This is the html version of the file http://www. automatically generates html versions of documents as we crawl the web. | |[pic]|Page 1 |Employee Attrition and Retention:Exploring the Dimensions in the urban centricBPO IndustrySynopsis of the thesis to be submitted in fulfillment of therequirement for the Degree ofDOCTOR OF PHILOSOPHYinMANAGEMENTBySantoshi Sen GuptaEnrollment No: 064009502Under the guidance ofDr.

Aayushi GuptaJAYPEE INSTITUTE OF INFORMATION TECHNOLOGY, NOIDAA-10, SECTOR 62, NOIDA, INDIA[pic]|Page 2 |2TABLE OF CONTENTSS. No.TopicPage No.1.1 Basic Introduction31.2 Need of the research51.

3 Aim of the research61.4 Objectives of the study91.5 Research Methodology101.

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6 Significance of the Study101.7 Scope of the study112.0 Literature Review112.1 Introduction112.2 BPO: An overview122.2.1 Market Size of BPO in India122.

2.2 Growth of Indian BPO Industry122.2.3 Attrition in BPO132.3 Employee Motivation152.4 Employee Involvement152.5 Hackman and Oldham??™s Job Characteristic Model162.

6 Conceptual model of the research163.0 Research Methodology174.Exploring the dimensions of attrition in the BPO industry184.1 Secondary Data Analysis184.

2 Primary Data Analysis215.Exploring the dimensions of employee retention245.1 Retention Factors245.2 Regression Model of Retention265.3 Model Validation286.Conclusions286.

1 Analogy with established theories286.2 Implications of the Study306.3 Recommendations: Developing Retention Strategy316.4 Limitations and scope for further research33[pic]|Page 3 |31.1 Basic IntroductionBPO! One reads the word and myriad of well-groomed youth on calls, fast money, and phenomenallifestyles seem to flash the mind in a jiffy. That??™s just the start. One reads it again, contemplates overit, dives into the unveiled afflictions, and gives it a second thought and a completely differingdepiction blazes the mind. Lopsided working hours, unimaginable attrition rate, stress and burnoutexhibit its ugly side.

No matter how the seesaw balances between the pros and cons, the fact remainsconspicuous, loud and unchanged. BPO, Business Process Outsourcing, is the mantra of employment,the buzz of present, and the promise of future!The last decade saw an upheaval in the growth and development of the Indian economy, which wasaccompanied by the revolution in the technological front and a radical change in the way businesseswere done. Instead of being the jack of all trades, the smart organizations have now redefined the wayof working and now aim at being the master of their core business. Outsourcing the non-core processesin order to concentrate on the core ones is how the companies prefer to work now.

BPO has becomethe obvious strategic choice of the companies looking at the visible profits of cost reduction whileimproving the quality of service, increasing shareholder value etc. (Shah and Sharma 2006). With thewhirlpool of opportunities the Indian Business Process Outsourcing sector seems to be on a happyride.

It has emerged rapidly, and its exports have grown from $565 million in 2000 to about $7.3billion in 2005 (Budhwar et al. 2006). With the boat steaming ahead in the global markets, India hasalready become the most privileged destination. Hence such an eternal inventory of opportunitiessimply showcases a phenomenon which is no less than the renaissance for our Indian markets.Today, India is the hottest destination for any company that wants to outsource its business processes.From a negligible size in early 2000 to a gigantic size today, the BPO sector has been growing at anunprecedented rate.

In 2003, India accounted for 75 percent of the total BPO offshore delivery valuethat was expected to increase by 55 percent annually over the next five years (Neale 2004). Accordingto Scholl et al. (2003), India??™s revenue from BPO operations was expected to grow fromapproximately $1 billion in 2002 to $13.8 billion in 2007 and its share of supply was projected to be57 percent of the offshore BPO market. According to Nasscom, the Indian IT-BPO industry (includingdomestic market) recorded an overall growth of 28 per cent (currency adjusted), clocking revenues of$52 billion in FY07-08 up from $39.6 billion in FY06-07. 2008 was a year of revolution for the IndianIT ??“ BPO sector as it began to re-engineer challenges posed by macro-economic environment, with theworldwide spending aggregate expected to reach nearly USD 1.

6 trillion, a growth of 5.6 per cent overthe previous year. The BPO exports are up by 30 per cent (in US dollars), registering revenues of[pic]|Page 4 |4$10.

9 billion (Nasscom 2009). Indian IT-BPO grew by 12 per cent in FY2009 to reach USD 71.7billion in aggregate revenue. Software and services exports (includes exports of IT services, BPO,Engineering Services and R&D and Software products) reached USD 47 billion, contributing nearly66 per cent to the overall IT-BPO revenue aggregate. IT-BPO exports (including hardware exports)reached USD 47.3 billion in FY2009 as against USD 40.9 billion in FY2008, a growth of 16 per cent.Contrary to the sunny side of the story, we have a dark side of the BPO too.

The flip side of the BPOs revolves around the host of challenges that they have been facing since theirvery inception. The major challenges being faced by the BPO industry in India can be classified intointernal and external challenges. The internal challenges include shortage of competent managers forthe middle and senior management and the high attrition rates. The external challenge is in the form ofopposition from the US politicians and the UK labor unions against shifting of the BPO operations bylocal companies to India. One of the most significant internal challenges is high attrition rates.Attrition refers to a gradual, natural reduction in membership or personnel, as through retirement,resignation, or death (National Performance Review 1997).

It means not only loss of talent, but alsoincludes the cost of training the new recruits. According to Mehta et al. (2006), of all the challengesposed to BPO organizations at various levels, attrition, absenteeism and motivating employees are themajor ones that dominate at the middle level. The attrition rate in the industry has been hoveringaround 35%, which is quite high for any industry. An average Indian call center employee works witha company for 11 months, where as an average UK call center employee stays in a company for 3years. According to some analysts (BPO India 2004), in general, the attrition rate fluctuates between20% and 40%, while in the best companies, it averages around 15%. As per NASSCOM (2004) report,the outsourcing industry would have a shortage of 262,000 professionals by 2012. Despite potentialfor tremendous growth, BPO industry continues to suffer from high level of attrition stemming fromfactors like high levels of stress and lack of opportunities for growth.

