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The aim of the report is to identify the major challenges and try to offer feasible solution / suggestion to the industry. This report will specifically look into
External and Internal challenges faced by the industry (SWOT Analysis).
It will try to determine the challenges faced by frontline officers (Associates) and the management team.
Once they are identified we will analysis how these factors are affecting the Industry and to what extent.
Finally we based on our recorded observation we will try offer suggestion to the industry which could help them overcome these challenges.
This research will consider both primary and secondary data collected. Later on we will analyse the secondary data collected through questionnaires / interviews against the primary data. This will help us to get precise results.
Understanding What BPO is?
Companies that are unable to manage their important or unimportant functions or applications could be seem hiring or outsourcing their tasks to third party firms to manage these functions by the influence of their knowledge, technology or skills. This business process outsourcing influences the important and unimportant functions of a business to shift to a third party vendor, which would be adept at handling those tasks, thereby reducing their burden. Outsourcing is termed as offshore-outsourcing if the third party vendor is located in another country. The theory of outsourcing itself dates back to the previous decade and is not recent emergence. Outsourcing existed in the past and was mainly confined to the manufacturing industry, during the prime stage of technology-transfer and during the final phases of a product life term. Many companies outsource their tasks or functions because of reasons such as cheap labour, reduction in infrastructure costs and other additional benefits. Even though BPO companies are proficient in handling these functions, everything is not all well for them. Today, BPOs are facing a new challenge that of employee turnover, which would tip the balance of providing quality service to the customers. Prelude
Preliminary Literature Review
According to Deery and Kinnie (2001), the world economy is transferring itself from the out-dated industrial production economy to an economy which is more customer focussed and offering knowledge-based service. call centres with the ability to handle faxes, letters and emails, also known as contact centres play an essential role in today's economy and so they are increasing in size and numbers as well (Barnes, 2001; Deery and Kinnie, 2004). Every customer service vendor, in order to dominate in the market, try to squeeze out the best of their abilities to provide the finest customer experience to their clients and customers for building a strong relationship with them, thereby adding brand image to themselves. This would also help them to establish a launching pad for venture into newer markets. As a result, many companies bring out their own division of contact centres or outsource it to a third party BPO company for delivering proper customer service and at the same time being competitive as well (Crome, 1998). Therefore, this type of service economy creates huge job opportunities and has further potential; ten million customers use the phone banking facility and to cater to these needs the demand for customer service agents is increasing a rapid pace (Forsyth, 2004).
Indian BPO Industry & Attrition
The idea of "contact centres" or in other words "Business Process Outsourcing" BPO has been rapidly developing in Asian countries like Philippines and India. The service industries in these countries are showing an astronomical growth over the last ten years (Chengappa and Goyal, 2002; The Economic Times, 2005). Some of the factors influencing this increased growth and expansion include the rapid development of the software/IT field and the general access to quality education and skilled talents. It has also been suggested that outsourcing saves upto 50% of the total costs (Chengappa and Goyal, 2002, Saini and Budhwar, 2004, Ramchandran and Voleti, 2004). According to the Indian news media The Economic Times (2005), India has become one of the preferred destinations for companies outsourcing jobs from developed countries like UK, USA, Australia and others. NASSCOM has also suggested that more than 400 companies from the fortune 500 list have their own captive units for customer service or they may have outsourced some of their businesses to third party firms having contact centres. Consequently, India has nearly 45% of the total outsourcing of organizations worldwide. It has been calculated that if the companies in UK outsources 1000 jobs to India, then the country would be saving around £10 million per year and the same can be applied to the USA where outsourcing 1000 jobs can save costs up to $30 million a year (The Economic Times 2005). It would seem that this industry would have an annual forecasted growth rate of 50% and therefore has remarkable potential in developing countries like India (McKinsey, 1999; NASSCOM, 2001; Shah and Bandi, 2003; The Economist, 2004, Sifynews, 2005).
