CONTENT

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1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

PARTICULARS
OVER VIEW OF BPO BPO TERMINOLOGY ORGANIZATION STRUCTURE OF BPO INDUSTRY RATIO OF MANPOWER IN BPO INDUSTRIES COMPETENCIES REQUIRED FOR DIFFERENT DEPARTMENT CAREER PLANNING / GROWTH OF BPO PERFORMANCE MANAGEMENT SYSTEM OF BPO SUCCESSION PLANNING OF BPO INDUSTRY REWARDS AND RECOGNITION IN BPO INDUSTRY CHALLENGES FOR HR IN BPO INDUSTRY CONCLUSION

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1. OVER VIEW OF BPO

The concept of outsourcing started with Ross Perot when he founded Electronic Data Systems in 1962. EDS would tell a prospective client, "You are familiar with designing, manufacturing and selling furniture, but we're familiar with managing information technology. We can sell you the information technology you need, and you pay us monthly for the service with a minimum commitment of two to ten years. BPO is the act of transferring some of an organization's repeated non-core and core business processes to an outside provider to achieve cost reductions while improving service quality. Because the processes are repeated and a long-term contract is used, outsourcing goes far beyond the use of consultants. If done well, BPO results in increasing shareholder value. The main difference between BPO and more traditional IT outsourcing is that BPO offers companies a way of achieving transformational outcomes much more quickly. In a typical BPO contract, a service provider takes over a specific corporate function. Effective BPO encompasses much more than just changing who is responsible for performing the process. In BPO, the outside provider not only takes on the responsibility to manage the function or business process, but also re-engineers the way the process has been traditionally done. The next generation of Business Process Outsourcing has emerged as a priority for businesses looking to better options in managing their application portfolios. The first wave offered lowcost, off-shore development labor, but today firms are demanding new, less risky options for applications that are strategic, complex, or mission-critical, while still taking cost into consideration. Outsourcing has moved from a niche technology management tool to a mainstream strategic weapon. Business Process Outsourcing leverages process driven efficiencies in terms of organizational excellence, responsiveness & branding, financial efficiency and customer relationship. BPO is emerging as a powerful and flexible approach that business leaders can use to achieve a wide range of tactical and strategic aims. The most common business process that gets outsourced is call centers. Call centers and Help Desks of many multi national and fortune 500 companies are being outsourced to low waged, English

speaking countries such as Philippines and India. Countries like India with vast IT human resources are also attracting outsourcing from American IT/Technology companies to outsource their IT Help Desks. Many of these help desks are state of the art with latest Help Desk software and help desk hardware with technical savvy IT graduates behind them answering your questions. It can be defined as the transfer of an organization's entire non-core but critical business process/function to an external vendor who uses an IT-based service delivery. By doing so, BPO helps an organization concentrate on its core competencies, improve efficiency, reduce cost and improve shareholders' value. Though IT outsourcing has been happening for so many years, an increased momentum has been witnessed since the late 1990s due to the rise of Internet and Communication technologies. Several global giants from various industries have begun to realize the importance of BPO and have started outsourcing their non-core business functions. This has given rise to many specialized BPO vendors across the globe, with India being a major hub owing to its large computer-literate English-speaking population, low billing rates, strategically favorable time zone and high quality. The BPO market in India is expected to grow exponentially in the coming years. Although the term "business process outsourcing" (BPO) has gained visibility in the IT services industry only in the past four to five years, the service offering itself has existed for decades. For example, several of the largest service providers have significant legacy revenue streams that are derived from medical claims processing contracts. In many instances, these contracts include the entire back-office function. The outsourcing of payroll administration, an accepted practice for many years, is another illustration of the true age of the BPO market. This market is now experiencing noticeable momentum in terms of wider user acceptance and the emergence of new service offering categories, as well as a proliferation of providers from which to choose. Service providers offer BPO for literally hundreds of business processes. Some of these service offerings are very stable; some are just emerging and are, therefore, largely untested.

Domestic Market Of BPO

Business process outsourcing in India The business process outsourcing industry in India has grown by leaps and bounds and as its size increases so does its competitive advantage. Compared with 1996 when this Industry had started inroads into the United States with Outbound Telemarketing campaigns, today the vehicle for these calls-the internet has become cheaper and more reliable for the average Indian business. The business has boomed to the extent that many people are now running BPOs out of their cyber cafes and houses in New Delhi. The sector witnessed considerable activity during 2004-05, including a ramping up of operations by major Indian and MNC players and stepped up hiring. The domestic BPO market, catalyzed by demand from the telecommunications and BFSI segments, matched the growth of BPO exports. The market experienced maturity and consolidation, a result of numerous mergers and acquisitions taking place within the sector. There were over 400 companies operating within the Indian BPO space, including captive units (of both MNCs and Indian companies) and third-party services providers. The Indian BPO industry remains on a growth path, emerging as one of the key investment markets in the country. Growth in this sector will get a further impetus as Indian BPO companies have robust security practices and emphasis is laid in developing trust with clients on this score. While earlier there were varying quality standards on this aspect, today there is focus on standardization of security, such as data and IP security. Major BPO locations in India

Cities that are leading BPO-ITeS hubs in India today:

Bangalore Chennai Hyderabad Mumbai NCR (Gurgaon, Noida, Faridabad, Greater Noida) New Delhi Pune

These are Tier I cities that are leading IT cities in India. With rising infrastructure costs in these cities, many BPO's are shifting operations to Tier II cities like:-Ahmedabad, Amritsar, Bhubaneswar, Chandigarh, Guwahati, Indore, Jaipur, Kanpur, Kochi, Kolkata, Mangalore, Mohali, Mysore, Nagpur and Srinagar. Tier II cities offer lower business process overhead is compared to Tier I cities, but may have a less reliable infrastructure system which may hamper dedicated operations. The Government of India in partnership with private infrastructure giants is committed to bringing all around development and providing robust infrastructure all over the nation. Business Process Outsourcing (BPO) - Advantage India

The abundant skilled manpower has made India a target destination for multinationals to back end their operations in India. India ranks high in areas such as qualifications, capabilities, quality of work, linguistic capabilities and work ethics, and thus is ahead of competitors such as China, Philippines, Ireland, Australia, Canada etc. Indian companies have unique capabilities and systems to set, measure and monitor quality targets. In specific BPO categories, Indian centers have achieved higher productivity levels-for example, the number of transactions per hour for back office processing, than their Western counterparts. Also, India is able to offer a 24x7 services and reduction in turnaround times by leveraging time zone differences. India's unique geographic Positioning makes this possible. Many state governments in India are offering incentives and infrastructure to set up IT enabled services. About 100,000 engineers graduate from India every year. Many of these engineers are employed with call centers for troubleshooting and providing technical support at salaries that are dramatically lower compared to the pay scales in the US. The average monthly salary in India is $400-700 compared to $2,700-2,800 in the US.

Size and Growth of BPO in India Year 2003 2004 2005 Size (US$ Bn) Growth Rate 2.8 59% 3.9 45.3% 5.7 44.4%

Strengths

Weaknesses

Solid history in software development. English proficiency Government Support Cost advantage Strong tertiary education Process quality focus Skilled workforce Expertise in new technologies Entrepreneurship Reasonable technical innovations Reverse brain drain Existing long term relationships

Positioning & Brand management Infrastructure Cultural differences Sales & marketing Leverage expertise for higher-value education Business process experience Distance from US Fear/Uncertainty from Pakistan Legal system Poor globalization skills

Opportunities

Threats

Creation of global brands BPO & Call center offerings Expansion of existing relationships Chinese domestic & export market Leverage relationships in West to access APAC/Middle East markets Indian domestic-market growth

Internal competition for resources Over-promise / Under-deliver Regional geopolitical uncertainty Rising labor costs Competition from other countries Sometime blinding nationalism Government blocking reform/deals Corruption/piracy/trust Political & religious instability -war

 Global Market of BPO

Global BPO Market by Industry Information Technology Financial Services Communication (Telecom) Consumer Goods/ Services Manufacturing 43% 17% 16% 15% 9%

Global BPO Market by Geography United States Europe Asia-Pacific (incl. Japan) Rest of the World 59% 27% 9% 5%

Size of Global Outsourcing Market 2000 USD$ 119 Billion 2005 USD$ 234 Billion 2008 (est.) USD$ 310 Billion Call Center Employee cost USA Australia Philippines India US$ 19,000 annually US$ 17,000 annually US$ 9,050 annually US$ 7,500 annually

Nearly 75% of US and European multinational companies now use outsourcing or shared services to support their financial functions. 72% of European multinational companies have outsourced financial functions over the past two years. Additionally, 71% of European companies and 78% US companies plan to use these services in the next 12-24 months. Overall, 29% of US and European companies expect to increase

their use of outsourcing of financial functions, with spending expected to be nearly 16% higher than current levels. North America is expected to represent 57 percent of the total BPO market in 2003 - to $69 billion - with growth in other regions eventually outpacing North America. Gartner analysts say that after several years of double-digit growth, delays in contract signings and lower negotiated rates for large BPO deals have led to moderate growth in 2002 and 2003. The Western European BPO market is forecast to grow 10.9 percent in 2003, to $27 billion, according to Gartner. In Europe, outsourcing of financial services processes are widely used, however, other industries are growing in respect for different types of BPO. Customer interaction for demand-management BPO is proving popular in the utilities and telecommunications sectors. Supply-management BPO is gaining popularity in local governments, and enterprise services are growing in telecommunications for human resources, finance and accounting Starting off slowly, the Asia Pacific BPO market is expected to grow 7.8 percent in 2003, to $8.7 billion, but it is then forecast to have double-digit growth during the next few years. META Group, Inc. found that nearly all Asia Pacific IT organizations will outsource at least one mission-critical technology operation by 2005. McKinsey's research found that Australia and New Zealand are the most mature economies in terms of acceptance of BPO services, followed by Singapore. In most other countries there is almost no history of outsourcing other than product support. CHINA In the outsourcing field, China is the biggest challenge in the future and the largest threat to India. With the largest population and fastest economic growth, China has at least two strengths in the global outsourcing market: manufacturing and IT. The main advantages of China are as follows:

Lower Manpower costs: The Chinese workers cost about 15 percent less than equally qualified Indians.

Japan Advantage: China is likely to grow through the Japanese outsourcing route. The advantages that China has are Japan's proximity to China, similarity of the languages. India currently offers almost no BPO services in Japan.

Extremely low cost real estate and power: These costs are lower than in India. This can be a very attractive to the US companies, which are looking for cost cutting due to the downturn.

Proactive Govt.: The govt. is very friendly to this sector and has taken the following steps. 1. English teaching and other skill sets: Over $5.4 billion was invested in nine universities in China to promote English language and other skill sets. 2. Increasing telecom density and PC penetration: China scores over India in these aspects and intends to further increase the gap.

Leveraging on the manufacturing image: Western manufacturing companies have found that outsourcing their manufacturing function to China for their companies' global operation can be profitable and also of good quality.

The main disadvantages of China are as follows:

Lack of a good Quality record in Software: India has a better image as a quality supplier mostly due to its track record of better quality software than China.

Low English speaking population: This is the biggest drawback of China. It has a very small proportion of the population speaking fluent English.

Less mature: The Indian business processes are much more mature. China has only recently entered into BPO. As such, despite lower billing rates, total project costs in China would turn out be higher because of the higher overheads incurred.

PHILIPPINES In the Philippines the manpower costs are 60 to 80 percent lower as compared to UK and US. The average salary cost is around $700-800 per month in the BPO sector. The country has a

shortage of manpower mainly due to the small population as compared to India. The manpower base for BPO is only 300,000. Right now the country is getting business from nearly 70 companies employing more than 12,000 people with revenues of US$ 250 million. The main advantages of Philippines are as follows:

Large scale technical training program: The govt. has initiated a no. of policies by which the skills can be provided to a larger population.

Improved telecom and office infrastructure: Philippines scores over India in this respect.

3rd largest English-speaking nation in the world: This is a very important advantage. Well developed IT skill set: It is considered 2nd only to India due to performance in software.

