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| Consider attrition |
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How would you measure the quality of BPO company? Your measure must be clear, quantitative, and apply to all BPO companies in all niches anywhere in the world. Sound impossible?
Accurately identifying a mature BPO service provider requires objective proof. This article proposes that attrition can serve as a broad indicator of BPO quality.
BPO industry news is saturated with buoyant growth projections and headcount explosions. In an industry growing this rapidly, many companies appear to offer robust, long term partnership.
Do these short term growth rates guarantee anything? Can every BPO service provider give you the strategic, global sourcing partnership needed to achieve long term competitive advantage in your industry? Of course not.
The pioneering buyers of global sourcing, from banks and consultancies to Fortune 100 companies, are quietly realizing a competitive advantage in their industry. Their insistence on anonymity may be politically expedient or simply a desire to maximize early-adopter advantages.
In any case, you won't be able to identify the leading independent BPO service provider by looking at its client list. At best, you will get tantalizing clues such as "we work for the world's largest law firm."
The correlation of attrition and overall quality can be demonstrated by understanding how attrition relates to several core aspects of any BPO company: service quality, training, cost, and company culture and standards.
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Service quality
Quality of service is built on training and knowledge of the customer. Developing a staff with deep domain expertise is clearly impossible if 40% of your employees quit every year. This is exacerbated by the cultural barriers most buyers experience when working with offshore BPO companies. A bright young person from Kerala or Madhya Pradesh will require some time to fully understand the mentality of a New York investment banker. It takes time for an employee to become an expert service provider.
Training
Strong training programs reduce attrition by giving employees a focused, useful skill set. Employees that receive valuable training know that future skill development is worth sticking around for. Mature companies invest in broader training initiatives, such as communication skills, time management skills, and management training. A company that invests little in training is more likely to face high attrition rates. Without significant and effective training, a service company has little chance of long term success.
Cost
There are many direct monetary costs to attrition: HR costs, lost productivity, and management overhead. Precisely determining the direct costs of attrition is difficult, but a common estimate is 1.5 times the employee's annual salary. Since saving money is a major motivation for BPO buyers, cost increases harm BPO relationships. High attrition is a form of operational inefficiency and waste.
Company morale and standards
In addition to the monetary cost, attrition does insidious, intangible harm to a company's culture and standards. The overstaffing necessitated by a high attrition rate and the fact that teams are constantly disintegrating and being reformed with novices contribute to a sense that individuals don't matter and that standards cannot be achieved.
Overstaffed employees learn that waste and inefficiency are built into the operation while productive employees learn that "productivity doesn't pay". All employees become less likely to internalize the high standards for quality, security and customer service. When people are seen to be highly interchangeable, developing human capital becomes difficult and morale drops.
Since most costs of attrition are hidden from the customer's immediate experience, managers are tempted to see attrition as an inevitable fact of BPO life, or a statistic for HR departments to worry about. But attrition rates deserve close attention from BPO managers and buyers alike. While rates of up to 40% have been reported by BPOs in India, a reasonably successful company will have a rate no higher than 15%.
Attrition is manageable. Leading BPO companies think strategically about retaining employees. They use professional development programs, stock option grants, promotions and mentoring. They understand that employee satisfaction and loyalty, at all levels is an essential foundation for a successful business.
BPO executives have long understood that attrition management is critical. To get an honest measure of a BPO company, check out the bottom line in BPO quality: attrition. |
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