Attrition in BPO, though varyingfrom industry to industry has reached an all-time high level of nearly 60% (BPO India 2004).Attrition in BPOs has terrible effects on the organization. The high attrition costs increases the costs tothe organization considerably. They have to combat the amount of disruption due to unplanned exits.The more the people leave an organization, the more it is a drain on the company??™s resources likerecruitment expenses, training and orientation resources and the time. The high attrition rate alsoaffects the productivity of the organization. Therefore, it is extremely important to curb attrition notonly for an individual firm but also for the industry as a whole. Many researchers have worked[pic]|Page 5 |5enormously on the BPO sector, citing its challenges, issues, and opportunities in and around employeeperformance, employee satisfaction, employee turnover etc.

1.2 Need of the researchMost research in the BPO sector has addressed only specific problems related to its environmentalanalysis like challenges, growth and opportunities, the problem of attrition, the HRM systems, andissues of job stress, job satisfaction, individual performance etc. Research done in the area ofemployee motivation and satisfaction has discussed domains like education (Sharma and Jyoti 2008,Smerek and Peterson 2006), private public employment (Demoussis and Giannakopoulos 2007),financial institutes (Kazemzadeh and Bashiri 2005), ITES industry (Dash et al. 2008), oil industry(Okpara 2006), government ministries (Al-Ajmi 2006), labor market (Brown et al. 2007), to name afew but not much inclusive and structured work has been done in the domain of BPO sector. Literaturereview has also shown how various researchers have identified a plethora of reasons behind theescalating problem of attrition and how many of them have even suggested recommendations tocombat it (Misra 2007, Prakash and Chowdhary 2004, Joshi 2004).

Many researchers have alsoworked on various domains like the HRM systems and practices (Budhwar et al. 2006), jobsatisfaction (Sharma 2006, E-sat survey 2005), and burnout prevention (Kanwar et al. 2008).However, no systematic and comprehensive work has been found that collaborates all the facets viz.

attrition, retention, employee motivation, involvement etc to combat the most smoldering problem ofthe present times i.e. attrition. Another interesting thing that emerged from prior researches andfocused group interviews taken for pilot survey is that reducing attrition may not always meanincreasing retention.

Attrition may reduce if the negative characteristics of the job are taken care of.However, that does not mean employees increase their willingness to stay in the same organization.Thus different set of factors emerged for attrition and retention respectively. Looking at the big pictureof the much realized potential of the BPO industry in India and the impending curse of attrition in thissector, it can be confidently said that the problem can not be overlooked. There is a dire need oftackling the problem of attrition in the BPO industry of India and for this employee motivation hasbeen chosen as an effective tool. There is need to develop a concurrent strategic method, an innovativedevelopment paradigm that can be utilized to curb the ever-increasing attrition rate in the BPOindustry. Thus the need for this study can be clearly defined in two points:1. Attrition is a burning problem for the promising industry of BPO, especially because it fails to tapthe full utilization of the human resources and wastes much of its time, money and resources due tothis.

[pic]|Page 6 |62. Dearth of motivation among the BPO employees is one of the bitter truths that is responsible forthe attrition in this sector, and it is time we enhanced it in the BPO sector.1.3 Aim of the researchThis research aims to produce a model for employee retention conjoining it with other aspects ofperceived attitudes viz. employee motivation, employee satisfaction, employee involvement and lifeinterest and work compatibility etc. To attain the aim of the research, the Hackman and Oldham??™s JobCharacteristics model (1976) was taken as the basic foundation. Hackman & Oldham (1976) proposedthe Job Characteristics Model, which is widely used as a framework to study how particular jobcharacteristics impact on job outcomes, including job satisfaction.

The model states that there are fivecore job characteristics (skill variety, task identity, task significance, autonomy, and feedback) whichimpact three critical psychological states (experienced meaningfulness, experienced responsibility foroutcomes, and knowledge of the actual results), in turn influencing work outcomes (job satisfaction,absenteeism, work motivation, etc). The basic hypothesis of this research that employee motivation,employee satisfaction, employee involvement, and life interest and work compatibility lead toprolonged sustenance is an extension of this model with minor modifications in it. It is proposed thatthe Job Characteristics model is modified by redefining job dimensions as growth prospects,accountability, sense of accomplishment, self-esteem, job security, interpersonal relationships,working conditions, by extending organizational outcomes as satisfied, motivated, involved andretained employees. Figure 1 is the modified Hackman and Oldham??™s Job Characteristics model whichhas been taken as the base to study the research questions pertaining to this research. The new model isalso designed to be of use as a management tool and must therefore be simple and flexible enough tobe of use to the management of an organization. Typical management questions would involve thelikely motivational impact of job redesign, such as increasing employees??™ level of control andresponsibility over their work behavior or introducing a scheme whereby employees participate incertain management decisions. The model should therefore allow managers to manipulate a host of jobcharacteristics and investigate the likely effects upon the motivation, performance and sustenance ofthe workforce. This study aimed at exploring the dimensions of attrition and retention.

Based on ourground work; initial survey and personal interviews held with the BPO employees, it was found thatfactors that contribute to attrition are quite different from the factors that contribute to retention. Thusbased on this, we developed two basic models of our research as shown in figure 2 and figure 3.[pic]|Page 7 |Figure 1.4: Modified Hackman and Oldham??™s Job Characteristics ModelSkill VarietyExperienced meaningfulnessHigh internalTask Identityof the workwork motivationTask SignificanceHigh quality of workperformancesAutonomyExperienced responsibility foroutcomes of the workHigh satisfactionwith the workFeedbackKnowledge of the actualLow absenteeism andresults of the work activitiesturnoverGrowth ProspectsHigh Work MotivationSatisfied EmployeesParticipationAccountabilityFeeling of accomplishmentHigh Satisfaction with workMotivated EmployeesJob SecuritySelf-EsteemPrestige inside and outsideInvolved EmployeesAmenitiesHigh Involvement with workAuthorityInvolvementRetained EmployeesInterpersonal relationshipsWorking ConditionsCore JobDimensionsCritical PsychologicalStatesPersonal and WorkOutcomesOrganizationalOutcomesFigure 1: Modified version of Hackman and Oldham??™s Job Characteristics ModelBased on the Hackman and Oldham??™s Job Characteristics Model and the modifications made to it, aclearer and more lucid pictorial framework of the model is given in Figure 2 and 3. Figure 2 clearlyillustrates the basic constructs of the attrition model: personal characteristics, negative jobcharacteristics (job dimensions), and the final resultant as attrition. Figure 3 illustrates constructs ofretention model i.