Costs of technology workers: This is(which represents the biggest recurring costs for, say, a B2B site) is only around 16% to 25% in the Philippines to that of comparable workers from the United States.

Former American colony: As a former American colony, American culture and language is widely emulated here. These cultural and communications skills could prove to be so appealing to American firms that they would outweigh slightly higher labor costs in the Philippines.

The main disadvantages of Philippines are as follows:

Low graduate turnout: Philippines has a low graduate turnout (only 400,000 per annum). This compares very unfavorably with India.

Not having a record of high quality: India has consistently delivered very high quality in Software and has built a very high reputation in it.

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Political instability: The country has frequent elections which makes it difficult for companies to outsource as there is lack of uniformity of policies with changes in the Govt.

No disaster recovery facilities or multi-location facilities: After the WTC bombing terrorism has become a very important issue for the US companies in particular and they want that the BPO providers should have multi location facilities which can be used in case of any terrorist attack.

Issue of scaling up: Philippines face the important issues of scaling up. Issues like scaling up have stunted the growth of BPO activities being outsourced to Philippines. The largest call Centre in Philippines of AOL has only 800 people.

The size of the Philippines BPO industry is only $100 million, whereas India's BPO industry is presently at $1.5 billion (2001-02). IRELAND It was one of the front runners in the BPO and started much earlier than India. Thus it has built good brand equity in US. It has a very conducive regulatory framework and is known for excellent quality standards. The country that has strategically pursued developing outsourcing services market and is planning to invest heavily in telecom infrastructure ($ 5 billion over 10 years).But it suffers from a very big disadvantage of a lack of a large human resource pool. It has nearly 500 companies employing more than 40,000 people. Also it compares very poorly with India and China in terms of Manpower costs. Ireland is actually the biggest exporter of software services in the world today. But there is currently a shortage of programmers in Ireland and companies are forced to outsource work to India. The other countries, which have a share in the BPO sector, are given below. These countries are not serious competitors to India mostly due to the small population base. AUSTRALIA It has a mature BPO industry with 4000 call centers employing 225,000 people with US$ 5.7 billion revenue. It has the advantage of large English speaking population with a favorable time zone.

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2. BPO TERMINOLOGY
Business Process Outsourcing Business process outsourcing means examining the processes that compose the business and its functional units, and then working with focused service providers to both re-engineer and outsource these at the same time. BPO involves the full transfer of responsibility for functions such as transaction processing, policy servicing, claims management, HR, finance, and compliance to the outsourcing company. The outsourcing provider then administers these functions on their own systems to agreed service standards and at a guaranteed cost. Some of the BPO contracts call for performance-based payouts, tying vendor payments to business performance or overall cost savings. Business Application Outsourcing Company A (vendor) rents applications to Company B (user). Increasingly corporations are renting applications like enterprise resource planning, customer relationship management, messaging and collaboration, and e-business. The outsourcer provides the mission-critical enterprise application hosting and management. The goal is to relieve the corporation from day-to-day management and lower the total cost of ownership (TCO). The outsourcer hosts the software solution ensuring a preset level of performance and reliability. This is also termed application service provider (ASP) service. Business Process Off shoring Business process off shoring is the transfer of business tasks (medical transcription) or business processes (call centers) to a low-cost country like India or the Philippines. The interaction is conducted over telecom networks and the Internet. Off shoring typically include tasks like transaction or accounts processing, credit card processing, call centers, translation, and transcription. Most of this work can be sent without the need for in-person interaction. The off shoring of support functions is still relatively new. The off shoring wave began with IT/software services in the 1980s and accelerated in the 1990s with the Y2K hysteria. With the global economic slowdown, off shoring has vaulted to the forefront as an effective costcutting technique that takes advantage of labor price differentials and favorable skill/performance ratios.

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Business Transformation Outsourcing Business transformation outsourcing (BTO) is a natural extension of the more tactical BPO model and involves the transfer of responsibility for all back-office functions, as well as a comprehensive business change management process to an external vendor. The objective is to maximize the long-term benefits of the BPO operations, resulting in a comprehensive business transformation (or overhaul). Transformation outsourcing is not a tactical issue but a forward-looking strategic tool for change. The logic: big gains in performance only come about through business transformation. Outsourcing Multi sourcing is the management and distribution of different business processes among multiple BPO vendors. For instance, HR processes are outsourced to one best-of-breed vendor. Logistics are outsourced to another. IT development and maintenance to another vendor. Risk mitigation is a primary driver behind multi sourcing. One aspect of multisourcing is to use multiple suppliers to eliminate lock-in and achieve so-called best-ofbreed advantages. This is especially true for U.S. and European firms, which often like to spread offshore development to a variety of vendors and locations. Multisourcing also covers the different delivery models. These include:

On shoring - outsourcing to another company within the United States Near shoring - outsourcing to Mexico or Canada Off shoring - outsourcing to another country such as Ireland or India

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The figure below captures the differences.

Shared Services (or in sourcing) Shared services, a form of "internal outsourcing," enables corporations to achieve economies of scale by creating a separate internal entity within the company to perform specific services, such as payroll, accounts payable, travel and expense processing. A typical shared services initiative takes advantage of enterprise applications and other technological developments, enabling the company to achieve further improvements to quality in processes, such as finance, accounting, procurement, IT, and human resources. At the core of shared services is the idea that new technologies offer businesses the opportunity to 1) make better use of scarce skills, 2) provide information and services more efficiently, and 3) reduce the cost of administration. The bottom line: The modern firm sits at the centre of a network of suppliers. Gone are the big in-house departments and in their place are complex chains of external partners that are meant to deliver better services for less cost. All these signify a greater reliance on partners for non-core activities and resources. The advent of the Internet and the increasing sophistication of enterprise applications open up new opportunities for companies to share a wider range of services across a greater number of business units, departments, or vendors.

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3. ORGANIZATION STRUCTURE OF BPO INDUSTRY

The typical organization structure of a BPO service provider is a pyramidal one. The figure below depicts a simplified organization hierarchy, the roles and responsibilities at each level and the competencies required at each level.

Top Management

Manager Team Leader / Quality Analysts

Agents

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4. RATIO OF MANPOWER RATIO IN BPO SECTOR

FOR EXAMPLE HCL TECHNOLOGY

HCL Technologies Ltd expects the BPO and IT infrastructure management services to be the major growth driver, in line with the IT outsourcing industry trend. BPO space is still in an investment period. In the core product engineering area, the company expects buying interest to rebound in near future. `We have strong presence in BPO and IT infrastructure management services and lead in both the spaces, but due to the sensitivity of our clients we have kept its successes in these areas a low-key affair,` said Shiv Nadar, chairman and CEO, HCL Technologies Ltd, at the conference call.

BPO

BPO business recorded a four per cent sequential growth in June 2003 quarter with organic revenues registering a significant 46 per cent growth, while contribution to overall revenues stands at 8.6 per cent. Manpower in the segment increased by 635 to 1,466 permanent employees on the companys rolls and added seven clients during the June 2003 quarter.

Infrastructure

Infrastructure services business managed by HCL Comment has started yielding results from global markets, registering a two per cent sequential growth in revenues and contribution to overall revenues stands at 9.4 per cent. A total of 84 new employees were added during the June 2003 quarter, taking total headcount to 614.

HCL Technology (HCL Tech) has earned a net income of $ 52 million during 1999-2000 which is an increase of 136 per cent. 3087 software engineers were added last year which meant a growth of 51 per cent. Customer size increased to 269. They have offices in 15 countries worldwide.

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Their customers include NTT Data, VDO, Toshiba and Intelsat. THE KEY OPERATING STRATEGIES OF HCL TECHNOLOGIES ARE AS FOLLOWS:

Emphasis on a strong management team : 1. The creation of a global advisory board and technology advisory board should help in improving their geographical and technological strategy; this would help them in the acquisition of emerging technologies. 2. The organizational structure fosters an entrepreneurial spirit. 3. Independent Audit, Compensation and Related Party Committees have been formed. Audit Committee, headed by ambassador, Richard Burt, has formulated guidelines for insider trading and best practices. Compensation committee, headed by Robin Abrams, has approved of an Employee Stock Option plan to cover 91 per cent of the employees. 4. They have a distinguished International Board of Directors. This international experience should be useful while making acquisitions.

Emphasis on front run emerging technologies : 1. The investment in Research and development (R & D) should provide accelerated growth. 2. 9 per cent of their offshore manpower is dedicated to R & D. 3. The company intends to add value to the customer's business rather than just maintain systems. Thus there is greater potential for value based pricing. 4. Their technology services continue to move up the value-chain. 5. The company has placed an emphasis on Internet technologies development with minimum exposure to dot coms.

Non-linear growth model : 1. This implies that the company seeks to push revenue/income further than the hours put in and supplement its organic growth through diverse avenues. 2. Joint ventures and strategic partnerships: The company's partnership with Perot Systems (50:50) has been a highly successful one. HCL Perot has a man power of 1373 employees and has emerged as a leading outsourcing and

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systems integration company, with strengths in banking, energy, healthcare, insurance, manufacturing and telecommunications. HCL Perot added $ 4.1 million to the company's net profit during Q1 of FY2001. The company has also completed the acquisition and integration of Intelicent Inc. successfully. 3. Equity investments for value acquisition: HCL Tech is involved in developing cutting edge technologies along with some smaller companies, and may go in for a value acquisition to enhance shareholder value soon. 4. Mergers and acquisitions: Though the company has been actively evaluating M&A opportunities in the US and Europe, yet it has not finalized a deal as yet. They intend to acquire companies with strong technology, network services orientation and a quality client base. Mr. Shiv Nadar stated that the companies that they had targeted were going through a low phase, due to which their valuations were not correct. So the company could not go forward with their acquisition plans. 5. The company has invested $13 million in technology funds and other related areas. 6. The non-linear model can lead to better scalability through the creation of "soft cores" such as the Bluetooth soft core, Modem software, 12C Software and Bluetooth Stack.

Emphasis on quality revenue mix through the following : 1. Increased contribution from high value and high margin services- however it must be noted here that revenue growth this time is lower than the last time. 2. 72 per cent of the company's revenue's come from technology development services, software product engineering and networking services. 3. The company has a de-risked business model. 4. The top 5, top 10, top 15 customers contribute 23 per cent, 35 per cent and 46 per cent of revenues respectively. 5. The repeat business of the company from existing clients is of the order of 69 per cent. 6. The total client base is of the order of 286 as of September 30, 2000.

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7. The company's offshore revenues are growing at a CAGR of 71 per cent for 1999-00.

Emphasis on earnings led growth : 1. The company has been focusing on moving up the value chain, due to which the bill rate has increased both for offshore centric (11.4 per cent) and onsite services (10.9 per cent) over Q1 last year. 2. Average revenue per employee during Q1 2001 has also increased to Rs. 3.2 million per annum and gross profit per employee has also gone up to Rs. 1.5 million. 3. Margins of the company have also improved.

Employee Development and Contribution : 1. Human resources are the backbone of any information technology company and the long-term success of HCL Tech also depends crucially on their human resources. 2. Their total manpower stands at 4195 (inclusive of 494 people taken in during the quarter). 3. 83% of their total manpower is established in India. 4. The company's attrition rate is 11.6 per cent while the average training duration per employee stood at 13 days annualized for Q1 2001.

