact reason behind this, methods taken to
tackle it and hence take necessary steps for it. The report also
helps the student to devote his/her skill to analyze the problem to
suggest alternative solutions, to evaluate them and to provide
feasible recommendations on the provided data.

The research is on the topic “A STUDY ON ATTRITION AND

RETENTION OF EMPLOYEES IN BPO SECTOR”. Although we
have tried our level best to prepare this report an error free
report, every effort has been made to offer the most authenticate
position with accuracy.

DECLARATION

We hereby declare that the following documented Project Report

titled “A STUDY ON ATTRITION AND RETENTION OF
EMPLOYEES IN BPO SECTOR” is an authentic work done by us.

The Study was undertaken as a part of the course curriculum of

MBA Full Time Program of IILM institute for Higher Education,
GURGAON.
 GROUP NO: 2
OXYGEN
SECTION-I

CONTENTS
Abstract…………………………………………………………………………………………
………………………………………7

Introduction……………………………………………………………………………………
…………………………………….8
Purpose of the
study………………………………………………………………………………………………
……………..8

Employee
Attrition…………………………………………………………………………………………
……………………..9

➢ High attrition rate: A big

challenge…………………………………………………………………………….9
 Major worries for the
industry……………………………………………………………………….11
 Costs due to person
leaving……………………………………………………………………………
12
 Benefits of
attrition…………………………………………………………………………
……………..14
 Analyzing the
impact……………………………………………………………………………
…………16
➢ Managing the
problem…………………………………………………………………………………
……………17
➢ The attrition
problem…………………………………………………………………………………
………………17
➢ Addressing the
problem…………………………………………………………………………………
………….19
➢ About the BPO
industry…………………………………………………………………………………
…………..20
➢ Causes……………………………………………………………………………………
………………………………….21
➢ Analyzing cause of attrition using a multilevel
approach…………………………………………….22
 Maslow’s hierarchy of
needs………………………………………………………………………….22
 Recommendations……………………………………………………………
……………………………..25
  The win-win
model……………………………………………………………………………
……………25
➢ Reducing
attrition…………………………………………………………………………………
……………………..28
➢ The challenge of employee attrition-How bad is
it? .......................................................28
➢ Reducing end of career
attrition………………………………………………………………………………….
29
➢ Reducing early career
attrition…………………………………………………………………………………
….29
➢ Factors to consider in the cost of
attrition……………………………………………………………………30
➢ Is attrition important to your
organization…………………………………………………………………..31
➢ Is attrition always bad for an
organization? .....................................................................34
➢ Attrition in Indian BPO
industry…………………………………………………………………………………..
35
➢ Tackling attrition head
on…………………………………………………………………………………………
….37
➢ What is the attrition rate in the ITes
sector………………………………………………………………….39
➢ BPO attrition-The challenge of the
year………………………………………………………………………40
➢ Why is attrition impacting on market
growth? ...............................................................41
➢ Why are BPO providers experiencing higher attrition
rates? ..........................................42
➢ What can BPO providers do about
it? .............................................................................43

Employee
Retention………………………………………………………………………………………
…………………..45
➢ 5 major things involved in retention
 Compensation………………………………………………………………………
…………………………..46
 Growth and
career…………………………………………………………………………………
………….47
 Support………………………………………………………………………………
……………………………..48
 Importance of Relationship in
employee……………………………………………………………..49
 Organizational
environment………………………………………………………………………
………..50
➢ Managing employee
retention…………………………………………………………………………………
.51
➢ How to increase employee
retention………………………………………………………………………..52
➢ Employers and their key drivers to attract and retain
talent………………………………………54
➢ Retention
bonus……………………………………………………………………………………
………………….54
➢ Hire right
talent……………………………………………………………………………………
……………………56
➢ Manager role in
retention…………………………………………………………………………………
……….57
➢ Importance of employee
retention……………………………………………………………………………58
➢ What makes employee
leave? ......................................................................................59
➢ Employee retention
strategies………………………………………………………………………………
….59
➢ Innovative retention strategies for Indian
BPO…………………………………………………………61
 ➢ Retention
myths……………………………………………………………………………………
………………….66
➢ Retention success
mantras…………………………………………………………………………………
……..68
➢ 10 reasons why organizations are not able to retain
employees…………………………………74

Research: The critical

findings…………………………………………………………………………………………
…….75

Summary…………………………………………………………………………………………
…………………………………..79

Analysis of Data and

Questionnaire…………………………………………………………………………………
……80

Limitations of the
project……………………………………………………………………………………………
………….88

Suggestions……………………………………………………………………………………
………………………………………88

Conclusion………………………………………………………………………………………
………………………………………89

Bibliography……………………………………………………………………………………
………………………………………91

Appendix…………………………………………………………………………………………
……………………………………..92
 ABSTRACT
Turnover is of considerable concern to managers because it
disrupts normal operations and necessitates the costly selection
and training of replacements, the costly hiring and training the
new employee to regain the lost customer and supplier contacts.
Employee retention is obviously one of the most important
challenges in organizations’ ability to keep employees in the
organization and avoid unwanted turnover. Employees who have
relatively low levels of satisfaction are indeed the most likely to
quit their jobs. In addition, organizational units with the lowest
average satisfaction levels tend to have the highest turnover
rates. Not many companies seem to understand and focus on
retention until it's too late.

Key employee retention is critical to the long term health and

success of company business. If companies are losing critical staff
members, they can safely bet that other people in their
departments are looking as well. Managers readily agree that
retaining the employees ensure customer satisfaction, product
sales, satisfied coworkers and reporting staff, effective succession
planning and deeply imbedded organizational knowledge and
learning. How to create an environment that makes employees
want to stay. It's not always about money. Recognition programs,
feeling valued and the employees' senses of worth to their
employers are some factors in motivation. For a variety of
reasons, managers also are interested in the satisfaction of
members of their organization. It can affect employee
commitment to the job and organization, employees’ willingness
to do more than is required, their creativity or flexibility. It can
also affect absenteeism and turnover.

Employee turnover or resign could disrupt normal operations and

necessitates the costly selection and training of replacements.
Reducing employee turnover required the management efforts of
companies.
 INTRODUCTION
Attrition is a universal phenomenon and no industry is devoid of it, but the
degree fluctuates from industry to industry on the basis of their capacity to
manage low attrition rate. Attrition not only affects the quality of service, but
also leads to increased expenditure on training and development, thereby
affecting the overall organizational performance. Several companies are
trying out different ways to manage low attrition rate. Be it an IT sector, or
BPO, they are trying out their ways to manage lower rate of attrition by
creating a healthy work environment, work-life balance, corporate brand
building and so on.

There is a famous Chinese proverb which says that

“If you want returns for 1 year, invest in crops.”
“If you want returns for 10 years, invest in trees.”
“But if you want returns for 100 years, invest in people”

Yes, it is the people who hold the attraction in today’s highly competitive
world. With increasing attrition levels, it is necessary to have creative
retention strategies.

PURPOSE OF THIS REPORT

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