e. personal characteristics, intrinsic job dimensions and the resulting level ofsatisfaction, motivation and involvement (work outcomes) and the final result i.e. retained employees(organizational outcomes).7[pic]|Page 8 |Gender? Education? Marital? Status? Age? TenureAttrition? of? EmployeesPersonal? CharacteristicsMonotonous? nature? of? job? Lack? of? motivation? Poor? mentoring? Power? and? politics? Dissatisfaction? with? colleagues? Low? career? growth? Lack? of? skill? variety? Irregular? working? hours? Achievement? not? recognizedNegativecharacteristicsof a BPO jobFigure 2: Basic model for attritionFigure 2 clearly suggests the personal characteristics as age, education, gender, marital status andtenure along with the negative characteristics of a BPO job i.e.

monotonous nature of job, lack ofmotivation, poor mentoring, power and politics, dissatisfaction with colleagues, low career growth,lack of skill variety, irregular working hours, achievement not recognized etc. These two collectivelyresult in the attrition of employees. The question is how much do these factors actually contribute toattrition. Similarly figure 3 describes the personal characteristics and core job dimensions which areintrinsic in nature and how do they contribute to retention of employees.

8[pic]|Page 9 |GenderEducationMarital StatusAgeRetention ofEmployees(OrganizationalOutcome)PersonalCharacteristicsSelf-EsteemParticipationAccountabilityGrowth ProspectsFeeling ofaccomplishmentPrestige inside andoutsideInterpersonalrelationshipsWorkingConditionsInvolvementJob SecurityAmenitiesAuthorityJobCharacteristics(Core JobDimensions)SatisfactionMotivationInvolvementLife interestand workcompatibilityFigure 3: Basic model for retention of employees1.4 Objectives of the studyThe major motivation of this thesis is derived from the studies of Mehta et al. (2006), Budhwar et al.

(2006), Shah and Sharma (2007), Misra (2007). It is clear from the review of earlier research thatsolutions are required to some specific problems of practical importance in the field of escalatingattrition in BPOs. The broad objective of this thesis is to identify the root causes of attrition in BPOs,analyzing the level of employee motivation, satisfaction and involvement, generate a model formaximizing sustenance of employees in the organization and come up with concreterecommendations, which will eventually be valuable to the organizations to retain their employees fora long term. The specific objectives of this thesis are:9[pic]|Page 10 |101. To identify and rank the factors of attrition in BPOs based on accumulative literature review andsecondary data.2. To explore and analyze the dimensions of attrition in BPOs based on primary data collected fromfield survey.

3. To identify and explore the dimensions of employee retention in BPOs based on primary datacollected from field survey.4. To develop a regression model for escalating the stay of employees in BPOs and giverecommendations for the same.5.

To assess the existing level of employee motivation and validate the model by studying the impactof recommendations on a small patch.1.5 Research MethodologyThe general intent of this descriptive study was threefold. Therefore a systematic and organized methodology was obtained for the research study. A survey design was used to obtain the required information. The population for this study comprised of employees working in various BPOs in the National Capital Region.

A sample size of 500 was chosen for this study. Simple random sampling technique was used to gather data from the respondents, because of which respondents diverged from every age group, gender, organization, marital status etc. but were restricted only to low and middle level employees, where the attrition is highest. The questionnaire was intricately designed to tap thedemographic variables including age, education, gender, marital status, and tenure of the respondents. It also gathered information about the factors responsible for attrition, the factors that can be employed to retain the employees in a BPO, their overall level of satisfaction, motivation, involvement and life interest and work compatibility. Main data collection began in the month of July 2008. Statistical Package for the Social Sciences (SPSS) version 17.

0 was religiously used for the statistical analyses.1.6 Significance of the StudyThe significance of the study lies in the detonation of the BPO industry in the recent years.

Where on one hand the sector is growing with leaps and bounds, on the other the employee turnover has been alarmingly high, thus costing a lot to the company. The middle level and low level employees are victims of dearth of motivation and employee satisfaction also seems to be brandishing. The study is an attempt to assess the patterns of attrition in BPO and analyze the relationship among employee[pic]|Page 11 |11motivation, job satisfaction and employee retention, so as to utilize employee motivation to retain employees in an organization. Thus, not only is it significant for academicians but also for professionals who can exploit it to control the employee turnover.1.7 Scope of the studyAlthough the development of motivation model to tackle the problem of attrition in the BPO sector has inputs from a variety of sources including primary and secondary sources, the study is confined to the data collected from the national capital region of India.

Moreover, only selected facets of job characteristics have been considered for the study. There are many which can be included in order to assess employee motivation. Therefore the scope of the study is limited to the geographical location of the sample size and also to the selected dimensions of personal characteristics and employee motivation.2. Literature Review2.

1 IntroductionWith the boat of success steaming ahead in the global markets, India has already become the mostprivileged destination for Business Process Outsourcing. The word which one would simply lisp in thebeginning of this century has become the most pronounced and sought after term. Generatingrevenues, fostering employments, elevating the living standards, an eternal inventory of opportunitiessimply showcase a phenomenon which is no less than the renaissance for our Indian markets. Manyresearchers have talked about BPOs in their works, highlighted its capability as money making sector,showcased its doom of high employee turnover, sketched out its strengths, weaknesses, opportunitiesand threats, and also chalked out its dynamics of HR. Other researchers have extensively worked onvarious perceived attitudes of employees like their satisfaction, motivation, its influence on theirtenure, their loyalty, commitment etc. This chapter unfolds all the relevant literature about the BPOindustry in India, theories and research works of employee motivation and satisfaction, andcollaborates the findings to tackle the problem of attrition in this sector.[pic]|Page 12 |122.2 BPO: An overviewGrossman and Helpman??™s (2005: 135) statement, ???We live in an age of outsourcing,??? clearlydesignates that outsourcing has now become an acknowledged, accepted and established businessstrategy.