IT-Enabled Services (ITES) or BPO (Business Process Outsourcing) as it is better known holds tremendous potential for India. Though ITES in India has become almost synonymous with call centers in public perception, it encompasses much more. The term ITES can be defined as outsourcing of such processes that can be enabled with information technology and covers areas as diverse as finance, HR (human resource), administration, healthcare, telecommunication, manufacturing etc. These services are usually delivered to remote areas through the telecom and Internet medium and imply transfer of ownership and management of the process from the customer to the service provider. The concept of ITES started with the drive of the global companies to become cost efficient. In an attempt to stay competitive, corporate restructured their business in such a way that they

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could concentrate on their competencies and outsource the processes that were non-core to their business. India with its large English speaking graduate workforce and low wage levels emerged as an attractive destination for ITES (Exhibit I). Exhibit I Comparison Costs Personnel General Expense Telecom Property Rentals Depreciation Total Expenses 1500 2600 3000 2328 847 1500 155.2 32.6 50.0 20.2 & 42927 6179 Administrative 8571 1000 of Operating US India (US $ cost per full time

employee) India as % of US costs 14.4 11.7

58598 11854

Every year, India produces 2.1 mn graduates and 0.3mn post-graduates (including nonengineering colleges). As these graduates do not have enough job options available, a large pool of graduate workforce becomes available to the ITES industry. There is not only abundant workforce in India, they are also available at very cheap rates. The difference in wages between the US or UK and India is more than 70-80% for off shorable processes. Even after taking into account the interaction cost of 10-20% because of locational differences, the customers can still have net savings of 50-60% by outsourcing to India. Impressive growth Potential The ITES industry, which contributes 25% to the total IT Software and Service exports from India, witnessed a growth of 53.3% to reach US$ 2.3 bn in FY03. According to Nasscom, the industry is expected to grow by around 57% to touch US$ 3.6 bn. in the current fiscal. Going by the long-term projection of Nasscom, the industry is estimated to touch a size of US$ 2124 bn by 2008. This would imply an estimated compound annual growth rate of 58%, making it one of the fastest growing sectors in India (Exhibit 2).

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Exhibit 2 Growth of ITES Industry US$ mn 2000 2001 2002 2003 2004 565 930 1,495 2,300 5,200

Third-party service providers gaining prominence One of the main proponents of outsourcing is General Electric (GE), which started operations in India in 1997, has the largest ITES operation in India with more than 12,000 employees. The ITES story started in India with the captive centers of MNCs like GE, HSBC, American Express, Dell Computers etc setting up base here. This was followed by the emergence of venture funded third-party Indian ITES firms in descending order of revenues (based on FY03 revenues reported in accordance with US Generally Accepted Accounting Principles) which are Wipro Spectra mind, WNS Group, Daksh services, Ex-Service and HCL Technologies. The industry also has the presence of global BPO players like Converges, ES, Computer Sciences Corporation (CSC), Accenture and Exult Inc. Established software services companies like Infosys, Wipro, Patni, Satyam, HCL, Cognizant and Syntel have also started venturing into the ITES arena. These companies enjoy a number of synergies between their ITES operations and IT service offerings. They are able to leverage their existing customer relationships to get contracts and are also in a position to target a larger share of the customer's wallet by cross-selling different services. The customers also prefer vendors who can provide end-to-end services. Moreover, the cash-rich balance sheets of these companies are a big advantage as ITES is a capital-intensive industry. Customer care: Fastest growing segment Customer care also known as call center includes database marketing, customer analytics, telesales/telemarketing, inbound call center, web sales and marketing, sales and marketing,

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sales and marketing administration. The hype surrounding the industry can be explained by the fact that this segment is not only the largest revenue earner (US$ 810 mn in FY03). But is also the fastest growing segment (103% in FY03) in the industry (Exhibit 3). It also has to its credit the status of being one of the largest employment generators. The segment employed 65000 people in FY03 a stupendous growth of 117% compared to the previous year. Exhibit 3 ITES: Market Segmentation Revenue (US$ mn) FY03 Customer Care Finance HR Payment Services Administration Content development 810 510 45 210 310 465 102.5 70.0 50.0 90.9 67.6 3.3 Employment Growth* (%) 116.7 60.0 40.0 57.1 78.6 12.8 65,000 24,000 2,100 11,000 25,000 44,000 Growth* (%) FY03

* Growth over FY02 Source: Nasscom Financial service is the second highest revenue earner for the industry. The segment includes billing compliance, risk management, financial reporting and financial analysis. This segment earned revenue of US$ 510 mn in FY03 (70% y-o-y increase) and it employed 24000 people in FY03. Some of the BPO players active in the banking, financial services and insurance (BFSI) are ICICI One source, Ex Service and Wipro Spectra mind. Content development, which includes areas like engineering, design animation, network consultancy and management, biotech research, is another high revenue earner in the ITES industry. The revenue of this segment in FY03 was US$ 465 mn. However,with 44,000 employees, this segment is the second largest employment generator in the industry. Some of the other emerging segments in the ITES industry are HR, payment services, administration, healthcare, retail, telecom and hospitality. Challenges facing the industry

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Mushrooming of small players Attractive growth rate of the BPO industry has resulted in many reckless start-ups. Several companies from unrelated sectors without the required expertise entered the industry lured by the healthy potential of the industry. These small companies are now finding it difficult to survive in this capital-intensive industry. In a dire strait, some of the players are taking huge cuts in their billing rates, which in turn threaten to de-stabilise the entire industry by reducing margins to unsustainable levels. They also portray a negative picture of the industry as a whole because of their inability to deliver on time. Margins under pressure With increasing competition and subsequent price dips, the margins of ITES companies have come under tremendous pressure. Moreover, most of the players in the industry are working in low margin areas. More than 60% of the BPO business coming to India is voice related. Barring transcription, voice has the lowest margins among BPO business. With the BPO business increasingly getting commoditised, moving up the value chain is a sensible option before the industry. Vendors can move up the value chain vertically. For example, for a credit card customer, the low end processes would include services such as data entry and processing of applications, but the higher value jobs would include processes such as credit evaluation and fraud detection. Vendors can also move horizontally, that is expand services portfolio by moving into sophisticated areas such as US GAAP accounting, certain engineering services, consulting etc.

HR Issues The ITES industry currently employs more than 171,000 professionals compared to a 25,000 in 1999. However, India is running out of the supply of good quality managerial talent. There have been recent cases of mid-sized companies losing BPO orders for not being able to demonstrate a competent team that can manage a large workforce. High level of attrition further complicates the problem. At least 60,000 of the 171,000 workforce change jobs every year. The supply of skilled manpower to the industry needs to expand at a fast rate to keep

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pace with the rapid growth of the industry. In order to create a big pool of qualified personnel, there is a need to encourage private institutions to provide training to people interested in joining this industry. Infrastructure Bottleneck The state of India's Infrastructure is also a cause of concern for the ITES Industry. The industry is suffering from long lead-time in commissioning of telecom services and power supply problems. The country also needs to improve its roads and airports to facilitate marketing of India as an ITES destination. In the last couple of years, the Infrastructure condition in the country has shown improvement. Deregulation of the telecom sector has resulted in the addition of significant bandwidth as well as a decline in telecom costs. Several high-quality technology parks such as Hitec city, Hyderabad Tata-Singapore Consortium, Bangalore and Tidel Park. Chennai have also been established in the Industry. Apart from the challenges discussed above, if the unemployment rate in the US/ other customer countries soars further, it could lead to increased opposition to outsourcing. This could become a threat for the Indian BPO Industry.

Strategic Planning Business strategy HR management HR Planning Key Account Management Financial Management skills Financial Management 5. COMPETENCIES REQUIRED Leadership and Motivation FOR DIFFERENT Business Development Project Management DEPARTMENT Account Handling Metrics and Quality management Process Migration Process improvement tools Team management Technology Management Mentoring and coaching Operations Competencies Management Responsibilities Process Improvement Forecasting, Staffing and Quality Assurance Scheduling Reporting Mentoring and Coaching skills Rostering and scheduling People Management skills Supporting agents as the SME MIS and reporting tools Processing Transactions Industry knowledge 24 End Customer Interaction Product Knowledge Process Knowledge Customer handling skills (Accent,

6. CAREER PLANNING / GROWTH OF BPO

BPO is becoming part of the new model for managing international growth. The benefits of this model are clear: Management can focus more time and attention on building core business, without the distraction of back-office operations and administrative issues. Also, management can avoid having to invest in office facilities and computer systems, thereby freeing up investment capital that can be used to better advantage elsewhere. Another benefit

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is that local outsourcing firms can provide valuable in-country experience and really help new entrants get things done more efficiently. Business process outsourcing (BPO) is a broad term referring to outsourcing in all fields. A BPO differentiates itself by either putting in new technology or applying existing technology in a new way to improve a process. Business Process Outsourcing (BPO) is the delegation of one or more IT-intensive business processes to an external provider that in turn owns administers and manages the selected process based on defined and measurable performance criteria. Business Process Outsourcing (BPO) is one of the fastest growing segments of the Information Technology Enabled Services (ITES) industry. Few of the motivation factors as to why BPO is gaining ground are: - Factor Cost Advantage - Economy of Scale - Business Risk Mitigation - Superior Competency - Utilization Improvement Generally outsourcing can be defined as - An organization entering into a contract with another organization to operate and manage one or more of its business processes.

Different Types of Services Being Offered By BPO's Customer Support Services

Customer service offerings create a virtual customer service center to manage customer concerns and queries through multiple channels including voice, e-mail and chat on a 24/7 and 365 days basis.

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Service Example: Customers calling to check on their order status, customers calling to check for information on products and services, customers calling to verify their account status, customers calling to check their reservation status etc. Technical Support Services

Technical support offerings include round-the-clock technical support and problem resolution for OEM customers and computer hardware, software, peripherals and Internet infrastructure manufacturing companies. These include installation and product support, up & running support, troubleshooting and Usage support. Service Example: Customers calling to resolve a problem with their home PC, customers calling to understand how to dial up to their ISP, customers calling with a problem with their software or hardware. Telemarketing Services

Telesales and telemarketing outsourcing services target interaction with potential customers for 'prospecting' like either for generating interest in products and services, or to up-sell / promote and cross sell to an existing customer base or to complete the sales process online. Service Example: Outbound calling to sell wireless services for a telecom provider, outbound calling to retail households to sell leisure holidays, outbound calling to existing customers to sell a new rate card for a mobile service provider or outbound calling to sell credit or debit cards etc.

Employee IT Help-desk Services

Employee IT help-desk services provide technical problem resolution and support for corporate employees.

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Service Example: of this service include level 1 and 2 multi-channel support across a wide range of shrink wrapped and LOB applications, system problem resolutions related to desktop, notebooks, OS, connectivity etc., office productivity tools support including browsers and mail, new service requests, IT operational issues, product usage queries, routing specific requests to designated contacts and remote diagnostics etc. Insurance Processing

Insurance processing services provide specialized solutions to the insurance sector and support critical business processes applicable to the industry right from new business acquisition to policy maintenance to claims processing. New Business / Promotion:

Inbound / outbound sales, Initial Setup, Case Management, Underwriting, Risk assessment, Policy issuance etc. Policy Maintenance / Management:

Record Changes like Name, Beneficiary, Nominee, Address; Collateral verification, Surrender Audits Accounts Receivable, Accounting, Claim Overpayment, Customer care service via voice/email etc. Data Entry Services / Data Processing Services Service Example:

Data entry from Paper/Books with highest accuracy and fast turn around time (TAT) Data entry from Image files in any format Business Transaction Data entry like sales / purchase / payroll. Data entry of E-Books / Electronic Books Data Entry: Yellow Pages / White Pages Keying Data Entry and compilation from Web site Data Capture / Collection Business Card Data Entry into any Format

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Data Entry from hardcopy/Printed Material into text or required format Data Entry into Software Program and application Receipt and Bill Data Entry Catalog Data Entry. Data Entry for Mailing List/Mailing Label. Manu scripting typing in to word Taped Transcription in to word. Copy, Paste, Editing, Sorting, Indexing Data into required format etc. Data Conversion Services Service Example: Conversion of data across various databases on different platforms Data Conversion via Input / Output for various media. Data Conversion for databases, word processors, spreadsheets, and many other standard and custom-made software packages as per requirement. Conversion from Page maker to PDF format. Conversion from Ms-Word to HTML format Conversion from Text to Word Perfect. Conversion from Text to Word to HTML and Acrobat Convert Raw Data into required MS Office formats. Text to PDF and PDF to Word / Text / Doc Data Compilation in PDF from Several Sources. E-Book Conversion etc. Scanning, OCR with Editing & Indexing:

High speed Image-Scanning and Data capture services High speed large volume scanning

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OCR Data From Scanned page / image Scan & OCR paper Book in to CD. ADOBE PDF Conversion Services. Conversion from paper or e-file to various formats Book Keeping and Accounting:

General Ledger Accounts Receivables and Accounts Payable Financial Statements Bank Reconciliation Assets / Equipment Ledgers etc. Form Processing Services:

Insurance claim form Medical Form / Medical billing Online Form Processing Payroll Processing etc. Internet / Online / Web Research

Internet Search, Product Research, Market Research, Survey, Analysis. Web and Mailing list research etc.

