CHALLENGES FOR THE INDIAN BPO

Article by -  Niharika ,
Faculty Member ,
ICMR Case Studies and Management Resources.

Tackling the attrition problem...

The industry players are trying out all the tricks in the book to tie down their employees and keep them locked in a safe.

Within the country, it was the ITES industry which recorded the highest growth of 14%. The variable pay component varied in the range of 15-70%, which is exhorbitant, to say the least.

All these measures are at the organizational level. At the industry level, companies have tried to get into informal agreements with competitors to avoid poaching. Though these agreements have no legal sanctity, they are based on mutual faith of the companies. For example, GE, HSBC, Nipuna, Microsoft, etc. informally agreed that they would not recruit someone who has worked for less than a year with his employer or someone who has switched 3 jobs in 2 years. Similarly, Tracmail, Infowavz, Transworks, Epicenter and Global Telesystems have all entered into an informal understanding to arrest poaching.

In spite of all these measures, the attrition rates have remained high. All these attempts by the employers have resulted in only partial success. What should companies do to curb this unhealthy trend? Experts feel that appropriate staffing strategies and managing employee morale are the key areas. Recruiting the right kind of people not only at the entry level but also for the middle management level can be a big contributing factor. Any fresh graduate in need of a job would say that working during odd hours and adapting to a new life style is not a problem, but when it actually comes to adapting to a completely different way of life, they find it difficult to reorient themselves. Adequate care should be taken in choosing and employing candidates in the entry level positions. Companies should also be willing to invest in training employees to take up higher responsibilities as team leads and managers. A strong middle and senior management helps in arresting attrition at the lower levels and consolidates the organizational culture and character.

Another important area of concern is the limited growth potential for an employee in this industry. Organizations should concentrate on individual career growth of employees and succession planning in the organization. Planning for growth both vertically and horizontally can bring a little reprieve to the employees. Horizontal growth can be in the form of promoting the employee from simple to more complex processes within the organization. This will enhance the learning of the employee and make him "feel-good".

The 'International' issue

The latest addition to the basket of woes of the BPO players is the hue & cry on outsourcing to India by the labor unions in the UK and the politicians in the USA. In the UK, the call center industry employs nearly 800,000 British workers and is a vital part of their economy. Labor unions are playing the card of 'patriotism' to stop UK based companies from outsourcing their back-office operations to India. The fact that it is election time in the USA and perhaps in the UK too, has added fuel to the fire. The media, the unions and the politicians in these countries have jumped on the 'backlash' bandwagon and have been making strong statements on outsourcing to India. However, there have been some rational-thinking bigwigs who have been opposing this backlash. The issue is expected to cool down slowly, with the elections getting over and better business sense prevailing over the outsourcing companies. The Indian BPO industry can also launch a friendly and soft campaign against the backlash, explaining the advantages of outsourcing, especially to India.

The threat of competition

Many competitors like Philippines, Ireland and even China are expected to catch up with India in the future, but they have their own constraints. China, which is being forecasted by some as the biggest threat to the Indian BPO industry, for example does not have English-speaking populace who can meet the requirements of a primarily English clientele. India outruns all its competitors when it comes to availability of quality services at the lowest possible rates. However, this does not mean that the Indian BPO industry can sit back and relax. It needs to gear up and prepare itself to face the competition. The strategy of the Indian industry should be to go up the value chain and offer more specialized services that can create a special position for it in the global outsourcing industry. It should not completely bank on the low-end services as they are cost-based and can be transferred to any country that offers the same services at a cheaper rate.

To conclude...

The Indian ITES industry should consolidate its position in the business of outsourcing by strengthening its domain knowledge and becoming more specialized in terms of the services offered. It should aim to go up the value chain without restricting itself to low-skilled jobs. It has to continuously strive to maintain its position of competitive advantage over other countries in the fray, in terms of low costs, quality people and conducive environment. It should also realize that unhealthy practices within the Indian industry can affect its competitiveness in the global BPO arena and therefore curb such practices. With the international business world eyeing India as a hot ITES destination and the Indian industry gearing up to bring in a new revolution, India is bound to become the BPO and ITES hub of the world.