One of the most familiar forms of outsourcing is business process outsourcing (BPO), i.e.,transferring the operational ownership of one or more of the firm??™s business processes to an externalsupplier that, in turn, administers the processes according to some predefined metrics (Ghosh andScott, 2005; Stone, 2004).

BPO or Business Process Outsourcing thus refers to the rearrangement ofentire business functions to some other service providers, primarily in low cost locations. The serviceprovider may be either self-owned or a third party. This relocation or transferring of businessprocesses to an external provider is essentially to accomplish increased shareholder value.

Some of the general services provided by the BPOs are Receivables and Payables, InventoryManagement, Order Processing, Cash flow Analysis, Reconciliation, Data Entry, Payroll Processing,QuickBooks Accounting, Financial Statement Preparation and Accounting Services. Some of the webbased services include live online sales and order entry, E-commerce transaction support, Live onlineenquiry handling, Web Design/Development.2.2.

1 Market Size of BPO in IndiaSpeedy transformation is taking place in the global BPO market. It is escorted by increasedinvestments in BPO services. Most of the principal business companies of the world are adopting BPOas a strategic business solution.

The BPO industry is quite assorted, with several sub-segments, eachexhibiting its own unique and exclusive characteristics. The size of the global BPO market wasprojected to be $173bn by 2007, of which $24.23bn would be outsourced to offshore contractors(Gartner 2005). Of this, India has the potential to generate $13.8bn in revenue. “The projectionincludes revenues of pure play Indian BPO service providers, captives operations of MNCs operatingin India, third party service providers and BPO subsidiaries of IT services firms.

2.2.2 Growth of Indian BPO IndustryBPO is a varied and speedily growing offshore market with an estimated annual growth rate of 60percent (Tapper, 2004). Brown and Stone (2004) reported that BPO accounted for 34 percent of theglobal outsourcing contract value in 2004 and estimated that BPO services would grow from $1.3[pic]|Page 13 |13billion in 2002 to $4.3 billion in 2007. The Indian BPO sector has emerged rapidly, and its exportshave grown from $565 million in 2000 to about $7.3 billion in 2005.

These exports were projected toincrease to $20 billion by 2007 and employment in the sector was expected to rise from its currentlevel of 300,000 to over 1.1 million by 2008 (Chanda, 2005; NASSCOM, 2005a). The firstNASSCOM-McKinsey study (Indian IT Strategy, 1999) had set an ambition of USD 50 million inexports by 2008, and as a matter of fact, the industry has been on track to achieve this figure.

Theaspiration for 2010 however, is expected to witness a delay of three to four quarters on account of theglobal meltdown. The IT-BPO industry has traveled from a USD 4 billion sector in 1998 to a breath-taking USD 52 billion in 2008 employing over 2 million people (NASSCOM 2009). Looking at the hitside of the fabulous growth of the BPO industry, a number of leading software service companies alsomade a foray into the BPO domain, either directly, or through the mergers and acquisitions route. MostIndian IT leaders today such as Wipro, Patni, Satyam, HCL, among others, have presence in thismarket. The segments like customer care and administration showed a promising growth of over 75%which was the highest among all.2008 was a year of transformation for the Indian IT ??“ BPO sector as it began to re-engineer challengesposed by macro-economic environment, with the worldwide spending aggregate estimated to reachnearly USD 1.6 trillion, a growth of 5.6 per cent over the previous year.

In the global market, softwareand services touched USD 967 billion, an above average growth of 6.3 per cent over past year and theworldwide BPO grew by 12 per cent, the highest among all technology related segments. 2008 was astrong year as number of contracts, total contract value and annualized; and contract values exceededas compared to 2007. Among all users above average growth was witnessed in the Government,Healthcare and manufacturing segments (NASSCOM 2009). Indian IT-BPO grew by 12 per cent inFY2009 to reach USD 71.

7 billion in aggregate revenue2.2.3 Attrition in BPOAttrition is defined as a reduction in the number of employees through retirement, resignation or deathand attrition rate is defined as the rate of shrinkage in size or number (BPO India 2009). Attrition ofemployees in a limited measure is desirable for influx of new ideas in any type of organization. Ithelps organizations to maintain their agility in fast changing environment. It brings in new blood,opens up new vistas for change, development and improvement, shows avenues to expand operationsand add to the creative lines of the organizations.

Attrition in a limited measure can thus bring gains tothe organization. However if attrition increases beyond a certain level, the gains are transformed into[pic]|Page 14 |14pains. Recruiters explain that high attrition rates significantly increase the investment made onemployees (Prakash and Chowdhury 2004). Significant investments in time and money need to bemade for acquiring employees in any organization. These can never be translated into profit whenattrition is high.

There is an escalating paucity of the appropriate skills gained through the education system, which isshort on quality and relevance. Because of dearth, hiring new talent has become more expensive. In1999, the average pay packet of an entry-level agent was $160??“$180; now it is $300??“$350. Due tohigh attrition rates, every employee who leaves costs the company another $900??“$1100 to recruit andtrain a replacement. Finding the right candidate and sustaining it is now becoming a problem. Yearsago, the success rate was of choosing the right candidate was 20 percent (, 2005a, 2005b;Sangameshwaran and Rai, 2005). Besides this, BPO employees are experiencing problems related tostress, sexual and racial abuse, and dissatisfaction at work (Walletwatch, 2003; Cacanas, 2004; Singh,2005b; Witt et al.

, 2004; Rose and Wright, 2005; Houlihan, 2002). Inside a BPO organization, HRrelated issues arising at all levels have become significantly alarming and need to be addressed soon.Major HR-related issues standing as problems in the various levels of management include attrition,HR policies, absenteeism, performance appraisal, and manpower allocation (Mehta et al. 2006). Inorganizing, the major concerns at the lower management level are related to job design and jobrequirements, like night shifts, monotony, and long hours. At the middle-management level, criticalissues were related to HR, organizing, and motivation.

Middle-level managers have difficulty retaininggood employees, motivating them to put in their best effort, and keeping them happy. Often managersare not trained to work with teams and directing and motivating numerous teams simultaneously ischallenging (Mehta et al 2006).Attrition in the BPO industry is two fold.

