Tuesday, 19 June, 2007

HR in the ITES – BPO Industry - Challenges & Strategies


Over the last few years, the worldwide ITES – BPO industry has undergone rapid transformation. Maturities of the marketplace and rapid development in infrastructure & telecommunication have all catalyzed the growth of the industry. BPO has become synonymous with corporate strategy and companies are realizing the strategic role it can play in maintaining global competitiveness.

India’s USP - ‘Proven & Beyond’

The Cost Advantage - India’s USP are really proven & beyond. Outsourcing to India has helped companies achieve higher levels of cost savings. Skilled Manpower Availability - India has a pool of educated, English speaking manpower that places India above other off shore locations. Customer’s demand quality and the Indian BPO industry attracts educated and talented workforce that is quality centric. Infrastructure & Fiscal Incentives - Infrastructure is among the best in the world with State Governments providing tremendous support & incentives to companies wanting to invest in the state.

Maturing BPO Industry – ‘Adolescence to Adulthood’

According to Nasscom Strategic Review 2004 - In 2002, the global BPO market was approximately $773 billion and by 2008, the potential BPO market may increase to
$2 trillion and Asia-Pacific BPO market is expected to account for 25% of the total BPO market in 2008. As companies begin to focus on core businesses, and optimize existing processes, BPO will prove to be an unbeatable advantage. It’s all happening and will continue for next 2-3 years. Acquisitions for consolidation, end-to-end services for moving-up the value-chain, investing in R & D, robust infrastructure in anticipation of a trend of niche offerings.

The Package Deal – ‘Issues’

However, this deal also comes with certain issues associated with it - increased attrition levels. Trained people being recruited by new entrants which has created a self defeating cycle. While in the past few years there has been an abundance of English language skilled manpower, today the challenge is in finding this skilled manpower who will meet high quality global standards. New laws being enacted, Data Protection norms, pressure of scaling-up rapidly and need for new business models also adds to the chain.

Recruitment – ‘Swinging Pendulum’

Many BPO Companies offering high-end services are moving away from current trend of ‘fresh graduates’ to people with ‘specialized’ qualifications. BPO outfits are moving to smaller towns and experience a reduction in attrition levels. Cost implications on changing landscape - Rise in salary levels by 10-15% per annum, rising cost of training employees. This essentially means that India will soon loose its advantage of being a choice destination if it is unable to curb this growing disadvantage.

Attrition Rate of 45% - ‘Controlling Barometer’

A lot of thought has been given to controlling these issues and not only are companies looking at measures to address them but also the Industry Associations such as NASSCOM are taking steps

Primary among these are:

Training: The industry lacks pre-job training, certification and standard curriculum.
Good HR Practices: such as non-hiring of applicants who spend less than a year at their previous workplace or those who have changed 3 jobs in two years. Blacklisting of agencies who poach and ensuring that candidates produce official release letters

Key to Successful BPO - ‘Creating Capabilities’

‘Came for Cost’ will ‘Stay for Quality’

To summarize, I’d like to say that going forward, Recruitment & HR best practices will become the single most important factor for the success of BPO in India

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