Posted by Global Sourcing Forum on Sun, Jul 25, 2010
from ValueNotes
There is much talk about IT and BPO industry growth, fuelled by the recovering global economy. Expected offshore business that was stalled 2009 onwards, is now on the cards again, as management focus and financial situations are more conducive. Studies have shown that organizations of all sizes are planning to outsource more in the next two years, to countries such as Mexico, China, India and Philippines. What this signals for Indian providers is that business is about to boom in the next financial year. Several analysts have forecast an industry uptick. But while the signs all point towards growth, there have been no significant new deals to corroborate this sentiment. In anticipation of the growth in business, this much has become clear for Indian IT-BPO firms: the level of scale offered will be paramount to exploiting this expected growth period. Employers have in fact realized this, and the ‘demand environment’ is already affecting the industry’s human capital.
Rise in attrition in Q1
Attrition is rising once again, across IT and BPO segments. The first quarter saw attrition rates of over 15% for many software exporters. Infosys’ Q1FY11 attrition rates, at 16%, were its highest in the last four quarters. Even TCS faced an escalation, with 13.1% LTM attrition, compared to 11.5 in Q1FY10. Attrition in the company’s BPO wing was significantly higher (at 20%), compared to IT services (at 12.3%). As the economy recovers, industry opportunities are opening up again, and attrition has naturally been higher in the first quarter. In fact, most IT-BPOs have formulated their hiring strategies in anticipation of higher attrition rates this year. Voice processes in BPOs have particularly high attrition (anywhere between 50-70%). Some of the ways in which BPOs are trying to lower attrition is by looking at Tier III cities and rural locations for setting up centers, and diverting voice processes into multi-channel contact processes (involving non-voice, email/chat/web based support).
NASSCOM has predicted a drop in attrition rates by September 2010, nearing campus recruitment time for many employers. To counter this temporary churn, retention of critical resources, coupled with aggressive capacity addition will be key for industry growth this year.
Revised hiring targets
Companies are revising their annual and quarterly hiring targets upwards. To illustrate, TCS is now targeting 40,000 new recruits, in lieu of the previously estimated 30,000. Infosys is also looking at hiring 36,000 from the 30,000 outlined in April. The majority of these will be campus recruits, and of the 14,000 to be added in Q2, the Infosys BPO itself will absorb 9,000 employees.
The capacity addition for these companies is mainly in new centers, and new markets. The reasons attributed for both upward revisions are strong deal momentum and consistent ramp-ups for both companies. While companies such as Wipro and WNS are yet to declare their Q1 results, it can be expected that aggressive human capital development will be a crucial element in their strategies as well.
Aggressive retention plans
NASSCOM believes that remuneration is extremely important in motivating an employee to continue with his company in the long run. In line with this, most large outsourcers are pre-empting the exits, and offering salary hikes as a retention strategy. Current BPO wage inflation of 10-15% is definitely increasing costs for employers. But as it is expected to lower attrition rates in the next few quarters, the costs associated with new hires will reduce significantly. Retention is being termed as a ‘major priority area’ for the industry and remuneration is one of the most important ways it may be addressed. TCS, Infosys and Wipro have introduced salary hikes of 10-20% (on average) in this year to ensure that their workforces are not motivated towards global rivals such as HP, Accenture and IBM.
To further enhance retention, IT-BPOs will have to evolve a stronger employee value proposition, with greater scope for learning and career development opportunities. These factors will be the strongest source of differentiation for employers, once the dust from the attrition settles down.
So even in anticipation of strong growth, IT-BPO companies are striving to match pace with global demand, in terms of human resources. Companies are in a bid to extend service capabilities for the expected international business, and aggressive human capital development seems to be the ace up their sleeves this year.
Posted by Shelley Ballarino on Tue, May 04, 2010
Focused Content, Valuable Networking, New Location!
Global Sourcing Forum (GSF)'s primary focus is on showcasing latest strategies, trends and best practices in the industry through an interactive forum that encourages discussions and peer to peer learning. In addition, GSF offers a Global Showcase for exploration of established and emerging global destinations for outsourcing solutions and partnerships.
Executive Forum: Participate in two days of insightful and educational sessions provide a unique perspective on the most current issues impacting this sector as well as solutions that will stay the test of time and rigor.
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Posted by Shelley Ballarino on Fri, Apr 30, 2010
Global Sourcing Forum (GSF) is the premier conference and thought-leadership forum covering various facets of outsourcing and globalization.
WHEN:
October 13-14, 2010
Pre-Conference Workshops: October 12
WHERE:
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New York, NY USA
Theme: Managing Growth & Change in the New Relentless Economy
This premier event caters to the needs of senior business and soucing executives charged with leading their organizations through change during an economic period that has undergone significant structural shifts. Over the last decade, Global Sourcing Fourm has become the leading conference in the industry that goes beyond the common issues to provide insights and advice on improving competitiveness and increasing profit margins through strategic outsourcing.
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Submission Deadline is May 23, 2010
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