(ACADEMY OF RESEARCH& EDUCATION)
MOTIVATION AND EMPLOYEE RETENTION IN INDIAN ITES INDUSTRY
The ITES industry in India is gaining momentum and promises to add 3.3
million jobs in a country, where productive employment is scarce. The nascent IT
industry in India has come a long way in a very short time. Just a decade back, it all
started as an activity in resetting password, making address changes and transcribing
medical records and other such task. Today it has graduated to service that call for expert
knowledge and decision making. There are numerous opening for job seekers in the IT
industry. The industry is estimated to grow $301 billion industry in by 2010 is a sheer
pleasure for the aspiring workforce in India. Indians have tactfully managed to produce
quality assurance in different areas. Though there are so many benefits and privileges
associated with IT industry, yet employees moving from job in less than a year, the multi
billion –dollar industry is confronting with the problem of retaining talent. Hence it is the
need of the hour to give strategic importance to the problem of retaining talent by the IT
industry. It is to be recognized what tempts the employees to move out from the job.
Motivation would be one of the points for consideration to face the problem of retaining
talent boldly. In the present paper an attempt has been made to see what motivates
employees to join the ITES industry and why they are moving out of the job. Moreover,
attempt has also been laid out to provide some suggestive framework by using
motivational tool to retain employees.
The business world is always dynamic and ever changing. The history of business
world provides many examples of empowering some individual, group or nations, while
excluding others. Outsourcing industry, the new entrants in the business lexicon a few
decades ago, is now one of the most emerging sectors in the business world. With
economic liberalization and service globalization India, too, opens up its avenue for the
outsourcing players. A few years ago, when outsourcing started out its journey in India to
become the back office of the world, the path was fraught with uncertainty, but now, a
significant portion of India’s GDP has been contributed from outsourcing industry. India
still continues to be rated as most preferred destination for outsourcing. Genpact,
American Express, Citibank, British Airway, Dell, HP, Standard Chartered Bank,
Deutche Bank, and Philips are among the companies taking advantage of India’s
capabilities. Despite conflicting accounts the first documented practice of outsourcing
appeared in the area of information system when General Electric contracted with Arthur
Andersen and UNIVAC in 1954. The highlights of evolution of outsourcing industry are
summarized in chart1.
Chart1: Evolution of outsourcing industry
Forms Of Outsourcing
In sourced/in house
Business process outsourcing and off shoring
In practice organization use different approach in outsourcing and typically in a hybrid
fashion. There are primarily three approaches that used both effectively and efficiently at
different times over the last decade, they are:
Big Bang approach where significant portion of all activities are outsourced at one time;
reported often in the media but less used in practice. The strength of this approach is
more interest from supplier due to potential revenue; centralized program and lower co-
ordination cost. The weakness of this approach is greater risk; supplier may not have
adequate skills. The piece mental approach where each activity is outsourced
independently overtime and a variety of suppliers are used; most common approach, but
often by default rather than by design. The strength of this approach is best supplier and
price obtain for each outsource activity over time. Third is the incremental approach
where one or more suppliers are selected for pilot project with planned escalation of
outsourcing; Escalation occurs if preceding outsourcing is successful. The strength of this
approach is to meet the immediate need through pilot.
BUSINESS PROCESS OUTSOURCING: A CONCEPTUAL OVERVIEW
ITES is a long term contracting out of non-niche business process to an outside
service provider to achieve better synergies in the organizational functioning. Business
process outsourcing may be defined as the buying of component sub assembly, finished
product and services from outside suppliers rather than by supplying them internally. The
scope of ITES sector is being expanded day by day. The nature of activities carried out
by this is varied and complex. The major areas of ITES operations are- Database for
recruitment and selection; Insurance claims; Processing of loan application; Handling
customer complaint; After sales service; Telephone service; Training activity; Payroll
system; Appraisal system; Customer complaint; Human Resource information system;
Market Research, etc.
The resource like human, Physical, finance and other sources played a key role in
competitive economy decide successor failure of business and organization required to
procuring these resources at cheaper price to produce good and services with quality to
get competitive advantage over competitors. This is possible through business process
outsourcing because ITES facilitate business community to get required resources at
cheaper price inorder to get competitive advantage over competitor. The success of
outsourcing business depends on improvement of quality workforce, strengthening
infrastructure, proper people management, enhance customer interaction and problem
solution. Despite the tremendous growth, unlike other sector the ITES industry also
confronting the problem of retaining the talent. People have been the backbone of ITES
industry. Yet the very factor that has been industry’s strengths could turn into its enemies.
ITES attrition rates are officially pegged by the industry at 46% but informally it is as
high as 70 percent.
