BPO or Business Process Outsourcing is distinct from Information Technology (IT) outsourcing. IT focuses on hiring a third-party company or service provider for activities, such as application management and application development, data center operations, or testing and quality assurance. In the early days, BPO usually consisted of outsourcing processes, such as payroll. It then grew to include employee benefits management and now encompasses a number of functions that are considered "non-core" to the primary business strategy.
Typically, BPO would include everything from call centers, problem solving in the insurance sector, to other sophisticated activities, such as research and other back office dealings. India has the distinct advantage of low cost, highly qualified, English speaking labor. Hence, most of the BPO ventures in India are call centers. Even though of late companies are venturing into high-end areas like research, we can assume that most companies in India would continue doing the call center type of business for some time to come.
Modern India has risen on the wave of outsourcing. It has made India so prominent around the globe. MNCs are attracted to Indian BPOs and IT industry because of the low salaries of skilled workers. Apart from the salary, Indian BPO employees are paid incentives depending on factors, such as attendance regularity, target achievements, etc.
Compared to other Indian companies, Indian BPOs pay a fat salary because of the following reasons:
1. We do not have enough experienced people in the call-center business and the working hours are odd. This is why we do not have as many peopleas we want in the field.
2. There are no college courses or professional training centers on BPO in colleges.
3. There is a high turnover and the companies struggle to retain employees by giving them extra money in the form of incentives and other facilities.
BPOs generally perform back-end administrative functions that are essential to running a business, but are not part of the core business. Business Process Outsourcing is the transfer of direct managerial responsibility, but not accountability, to an unaffiliated third party service provider who performs services previously delivered by internal staff and management. Globalization, competitive markets, mergers and acquisitions are theprimary stimuli for BPOs. Companies are now increasingly outsourcing their Finance and Accounting functions, followed by Human Resource (HR)outsourcing.
Top reasons for outsourcing include:
* Expertise of specialists.
* Saving of time and money.
* Saving administrative costs.
* Freedom to focus on more strategic initiatives.
* Elimination functions that are not part of the core business.
* Redistribution of increased responsibilities.
India became a prominent destination for outsourcing in the services sector in the 1990's. Indian BPOs have responded to the changing market demands by increasing the scale of operations and are now capable of handling complexity. BPOs in India have grown very rapidly as compared to softwareservices, as the advantages offered by the country (low cost and abundant talent pool) were well known and tested in IT outsourcing.
Financial institutions generally seen as victims of archaic thought processes are witnessing cataclysmic changes. Everybody is on the lookout for ways to make their operations more efficient and providing customers with convenient, innovative, and cutting edge services. However, the sad part is that any effort in this direction directly increases pressure on bottom-line profitability. To compound the problem, there is an exponential increase in competition. Hitherto unknown players are entering the market and customers are becoming more mercenary and consequently less loyal. Information technology was already tearing down barriers to remote working before the arrival of the Internet. This has only served to accelerate the pace, especially as more and more applications become Web-enabled.
The number of people employed in the BPO sector is now above 2,50,000 in the country and is expected to reach 1.1 million by 2008. (According to a NASSCOM Report) The business has grown by 46 per cent, with the revenue touching $3.6 billion and has added 70,000 new jobs in the year 2004. NGO workers are apprehensive about the sustainability of these numbers. This is because it is very difficult to manage a large number of people in a short span of time in this industry. The working hours cause great stress in the people who work in BPOs and they are yet to be trained on differentissues. Poaching of employees, the gap of supply and demand, high labor turnover are other problems faced by the industry.
Human Resources (HR) as a function is changing fast as it works closely with senior management, business segments, line management, and functionalleaders in an IT organization. HR management is undoubtedly one of the major challenges ahead for Indian IT companies.
Recruitment and Training
Recruitment has changed from an important sub-system to a major function in HR, particularly in the IT industry. HR managers play a vital role in creating assets for the organization in the form of quality manpower. Another challenge for HR managers is to put systems in place to make peoplea perfect fit for their jobs. Skill obsolescence is rapid in the software industry. To overcome this problem, organizations give utmost priority totraining and skill enhancement programs on a continuous basis. Many IT companies are providing technical training to their employees on variousplatforms every quarter. Most employees find this regular training quite useful, apart from the feeling of security it provides.