Management of human resources is very crucial for the organizations stability and survival in the present economic situations (Schuler and Jackson1999; guest et al 2003).In India, management of Human resources is very critical because of its increasingly fast sector growth and the impact it has on the global economy because of its connections with various national and international organizations. However, it could be seen that many of the BPOs established in India have begun facing newer challenges. Many employees experience stress due to workload, performance issues, unable to meet client targets etc. as a result, workers are mostly dissatisfied with their jobs giving rise to high rate of attrition, even catching media attention (Walletwatch,2003; Singh,2005).
According to Zarling (2006), many BPOs have conveyed of a dearth of talented people. According to a survey of Wall Street Journal and Society of HRM, it was also determined that nearly 35% of professionals are looking for a new job and 40% are inertly on job hunt. Due to improved job markets and fluctuating demographics, many organizations are shifting their focus on employee retention (Fredric, Finnegan and Craig, 2004). According to Bond & Smith (1996) and Earley & Gibson (1998), Organizational culture such as job satisfaction, commitment, motivation of workers, performance, teamwork as well as employee turnover influences organizational behaviour. Therefore it becomes important for the organization to recognise the factors that are influencing the rate at which they gain or lose their employees. Also, they should discover ways to decrease costs involved in employee selection and training by increasing productivity of the entire organization.
Whenever a worker is not satisfied with his or her current job, they are likely to quit their existing job, if the find a new one (lee et al, 2004). This assumption is taken into account for the employee turnover model. As a result, many employee turnover models are having commitment and job satisfaction as its key focal point (march and Simon, 1958).However, some models (Mobley, 1977; Porter & Steers, 1973; Price, 1977) have additional variables like "employee's expectation from the job, likely benefits seen by an employee to quit an existing job, organizational structure, alternatives available in the market, ease of movement".
"It is always critical to define a problem or an objective in order to set a direction for the successive phases of a research" (Burns et al 1995). What Burns is implying is that in order to easily design the plan of action, we should develop its objective. Here, we will be discussing the procedures learnt to find a solution to this research problem. For reaching the objective of finding a solution for the attrition problem in Indian BPO industry and the hurdles we would face during this process, we would be focussing more on the approach used to reach the objective. Identifying and analysing the key factors linked with excessive employee turnover rates in Indian contact centres would be the main objective of this study due to its direct impact on the world market.
Primary & Secondary data are two accessible sources for data collection. This research work includes both the aspects of data collection for the presentation & validation of the topic. Internet, official websites such as NASSCOM, articles, books & journals are the source of secondary data collection. It is essential for the comprehensive understanding, with reference to the research topic and at the same time facilitates response to the research question. After a comprehensive understanding & availability of adequate data on research topic, as a researcher it was desired to gather empirical data so as to review the present state of research topic & analyze the understanding about the topic. The process of gather empirical data is referred to as primary data collection. It can be gathered through interviews, questionnaires, focus groups & observations. Bearing in mind the exploratory nature of study the primary research will be questionnaire based approach. The focus is on BPO industry in particular because this industry is one of the few industries in a growth stage in many parts of the world, including India (Batt, Doellgast & Kwon, 2004; Deery & Kinnie, 2004; Morrell, 2006; Paul & Huws, 2002). In India average employee turnover rate in BPOs is approx.31% (Kelly Services, 2004; Roy, Sharma & Bhushan, 2004). The survey is designed in way, which will enable to validate the literature with the current scenario in the industry. The fusion of two data sources enabled to present personal view & obtained results in a better way.
In this section the data collected from the primary research will be analysed and the results will be discussed later on. The discussion will try to validate the literature collected for the secondary research against the data collected from the questionnaire i.e. primary research. This will help to cross check the major reasons for high attrition rate in Indian BPO sector. To make sure that the data presented is from a trustworthy source all the contemplations and care will taken.
