Slowdown cools attrition in outsourcing industry4 min read . Updated: 11 Nov 2008, 12:45 AM IST
Slowdown cools attrition in outsourcing industry
Slowdown cools attrition in outsourcing industry
Bangalore: First they tried bonuses. Then award programmes, and long-term planning for career. But the US financial crisis has helped Indian outsourcing firms do what they couldn’t quite do on their own: get employees to stick around.
Business process outsourcing (BPO) companies have struggled for years with a labour pool largely defined by young workers who hopped from one employer to another, and stayed with one, on average, for only 11 months. But that was before several of the world’s largest banks collapsed, the credit markets froze, and people started to worry more about whether or not they had a job than how good a job it was.
The BPO industry’s churn rate has come down below 20% in the third quarter, down from 35% in 2007, and the low 20s earlier this year.
As call centre agents and other outsourcing workers stay put, companies are cutting their recruiting budgets, scaling back or refocusing training efforts and agreeing that the frenzied wooing of employees is a thing of the past. “There are lesser jobs on the job market, but there is also more maturity in the job market," says Samir Chopra, president of the Business Process Industry Association of India. “They would leave for a few hundred rupees’ increment, or a few whimsical perks. Now, they are more stable with the general state of the economy," he says.
Attrition occurs in different forms, and is calculated in different ways, so statistics are often difficult to compare. The bulk of call centre employees simply choose a day to stop showing up, but a smaller minority serve out a notice period. Nina Nair, who heads human resources for the BPO 24/7 Customer, Inc. says she has seen a significant drop in numbers of the latter, but hasn’t yet seen the same kind of decline in the number of so-called “no-shows".
“The number of no-call, no-shows should come down, and that’s where the positive impact will be," says Nair, who estimates that the company’s attrition rate hovers around 38-40%, but that voluntary resignations have come down 8 percentage points in the past few months.
The slowdown on attrition has made some internal development goals easier to fulfil. Genpact, for example, Mehta says, set a target for itself to fill 80% of new roles through internal promotion, a goal that is easier to reach when employees are staying with the company long enough to rise through the ranks. “Clearly, slowdown is a good thing in attrition," Mehta says, “but we also have fewer positions to fill. Eighty per cent is ambitious and we’re doing well."
BPO company Convergys Corp. has also used the slowdown to move more employees into new mid-level positions within the organization. “At last year’s (attrition) level, we would have hired more from outside," says recruiting director Ashutosh Sinha. “We wouldn’t have that luxury to move people internally."
Convergys, which has been expanding amid the downturn with new business lines, including work for financial companies counselling mortgage defaulters in the United States on how to pay off their debts, is also feeling the flip side of low attrition—a tough environment to recruit. The company planned to hire around 2,500 agents between September and December, which is more than double the amount the company has ever recruited in the past within the same time frame, Sinha says. “It has forced us to add more budget to advertisements, vendor costs, the cost of referrals," he says, “and right now we are actually seeing no let-down on those costs."
In order to recruit in an environment where employees aren’t as likely to move around, the company is trying out things it hasn’t in the past, including television advertisements, on channels such as MTV and Times Now, incentives for team leaders to promote referrals within their team, and training sessions for candidate that didn’t make the cut on the first try. “The stretch in my team is huge," Sinha says. “People are not job-hopping across companies so easily, so we are doing more to give them confidence that we are giving them a secure job."
Since agents are staying with their current employer, many outsourcing firms are turning more to campuses for hiring. “We’re getting a whole lot of people coming in for employment," says 24/7’s Nair, “and most are youngsters looking at taking up a job with a BPO."
The decrease in attrition does have a downside, since attrition is often considered an easy way to get rid of low performers. Most don’t expect attrition to drop enough to make firing underperformers a major issue, but they do expect the next round of salary raises and evaluations to be much stricter. “The guys who started at Rs5,000 and were suddenly sitting on Rs20,000 when supply was shorter than demand," says Chopra, “those Rs20,000 might get salary corrections."
“Employers have a choice, and will be more strict in terms of quality, appraisal," he says, “and only the best will get salary increments."