One part of the attrition is where the employee leaves theindustry entirely. The other section of attrition is where the employee joins another firm in theindustry. Both the sections have separate reasons which need to be identified. The primary reason forpeople leaving the industry is due to the cause that the industry is viewed as a gap filler occupation.There seems to be a flaw in the way the industry is structured.

The industry has been mainly dependenton youth who take out time to work, make money in the process while thinking of career alternatives.Hence for this group BPO is never a long term career but only as a part time job. The easy availabilityof BPO jobs is only a source of easy money till the time there is no other source of funding. Also theunfriendly working conditions, late night work shifts, high tension jobs acts as a deterrent for people tostick to this industry for long time. In addition, the BPO jobs are not being taken with a positive spirit[pic]|Page 15 |15by the society on a large. Research says that nearly 50 per cent of those who quit leave the industry(Prakash and Chowdhury 2004).2.

3 Employee MotivationEmployee motivation has been extensively reviewed for this research. Literature on the establishedwell known motivation theories has been reviewed as one of the final results of our study showsintrinsic motivation factors as a significant dimension of employee retention in the BPO industry.Theories of motivation were intricately studied to understand the concept of motivation as animportant predictor of employee turnover.

Motivation theories have been broadly classified into needbased theories and process based theories. These theories form the pedestal of all work on motivation.Here these theories have been discussed to understand the philosophy of motivation so as toincorporate the same in the study of employee retention. Johnson and Gill (1993) describe motivationin work organizations as ???the processes by which people are enabled to and induced to choose tobehave in particular ways???. Motivation is therefore coupled with a search for the ways by whichmembers??™ job performance and productivity may be enhanced or maintain.

2.4 Employee InvolvementLiterature on employee involvement was also extensively reviewed as one of the significantdeterminants of employee retention came out as involvement factors. Many researchers have workedon employee involvement and participation at various levels and in various domains.

Employeeinvolvement is an important attribute of job satisfaction, employee motivation and even employeeretention. Employee involvement has a direct correlation with productivity, quality, efficiency,absenteeism, and even motivation. Employee involvement has received much attention in the area ofwork organization in recent decades.

Although changes in the work organization during the lastdecades are diverse and difficult to summarize by a few key concepts, there has emerged an agreementthat employee involvement and monetary incentive systems are important measures in modernpersonnel management (Delery and Doty 1996), (Appelbaum et al. 2000), (Godard 2004). Addison etal. (2000) shows that establishments of different sizes might be affected differently by employeeinvolvement.

Employee involvement produces improved enterprise performance through diversechannels including enhanced discretionary effort by employees (Jones et al 2003). There is also a highassociation between peer review and employee involvement in work organization and better the peerreview, better is the efficiency towards work. Employee involvement also affects the important[pic]|Page 16 |16dimensions of individual performance, organizational citizenship behavior, defined as individualdiscretionary behavior that promotes the organization and is not explicitly rewarded. The mainprinciple behind all initiatives for increasing the involvement of workers is to get the lower-level staffmore involved in the decision making and work processes, and to grant these employees greaterautonomy and control over job tasks and methods of work (Cappelli and Rogovsky 1994). Typicalmeasures are teamwork, lean management, and reduced hierarchic levels (Godard 2004).2.

5 Hackman and Oldham??™s Job characteristics modelHackman and Oldham??™s Job characteristics model has been used to develop the conceptual model forthe research. The Job Characteristics Model by Hackman and Oldham (1976) focuses on theinteraction between the psychological states of employees, the job characteristics that are believed todetermine these states and the attributes of individuals that determine how positively a person willrespond to a complex and challenging job. Few of the aspects of the model have been amended withreasons. This amended model then generates a base for the theoretical skeleton of the research model.2.6 Conceptual Model of the researchThe Hackman and Oldham??™s Job Characteristics Model was taken as the foundation to generate aconceptual model for the research. The three psychological states applied in the model are experiencedmeaningfulness of the work; experienced responsibility for the outcomes of the work and knowledgeof the actual results of the work activities.

All these can be purely classed as intrinsic to the job itself.Consequently, the model predicts only intrinsic (internal) motivation. The effects of extrinsic rewards,such as pay and other benefits, self-esteem, job security, hours of work and working conditions, etc.and the resulting extrinsic motivation are ignored. Moreover, there are several job dimensions thathave been found to have an effect on worker satisfaction and motivation that are not included inHackman and Oldham??™s formulation of the model. It may also be argued that personal and workoutcomes need to be amended. The outcomes limit to high internal work motivation, high quality ofwork performances, high satisfaction with work, and low absenteeism and turnover. It may be notedhere that along with personal outcomes as mentioned here, involvement with work may also breed as aresult of the critical psychological states.

The personal and work outcomes may be redefined as highwork motivation, high work satisfaction and high work involvement. If this be the case, it may resultin organizational outcomes too. Organization outcome will be a chain of events, wherein the[pic]|Page 17 |17organization cultivates satisfied employees; who feel motivated; show high involvement and henceretains employees.The research aims to find out the factors that cause attrition, how do these dimensions vary across thepersonal characteristics, what factors actually contribute to attrition.

Similarly, it studies whethersatisfaction, motivation and involvement enhance the stay of an employee in the organization. Thus,based on our literature review, we assume that personal characteristics and job characteristics togetherlead to the level of satisfaction, motivation and involvement in an employee, which further leads totheir sustenance in the organization for a long term.3. Research MethodologyThe general intent of this descriptive study was threefold. Therefore a systematic and organizedmethodology was obtained for the research study. A survey design was used to obtain the requiredinformation. The population for this study comprised of employees working in various BPOs in theNational Capital Region.

A sample size of 500 was chosen for this study. Simple random samplingtechnique was used to gather data from the respondents, because of which respondents diverged fromevery age group, gender, organization, marital status etc. but were restricted only to low and middlelevel employees, where the attrition is highest. The questionnaire was intricately designed to tap thedemographic variables including age, education, gender, marital status, and tenure of the respondents.It also gathered information about the factors responsible for attrition, the factors that can be employedto retain the employees in a BPO, their overall level of satisfaction, motivation, involvement and lifeinterest and work compatibility.