Key To success The key to success in ramping up talent in a BPO environment is a rapid training module. The training component has to be seen as an important sub-process, requiring constant reengineering. Business Process Outsourcing: The Top Rankers WNS has emerged as the top BPO in India, pushing Wipro Spectra mind to the second position, according to a survey done

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by NASSCOM. The basis of ranking is the revenues generated by the BPO companies in 2003-04, as per US GAAP. A list of top fifteen BPO companies in India is given below. WNS Group Wipro Spectra mind Daksh e-Services Converges HCL Technologies Zenta ICICI One source MphasiS EXL Tracmail GTL Ltd. vCustomer HTMT 24/7 Customer Sutherland Technologies The parameters for the survey was: Employee Size (Operation level executives), Percentage of last salary hike, Cost to company, Overall Satisfaction Score, Composite Satisfaction, Company Culture, Job Content / Growth, Training, Salary and Compensation, Appraisal System, People, Preferred Company: (Percentage of respondents of a company who named their own company as the preferred one), Dream Company: (Percentage of respondents in the total sample who preferred a particular company). Employee Benefits Provided By Majority Of the BPO Companies Provident Fund: As per the statutory guidelines, the employee is required to contribute a percentage of his basic salary and DA to a common fund. The employer for this fund contributes as well. The employee can use the amount deposited in this fund for various personal purposes such as purchase of a new house, marriage etc. Gratuity: Gratuity is one of the retrial benefits given to the employee in which the employer every year contributes a particular amount. The fund created can be used by the employee for the purpose of long-term investment in various things such as a house etc. Group Medical claim Insurance Scheme: This insurance scheme is to provide adequate insurance coverage of employees for expenses related to hospitalization due to illness,

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disease or injury or pregnancy in case of female employees or spouse of male employees. All employees and their dependent family members are eligible. Dependent family members include spouse, non-earning parents and children above three months Personal Accident Insurance Scheme: This scheme is to provide adequate insurance coverage for Hospitalization expenses arising out of injuries sustained in an accident. Subsidized Food and Transportation: The organizations provide transportation facility to all the employees from home till office at subsidized rates. The lunch provided is also subsidized. Company Leased Accommodation: Some of the companies provides shared

accommodation for all the out station employees, in fact some of the BPO companies also undertakes to pay electricity/water bills as well as the Society charges for the shared accommodation. The purpose is to provide to the employees to lead a more comfortable work life balance. Recreation, Cafeteria, ATM and Concierge facilities: The recreation facilities include pool tables, chess tables and coffee bars. Companies also have well equipped gyms, personal trainers and showers at facilities. Corporate Credit Card: The main purpose of the corporate credit card is enable the timely and efficient payment of official expenses which the employees undertake for purposes such as travel related expenses like Hotel bills, Air tickets etc Cellular Phone / Laptop: Cellular phone and / or Laptop is provided to the employees on the basis of business need. The employee is responsible for the maintenance and safeguarding of the asset. Personal Health Care (Regular medical check-ups): Some of the BPO'S provides the facility for extensive health check-up. For employees with above 40 years of age, the medical check-up can be done once a year.

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Loans: Many BPO companies provide loan facility on three different occasions: Employees are provided with financial assistance in case of a medical emergency. Employees are also provided with financial assistance at the time of their wedding. And, The new recruits are provided with interest free loans to assist them in their initial settlement at the work location. Educational Benefits: Many BPO companies have this policy to develop the personality and knowledge level of their employees and hence reimburses the expenses incurred towards tuition fees, examination fees, and purchase of books subject, for pursuing MBA, and/or other management qualification at India's top most Business Schools. Performance based incentives: In many BPO companies they have plans for , performance based incentive scheme. The parameters for calculation are process performance i.e. speed, accuracy and productivity of each process. The Pay for Performance can be as much as 22% of the salary. Flexi-time: The main objective of the flextime policy is to provide opportunity to employees to work with flexible work schedules and set out conditions for availing this provision. Flexible work schedules are initiated by employees and approved by management to meet business commitments while supporting employee personal life needs .The factors on which Flexi time is allowed to an employee include: Child or Parent care, Health situation, Maternity, Formal education program Flexible Salary Benefits: Its main objective is to provide flexibility to the employees to plan a tax-effective compensation structure by balancing the monthly net income, yearly benefits and income tax payable. It is applicable of all the employees of the organization. The Salary consists of Basic, DA and Conveyance Allowance. The Flexible Benefit Plan consists of: House Rent Allowance, Leave Travel Assistance, Medical Reimbursement, Special Allowance Regular Get together and other cultural programs: The companies organizes cultural program as and when possible but most of the times, once in a quarter, in which all the employees are given an opportunity to display their talents in dramatics, singing, acting, dancing etc. Apart from that the organizations also conduct various sports programs such as

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Cricket, football, etc and regularly play matches with the teams of other organizations and colleges. Wedding Day Gift: Employee is given a gift voucher of Rs. 2000/- to Rs. 7000/- based on their level in the organization. Employee Referral Scheme: In several companies employee referral scheme is implemented to encourage employees to refer friends and relatives for employment in the organization.

7. PERFORMANCE MANAGEMENT SYSTEM OF BPO

INTRODUCTION The history of management in India can be traced to the English East India Company, (1600 1874) chartered by Queen Elizabeth I for trade with Asia. After independence in 1947, India

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subscribed to a model which placed a strong emphasis on central planning and a big role for government owned Public Sector Enterprises (PSEs) who were established to control the "commanding heights" of the economy. After the economic reforms of 1991 the country's economy became much more integrated to the world economy, which was the effect of liberalization in our country and globalization worldwide. The concept of human resources has undergone drastic changes as far as the Indian Industry is concerned. The age-old concept of Human Resource Management has changed to Human Resource Development. This change has come as a result of the change in industry from manufacturing in the public sector to information technology in the private sector. PERFORMANCE MANAGEMENT IN HUMAN RESOURCES: The evolution of the concept of performance management as a new Human Resource Management model reflects a change of emphasis in organizations away from command-andcontrol toward a facilitation model of leadership. This change has been accompanied by recognition of the importance to the employee and the institution of relating work performance to the strategic or long-term and overarching mission of the organization as a whole. The performance management process provides an opportunity for the employee and performance manager to discuss development goals and jointly create a plan for achieving those goals. Development plans should contribute to organizational goals and the professional growth of the employee. Critical to the success of this new model, a flexible attitude in the face of constant change is most essential. For performance managers, this changing environment offers many new challenges and opportunities. Performance managers and their employees are increasingly being asked to become generalists who step outside of traditional narrowly-defined job descriptions in support of team objectives and goals. These changes are resulting in the development of new approaches to human resource management.

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Job description & essential functions Strategic plan & Annual goals Standards of performance

Observation & Feedback

Performance Appraisal

Performance Development BPO INDUSTRY AND PERFORANCE MANAGEMENT: The BPO industry with its major thrust on knowledge workers offers a challenge to the Human Resource manager. The major challenges are: Brand equity: People still consider BPO to be "low brow", thus making it difficult to attract the best talent. Standard pre-job training: Again, due to the wide variety of the jobs, lack of general clarity on skill sets, etc, there is no standard curriculum, which could be designed and followed. Benchmarks: There are hardly any benchmarks for compensation and benefits, performance or HR policies. Everyone is charting his or her own course. In both the pre-job training as well as in benchmarks, the role performance management plays is not too small. Performance appraisals whether they be pre/post training, offers the company a quick glance through the effectiveness and the worthiness of a person in the organization and also helps in effective placements. PERFORMANCE MANAGEMENT IN BPO INDUSTRY: Business process outsourcing (BPO) satisfaction levels are on the up but while more organizations are now confident when negotiating outsourcing contracts.

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Most struggle with ongoing management and making the deal deliver ongoing value, argues Simon Lindley, Principal Consultant at Orbys Consulting. Over the last couple of years, the outsourcing market has turned a corner and the widespread perception of failure has been replaced by a growing acceptance that BPO can really deliver on its potential benefits from reduced cost to supporting business growth through effective access to key skills. Organizations now have a level of confidence in negotiating outsourcing contracts that is enabling far more to achieve strategic objectives via a BPO arrangement. Indeed, in a recent independent study undertaken by Benchmark Research on behalf of Orbys Consulting, 29 percent stated the contract exceeded expectations, 61 percent believed it was in line with expectations and only nine percent felt that it fell below expectations. However, it is also apparent that organizations increasingly recognize that getting to contract is just the beginning of a complex, evolving relationship with the outsource service provider. Ensuring the contract retains its successful perception throughout the business over the long term requires a proactive approach to managing the relationship between the business and BPO service provider. For example, post contract performance management should not just be about tracking service level agreement (SLA) metrics. If organizations are to maximize their relationship with a BPO service provider and achieve long-term strategic benefits or even just make sure they stay on track then other key factors need to be identified, monitored and actively managed against. Some will be ongoing regular measures; others should be modified over time to reflect changing business priorities, and current business strategy and initiatives. This wider balanced scorecard approach to performance management is not only of value to the business in driving continuous improvement and business focus, it also helps the BPO service provider in terms of providing greater clarity of customer perceptions and satisfaction, and clearer specification of business priorities and how the service provider can help them be delivered. Although initially some service providers may be wary of the additional effort and investment required, the wiser ones will realize the potential for providing wider service and

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project support. Effective ongoing management can also greatly reduce the risk of client dissatisfaction and therefore ultimately help avoid subsequent re-tendering of the contract or services being taken back in-house. PROCESSES OF PERFORMANCE MANAGEENT IN BPO INDUSTRIES: Business process outsourcing (BPO) has become an essential trend in the current digitalization and globalization environment which influences the strategy of enterprise greatly. In this paper, current research and results are discussed as well as their deficiencies. Then based on business process performance measurement, the total life cycle management framework of BPO is brought forward to solve challenges identified through these deficiencies. At last business process performance and management system and relevant concrete methods such as business process based risk analysis, hierarchical fuzzy cognitive map to simulate the cause-effect logical relationships among performance indicators are presented as well to support the analysis and decision in the total life cycle management. Companies of today and tomorrow are confronted with intense global competition, demanding customers with rapidly changing desires, shrinking response times and shortened product life cycle. However, globalization also gives companies an opportunity to take a fresh look at their competitive strategy and exploit outside resources even in remote regions. Thus outsourcing has become the most popular strategy in business for several decades. According to the definition in [1], outsourcing is the operation of shifting a transaction previously governed internally to an external supplier through a long-term contract, and involving the transfer of staff to the vendor for the firm. Obviously, outsourcing implies transferring a significant amount of management control to the supplier. Although outsourcing IT and other specific services has taken place for about 50 years, outsourcing entire functions which is called business process outsourcing (BPO) started in the late 1980s and early 1990s [5]. There are several principal reasons for company to outsource business process. The first is apparently cost saving and to focus on core capabilities; the second is to improve or reengineer the outsourced business process; and the third is that a business requires

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immediate access to specialist skills. In the beginning, companies outsource their non-core activities to countries where labor and other expenses are low. But today there is more to BPO than just cutting down costs. BPO tends to focus more on the overall creation of value such as efficiency, high quality and customer satisfaction. What are the major challenges of BPO confronted by service provider (or called third party providers) and outsourcing company at present? From the point view of service provider, there exists contradiction between large scale and customization. Due to the complex nature of business processes and activities, service providers have to cater for the special requirements of a company. Nevertheless to meet the demand for flexible but multi-clients outsourcing arrangements, it is promising that the advent of standards-based architectures, such as Web Services which provide a standardized IT environment will achieve the seamless integration between service provider and outsourcing company. While from the point view of outsourcing company and combined with many failure cases, the principal challenge and obstacle stems from loss of control on outsourced activities which always leads to the huge risk and high failure rate. So the key to success in all BPO segments, regardless of process or industry, is the ability to measure process performance before a process is outsourced and during the life cycle of the engagement. Although BPO is a growing trend and has finally moved from concept to reality, the existing huge risk and lack of support approaches and technologies still lead to high ratio of unsuccessful cases. With the efforts of many researchers research work on this field is significantly developed but still has not fully stepped up to meet the actual requirements of potential world market. Furthermore these deficiencies in research findings mainly focus on managing approaches, not technical support. However with the rapid IT application development in BPO and dramatic improvement of business process management, the procurement of process data turns to easier and business process-based BPO management with technical support is getting possible.

