Why Your BPO/ITO Provider is Losing Qualified Staff

Attrition is a fact of life for the BPO/ITO sector, yet there are vast differences in the level of attrition in different places and at different companies. Rates of attrition can vary from as low as five percent in Mexico to over 35% in India or even 70% for the USA, depending on which study you consult.

Anecdotal evidence from companies such as Velocity Partners, which reported an almost 40% attrition rate in an outsourced project in India and now boasts a four to five percent rate in its nearshore operations, points to the vast differences between countries. It is difficult to gauge exactly what the rates really are because there is little data available, but it is clear that employee turnover is a problem.

Learning From Experience

There’s nothing like sharing a cerveza and a carne asada to build rapport with the team and intensify commitment to truly shared goals — Jon Butler, ISG

Stephen B. Ferber, Managing Partner at Golden Gate BPO Solutions, LLC, told Nearshore Americas about their experience in Belize City, a market they entered in January 2014. The belief was that the market was mature enough and offered high levels of the nearshore advantages such as excellent English language skills and cultural alignment with the USA.

“What we saw was that the providers that were there already were very much transactional and sales-focused. Attrition with most call centers there was relatively high and there wasn’t a lot of focus on culture and retention,” he said.

Golden Gate BPO partnered with Transparent BPO in Belize City and adopted a model that was focusing on training and career development for employees, and offered a very high level of customer service and progressed in the tech support area. “It brings the best out in the culture, and employees love the environment,” Ferber said.

Ferber said that the true attrition rate at their call center in Belize City is running at 35%. “We have a really good loyal, tenured group. I would say that outside of what we are doing, the attrition rate is probably two to three times that amount,” he said.

Ferber contrasted this with the Dominican Republic, which is a more mature market. Golden Gate BPO has about 1,200 agents in Santiago, with most of the work in customer service, technical support at tiers 1, 2 and 3, and sales and service. Santiago is not the main call center location, and it is not as transient as Santa Domingo, the capital, though both have grown in the call center industry.

“Santa Domingo has always seen higher attrition rates than Santiago because of the larger number of call centers there. Santiago is at about 40%; In Santa Domingo, the good companies are at about 60% and some global brands have even higher attrition than that,” he said.

For Jon Butler, Principal Consultant with global sourcing insights and advisory firm Information Services Group (ISG), decreasing attrition rates comes down to three main things:

• Communicate with your teams and extoll their achievements
• Lay out clear career path progressions, and
• Have fun with them.

Clear Paths

It brings the best out in the culture, and employees love the environment — Stephen Ferber, Golden Gate BPO Solutions

Chuck Rosenfield, an Alsbridge Managing Consultant, agreed that one of the biggest mistakes providers make is to not offer a clear career path for employees. “If employees don’t have a good understanding of how they can grow and develop with the company, it’s only natural that they will look for greener pastures,” he said.

Rosenfield added that an effective way to address this problem is through cross-training, which exposes employees to different types of roles. This can be especially useful to entry-level employees, to break up the tedium of lower-level jobs and to provide a sense of what other areas of the business offer.

Clients can also negatively impact on this factor, by not allowing people career mobility within the organizations. “Oftentimes, it’s the providers’ clients that won’t let people move to different positions. What these short-sighted clients fail to realize is that when people leave the provider they also leave the client company,” Butler said.

He added that there may be SLAs designed to punish the provider for high attrition in place, but these do not ultimately recover the lost company process insight and knowledge that providers’ employees develop over time.

“By simply working with the service provider to better understand its employees’ career paths, companies can help keep people on or near their account while facilitating the natural advancement aspirations of the providers’ employees,” he said.

Another issue, according to Rosenfield, is that many providers fail to clearly define roles and responsibilities for employees, which can lead to job dissatisfaction, not to mention poor service for the customer.

Outside Forces

Lack of recognition is another contributor to employee attrition. “This can be especially true when provider staff is working remotely and doesn’t feel like part of the team,” Rosenfield said.

While there are many internal aspects that can result in employee turnover, an additional factor outside the control of providers is economic growth, which drives higher wages and often results in higher rates of attrition for the simple reason that more opportunities exist and people are looking to move up and out. A number of Latin American and Caribbean countries are facing this issue, with wages skyrocketing in places such as Costa Rica.

“In the past, some South American countries have developed IT centers inland due to lower cost resources and government-created specialized business zones and tax incentives for these regions,” Rosenfield explained. “That may impact attrition if there are fewer alternative opportunities available in the larger metropolitan as a result of new jobs in the inland business zones.”

Clients also need to play a role in minimizing attrition. Butler said that when many companies outsource work to service providers they fail to hold their providers responsible for attrition, and most importantly they fail to realize the role they play in it.

Rosenfield advises that as part of the selection process, the client should visit onshore and offshore locations that will be involved in providing services. “This gives the client team the chance to meet the individuals on the provider team,” he said.

He added that, post-award, clients can conduct periodic planning meetings at the provider’s location to make the remote delivery team feel a part of the solution.

In addition, meetings to recognize individuals on the provider side can reduce attrition. Alsbridge has also used the approach of bringing in internal business partners to present and speak with both companies’ employees. “This can demonstrate the value being delivered by outsourcing and align provider staff to your business goals,” Rosenfield said.

Communication and Fun Are Key

Fewer alternative opportunities available in the larger metropolitan as a result of new jobs in the inland business zones can impact attrition rates — Chuck Rosenfield, Alsbridge

Butler cited the example of when he was leading a major provider’s Mexico operations. He communicated frequently with all the people in the operation – both good and bad news – and solicited their opinions in coffee meetings called “Café con Jon.” “It was an inexpensive way to demonstrate they were valued, to tell them how great the numbers showed they were doing – which reinforced our high work ethic – and to hear their really great ideas on how to work better,” he said.

Butler added: “I told them that if we always did what I thought was right without discussion then our group of 500 brains would be only as smart as one. Some leaders lack the humility to give their people a voice or don’t encourage it, and, thus, don’t hear the brilliant ideas that naturally arise from people close to the work.”

Butler emphasized that having fun with the teams is important. In Latin America, he said, the notion of family is very strong and doing events together helps to reinforce a family-like bond with the team.

In addition, clients should visit their teams to communicate how the teams’ work helps the company and to go out and have fun with them. “There’s nothing like sharing a cerveza and a carne asada to build rapport with the team and intensify commitment to truly shared goals,” Butler said. “The end result is that people want to stay and work together, especially with people who care about their careers and with whom they have fun.”

Creating an environment in which people feel valued, combined with fair wages, clear career progression, and a team-feel that encompasses client and vendor can go some way to lowering attrition, and cementing employee loyalty in the long term. Those countries and companies that are able to address attrition in a coherent and structured way and bring it to manageable levels will ultimately reap success in the BPO sector.

It’s also important to note that attrition can be good, provided that it is not at an abnormally high level. Bringing new blood into a company is a great way to encourage new ideas and ways of working and often re-energizes the team.