Main data collection began in the month of July 2008. StatisticalPackage for the Social Sciences (SPSS) version 17.0 was religiously used for the statistical analyses.A questionnaire was intricately designed to tap the factors responsible for attrition, the factors that areexpected to be present in a specific job for retention.

The instrument was divided into 4 parts. The firstpart gathered information about the personal profile of the respondents which included their age,gender, education, marital status, and tenure. Part II consisted of questions about their reasons forchange or probable change in their jobs. Part III aimed at knowing what according to the respondentsis important for their sustenance in an organization.

And last of all, Part IV was about their overallperception of the work which included their level of satisfaction, level of motivation, level ofinvolvement and level of life interest and work compatibility.[pic]|Page 18 |18To test the validity of the instrument, a pilot study was done on 100 participants in the month ofJanuary 2008. Based on their responses, validity tests were done to check for the validity and usabilityof the instrument. Cronbach alpha, KMO measure of adequacy and Bartlett??™s test of sphericity wereconducted. Cronbach alpha was calculated to measure the internal consistency reliability of theinstrument. The cronbach alpha came as 0.898 for Part II and 0.

963 for Part III thus the instrument wasconsidered reliable for the study. Kaiser-Meyer-Olkin test was done to measure the homogeneity ofvariables and Bartletts test of sphericity was done to test for the correlation among the variables used.The KMO value for part I of the instrument was 0.745, and for part II was 0.767, both of which areacceptable as a middling value. The Bartlett??™s test showed significant results for both the parts andhence the instrument was accepted for further study. Table 1 summarizes the entire result viz.

cronbach alpha, KMO test values, and Bartletts??™s significance of the instrument. On getting quitemeritorious results of the validity, the instrument was floated for data collection.Table 1: Tests of Validity of the questionnaireNo.ofitemsCronbach??™sAlphaKaiser-Meyer-OlkinMeasureofSampling AdequacyBartletts Test ofSphericityApprox.Chi-Square6052.012df210.000Part II21.


Chi-Square12554.051df190.000Part III20.

963.767Sig..0004. Exploring the dimensions of attrition in the BPO industry4.1 Secondary Data AnalysisIn order to gain a deeper understanding about the phenomenon of high attrition, and identification ofthe factors behind it, a lot of literature on BPO, particularly what got published during 2004 and 2005was studied in detail.

Major causal factors for high attrition in Indian BPO industry identified in thisstudy were based on qualitative research using secondary data. These were compared with causalfactors for attrition identified through personal interview with a number of BPO employees in theNCR. There was a close similarity between the two results, authenticating the qualitative research oncausal agents for attrition identified in this study. The study ranked low perceived value andmonotonous work as number one factor attrition. Rank two was shared by high salary expectation andunusual working hours. Next factor was disillusioned employees; rank four was shared by stress and[pic]|Page 19 |burnout, pressure to perform on metrics, and lack of motivation. Finally rank five was jointly sharedby lack of security and social interaction.Table 2: Summary of ranks from secondary studyCausal Agents / FactorsScore (on 1) (Rank)Higher Salary Expectation0.

7 (Rank-II)Lack of Security0.3 (Rank-V)Lack of Social Interaction0.3 (Rank-V)Monotonous Work0.8 (Rank-I)Unusual Working Hours0.7 (Rank-II)Pressure to perform on Metrics0.5 (Rank-IV)Low Perceived Value0.

8 (Rank-I)Disillusioned Employees0.6 (Rank-III)Stress and Burnout0.5 (Rank-IV)Lack of Motivation0.5 (Rank-IV)On the basis of these ranks and factors, an interesting inference was drawn.

Low perceived valuestands out as the most significant factor for attrition. Increased dissatisfaction leads to reducedmotivation, which in turn results in lowered efficiency. When the efficiency is lowered, employees arenot able to deliver their expected output which results in their leaving the job. When employees quit,the perceived value is further lowered.

Thus a vicious circle is formed as shown in figure 4.IncreasedDissatisfactionReducedMotivationLoweredEfficiencyEmployeesQuittingLow PerceivedValueVICIOUSCIRCLEFigure 4. Vicious Circle of attrition19[pic]|Page 20 |Moreover, it gives rise to the prevalent gap in motivation in this industry as shown in Figure 5. BPOindustry is growing at a sweltering pace but the gap between the actual and expected level of employeemotivation in the industry is increasing due to the formation of a vicious circle. New employees jointhe industry with excitement (because of big bucks and vibrant work culture) resulting in higher levelsof motivation. However, they soon get disillusioned as the realities strikes in. Employee motivationgets a beating at a fast pace.

Gap between the actual and expected level of employee motivationincreases as the employee spends longer time in BPO industry. The objective concluded some findingsabout attrition through the way of motivation.LowTime Spent in OrganizationInitialLevel ofMotivationExpectedMotivationActualMotivationSubsequentLevel ofMotivationMain Causal Agents for Depletion of Motivation: Low Perceived Value;Monotonous Work; High Salary Expectation; Unusual Working Hours;Disillusioned Employees; Stress and Burnout; Pressure to Perform on Metrics;Lack of Security and Social Interaction.Level of MotivationFigure 5.

Motivation GapMotivational measures appropriate for BPO employees need a close examination and implementationon a high priority. Thus, the first objective was effectively achieved as it resulted in the formation ofvicious circle of attrition and also gave a clear picture of the gap in motivation prevalent in the BPOindustry. The next objective aimed at exploring the dimensions of attrition based on the primary datacollection.20[pic]|Page 21 |214.2 Primary Data AnalysisObjective 2. To explore and analyze the dimensions of attrition in BPOs based on primary datacollected from field survey.The second objective was fulfilled with the help of a number of statistical analyses that included factoranalysis, regression, t-test, Duncan??™s mean test, and correlation. In order to identify and evaluate thefactors behind attrition based on primary data, factor analysis was done.

Principal component analysiswas the method of extraction. The Kaiser rule for number of factors to extract was applied. 8 factorswere extracted viz. dispirited perceptual factors, unfavorable working conditions, hostileorganizational culture, discontented personal factors, substandard nature of job, uncongenialorganizational support, low self-fulfillment, and mystified career path.Table 3: Factors for attrition from factor analysisFactor ItemFactor LoadingFactor Name1??? Low Perceived Value??? Lack of Equality??? Lack of Advancement Opportunities??? Incompatible Policies.8622.