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TOTAL LIFE CYCLE MANAGEMENT OF BPO BASED ON PROCESS PERFORMANCE ANALYSIS Through the above literature review and to meet the challenge above mentioned, it is innovative and feasible to propose technical support to BPO grounding on business process analysis and put forward total life cycle management framework of BPO based on business process performance analysis.

Total Life Cycle Management of BPO-Framework The total life cycle framework is proposed in attempt to shed light on the relationship between BPO and business process performance the total life cycle management framework is proposed here. And in the view of constructing BPO, its total life cycle is composed of seven phases which are illustrated in Fig.1. Each phase will be elaborated in the following section. (1) Analyzing and planning outsourcing It is obvious that BPO will bring opportunities accompanied with risks to an outsourcing company. So before the make or buy decision, it is very critical to take an all-sided

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analysis. In this stage, the analysis, which is normally based both on performance and risk factors, firstly focuses on current business process if available. Thus a comparison can be made between the pre-outsourced and outsourced process. (2) Selecting service providers In this stage a set of evaluation criteria must be defined to select prospective BPO service provider. These criteria typically include cost, quality, IT capability and financial stability. After listing the evaluation criteria in a hierarchical way, decision method like AHP or expert system can be adopted to evaluate potential providers. Then a formal request for proposal (RFP) which take the above evaluation criteria listing as a part initiates the process. Thus the client and the prospective service providers enter into interviews, not only regarding price, but also skill, culture and commitment matching. Finally a service provider can be selected according to the evaluation criteria based on comparison, RFP responses and interviews. (3) Contracting and negotiating In this stage, the strategy and major solutions of BPO are settled; problem resolution procedures are established; to assure continued process improvement incentives as well as punishments even rules for termination of contract before its legally specified end are defined. Whats more, service level agreement (SLA) has been widely used as a reference for performance measurement. (4) Transferring activity The details related to transferring business activities like timetable for transfer, human resources handling are mostly described in the outsourcing contracts. Since the control of business process is now reassigned to service provider, how to properly integrate the outsourced processes into the outsourcing company and define their interfaces should be paid great attention to.

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(5) Managing ongoing supplier After the adaptation period, outsourcing company now changes its role from operational management into a more strategic one (monitoring the BPO activities and performance) and forms a management team in charge of coordination. Generally, because the methods used by the management team to supervise BPO activities are scheduled by the contracts (such as regular reports delivered by service providers, periodical meeting) and lack of effective technical support and analysis methodology, this phase is always confronted with many problems. (6) Ending Contract At the end of an outsourcing contract the outsourcing company has three options: to renegotiate the contract with the same supplier, to change supplier or to in-source the activity again. The two first options highlight the cyclical nature of BPO while the last one corresponds to its termination. (7) Constructing business process performance and management system In the above framework shown in Fig. 1, this phase locating in the centre is put forward to provide effective support for the most crucial three phases in the life cycle: analyzing and planning outsourcing, contracting and negotiating, managing ongoing supplier. The importance of this phase is usually neglected or underestimated by stakeholders of outsourcing activities which may cause many serious problems during the execution of outsourcing contracts. To apply and support the total life cycle management framework, it is necessary to offer relevant approaches and methods. Accordingly business process performance and management system and some concrete performance measurement methods are proposed as follows.

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In terms of business process, as shown in Fig. 2, business process performance and management system is composed of five modules---business process modeling, process performance measurement system, process monitoring, and process diagnosis and process improvement. Firstly after determining business process logic and collecting related process parameters, business process models are built by exploiting suitable process modeling methods such as IDEF3, EPC and so on. Because there are two kinds of hypotheses: one is non IT-enabled business process while the other is IT-enabled, the analysis thoughts are split in two parts. The first part is to directly apply some diagnosis and analysis methods like business process based risk analysis and find out the unreasonable structure or parameter setting which need improvement. The second part is based on performance measurement system which is constructed normally in a hierarchical way according to BPO strategy, stakeholders interests and business process objectives etc. The measurement system based on business process is supposed to be created to determine the performance of BPO. Such a system should be designed to measure how well the outsourcing strategy and objectives are being accomplished. The system must be in place before the outsourcing starts so that a comparison can be made. Then through the running IT system, data related to the indicators monitored can be extracted to assist business process diagnosis. The monitored indicators should include measures broader than the traditional operational and financial ones; for example, including indicators to evaluate the behavior of the supplier towards the relationship and the improvements that the supplier brought to the activity. Methods such as extended fuzzy cognitive map combined with process data mining can be introduced to diagnose the running relevant business process. And the following section is about to briefly introduce some sorts of concrete methods in business process performance and management system to support the application of total life cycle management framework of BPO.

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Figure 2: Business process performance and management system (1) Business process performance system construction Performance measurement of BPO is a constant challenge. All too often managers give up trying to create integrated performance measurement systems (PMS) because of the difficulties in managing inter-organization transactions. But unless this problem is addressed it is difficult to see how BPO can be realistically developed in the future. And it is suggested that a switch from transaction based PMS to process based PMS [3] is more likely to achieve a robust and focused PMS leading to better and more consistent customer service levels. Process performance normally measured from the following aspects: service cost, time, service quality, service differentiation and so on. And from the view of stakeholders is also another way to construct process based PMS. (2) Risk analysis--- from business process model to fault tree The risk related to a concerned process model which is associated with the cost of failure process as well as system unavailability is an important topic in the research of business

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process performance. The requirement to improve the process is also an attractive issue. To meet these challenges, it is necessary to evaluate the risk of new process models. So it is very important that reliability analysis and risk assessment from several aspects of process modeling, such as process structure and process functions. To realize relevant risk analysis and assessment, the fault tree analysis technique is presented. This kind of technique was developed by H. A. Watson of the Bell Telephone Laboratories in 1961-1962 in an air force contract and it is also effective for qualitative and quantitative measurement. With reference to significant research and results of [4], at first, the process models are depicted by relevant process modeling tools issued by our research team and then these process models will be mapped to related fault tree structures. Afterwards through the minimal cut and path sets of fault tree technique, a methodology for identifying critical activities in process models as well as in fault tree from reliability and structural point view are put forward. And this sort of technique can also be applied in other aspects to evaluate process models. (3) Extended fuzzy cognitive maps Since fuzzy cognitive maps (FCMs) [6] are a very intuitional and powerful tool for simulation and analysis of dynamic systems, they are introduced to model the cause-effect logic relationship between process performance indicators and support reasoning of anticipated business process performance. FCMs were originally developed in 1980 by Kosko, and since then successfully applied to numerous domains, such as engineering, medicine, control, and political affairs. FCM is a modeling methodology for complex decision systems, which originated from the combination of fuzzy logic and neural networks. An FCM [2] describes the behavior of a system in terms of concepts and each concept represents an entity, a state, a variable, or a characteristic of the system. The proposed mechanism utilizes the fuzzy causal characteristics of FCMs as a new modeling technique to generate a hierarchical network of interconnected performance indicators. The weight which indicates the fuzzy cause-effect influences from one indicator to another comes from expert knowledge or analysis results based on process data mining. And the proposed method aims at simulating the operational efficiency of complex hierarchical process models with imprecise relationships, while quantifying the impact of the improved process on the overall outsourcing strategy.

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Performance appraisals have become a tool of much importance in today's management scenario. This could be used best only with the help of objective and fair HR practices. The outputs of which could be used for Organization development rather than for mere employee efficiency improvement. Casual and subjective appraisals will not be able to stand the test of fairness and legality if challenged. Firms are thus being forced to emphasize a participative but joint management by objectives followed by a participative, joint-periodic appraisal, to bring more clarity into the system. Because companies involved in BPO are confronted with many challenges especially like the lack of performance measurement and management throughout the lifecycle, this paper proposes a total life cycle management framework of BPO based on business process performance. Also concrete methods such as business process based risk analysis, hierarchical fuzzy cognitive maps to simulate the cause-effect logical relationships among performance indicators are presented as well to support the analysis and decision of the most important three stages in the BPO life cycle. It is suggested that a careful consideration of this framework and the use of related supporting technical methods can provide insights for BPO service providers, outsourcing company, IT managers and academicians.

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8. SUCCESSION PLANNING OF BPO INDUSTRY

Succession planning is an essential part of corporate strategy in most IT organizations. While the design of the succession chart looks good on paper, it has often been found that the planning process fails to meet requirements at the time of filling a key position that has just been vacated. It is not an easy task dealing with the ever-changing equations of the leadership pipeline. According to a report by US-based business research firm Cutting Edge, while many companies have succession plans, very few follow through with the rigorous implementation required. In fact, 70 percent of succession plans fail due to bad execution. Succession planning has to ensure that the right people with the right skills are in the right place at the right time. It can be done in three ways: role-based, individual-based and teambased. The first is about identifying key positions, the second focuses upon key people, and the last involves replacing a section of people or resources. Reviewing talent One of the challenges in all organizations is planning for HR needs. It is essential to adopt a disciplined approach to match HR resources with the anticipated needs of an organization. This includes aligning the succession planning process with business strategy. The purpose of the talent review is to figure out the talent required to implement the business strategy and constantly strengthen the talent pool. The talent review and planning process helps us identify talent for emerging roles in the organization, says Bijay Sahoo, vicepresident (talent engagement and development) and head of HR, Wipro Technologies. Commitment from the top management is another key factor for ensuring the success of succession planning. Sahoo reveals that in Wipro, the chairman (Azim Premji) and vicechairman and CEO (Vivek Paul) give enormous importance and their personal time for talent review and planning, and personally supervise the development and implementation of the talent plan for key roles. According to Sahoo, the other essential factors are: (a) accountability, as the succession planning programme requires ownership at all levels in the organization. Each manager should be responsible for assessing and developing the talent in his or her team. (b) Constant

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attention, as it can be tempting to overlook the need for succession planning in the face of more immediate needs. Planning the process The bench strength of current and future leaders gives a competitive edge to every organization. At Wipro, the succession planning programme is called Talent Review and Planning (TRP), and it is the most critical part of the organizations leadership building and talent management process. Once our business strategy for the year is finalized, we identify the critical roles to execute it. We review the talent available for those roles internally as well as externally. We plan for the succession of existing critical roles, including that of the CEO, and identify employees who are ready to take over the roles immediately and over the next 12 or 2-3 years, informs Sahoo. He adds that the company does developmental planning for each identified internal candidate in terms of job rotation, training, coaching and performance counseling. They also keep track of potential external candidates, and establish touch points for attracting them at the appropriate time. The respective SBU heads and the SBU HR heads do the TRP for the top three levels of their business. This contributes to the TRP at the Wipro Technologies level, where the chairman and vice-chairman, along with the HR head, get involved in talent planning for the top three levels. Next is the implementation of the talent strategies by developing and reviewing the action plan. At Infinite Computer Solutions (ICS), which has a global headcount of 1,800, employees have also taken up higher roles without a change in designation, with support from functional heads and senior management teams? A skill-gap analysis is done of the candidates, and requisite training provided to make them able successors. Clear focus It is a known fact that while most management is interested in developing a pool of successors for key positions, they find it a difficult task to ensure the success of their efforts. Succession planning can get very complicated. Organizations must therefore have a clear focus.