Lot many different thinker has endowed with their valuable thinking in connection
with the study area. The human resource arena is fast changing with the advent of the
dynamic, volatile and employee-oriented ITES industry. The challenge of effective
human resource management haunts every business process outsourcing managerial
executive. The ITES industry has closed the gaps of geographical and national diversities
and thus adopted a global business environment with an international standard. This
cross- national approach has resulted in a paradigm shift in the trends of managing
human resources of the ITES industry. The global approach with the diverse of work
culture, workforce, international standards and intense competition intensifies the
challenges of effective human resource management. The future of the ITES industry lies
in the effective blending of the concept of human resource and evolving best suited
strategies in human resource management and development. (Nakkiran and Frankiln)
Despite the fast growth in the ITES industry, players in India still have not reached a
stage where they truly handle an entire business process. Apart from the regular HR
functions, every HR manager has to rethink on the human resource strategies involved in
identifying skilled personnel, to motivate, retain, develop and elevate the employees. The
fact that though entry-level recruitment has not been a problem for the HR manager with
the fresh graduate in the labor pool readily available with language skills, the industry has
been facing a fast rate of labor turnover in this category. Attrition signifies not only the
loss of talent but also includes the cost of training the new recruits’. The attrition rate is
reported around 35%, which is high for any industry. The employees though young with
huge salary soon realize that the job characteristic has the side effect of psychological and
physical burden. Many ITES centers demand nearly 10 hours of night shift, which
damages the natural body clock of the employees and compounds in the form of social
stress and health problems.(Madhumathi and Sujatha).
Another problem has been the acute shortage of skilled CSR in an industry that suffers
from a high rate of attrition. There is no creditable and independent institution for the
formal training and certification of CSR competencies. (Sanket). In a study done by Nitin
Aggarwal, revealed that with employees moving to jobs in less than a year, the multi-
billion dollar Indian ITES industry is confronting gnawing problems like productivity
loss, training cost to name a few . The “Business World-ITES industry report” views that
“It is difficult to pick which is the more serious problem – the outsourcing backlash or
attrition. People have been the backbone of the Indian ITES industry –no other offshore
location offers the unique combinations of volume and skills base that India does. Yet,
the very factor that has been the industry’s strengths could turn into its enemies. ITES
attrition rates are officially pegged by the industry at 46%, but informally companies,
even those among the top 10, admit that the attrition rates often scale as high as 70%.
Along with attrition rates, salaries have also shot up drastically over the last couple of
years. And there’s a third problem. The huge talent resource base that has been the pride
of the Indian ITES industry is fast depleting (Sengupta et.al.).”
People, Processes, and technologies-the key elements of the ITES business. Meanwhile,
the industry has more to worry about than just reckless start-ups. Another major problem
is the high rate of attrition and growth aspiration of the workforce. High attrition and
growth aspiration of the workforce are the major problems faced by the Indian ITES
firms. At least 60,000 of the 1, 71,000 workforce change jobs every year. About 80% of
them look for better prospect within the industry, as for example, agents wants to become
team leaders want to upgrade to supervisors, or quality professionals or operations heads.
The labor cost are rising because voice based laborers are paid 10% to 15% more wages
than the non-voice based employees because of the odd working hours and as a
compensation for the resultant stress that is created . As far as training these employees
Rs. 45,000 to Rs. 50,000 is spent on training and when the employee turnover rates raises
the overall cost of operation is also on the raise (Vijayalakshmi). From the preceding
discussion it emerges that the study of the different human resources effectively. It is not
worth mentioning that in most of the literature that has been collected, more
contemplation has given on the narrative overview of the problems rather than providing
the key to solve the problems. As the industry is growing and produced lot many
openings for the Indian youth, where productive employment is scarce, it is justified to
conduct a study on the different human resource problems in the ITES industry with
special attention on retaining talent.
The objectives of the study are:
1. To examine what motivates employees to join the ITES industry
2. To identify that what tempts the employees to move out from the job.
3. To provide some suggestive framework by using motivational tool to retain
The paper is based on both secondary and primary data. Methodology adopted for the
study is both descriptive and analytical. For collecting primary data Mail Questionnaire is
used. The sample size is 30 and the process of convenient sampling is used. The
average/percentage method has been used to analyze the data.
From the analysis of the data it is found that the following are the key factors for which
people use to join the ITES industry
Age group: When we look at the age group all these respondents were in the age
range of 21-25. With average age of 23.5 years. This shows this sector is chosen
by the younger people as their initial job.
First time jobs: For most of the respondents the current job is the first or second
job. No respondents join the present job from other industry.
High salary: The starting salary for these respondents is above Rs. 10,000. This
is above most of the remuneration received in starting of a career without any
professional degree. So it can be safely predicted that the starting salary has
attractive attribute for joining the industry.
Group Mediclaim insurance scheme: Unlike many start up job ITES offers
many HR benefits starting from the day one to the employee. Mediclaim, PF and
other facilities are such examples.
