ITES scenario and key challenges for HR professional

“You are not here merely to make a living. You are here to enable the world to live more amply, with greater vision, and with a finer spirit of hope and achievement. You are here to enrich the world. You impoverish yourself if you forget this errand.” – Woodrow Wilson.  

This is so true about India ITES Scenario. Amidst the continued high inflation, slowing economic growth, decline in employment rates across sectors, rapidly depreciating currency and to top it all a fast deteriorating global economic environment thanks to massive sovereign debt crisis in Euro Zone alongside Government  inaction have all combined to create an extremely difficult environment. However, as we say that great Leadership is about imagining possibilities rather than rationalizing current realities, The ITES industry demonstrated strong resilience and adaptability and is continually reinventing itself to retain its appeal to customers amidst uncertain  and ever changing macro economics scenario and business landscape.

The challenge faced by ITES industry is 2 fold  : -

External challenge : opposition from the US politicians and the UK labor unions against shifting of the operations by local companies to India. The threat of real competition from other players like Philippines, China etc also exists. 

Internal Challenge - High attrition and availability of competent Managers for Middle and Senior Management.  

Some Facts* : -

1. 2012 - Milestone year for Indian IT-BPO industry-aggregate revenues cross the USD 100 billion mark, exports at USD 69 billion
2. Within the global sourcing industry, India was able to increase its market share from 51 per cent in 2009, to 58 per cent in 2011, highlighting India’s continued competitiveness and the effectiveness of India-based providers delivering transformational benefits
3. The industry continues to be a net employment generator - expected to add 230,000 jobs in FY2012, thus providing direct employment to about 2.8 million, and indirectly employing 8.9 million people 
4. As a proportion of national GDP, the sector revenues have grown from 1.2 per cent in FY1998 to an estimated 7.5 per cent in FY2012

Key Highlights specific to BPO 

1. India continue to remain world's favored market for BPO companies, among other competitors, such as, Australia, China, Philippines and Ireland. 
2.  BPO exports expected to reach USD 16 billion in FY2012, growing by over 12 per cent over FY2011 
3. Knowledge services segment growing in significance; fastest growing among BPO segments at over 15 per cent; has pioneered outsourcing in areas such as data analytics, data management and legal services. Analytics is expected to grow 19 per cent, much faster than BPO industry average.

Key Challenges for HR Professionals in BPO 

1. Every year, 2.1 mn graduates and 0.3 mn post-graduates pass out of India’s non-engineering colleges. Although less than 10% find a job or pursue higher studies and the remaining have very few attractive avenues of employment open to them.  Moreover, while 19 million students enroll in the high schools every year, only 10 million students register for pre-graduate degree courses across India. If the flow from high schools to graduate courses increases even marginally, the number of skilled workers available to the industry will increase even further. 
2. There is a big mismatch between the skills that Indian industry required and what the education sector in the country provides.  So much  for demographic dividend.
3. 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, the challenge is to enable business to be more efficient than the original.
4. Integrating HR with Business Strategy is a key. The HR professional is expected to be a strategic partner contributing to the success of business plans, which to a great extent depend on HR policies pertaining to recruitment, retention, motivation, and reward
5. The other major areas of concern for HR personnel  is management of change, matching resources to future business requirements, organizational effectiveness and management of expectation of GEN Y.
6. Brand equity: People still consider BPO to be "low end", thus making it difficult to attract the best talent. 
7. 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. Also there is  lack of focused training and certifications
8. While there has been some progress in establishing benchmarks for compensation and benefits, performance or HR policies. However, still there is huge scope.
9. Retention and motivation of employees are major HR concerns today as average tenure for an IT professional is less than three years. Attrition means not only loss of talent, but also includes the cost of training the new recruits. The attrition rate in the industry has been hovering around 35%, which is quite high for any industry. An average Indian call center employee works with a company for ~12 months.
   
10. Established players and market leaders invest heavily in training their managers. However, their top talent is being poached by the new entrants to the industry.  Everyone agrees that hiring from competition is a vicious cycle and will not help the industry grow, but with very few options available, most of the established firms also resort to the easiest solution - poaching.

Given this background, it has become imperative for HR professional to ensure that they sharpen their business acumen, understand and anticipate global trends, be as good in understanding business / Financial matters of the company as the CFO does, if not better and at the same time, hone their ability to take all the stakeholders along while enabling business results.

*Data Source : Nasscom