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Wipro has quarterly talent engagement and development (TED) reviews, and action points of each SBU and vertical are tracked. We also track the number of senior positions that are filled internally, which gives an indication of the success of the programme. At the macro level, the retention figure also reflects the effectiveness of the succession planning programme, since one of the objectives of the programme is to help employees realize their career aspirations and thus retain them in the organization. Systematic succession planning does generate leadership talent, and an organization can measure its effectiveness by looking at the leadership talent it has created and provided to the industry. Wipro is one of the top companies when it comes to creating top-class leaders in the IT industry. Many of our exemployees are heading successful IT companies, says Sahoo with apparent pride. The training difference Organizations are less vulnerable to leadership crises when theres a shadow group of successors who are able and available to step into their shoes. Training plays a key role in succession planning. It is imperative to strategies, design and implements programmes to train future leaders. Wipro has its lifecycle leadership development programmes, which are synchronized with the roles employees play at different stages of their corporate life. These include the New Leaders Programme, Wipro Leaders Programme, Business Leaders Programme and Strategic Leaders Programme for different leadership positions that an employee will assume in the organization. Most organizations do skill-gap analysis of the selected candidates. A schedule is drawn for the prospective individual to acquire the knowledge, skills and competencies within a timeframe, says Sunder Rajan, general manager, HR & administration, ICS. He adds that the training could be through internal programmes or on-the-job (local as well as global) to gain cross-functional or cross-geographical exposure for better maturity of the expertise that would enhance the confidence level of the person.

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Just-in-time succession Then there just-in-time succession, which maps existing competencies of the staff to fill an important position. Succession planning software uses competency analysis which lets companies understand the demand side of the equation with what their staff has to offer. Succession planning is not an issue of a position; you can plan for two or three years, but by that time the to-be-successor may have already left the organization; consequently it is not relevant. Instead of looking at a job to fill, organizations should profile it in terms of competencies, go to the data bank, and find whose competency profile matches the job, advises Stephen Martin, president of ITAP Europe. The key to this is competency development across the organization; ITAP has done succession planning for many global organizations through competency development. Whatever be the methodology, measuring the effectiveness of a succession planning programme is critical to every organization, irrespective of its size. After all, it is more than just the passing of power and responsibility it is about survival and continuity.

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9. REWARDS AND RECOGNITION IN BPO INDUSTRY

HR professionals all over the world, working is Call-Center or Contact Center or BPO industries are breaking their heads to formulate Retention Strategies but nothing is working in their favor. The average attrition rate in this sector is still 35-40%. No perks, no rewards just nothing is working. Before proceeding further, lets see why people are leaving? Why there is high attrition rate. Why people are moving? When there are so many benefits associated with BPO industry. when there are so many privileges for the BPO employees than what makes them to change the company/industry?? Is it only MONEY that matters or anything else as well?? After taking exit-interviews and analyzing the trend I am able to list out following reasons for a BPO professional to change his/her job.

No growth opportunity/lack of promotion For higher Salary For Higher education Misguidance by the company Policies and procedures are not conducive No personal life Physical strains Uneasy relationship with peers or managers

Lets also see as what are the various benefitsthat have been extended to people working in this sector. Employee Benefits Provided By Majority of the BPO Companies A part from the legal and mandatory benefits such as provident-fund and gratuity, below is a list of other benefitsBPO professionals are entitled to the following: 1. Group Medical-claim Insurance Scheme: This insurance scheme is to provide adequate insurance coverage of employees for expenses related to hospitalization due

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to illness, disease or injury or pregnancy in case of female employees or spouse of male employees. All employees and their dependent family members are eligible. Dependent family members include spouse, non-earning parents and children above three months 2. Personal Accident Insurance Scheme: This scheme is to provide adequate insurance coverage for Hospitalization expenses arising out of injuries sustained in an accident. This covers total / partial disablement / death due to accident and due to accidents. 3. Subsidized Food and Transportation: The organizations provide transportation facility to all the employees from home till office at subsidized rates. The lunch provided is also subsidized. 4. Company Leased Accommodation: Some of the companies provides shared accommodation for all the out station employees, in fact some of the BPO companies also undertakes to pay electricity/water bills as well as the Society charges for the shared accommodation. The purpose is to provide to the employees to lead a more comfortable work life balance. 5. Recreation, Cafeteria, ATM and Concierge facilities: The recreation facilities include pool tables, chess tables and coffee bars. Companies also have well equipped gyms, personal trainers and showers at facilities. 6. Corporate Credit Card: The main purpose of the corporate credit card is enable the timely and efficient payment of official expenses which the employees undertake for purposes such as travel related expenses like Hotel bills, Air tickets etc 7. Cellular Phone / Laptop: Cellular phone and / or Laptop are provided to the employees on the basis of business need. The employee is responsible for the maintenance and safeguarding of the asset. 8. Personal Health Care (Regular medical check-ups): Some of the BPO'S provides the facility for extensive health check-up. For employees with above 40 years of age, the medical check-up can be done once a year.

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9. Loans: Many BPO companies provide loan facility on three different occasions: Employees are provided with financial assistance in case of a medical emergency. Employees are also provided with financial assistance at the time of their wedding. And, The new recruits are provided with interest free loans to assist them in their initial settlement at the work location. 10. Educational Benefits: Many BPO companies have this policy to develop the personality and knowledge level of their employees and hence reimburse the expenses incurred towards tuition fees, examination fees, and purchase of books subject, for pursuing MBA, and/or other management qualification at India's top most Business Schools. 11. Performance based incentives: In many BPO companies they have plans for, performance based incentive scheme. The parameters for calculation are process performance i.e. speed, accuracy and productivity of each process. The Pay for Performance can be as much as 22% of the salary. 12. Flexi-time: The main objective of the flextime policy is to provide opportunity to employees to work with flexible work schedules and set out conditions for availing this provision. Flexible work schedules are initiated by employees and approved by management to meet business commitments while supporting employee personal life needs .The factors on which Flexi time is allowed to an employee include: Child or Parent care, Health situation, Maternity, Formal education program 13. Flexible Salary Benefits: Its main objective is to provide flexibility to the employees to plan a tax-effective compensation structure by balancing the monthly net income, yearly benefits and income tax payable. It is applicable of all the employees of the organization. The Salary consists of Basic, DA and Conveyance Allowance. The Flexible Benefit Plan consists of: House Rent Allowance, Leave Travel Assistance, Medical Reimbursement, Special Allowance 14. Regular Get together and other cultural programs: The companies organizes cultural program as and when possible but most of the times, once in a quarter, in which all the employees are given an opportunity to display their talents in dramatics,

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singing, acting, dancing etc. Apart from that the organizations also conduct various sports programs such as Cricket, football, etc and regularly play matches with the teams of other organizations and colleges. 15. Wedding Day Gift: Employee is given a gift voucher of Rs. 2000/- to Rs. 7000/based on their level in the organization. 16. Employee Referral Scheme: In several companies employee referral scheme is implemented to encourage employees to refer friends and relatives for employment in the organization. 17. Employee Stock Option Plan: Now, the actual question, why people are leaving? What types of retention strategies are required? What is expected from HR Professional and how they can address this issue? Retention - A Big Challenge Fundamental changes are taking place in the work force and the workplace that promise to radically alter the way companies relate to their employees. Hiring and retaining good employees have become the chief concerns of nearly every company in every industry. Companies that understand what their employees want and need in the workplace and make a strategic decision to proactively fulfill those needs will become the dominant players in their respective markets. The fierce competition for qualified workers results from a number of workplace trends, including:

A robust economy Shift in how people view their careers Changes in the unspoken "contract" between employer and employee Corporate cocooning A new generation of workers Changes in social mores Life balance

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Concurrent with these trends, the emerging work force is developing very different attitudes about their role the workplace. Today's employees place a high priority on the following:

Family orientation Quality of life issues Autonomy

To hold onto your people, you have to work counter to prevailing trends causing the job churning. Smart employers make it a strategic initiative to understand what their people want and need -- then give it to them. Retention Strategies This is not an exhaustive list, one can add or delete any of the below mentioned strategies. Secondly, the need of the hour is to have "right basics". Every individual is different, his needs are different, and his emotions, his problems are different. So, dear HR-Professionals sit down and concentrate on your basics. I have classified retention strategies into two parts: Main and Ancillary. Main retention strategies This is not an exhaustive list, one can add or delete any of the below mentioned strategies. Secondly, the need of the hour is to have "right basics". Every individual is different, his needs are different, and his emotions, his problems are different. So, dear HR-Professionals sit down and concentrate on your basics. 1. Communications - Getting Your People to Care Communication is the first step toward creating the kind of environment that people care about, and if they care, they just may stay. I'm not talking about a lot of New Age stroking designed to bring out the inner person or false praise that creates a misplaced sense of security. Instead, keep your people in the loop about what's happening with the company. At any time, all of your employees should have a pretty good idea of how business has been, and they should be aware of what issues the company is attempting to address.

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That means that you regularly keep your people up to date with important events affecting the company. If November was good, let them know, and while you're at it, tell them what you expect to happen in December. Share good news, as well as points of concern. If you've got "issues," talk about them before they start making you crazy. And if they don't get resolved, figure out whether the problem stems from a couple of individuals or from your system. The point here is that you want to treat these people as your partners, which they are. They may not have to worry about covering the payroll this week, but they do have worries of their own. Treat them with at least as much respect as they give you. As the store's owner or manager, you set the tone for the entire organization. If your salespeople, for instance, enjoy their encounters with you, they are much more likely to greet customers with a positive attitude. They are also much more likely to enjoy their work when they don't have a fire-breathing dragon looking to singe their butts. Listen to your employees when they have ideas for improvement. Again, the benefits extend beyond just making people feel appreciated for their contributions. These are, after all, the people who do the work every day. They may have some ideas to improve productivity, and when they do come up with one, let everybody know where it came from. Post a "brag board" in your break room, or circulate an internal newsletter that touts these contributions. The pay-off is a contagious feeling of pride and, perhaps, some new efficiency that saves the company money. 2. Set Clear Expectations
o o

How often do you appraise your employees/team-members? What are your expectations from your employees/team-members? What are the parameters to measure their performance? Have you communicated to them? What will be the consequences, if they fail? What will be the rewards, if they exceed the expected level?

o o

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If you are not having any expectations, how you are going to appraise, your employees? Yes, you where are going is to a be biased, role because for you each don't have set standards. participant. The role of a CEO, HR Manager is like a director of a movie; choreographer of a stage show, there defined character, each Setting expectations initiates the process. Managers need to sit down with each employee and clearly define what's expected of them. Management consultant, Kenneth Philips, states that when expectations are not clear, employees may not be in sync with their job's current demands and priorities. Setting expectations is not a once and done activity. Jobs change. Priorities change. Resources change. Managers need to revise and set new expectations throughout the year. Setting expectations revolves around the following three areas:
o o o

Key job responsibilities Performance factors and standards Goals

Why is a setting expectation important? Quite simply, this process can be the cornerstone of improving the motivational climate within your sphere of responsibility. If your employees know what is expected of them, it allows them to focus on results and to monitor themselves against the set standards. Environments in which expectations are not clear, or change from week to week, seldom create high-performing work groups. The three principles that should drive expectations are clarity, relevance, and simplicity. Clarity. Expectations should focus on outcomes, not activities. In other words, you achieve clarity when you identify the expected results rather than the method for achieving them. Managers often make the mistake of attempting to direct the process that an employee will use rather than being clear about results. The advantage of identifying the outcome is that you, the manager, focus only on the goal; after all, the employee will develop the method for achieving the desired results. Defining the objective often requires some thought on the part of the manager because it is easy to fall into the "activities trap." While developing a strategic plan for a department or division is a worthy activity, it does not represent an outcome. In the activities trap, developing a plan is the goal, rather than increasing your market share. Relevance. The principle of relevance helps define the "why" of the assignment. If your

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employees have a full understanding of the project's importance, they can make adjustments as unanticipated factors crop up within the process. They probably also will be more committed to the result because they can see more easily how it fits into the big picture and how their efforts impact the company. This understanding typically is accomplished through dialogue between the manager and subordinate, which allows for a more thorough review of the situation and for feedback and discussion. This process builds good will with the employee and sets the stage for additional responsibilities. Simplicity creates a sense of grounding for employees as they endeavor to carry out assignments. If managers identify the work in simple, straightforward terms, employees will find it much easier to follow through on managers' wishes. To accomplish this, a manager must identify the key message in a fashion that the employee can embrace. 3. Proper Rewarding A research reports says that in today's scenario,
o o o

70% of your employees are less motivated today than they used to be. 80% of your employees could perform significantly better if they wanted to. 50% of your employees only put enough effort into their work to keep their job.