Employee Benefits Provided By Majority Of the BPO CompaniesApart from the legal and mandatory benefits, such as provident-fund and gratuity, given below is a list of other benefits BPO professionals are entitled to:
1. Group Medi-claim Insurance Scheme: This insurance scheme provides adequate insurance coverage of employees for expenses related to hospitalization due to illness, disease, injury, or pregnancy. All employees and their dependent family members are eligible. Dependent family members include spouse, non-earning parents, and children above three months of age.
2. Personal Accident Insurance Scheme: This scheme is to provide adequate insurance coverage for Hospitalization expenses arising out of injuriessustained in an accident. This covers total or partial disablement and death due to accidents.
3. Subsidized Food and Transportation: BPOs provide transportation facilities to all employees from home to office at subsidized rates. The meals provided are also subsidized.
4. Company Leased Accommodation: Some companies provide shared accommodation for all outstation employees. In fact some of BPO companies also undertake payment of electricity and water bills, as well as the Society charges for the shared accommodation. The purpose is to enable employees to have a more comfortable work-life balance.
5. Recreation, Cafeteria, ATM and Concierge facilities: Recreation facilities include pool tables, chess tables, and coffee bars. Companies alsohave well equipped gyms, personal trainers, and showers.
6. Corporate Credit Card: The main purpose of the corporate credit card is to enable timely and efficient payment of official expenses that anemployee undertakes for purposes, such as travel related expenses like Hotel bills, Air tickets, etc.
7. Cellular Phone and Laptop: Cellular phones and/or Laptops are provided to employees based on business need. The employee is responsible for the maintenance and safeguarding of the asset.
8. Personal Health Care (Regular medical check-ups): Some of the BPO'S provides facilities for extensive health check-ups. For employees above 40 years of age, the medical check-up can be done once a year.
9. Loans: Many BPO companies provide loan facility on three different occasions: Employees are provided with financial assistance in case of amedical emergency. Employees are also provided with financial assistance at the time of their wedding. And, The new recruits are provided with interest free loans to assist them in their initial settlement at the work location.
10. Educational Benefits: Many BPO companies have this policy to develop the personality and knowledge level of their employees and hence reimburses the expenses incurred towards tuition fees, examination fees, and purchase of books subject, for pursuing MBA, and/or other management qualification at India's top most Business Schools.
11. Performance based incentives: In many BPO companies they have plans for, performance based incentive scheme. The parameters for calculation areprocess performance i.e. speed, accuracy and productivity of each process. The Pay for Performance can be as much as 22% of the salary.
12. Flexi-time: The main objective of the flextime policy is to provide opportunity to employees to work with flexible work schedules and set outconditions for availing this provision. Flexible work schedules are initiated by employees and approved by management to meet businesscommitments while supporting employee personal life needs .The factors on which Flexi time is allowed to an employee include: Child or Parent care,Health situation, Maternity, Formal education program.
13. Flexible Salary Benefits: Its main objective is to provide flexibility to the employees to plan a tax-effective compensation structure by balancing the monthly net income, yearly benefits and income tax payable. It is applicable of all the employees of the organization. The Salary consists of Basic, DA and Conveyance Allowance. The Flexible Benefit Plan consists of House Rent Allowance, Leave Travel Assistance, Medical Reimbursement, and Special Allowance.
14. Regular Get together and other cultural programs: The companies organizes cultural program as and when possible but most of the times, oncein a quarter, in which all the employees are given an opportunity to display their talents in dramatics, singing, acting, dancing etc. Apart from that the organizations also conduct various sports programs such as Cricket, football, etc and regularly play matches with the teams of otherorganizations and colleges.
15. Wedding Day Gift: Employee is given a gift voucher of Rs. 1100/- to Rs.3500/- based on their level in the organization.
16. Employee Referral Scheme: In several companies employee referral scheme is implemented to encourage employees to refer friends and relatives foremployment in the organization.
17. Employee Stock Option Plan
Now, the real question is, why are people leaving? What types of retention strategies are required? What is expected from HR professionals and how can they address this issue?
