A STUDY ON EMPLOYEE

ATTRITION AND RETENTION IN

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

ACKNOWLEDGEMENT
We would like to acknowledge and extend our gratitude to the following persons who have made the completion of this project possible:
First of all we would like to thank our Faculty Coordinator
Prof. Mr. Abhay Anand Tiwari for his great help. Being our Project Coordinator heprovided us very necessary and important guidance and
support until thesubmission 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 (allour group members) for their dedicated effort to make this project a success.
Lastly, we would like to be very thankful to the all theemployeesof 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 peoplefor their continuous effort in making the whole Project Activity very muchlearning 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 SECTORis 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.

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GROUP NO: 2
OXYGEN
SECTION-I

CONTENTS
Abstract7
Introduction.8
Purpose of the study..8
Employee Attrition..9

High attrition rate: A big challenge.9

Major worries for the industry.11

Costs due to person leaving12

Benefits of attrition..14

Analyzing the impact16

Managing the problem17
The attrition problem17
Addressing the problem.19
About the BPO industry..20
Causes.21
Analyzing cause of attrition using a multilevel approach.22

Maslows hierarchy of needs.22

Recommendations..25

The win-win model25

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 attrition30
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 year40
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

Employee Retention..45

5 major things involved in retention

Compensation..46

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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 talent54
Retention bonus.54
Hire right talent56
Manager role in retention.57
Importance of employee retention58
What makes employee leave? ......................................................................................59
Employee retention strategies.59
Innovative retention strategies for Indian BPO61
Retention myths.66
Retention success mantras..68
10 reasons why organizations are not able to retain employees74

Research: The critical findings.75

Summary..79
Analysis of Data and Questionnaire80
Limitations of the project.88
Suggestions88
Conclusion89
Bibliography91
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.

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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 todays 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 targets.
An attrition rate in call (or contact) centres has become legendary. Indeed, the attrition rates in some Indian call centers now reach 80%. This
is an extreme figure but the average attrition rates in Indian call centers are up around 30-40%.
However, it is interesting to note that the attrition rates in India - and the costs associated - are so high that they can override the benefits of
lower wage costs. While wages in call centres in Indian are less than one-eighth of those in Northern Europe, it has been reported
that Hewlett-Packard have found the cost per 'ticket' (the cost of processing a query) has doubled "due to the inability of the staff to resolve
customer queries efficiently because of language barriers and inexperience." It is said that this increased cost has made HP's move from
Ireland to India "completely pointless," and that it can never recover the (substantial) costs of the move. It is further reported that GE
Capital has moved a call centre back to Australia "after staff attrition rates of 70% wiped away any potential cost savings."
The issue is not with the quality or education of the staff - and still less with the investment in technology. It is simply attrition - people do not
stay long enough to be taught or to learn the job. The staff may be cheaper but if they cannot do the job, what's the point? Managing attrition
is not just a 'nice thing to do' in Indian call centers. It is the route to their survival.
Far from accepting attrition rates as part of the cost of doing business, it is surely something that all organizations should address, and
equally surely it is an area in which HR can take a lead - measure attrition, seek its causes, set out solutions and target performance.

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EMPLOYEE ATTRITION
Defining attrition: "A reduction in the number of employees through retirement, resignation or death"
Defining Attrition rate: "The rate of shrinkage in size or number"
HIGH ATTRITION RATE: A Big Challenge
Introduction: In the best of worlds, employees would love their jobs, like their coworkers, work hard for their employers, get paid well for
their work, have ample chances for advancement, and flexible schedules so they could attend to personal or family needs when
necessary. And never leave.
But then there's the real world. And in the real world, employees, do leave, either because they want more money, hate the working
conditions, hate their coworkers, want a change, or because their spouse gets a dream job in another state. So, what does that entire
turnover cost? And what employees are likely to have the highest turnover? Who is likely to stay the longest?
Background: The IT enabled services (BPO) industry is being looked upon as the next big employment generator. It is however no easy
task for an HR manager in this sector to bridge the ever increasing demand and supply gap of professionals. Unlike his software industry
counterpart, the BPO HR manager is not only required to fulfill this responsibility, but also find the right kind of people who can keep pace
with the unique work patterns in this industry. Adding to this is the issue of maintaining consistency in performance and keeping the
motivation levels high, despite the monotonous work. The toughest concern for an HR manager is however the high attrition rate.
In India, the average attrition rate in the BPO sector is approximately 30-35 percent. It is true that this is far less than the prevalent attrition
rate in the US market (around 70 percent), but the challenge continues to be greater considering the recent growth of the industry in the
country. The US BPO sector is estimated to be somewhere around three decades old. Keeping low attrition levels is a major challenge as
the demand outstrips the supply of good agents by a big margin. Further, the salary growth plan for each employee is not well defined. All
this only encourages poaching by other companies who can offer a higher salary.
The much hyped "work for fun" tag normally associated with the industry has in fact backfired, as many individuals (mostly fresh
graduates), take it as a pas-time job. Once they join the sector and understand its requirements, they are taken aback by the long
working hours and later monotony of the job starts setting in. This is the reason for the high attrition rate as many individuals are not
able to take the pressures of work.
The toughness of the job and timings is not adequately conveyed. Besides the induction and project training, not much investment has
been done to evolve a "continuous training program" for the agents. Motivational training is still to evolve in this industry. But, in all
this, it is the HR manager who is expected to straighten things out and help individuals adjust to the real world. I believe that the new
entrant needs to be made aware of the realistic situation from day-one itself, with the training session conducted in the nights, so that they
get accustomed to things right at the beginning.
The high percentage of females in the workforce (constituting 30-35 percent of the total), adds to the high attrition rate. Most women leave
their job either after marriage or because of social pressures caused by irregular working hours in the industry. All this translates into huge
losses for the company, which invests a lot of money in training them.
If a person leaves after the training it costs the company about Rs 60,000. For a 300-seater call centre facing the normal 30 percent
attrition, this translates into Rs 60 lakh per annum. Many experts are of believe that all these challenges can turn out to be a real
dampener in the growth of this industry. This only raises the responsibility of "finding the right candidate" and building a "conductive work
environment", which will be beneficial for the organization. The need is for those individuals who can make a career out of this.
All this has induced the companies to take necessary steps, both internally and externally. Internally most HR managers are busy putting
in efforts on the development of their employees, building innovative retention and motivational schemes (which was more money
oriented so far) and making the environment livelier. Outside, the focus is on creating awareness through seminars and going to
campuses for recruitment.

Major Worries for the Industry

Reckless Start-ups- a vast majority of the 310 start-ups are headed for a dead-end (according to Nasscom). Their capacity
utilization is less than one of the three shifts. Many of these companies that converted their empty basements and warehouses
into BPO units or firms with $10 million-20 million VC funds that ran out of cash without creating anything more than white
elephants. They have driven down prices to grab business, but have failed to deliver. They were always clueless about people,
processes or technologies- the three key elements of the BPO business.

Poor Infrastructure- the industry has more to worry about than just reckless start-ups. Primary among those is infrastructure.
While telecom networks are state of the art, getting a connection still takes up to three months. Unreliable power supply is forcing

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