As you might be aware of Employee Reward covers how people are rewarded in accordance with their value to an organization. It is about both financial and non-financial rewards and embraces the strategies, policies, structures and processes used to develop and maintain reward systems. The ways in which people are valued can make a considerable impact on the effectiveness of the organization, and is at the heart of the employment relationship. The aim of employee reward policies and practices, if any in your organization is to help attract, retain and motivate high-quality people. Getting it wrong can have a significant negative effect on the motivation, commitment and morale of employees. Personnel and

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development professionals will be involved frequently in reward issues, whether they are generalists or specialize in people resourcing, learning and development or employee relations. Keep following parameters in mind, while designing a reward policy: 4. Build a high degree of recognition value into every reward you offer. Recognition is the most cost-effective motivator there is. While the high cost of other rewards forces us to give them sparingly, recognition can be given any time, at very little cost. Some very ordinary items and events can be imbued with extraordinary motivational significance, far in excess of their monetary value. I am constantly amazed at how motivating a pizza or movie tickets can be if is given with sufficient appreciation. A sincere thank you can be delivered at any place and at any time, costs absolutely nothing and can be more motivationally powerful than a substantial monetary bonus. Organizations can provide innovative recognition in an infinite number of ways. For example, (A Hypothetical Incident) a small manufacturing company made its employees feel like heroes when they attained a major safety milestone - 100 days without a single accident. On the morning of day 100, it was announced that a catered lunch would be served the next day, if they made it to the 5:30 shift without an accident. At 5:15 anticipating was building. Managers took confetti and streamers to the balcony overlooking the shop floor. When the 5:30 whistle blew, there were congratulations all around, confetti flew through the air and banners were unfurled. It was a great moment for everyone - and one that was not soon forgotten. The recognition value of this celebration was extremely high, while the monetary cost was relatively low. Highly motivating organizations even celebrate small successes. A health-conscious company distributes fruit bowls to employees' work areas when key personal milestones are attained. Another company uses a more fattening approach: fresh-baked chocolate-chip cookies to say thank you.

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5. Reduce entitlements and link as many rewards as possible to performance. Clearly the traditional "pay for loyalty" systems in most organizations need to be changed. Don't let attendance be your major criterion for rewards. Most employees resent those who only put in their time and yet receive the same reward as those who go the extra mile. Today's employees have higher expectations for what work can and should be, and they want to receive rewards that reflect their personal efforts and contributions. This is why so many companies are moving toward performance-based rewards, including performance bonuses, gain-sharing and non-monetary recognition. Although not a panacea, companies are finding that these new reward systems do allow them to give substantial rewards to those who really deserve them. Smart organizations are looking for opportunities to reduce across-the-board entitlements, and thereby find more resources for discretionary performance-based rewards, without increasing the total cost of rewards.

6. Troubleshoot your reward system to make sure that what it is rewarding is what you really want to happen. The Law of Rewards - "What you reward is what you get" - Is extremely powerful. No matter what your orientation materials or job description might say, it is the rewards your organization gives that communicate the real expectations. The most important question to ask in evaluating the reward system in your organization is, do the rewards we are giving elicit the performance we want? Start with the results you want to achieve and then pinpoint the types of behaviors needed to achieve them. For example:
o

If you believe teamwork is going to get you the results you want, make sure you reward teamwork, and not internal competition between departments. If you want quality, make sure that productivity isn't over emphasized. And, If you want long-term solutions, don't reward quick fixes

o o

Also, don't confuse employees with too many rewards. It is better to focus rewards on the critical few behaviors and results, rather than diluting them by rewarding the trivial many.

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7. Reward promptly. Rewards should be given as soon as possible after the performance has taken place. This is why the most successful gain-sharing programs pay employees monthly, rather than quarterly or annually as in the past. There is a well-accepted law of behavioral psychology, that if you want someone to repeat a behavior, you should positively recognize it immediately. From this law, smart supervisors and managers can learn a vital lesson: Look for any employee doing something right, right now, and recognizes it. A support to this, here is my favorite reward story: "When a senior manager in one organization was trying to figure out a way to recognize an employee who had just done a great job, he spontaneously picked up a banana (which his wife had packed in his lunch), and handed it to the astonished employee with hearty congratulations. Now, one of the highest honors in that company has been dubbed the "Golden Banana Award"." 8. Give employees a choice of rewards. Rewards are as different as the people who receive them and it doesn't make sense to give rewards that recipients don't find rewarding. For example, some people prefer more pay, while others prefer more time off. A promotion might be more rewarding to one person, while a job-sharing arrangement might be more rewarding for another. Some people are excited about sports events, others about movies. Some employees would love a dinner in a romantic restaurant, others a book by their favorite author. Food, fun, education, improved work environment, gifts, travel, and family-oriented activities - the options are endless. How do you know what will be rewarding to employees? Ask them. Smart organizations are also letting employees choose their own rewards from reward menus and catalogs. Personalizing rewards shows that a company cares enough to discover what "interests" each employee, rather than just distributing generic items. It also reduces the following danger: In one organization I was visiting, an employee opened a big drawer in his desk and disdainfully showed me all the "worthless trinkets" he had collected over the years.

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9. Increase the longevity of your rewards. This can be done in a number of ways: One of the keys to reward longevity is symbolism. The more symbolic an item is of the accomplishment, the more likely it is to continue reminding the employee of why it was given. For instance, a T-shirt of coffee mug with a meaningful inscription will continue rewarding those who wear it, or use it, long after its initial receipt. There are many tokens of appreciation I still keep on or near my desk that remind me of the joy of past accomplishments, while the monetary rewards I have received are long spent and long forgotten. Another way to increase the longevity of rewards in your organization is by using some kind of point system. Rather than rewarding each individual behavior or accomplishment, points can be awarded, which employees can accumulate and eventually trade for items from a reward menu or gift catalog. This keeps the anticipation of rewards fresh for longer periods of time. It also addresses the need for reward individualization. One company that designs motivational systems offers an electronic debit-card system to help larger clients cope with the complexity of distributing, tracking and redeeming employees' points. Employees can use their points to purchase virtually anything they want, from sports equipment and clothing to automobiles and overseas vacations. They only caveat for such programs is to make sure that the recognition value of the rewards isn't lost because of the impersonal nature of the technology. One company uses a game it Call Safety Bingo. All employees receive a weekly bingo card. When an employee is observed working safely, a number is presented (immediate recognition). When they get "bingo", they receive a safety jacket (along with appropriate verbal reinforcement). The rewards escalate for subsequent wins. This type of program keeps employees interested for long periods of time, even though there might be weeks or months between rewards, and makes routine work more fun overall. Interestingly, when researchers have investigated the motivational dynamics of these workplace games, they have found that the major motivator is the playing, not the prize.

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10. Be continually vigilant of demotivators that may undermine your organization's best efforts to provide power rewards, and reduce them promptly: Most demotivators can be dramatically reduced by soliciting employee involvement in identifying highest-priority demotivators and by enlisting top-management commitment to support their reduction. It is probably self-evident that considerable sensitivity is needed in the administration of any reward system. One demotivators that is probably endemic in any reward system modification (especially as an organization moves from entitlements to more performancebased rewards) is a sense that something is being taken away. Employees need to be educated about the reasons that this is being done, understand the ultimate benefits to them and the organization, and should probably have some input into the change process. To avoid the perception of unfairness, it is important, first and foremost, that the process for allocating rewards is viewed by employees as being impartial. This requires an objective measurement system that few organizations have. Without such objective measurement, any reward system is probably destined to failure. 11. Ancillary Retention Strategies The quality of the supervision an employee receives is critical to employee retention. People leave managers and supervisors more often than they leave companies or jobs. It is not enough that the supervisor is well liked or a nice person, starting with clear expectations of the employee, the supervisor has a critical role to play in retention. Anything the supervisor does to make an employee feel unvalued will contribute to turnover. Frequent employee complaints center on these areas.

Lack of clarity about expectations, Lack of clarity about earning potential, Lack of feedback about performance, Failure to hold scheduled meetings, and Failure to provide a framework within which the employee perceives he can succeed.

12. The ability of the employee to speak his or her mind freely within the organization is another key factor in employee retention. Does your organization solicit ideas and provide an

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environment in which people are comfortable providing feedback? If so, employees offer ideas, feel free to criticize and commit to continuous improvement. If not, they bite their tongues or find themselves constantly "in trouble" - until they leave. 13. Talent and skill utilization is another environmental factor your key employees seek in your workplace. A motivated employee wants to contribute to work areas outside of his specific job description. How many people could contribute far more than they currently do? You just need to know their skills, talent and experience, and take the time to tap into it. As an example, in a small company, a manager pursued a new marketing plan and logo with the help of external consultants. An internal sales rep, with seven years of ad agency and logo development experience, repeatedly offered to help. His offer was ignored and he cited this as one reason why he quit his job. In fact, the recognition that the company didn't want to take advantage of his knowledge and capabilities helped precipitate his job search. 14. The perception of fairness and equitable treatment is important in employee retention. In one company, a new sales rep was given the most potentially successful, commissionproducing accounts. Current staff viewed these decisions as taking food off their tables. You can bet a number of them are looking for their next opportunity. In another instance, a staff person, just a year or two out of college, was given 20,000 in raises over a six month time period. Information of this type never stays secret in companies so you know, beyond any shadow of a doubt; the morale of several other employees will be affected. For example, you have a staff person who views her role as important and she brings ten years of experience, an M.B.A. and a great contribution record to the table. When she finds she is making less money than this employee, she is likely to look for a new job. Minimally, her morale and motivation will take a big hit. Did the staff person deserve the raises? Yes. But, recognize that there will be impact on others. 15. Your best employees, those employees you want to retain, seek frequent opportunities to learn and grow in their careers, knowledge and skill. Without the opportunity to try new opportunities, sit on challenging committees, attend seminars and read and discuss books, they feel they will stagnate.

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16. A career-oriented, valued employee must experience growth opportunities within your organization. A commonplace complaint or lament I hear during an exit interview is that the employee never felt senior managers knew he existed. By senior managers I refer to the president of a small company or a department or division head in a larger company. 17. Take time to meet with new employees to learn about their talents, abilities and skills. Meet with each employee periodically. You'll have more useful information and keep your fingers on the pulse of your organization. It's a critical tool to help employees feel welcomed, acknowledged and loyal. 18. No matter what the circumstances are but never, never, ever threaten an employee's job or income. Even if you know layoffs loom if you fail to meet production or sales goals, it is a mistake to foreshadow this information with employees. It makes them nervous; no matter how you phrase the information; no matter how you explain the information, even if you're absolutely correct, your best staff members will update their resumes. I'm not advocating keeping solid information away from people; however, think before you say anything that makes people feel they need to search for another job.

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10. CHALLENGES FOR HR PROFFESSIONAL IN BPO INDUSTRY

Business process outsourcing (BPO) is a broad term referring to outsourcing in all fields. A BPO differentiates itself by either putting in new technology or applying existing technology in a new way to improve a process. Business Process Outsourcing (BPO) is the delegation of one or more IT-intensive business processes to an external provider that in turn owns administers and manages the selected process based on defined and measurable performance criteria. Business Process Outsourcing (BPO) is one of the fastest growing segments of the Information Technology Enabled Services (ITES) industry. Few of the motivation factors as to why BPO is gaining ground are:

Factor Cost Advantage Economy of Scale Business Risk Mitigation Superior Competency Utilization Improvement

Generally outsourcing can be defined as - An organization entering into a contract with another organization to operate and manage one or more of its business processes. Different Types of Services Being Offered By BPO's 1. Customer Support Services Our customer service offerings create a virtual customer service center to manage customer concerns and queries through multiple channels including voice, e-mail and chat on a 24/7 and 365 days basis. Service Example: Customers calling to check on their order status, customers calling to check for information on products and services, customers calling to verify their account status, customers calling to check their reservation status etc.