Marshall (1998) suggested that management research has four aspects & all the four aspects have distinctive objective. The four aspects are: Exploratory, descriptive, evaluative and predictive research. For this study, an "Exploratory" research method was taken to study Indian service industry (BPO). The core reason of choosing "Exploratory research" was because it helps to identify why problem or a certain challenge exist and allows exploring root cause of it. In this method the information is gathered informally and in a structured format (Burns& Bush 1995). After the identification of the problem, it enables the investigator to investigate the source of problem. The approach of scanning the root cause of the problem, instead of its effects enables the researcher to develop recommendation in order to combat the problem at hand Churchill (1976).
Design of Questionnaire
Based on various turnover models & experience with the industry, a questionnaire will developed. This will cover issues related to working conditions, pay and incentives, job enrichment, customers, health, relations with colleagues, commitment level, performance appraisals and career development. All the statements relating to employee turnover, and intent to turnover, will be considered.
All the questions in the questionnaire will be close ended. The questionnaire design is kept simple, straight forward & it is ensured that no industry based jargons are used so that a layman can understand & respond to it. This increases the probability of collecting genuine & precise data from the participants. Moreover, to increase genuine results the focus was to ensure that the identity of the participants or organization is not disclosed, as this research is anonymous questionnaire based.
The questionnaire-based study will be conducted with five hundred "on-floor" or "frontline" employees, managers, trainers & HR personals across six call centres. The firms included in the research are global outsourcing leader located in India which established their operations in India after 2000. Most of these units are based in and around New Delhi (NCR Region), the capital of India.
All the participating respondents are employed in the firms that serve overseas clients. The major focus will be on the "frontline" representatives & team managers. The reason for choosing them will to get unbiased view of their overall satisfaction with organization and to dwell the intentions for the turnover., many new-hire employees leave during the training or just after that, therefore their trainer's views are critical to the evaluation process and hence, training teams will be considered. The managers & HR personals provided the views on operational challenges that contribute to high employee turnover rates.
The empirical study reflects & analyze on the responses collected from participant. Finally, a comprehensive result of primary data is collected analyzed against the literature to present the major factor leading to high employee turnover rates in Indian BPO industry. Primary research is important to validate the various turnover models studies. The primary data collected through questionnaires and validates the determined result i.e. root causes of attrition in Indian BPO industry against the empirical literature collected through secondary data. The results will present numerically as well as graphically in the form of pie charts.
Limitation of Research:
There are some limitations attached to the primary research. The questionnaire is emailed to participants and their interest in questionnaire is crucial, else the responses will be vague in nature. It could again be possible that adequate number of responses has not been able to be collected; due to various factors such lack of interest, time & adequate knowledge of industry as a participant could be a fresher. This can eventually reduce the sample size. The greater sample size provides a clearer picture. Other limitations could be experience of the participants, which may vary from individual to individual and can lead to assorted results. It is also possible that certain aspects related to the topic which could have make a difference to this research were missed and have not been included in the questionnaire.
It will highlight the major factors impacting the industry based on primary and secondary research. This will also include qualitative and quantitative aspect of research. In this section I will try to discuss all the questions formulated within the questionnaire and results obtained. It will be an in depth analysis of the results obtained and importance of the question.
This section will underline various measures that an industry can take to minimise the impact of challenges. The result of the data collected, will help us to formulate the suggestions for the industry based upon various employee job satisfaction model, which I will be studying during my primary research.
Turnover can be a matter of uneasiness, especially in todayâ€Ÿs business world (Zarling, 2006). It has been found that the costs associated with turnover, which includes recruiting, training and other productivity losses could be more than 5% of the entire organizationâ€Ÿs running costs (Waldman, Kelly, Aurora & Smith, 2004). The significance of turnover is also highlighted in the broad research done on employee turnover in organizations (Hom, Griffeth & Sellaro, 1984; Hom & Griffeth, 1991; Mobley, 1977; Price, 1977; Steers & Mowday, 1981). It can be seen from many turnover models that displeasure with the current job and the availability of other jobs are the chief reasons for turnover. Therefore I consider it as great questions which still need to be addressed in developing countries. The outcome will not only give a bigger view of the picture but will also help us to find answer to the arising questions.