8278-.6494.5026Dispirited PerceptualFactors2??? DissatisfiedwithWorkingConditions.7693Unfavorable WorkingConditions3??? Power and Politics??? Dissatisfied with Colleagues??? Lack of Teamwork.7974-.

4809.4482Hostile OrganizationalCulture??? Dissatisfied with compensation??? Personal Reasons??? Dearth of self-motivation-.8269.6595.6893Discontented PersonalFactors5??? Lack of Skill Variety??? Monotonous Nature of Job??? Absence of Challenge.

5135.5021.8519Substandard Nature of Job6??? Irregular Working Hours??? Emphasis on quantity over quality??? Ineffective Supervision.3608.5456-.4222Uncongenial OrganizationalSupport7??? Lack of Autonomy??? Achievement not recognized-.4471.

8373Low Self-FulfillmentFactors8??? Poor Mentoring??? Unsure of career growth-.6229.8151Mystified Career PathThe next step involved computing the correlations between the independent variables and thedependent variable in order to find out the relationship between the two. Substandard nature of job,dispirited perceptual factors, discontented personal Factors, uncongenial organizational support, andhostile organizational culture have significant correlations with the dependent variable that isprobability of quitting the organization.

All the correlations are positive. It should be noted here that[pic]|Page 22 |22the dependent variable in the equation is the employee??™s probability of quitting the organization and allthe independent variables are positively correlated with it. That means these pessimistic dimensionslike substandard nature of job, dispirited perceptual factors, discontented personal factors etc arepositively correlated with the employees??™ probability of quitting an organization. The only threevariables which do not have a significant correlation are low self fulfillment factors, mystified careerpath and unfavorable working conditions. That means it cannot be said with statistical significance thatprobability of quitting increases with the increase of uncertainty of career growth or poor mentoring oreven achievement not being recognized.Table 4: Relationships (Correlation coefficients) between factors of attrition,and probability of quitting the organization (N=500)Factors of attritionProbability of quittingSubstandard Nature of Job0.42**Dispirited Perceptual Factors0.

30**Discontented Personal Factors0.23**Uncongenial Organizational Support0.23**Hostile Organizational Culture0.17**Low Self-Fulfillment Factors0.

04NSMystified Career Path0.03NSUnfavorable Working Conditions0.03NS** Significant at .01 level.Regression analysis was also done in order to find out the contribution of these factors to the stay of anemployee. Substandard nature of the job, discontented personal factors, uncongenial organizationalsupport, dispirited perceptual factors and hostile organizational culture are the main determinants ofattrition in the BPO industry. The value of multiple R is 0.60 and the value of r square is 0.

36 in theequation. It states that 36% of the attrition in a BPO is explained by these factors. An employee tendsto leave the organization because of the substandard nature of the job, discontented personal factors,uncongenial organizational support, dispirited perceptual factors and hostile organizational culture.Y= 1.78 + 0.38X1 + 0.

42X2 + 0.34X3 + 0.33X4 + 0.09X5Where,Y = Stay in the organizationX1 = Substandard nature of jobX2 = Discontented personal factorsX3 = Uncongenial organizational supportX4 = Dispirited perceptual factorsX5 = Hostile organizational culture[pic]|Page 23 |23These dimensions were then compared across all the personal characteristics i.e. age, gender, maritalstatus and education.

In the gender dimension, factors like dispirited perceptual factors, unfavorableworking conditions, discontented personal factors, monotonous nature of job, and low self fulfillmentfactors had significant difference in the mean values of males and females. Dispirited perceptualfactors, discontented personal factors, and low self-fulfillment factors were ranked higher by maleemployees.In the marital status dimension, significant difference was found in the mean values of dispiritedperceptual factors, unfavorable working conditions, discontented personal factors, hostileorganizational culture, uncongenial organizational support and low self fulfillment factors.Uncongenial organizational support, hostile organizational culture, low self-fulfillment factors,discontented personal factors, and dispirited perceptual factors as factors responsible for attrition wereranked higher by married employees as compared to unmarried employees.In the education dimension, all the factors except for mystified career path had significant differencesin mean and standard deviation values between graduate and post-graduate respondents. Factors likehostile organizational culture, uncongenial organizational support, and dispirited perceptual factorswere highly significant as compared to others. Hostile organizational culture, uncongenialorganizational support, monotonous nature of job, discontented personal factors, and unfavorableworking conditions were all ranked higher by graduates as compared to post graduates. Post graduateemployees ranked perceptual factors and self-fulfillment factors as important reasons for leaving anorganization.

In the age dimension, dispirited perceptual factors and monotonous nature of job showed highlysignificant differences in mean and standard deviation values. Mystified career path, unfavorableworking conditions and hostile organizational culture were other significant factors. Organizationalculture, working conditions, nature of job was ranked highest by employees less than 25 years of age.Dispirited perceptual factors along with mystified career path were ranked highest by employees morethan 35 years of age than other less aged employees.When the dimensions were compared across the three tenure groups, uncongenial organizationalsupport, hostile organizational culture, low self-fulfillment factors, and discontented personal factorsshowed significant differences in mean and standard deviation values. Unfavorable workingconditions, dispirited perceptual factors and substandard nature of job did not have any significantdifference in the mean values or standard deviations. F value was highest in case of organizational[pic]|Page 24 |24support. This factor was ranked highest by respondents with less than 1 year of job.

Hostileorganizational culture, discontented personal factors, and mystified career path was ranked highest byrespondents with more than 3 years of experience. Employees with 1 to 3 years of experience rankedlow self fulfillment factors as the highest. Thus the second objective of exploring the dimensions ofattrition through primary data was successfully achieved.5. Exploring the dimensions of employee retention5.1 Dimensions of retentionObjective 3. To identify and explore the dimensions of employee retention in BPOs based onprimary data collected from field survey.For the fulfillment of the third objective, a series of statistical analyses were done.

It began with factoranalysis, followed by mean tests to compare the dimensions across various characteristics and endedwith the computation of correlations. In order to identify and evaluate the factors behind retentionbased on primary data, factor analysis was done. Principal component analysis was the method ofextraction.

