Attrition and Retention in BPO sector

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 First of all we would like to thank our Faculty Coordinator ATTRITION AND RETENTION IN of this project possible:

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: Group no. 2(OXYGEN) GROUP MEMBERS: Abhay Singh Amyn Sayani Anirban Das Jasmeet Kaur Jnana Ranjan Pati Pratibha Sharma Vikash Verma

thankful to the all the employees of IBM-Daksh for their good help to provide a

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

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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 

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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

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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