The Revolving Door in Indian IT/BPO

I’m on my way back to the US, and on a long flight.  These long flights have become a way of life over the last 6 months, and I’m either fly to India or from India every weekend.  As friends put it – WOW – what are you going to do with all those frequent flier miles?  Well, that’s the irony in life – the last thing I want to do is use the miles to go somewhere ☺.

Anyway, speaking of challenges with gifts we’ve received in life, I am reading an article on Business Today, the October 8th issue called the “Revolving Door”, which speaks to how the single biggest problem facing the Software and Services industry in India is inadequate and fickle manpower.  Having spent time working with the major outsourcers, I can see how the employee attrition problem is the largest challenge faced by them.  I can imagine the pain associated with finding talent in a market where the there’s strong demand and a lack of supply, especially when the employer spends 3-6 months training an employee, only to lose them within 6-12 months.

According to the article, attrition rates at BPO’s are close to 70%, and in my past experience with IT outsourcers, they hover around 43%.  That’s the equivalent of more than half the workforce leaving every year.  CEO’s at these companies routinely say that their biggest challenge isn’t getting business or managing customers, it’s retaining employees.  According to NASSCOM, India requires around 2.3 million people in IT over the next 3 years or so, and these attrition rates can cripple the industry.  Employee retention is one of the reason major players have shut down their operations in India.

The scarier part, is the article clearly states how there doesn’t seem to be a solution in sight.  Executives at the BPO and ITO companies complain about how in spite of being given a great opportunity, it baffles them that employees leave in a few months.  Well, in my humble opinion, this shouldn’t be a huge surprise.  There are parallels to what the Indian IT/BPO industry is going through, and as I’ve written before, some parallels are in the US Automotive industry.  The Indian IT/BPO industry has created an “Assembly Line” of technology enabled processes, which, combined with cheaper labor costs, has resulted in reduced costs of operations, leading to the major shift of the work to India.  In Detroit, when automakers first introduced the assembly line, they had cheaper labor, and they trained the labor force in the basic skills to work at the plants in assembly lines.  The employees were happy with the pay scales, and the expectations were in check.

We’ve created the same assembly line in India, but there are 2 MAJOR DIFFERENCES.  One, the average worker in the Indian industry is NOT a BLUE COLLAR WORKER, working away at the plants.  Second, the aspirations of the Detroit autoworker didn’t include BUILDING THE NEXT MAJOR CAR COMPANY IN 18-24 MONTHS (fueled by 4 companies that had done it in the United States). 

In my opinion, these are the 2 issues that need to be tackled, if we are to find a solution long term.  Short term plug-gap measures abound – incentives to stay, free food at cafeterias, access to malls, buses to commute, fancy buildings, ….the list goes on.  Yet, none of these seem to help much.  It’s IRONIC to me, that while the entire industry seems to complain about the government's lack of planning for long term infrastructure, when it comes to their own long plans, the focus continues to be on short term profits.

I realize I may be raising a controversial issue, but for those that wish to indulge with me for a few minutes, please read on.

1. The Indian IT/BPO employee is usually one who is bright, educated, and creative.  They’re attracted to the financial incentive offered by the industry, but soon are disheartened by the repetitive nature of the work, as well as the lack of creativity.  There’s an entrepreneur in every one of the workers, which is being squashed by the same old work, every single day.  It doesn’t matter if they’re answering phones for a credit card company, or setting up servers for them, it’s the same old work – every single day.  There’s a mismatch between what one believes themselves to be capable of, and what they’re doing on a daily basis.  It’s like asking your Mom to cook the same meal every single day – how long would that last before she quit???
2. Everywhere around us, we read about YouTube being built in 18 months by 3 young entrepreneurs for $1.65 Billion, or a mySpace being worth billions of dollars.  The expectations of the Indian IT/BPO worker is to make it BIG, and make it quick.  There’s no education on what it takes to build companies, not much career management on how their current work gets them on a path to build something some day, and no insight into what really goes on to build these successful companies, not to mention the 10,000 others that fail to get us the one Google or  YouTube. 
3. The Indian IT/BPO employee has no channel that I know of, to express their creative side.  They’re expected to do their daily work, but discouraged to venture into anything creative, some for security reasons, mostly for corporate paranoia.  Companies block access to chat, message boards, and other forms of collaboration with peers – which is a requirement for the employee to tap into their creative energies.  They’re not encouraged to think outside the box and come up with innovative solutions of any kind, and before people jump and claim otherwise, let me clarify that I mean encouragement in tangible form, not just words. 

Anyway, I’ve already written quite a bit today, so I’ll stop for now and pick up again in a couple of days.  I’ll leave with the simple thought that if we’re to solve the employee retention issue facing the Indian industry, the industry needs to come up with a long term solution that encourages people to spend time exploring their creative side (albeit at the supposed cost of some productivity/profits), and invest in entrepreneurship centric education in a very informal way (maybe mentorships etc.).

I’d love to hear from people…send me your thoughts.

Comments

[Deepa M Nair]

You have spoken on a very good topic. Its not just this that BPO employees quits the job. One could be the salary and the most important thing that I see and infact experience this in a BPO industry is no promotions, no motivation, etc... I am saying this because I too am an employee of a BPO industry. I know whats happening out here.

Inspite of putting in maximum hard work, people dont get promoted because perhaps such people may not be behind their managers always ( I mean they may not their manager's right hand - let me put it in our words butter-polishing such managers). People who are always behind their managers and who do not do much of work get the promotion. And the most discouraging way shown to the outstanding employee. Thats why we tend to move to some other companies looking out for more growth and of course financial opportunities.

It also becomes disgusting when the employees who are hard & sincere working, do not get their appraisals done in the right way as they expected. Its just goes the opposite way. When such things happens in a BPO industry how do you think that an employer can retain their employees.

They need to first train their managers to move in the right direction in honest way and then move on to the employees.

I have mentioned all this out of experience. I ahve faced this in real life. Even I am on the look out for growth and I dont mind jumping to another organization if given an opportunity to grow. Thats the life of a BPO employee.