Flexi time: Because of the flexi timings a class of people opts for the ITES jobs.
Getting in hand experiences: As the entry is easy a lot of youngster joins the
industry to gain handful of industry experience. This could be a basis for shaping
their career with some experiences and helps them to determine the skills of them.
Scope for enhancement: It is seen that the students also entered in the industry in
a big way to earn money in their holidays or working in night. These employees
are always working for a temporary time.
The study also finds the following factor that tempts the employees to move out from the
job. The stress level in the ITES is quite high according to the respondent. Though the
work timings are changes from day and night there are no or little compensatory benefits
for working in night. The growth is slow. Time taken to grow up from the preliminary to
a higher level is longer. The promotions are rare and they cannot rise quickly enough in
the preliminary level. Need for educational enhancement is told by employees. As
mentioned earlier there are a lot of peers joins this sector to earn and save money so that
they continue with their dreams. The industry also doesn’t provide any facility to enhance
their qualification in the work period. Since the scope for enhancing the career is limited
that is why people tend to shift their job in the early days.
It is clear from the study that though ITES employees are getting a good amount of
facilities, yet they are not fully motivated to stay in one organization. It is timely for all
the employers to consider motivating employee as their present philosophy. But here lays
the question how to motivate them for retaining in the same organization. Because the
basic fact is that most of us we are considering our growth rather than organizational
growth. Let us see what we can do to retain the employee:
Give Employees as much control over their work: This might be one of the
suggestive framework for motivating employees to stay in their job. One should
try to give the employee the utmost level of control over their job by the means of
putting creative element in the process of doing job, at least some degree of
freedom in making decision etc.
Challenge them to improve the operation: The more control and autonomy
employees have over their work, the more they will be able to take better
decisions on their work. Opportunities should be given to taken challenges in
improving their operation, in using creative talent in the different aspect of their
Get to know every employee: It is important to know each and every employee
to have him or her motivated for a manager. It’s important to have deployed team-
building measures. Starting from the day one the manager should have one to one
meeting to know the employee better.
Give respect: This is important to acknowledge each and every employee and
their work. He should know that the company truly values his place and his
contribution to the company. And he is an inseparable part of the future company.
Appreciate when employees do the right thing: It is also important to show
appreciation when something good happens to the company because of the team
or individual actions. Such appreciation and acknowledgement in front of others
boost employee confidence and these are good tools for motivating the employee.
The great Idea Award and Implementation of the Idea: There should be
provision for acknowledging the most innovative employees and their ideas.
These ideas should also be converted into regular day to day practice to make the
employee take the ownership of the success.
Opportunity for study Leave: As it is seen that most of the employees leave
their job to enhance their educational qualification. Therefore it is timely for the
employer to have provision for the study leave so those employees can
opportunity to enhance their educational qualification.
Job Rotation: In most of the interviews it has been seen that employees leave
their job due to repetitive nature of the job. There should be provision for job
rotation to avoid these repetitive natures of job
Clear Career path: The new entrant in the organization is not clear about their
career path. Therefore it is important for the manager to make clear the career
goal of the employee who is newly joined.
Managing the retention of talent in ITES is the necessary glue needed to build a
supportive climate to implement a successful business process transformation. Retention
of employees is critical to the long-term health and success of any organization. Effective
employee retention requires a systematic effort by the employee to create and foster an
environment that encourages current employees to remain employed, by having policies
and practices in place that address their diverse needs. Indeed most of the employer is
busy with tracking information not on controlling people but on to create and develop
innovative, powerful solution to retain talent. The organizations are trying to have
something innovative in their hands to retain talent to make a difference. But in real sense
this is not a very easy task. To retain talent though there are variety of measure, but still
all alone they are not enough. Here one has to think of how to engage employee in their
work so that the problem of retention can be solved. As from the study it has been clear
that “as employees’ income increase, money become less of a motivator’s. Also as
employees gets older, interesting work becomes motivators.”
Figure-1: Relation between motivation mix and Retention of talent
Retention of talent
In fact this is not like that only one approach to motivate the employee will be sufficient.
In the above figure an attempt has been made out to establish a framework to retain talent
in the industry. As the figure1 shows, one has to use the “motivation mix” to solve such
kind of problem, where “motivation mix” implies combination of traditional motivational
tool(like money, insurance benefits and other fringe benefit etc.) and the non-
conventional one(like involvement, appreciation, recognition, implementation of ideas
and so on ). The traditional motivational tool must be used with the non-conventional one
to motivate the employees not to change their job. In the times a head, if the organization
can use the “motivation mix” in proper manner, it is expected to face the problem of
retaining talent boldly.
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Sanket, Vij (2005). Call Centres: The House Keepers of the World. Synergy, 3(2), 91-10
Sengupta, Singdha; Singh Shelly and Moses Nelson Vinod. Business World ITES
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