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2. Technical Support Services Our technical support offerings include round-the-clock technical support and problem resolution for OEM customers and computer hardware, software, peripherals and Internet infrastructure manufacturing companies. These include installation and product support, up & running support, troubleshooting and Usage support. Service Example: Customers calling to resolve a problem with their home PC, customers calling to understand how to dial up to their ISP, customers calling with a problem with their software or hardware. 3. Telemarketing Services Our telesales and telemarketing outsourcing services target interaction with potential customers for 'prospecting' like either for generating interest in products and services, or to up-sell / promote and cross sell to an existing customer base or to complete the sales process online. Service Example: Outbound calling to sell wireless services for a telecom provider, outbound calling to retail households to sell leisure holidays, outbound calling to existing customers to sell a new rate card for a mobile service provider or outbound calling to sell credit or debit cards etc. 4. Employee IT Help-desk Services Our employee IT help-desk services provide technical problem resolution and support for corporate employees. Service Example: of this service include level 1 and 2 multi-channel support across a wide range of shrink wrapped and LOB applications, system problem resolutions related to desktop, notebooks, OS, connectivity etc., office productivity tools support including browsers and mail, new service requests, IT operational issues, product usage queries, routing specific requests to designated contacts and remote diagnostics etc.

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5. Insurance Processing Our insurance processing services provide specialized solutions to the insurance sector and support critical business processes applicable to the industry right from new business acquisition to policy maintenance to claims processing. Service Example: New Business / Promotion: Inbound/outbound sales, Initial Setup, Case Management, Underwriting, Risk assessment, Policy issuance etc. Policy Maintenance / Management: Record Changes like Name, Beneficiary, Nominee, Address; Collateral verification, Surrender Audits Accounts Receivable, Accounting, Claim Overpayment, Customer care service via voice/email etc. 6. Data Entry Services / Data Processing Services Service Example:
o

Data entry from Paper/Books with highest accuracy and fast turn around time (TAT) Data entry from Image file in any format Business Transaction Data entry like sales / purchase / payroll. Data entry of E-Books / Electronic Books Data Entry : Yellow Pages / White Pages Keying Data Entry and compilation from Web site Data Capture / Collection Business Card Data Entry into any Format Data Entry from hardcopy/Printed Material into text or required format Data Entry into Software Program and application

o o o o o o o o o

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o o o o o o

Receipt and Bill Data Entry Catalog Data Entry. Data Entry for Mailing List/Mailing Label. Manuscripting typing in to word Taped Transcription in to word. Copy, Paste, Editing, Sorting, Indexing Data into required format etc.

7. Data Conversion Services Service Example:

o o o

Conversion of data across various databases on different platforms Data Conversion via Input / Output for various media. Data Conversion for databases, word processors, spreadsheets, and many other standard and custom-made software packages as per requirement. Conversion from Page maker to PDF format. Conversion from Ms-Word to HTML format Conversion from Text to Word Perfect. Conversion from Text to Word to HTML and Acrobat Convert Raw Data into required MS Office formats. Text to PDF and PDF to Word / Text / Doc Data Compilation in PDF from Several Sources. E-Book Conversion etc.

o o o o o o o o

8. Scanning, OCR with Editing & Indexing Services Service Example:

o o o o o o

High speed Image-Scanning and Data capture services High speed large volume scanning OCR Data From Scanned page / image Scan & OCR paper Book in to CD. ADOBE PDF Conversion Services. Conversion from paper or e-file to various formats

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9. Book Keeping and Accounting Services Service Example:

o o o o o

General Ledger Accounts Receivables and Accounts Payable Financial Statements Bank Reconciliation Assets / Equipment Ledgers etc.

10. Form Processing Services: Service Example:

o o o o

Insurance claim form Medical Form / Medical billing Online Form Processing Payroll Processing etc.

11. Internet / Online / Web Research Service Example:

o o

Internet Search, Product Research, Market Research, Survey, Analysis. Web and Mailing list research etc.

Challenges for a HR Professional in BPO 1. Brand equity: People still consider BPO to be "low brow", thus making it difficult to attract the best talent. 2. Standard pre-job training: Again, due to the wide variety of the jobs, lack of general clarity on skill sets, etc, there is no standard curriculum, which could be designed and followed.

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3. Benchmarks: There are hardly any benchmarks for compensation and benefits, performance or HR policies. Everyone is charting their own course. 4. Customer-companies tend to demand better results from outsourcing partners than what they could actually expect from their own departments. "When the job is being done 10,000 miles away, demands on parameters such as quality, turn around timeliness, information security, business continuity and disaster recovery, etc, are far higher than at home. So, how to be more efficient than the original? 5. Lack of focused training and certifications Given this background, the recruiting and compensation challenges of HR departments are only understandable. Key To success The key to success in ramping up talent in a BPO environment is a rapid training module. The training component has to be seen as an important sub-process, requiring constant reengineering. Business Process Outsourcing: The Top Rankers WNS has emerged as the top BPO in India, pushing Wipro Spectra mind to the second position, according to a survey done by NASSCOM. The basis of ranking is the revenues generated by the BPO companies in 2003-04, as per US GAAP. A list of top fifteen BPO companies in India is given below. 1. WNS Group 2. Wipro Spectra mind 3. Daksh e-Services 4. Converges 5. HCL Technologies 6. Zenta 7. ICICI One source 8. MphasiS 9. EXL 10. Tracmail

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11. GTL Ltd. 12. vCustomer 13. HTMT 14. 24/7 Customer 15. Sutherland Technologies The parameters for the survey was: Employee Size (Operation level executives), Percentage of last salary hike, Cost to company, Overall Satisfaction Score, Composite Satisfaction, Company Culture, Job Content / Growth, Training, Salary and Compensation, Appraisal System, People, Preferred Company: (Percentage of respondents of a company who named their own company as the preferred one), Dream Company: (Percentage of respondents in the total sample who preferred a particular company). Employee Benefits Provided By Majority of the BPO Companies

Provident Fund: As per the statutory guidelines, the employee is required to contribute a percentage of his basic salary and DA to a common fund. The employer for this fund contributes as well. The employee can use the amount deposited in this fund for various personal purposes such as purchase of a new house, marriage etc.

Gratuity: Gratuity is one of the retrial benefits given to the employee in which the employer every year contributes a particular amount. The fund created can be used by the employee for the purpose of long-term investment in various things such as a house etc.

Group Medical claim Insurance Scheme: This insurance scheme is to provide adequate insurance coverage of employees for expenses related to hospitalization due to illness, disease or injury or pregnancy in case of female employees or spouse of male employees. All employees and their dependent family members are eligible. Dependent family members include spouse, non-earning parents and children above three months

Personal Accident Insurance Scheme: This scheme is to provide adequate insurance coverage for Hospitalization expenses arising out of injuries sustained in an accident. It is applicable to all the employees of JFWTC and covers total / partial disablement / death due to accident and due to accidents.

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Subsidized Food and Transportation: The organizations provide transportation facility to all the employees from home till office at subsidized rates. The lunch provided is also subsidized.

Company Leased Accommodation: Some of the companies provide shared accommodation for all the out station employees, in fact some of the BPO companies also undertakes to pay electricity/water bills as well as the Society charges for the shared accommodation. The purpose is to provide to the employees to lead a more comfortable work life balance.

Recreation, Cafeteria, ATM and Concierge facilities: The recreation facilities include pool tables, chess tables and coffee bars. Companies also have well equipped gyms, personal trainers and showers at facilities.

Corporate Credit Card: The main purpose of the corporate credit card is enable the timely and efficient payment of official expenses which the employees undertake for purposes such as travel related expenses like Hotel bills, Air tickets etc

Cellular Phone / Laptop: Cellular phone and / or Laptop is provided to the employees on the basis of business need. The employee is responsible for the maintenance and safeguarding of the asset.

Personal Health Care (Regular medical check-ups): Some of the BPO'S provides the facility for extensive health check-up. For employees with above 40 years of age, the medical check-up can be done once a year.

Loans: Many BPO companies provides loan facility on three different occasions: Employees are provided with financial assistance in case of a medical emergency. Employees are also provided with financial assistance at the time of their wedding. And, The new recruits are provided with interest free loans to assist them in their initial settlement at the work location.

Educational Benefits: Many BPO companies have this policy to develop the personality and knowledge level of their employees and hence reimburses the expenses incurred towards tuition fees, examination fees, and purchase of books subject, for pursuing MBA, and/or other management qualification at India's top most Business Schools.

Performance based incentives: In many BPO companies they have plans for , performance based incentive scheme. The parameters for calculation are process

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performance i.e. speed, accuracy and productivity of each process. The Pay for Performance can be as much as 22% of the salary.

Flexi-time: The main objective of the flextime policy is to provide opportunity to employees to work with flexible work schedules and set out conditions for availing this provision. Flexible work schedules are initiated by employees and approved by management to meet business commitments while supporting employee personal life needs .The factors on which Flexi time is allowed to an employee include: Child or Parent care, Health situation, Maternity, Formal education program

Flexible Salary Benefits: Its main objective is to provide flexibility to the employees to plan a tax-effective compensation structure by balancing the monthly net income, yearly benefits and income tax payable. It is applicable of all the employees of the organization. The Salary consists of Basic, DA and Conveyance Allowance. The Flexible Benefit Plan consists of: House Rent Allowance, Leave Travel Assistance, Medical Reimbursement, Special Allowance

Regular Get together and other cultural programs: The companies organizes cultural program as and when possible but most of the times, once in a quarter, in which all the employees are given an opportunity to display their talents in dramatics, singing, acting, dancing etc. Apart from that the organizations also conduct various sports programs such as Cricket, football, etc and regularly play matches with the teams of other organizations and colleges.

Wedding Day Gift: Employee is given a gift voucher of Rs. 2000/- to Rs. 7000/based on their level in the organization. Employee Referral Scheme: In several companies employee referral scheme is implemented to encourage employees to refer friends and relatives for employment in the organization.

Paid Days Off Maternity Leave Employee Stock Option Plan

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CONCLUSION
Inspite of all these benefits, the attrition rate in BPO industry is very high, why? What is the reason for an employee to leave? These and many more are the questions that need immediate attention from the industrial gurus. Why people prefer to join BPO's? In general a person with any graduation can join any of the BPO. Some BPO's like to take people with MBA but then again the specialization are of an individual hardly makes any difference. Again, this is the industry; where there is no reference checks and very often people don't even specify there exact age. Lets me share with you some of the reasons as why people prefer to join a BPO: 1. Did not get a better job. 2. Find nothing better to do. 3. Education level doesn't matter 4. Good work environment 5. Good Benefits 6. Flexibility of time 7. Attractive life style 8. Transport facility Why people leave the BPO's? When there are so many benefits associated with BPO industry.when there are so many privileges for the BPO employees than what makes them to change the company/industry?? Is it only MONEY that matters or anything else as well?? Here are some of the reasons for a BPO professional to change his/her job. 1. No growth opportunity/lack of promotion 2. For higher Salary 3. For Higher education 4. Misguidance by the company 5. Policies and procedures are not conducive

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6. No personal life 7. Physical strains 8. Uneasy relationship with peers or managers What they have to say? With so much of uncertainty in the market. People are trying their best to stop or to at least have a control on the attrition ratelet me share with you the opinion of the real gurus of the industry. Training is a very important aspect of the ITES-BPO industry Career growth in the industry is robust and there is a long-term opportunity. The great growth momentum that the industry is witnessing is creating both vertical and lateral career opportunities. There also exists enough growth opportunities in the middle-management and supervisory level within the industry" It will not be possible for the industry to arrive at a blanket agreement on poaching but bilateral agreements between companies are being signed. Basic norms are being put in place and code of ethics is being stressed upon by industry players within the sector with respect to HR practices. We are encouraging companies to adopt responsible behavior in order to ensure that the industry does not become a victim of its own actions. Industry needs to go aggressive but not cannibalistic."

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