The Kaiser rule for number of factors to extract was applied. All total 4 factors wereextracted viz. intrinsic motivation factors; hygiene; life interest and work compatibility factors; andinvolvement factors.Table 6: Factor Analysis of the factors of retentionFactor ItemLoading Factor Name1.??? Opportunity for personal growth and development in my jobposition.??? Opportunity in my job position to give help to other people.??? Feeling of self-esteem a person gets from being at myposition.

??? Authority connected with my position.??? Feeling of self fulfillment a person gets from being in my jobposition (i.e.

feeling of being able to use one??™s own uniquecapabilities, realizing one??™s potentialities)??? My role at the current job position.??? Prestige of my job position inside the organization..


4458.6149IntrinsicMotivationFactors2??? Amenities like housing, conveyance, medical benefitsprovided.??? Opportunity to develop close friendship in my job position.??? Salary offered for my job position.??? Facilities provided for effective working (lighting, airconditioning, seating etc.)??? Security of my job position..3075.4998.8405.6316.7643HygieneFactors[pic]|Page 25 |253??? Feeling of worthwhile accomplishment in my job position.??? Opportunity one gets to move ahead in life and become fairlywell-known and well-off.??? Consideration given by the government to this profession.??? Prestige of my job position outside the organization (that isregard received from others not in the organization.).3053.4692.8048.8696Life Interestand WorkCompatibilityFactors4??? My overall involvement in the work??? Sense of accountability for a person at my job position.??? Opportunity in my job position for participation in thedetermination of methods and procedures.??? Opportunity for independent thought and action..3516.3158.7969.6832InvolvementFactorsThe dimensions of retention so formulated after the factor analysis were then compared across thevarious personal characteristics of the respondents chosen for the study. On the basis of gendercomparison, extrinsic hygiene factors, involvement factors and life interest and work compatibilityfactors had their mean values significantly higher in case of females as compared to males. On thebasis of marital status comparison, the mean value of involvement factor was higher in case ofmarried employees than unmarried ones. On the basis of education, all the factors except involvementfactors had significant differences in mean and standard deviation values between graduate and post-graduate respondents. Life interest and work compatibility factors, intrinsic motivation factors andextrinsic hygiene factors were all ranked higher by post graduates as compared to graduates. On thebasis of age comparison, extrinsic hygiene factors, life interest and work compatibility factors andintrinsic motivation factors showed highly significant differences in mean and standard deviationvalues. Extrinsic hygiene factors; life interest and work compatibility; and intrinsic motivation factorswere ranked higher by employees more than 35 years of age than other less aged employees. On thebasis of tenure groups, intrinsic motivation factor and life interest and work compatibility was rankedhighest by the respondents with more than 3 years of tenure. Involvement factor was ranked highest bythe second tenure group i.e. with 1-3 years of tenure in the present organization.Relationships were also found out between the various retention factors and the perceived attitudes ofthe employees. All the correlations had positive and significant coefficients, thus stating the fact that ifan organization is able to exploit the retention factors, viz. motivation factors, hygiene factors,involvement factors, and life-interest and work compatibility, the employees can readily andvoluntarily express their willingness to continue.[pic]|Page 26 |265.2 Regression Model for retentionObjective 4. To develop a regression model for escalating the stay of employees in BPOs and giverecommendations for the same.For the fourth objective, regression analysis was done. The dependent variable was sustenance in anorganization, and the independent variables were personal characteristics viz. age, gender, education,marital status, and retention factors viz. motivation factors, extrinsic factors, involvement factors, andlife interest and job compatibility factors. All these eight factors were put in the model as independentvariables and willingness to continue in the organization was put as the dependent variable. Intrinsicmotivation factors, employee involvement factors, age and education are the main determinants ofretention. The value of multiple R is 0.60 and the value of r square is 0.36 in the equation. It states that36% of the retention in a BPO is explained by these factors. An employee??™s sustenance in anorganization can be rightfully explained by these factors.Y= 1.78 + 0.47X1 + 0.15X2 – 0.13X3 ??“ 0.11X4Where,Y = Stay in the organizationX1 = Intrinsic Motivation FactorsX2 = Involvement FactorsX3 = AgeX4 = EducationAfter forming the regression model, value for each respondent??™s willingness to stay in the organizationwas calculated. These predicted values were then compared to the actual values as given by therespondents. There was a strong correlation between the actual and predicted values. The correlationcame out to be 0.659** which was significant at 0.01 level. Thus, on the basis of the regression modelit can be concluded that intrinsic motivation factors; and involvement factors are quite instrumental inretaining the employees in an organization and at the same time, age and education negativelycontribute to the sustenance of the employees in the organization. Employee involvement is a proventool to motivate and retain employees and according to the result here, it can be constructive in theIndian BPOs too. In the West, there has been ongoing interest in getting workers more involved invarious processes, such as decision-making and information sharing. Employee participation adds toemployees??™ growth needs and sense of achievement through a healthier deployment of their dexterityand potential. Employee participation in planning and decision making and in articulating new policies[pic]|Page 27 |also acts an important tool to improve employee motivation. Finding ways to intrinsically motivateemployees to improve effectiveness and performance can have long lasting impact on their sustenancetoo.Based on the two dimensions i.e. motivation and involvement which, according to the regressionmodel, significantly contribute to the sustenance of an employee in the organization, employees can bebroadly classified into four broad categories. There are people who are woefully inadequate in bothdimensions i.e. neither are they involved in the work, nor are they motivated to perform. We may callsuch people as ???detached??™ who leave the organization for no rhyme or reason, hence extremelydifficult to be retained. Next comes the disgruntled??™ who get involved in the given assignment butlack aspiring motivation. Such people are moderately to highly difficult to be retained as they lack inthe basic intrinsic motivation. The other two segments comprise of ???strugglers??™ and ???stars??™ who are atthe higher end of the motivation continuum. The former may be relatively lower in their involvementas compared with the latter. ???Strugglers??™ lack involvement but have a high degree of intrinsicmotivation, because of which they struggle hard to work. It is moderately difficult to retain them. Theease and art lies in fulfilling their involvement needs by expanding their responsibilities, empoweringthem, making them involved in decision making etc. ???Stars??™ are highly motivated and highly involv