FACTORS AFFECTING RETENTION RATE IN BPO INDUSTRY AND

ANALYSIS OF PERCEPTION OF CALL CENTER AGENTS TOWARDS

THEIR ROLE

A Research Paper Presented to

The Lyceum of the Philippines University
Claro M. Recto Academy of Advance Studies

In Partial Fulfillment of the Requirements

in Research Method

Submitted by:
Monica Joy Caayohan

Submitted to:
Dr. Victorina Zosa
 Chapter 1

INTRODUCTION

In the global business scenario, BPO is on top of the list today. The new age

workforce comprises mostly of knowledge workers, who are techno savvy, aware of

market realities, materially focused and who have higher propensity to switch jobs. The

challenge of acquiring new talent and retaining the existing talent is only going to

intensify. (Mishra, 2018)

People have witnessed the instantaneous progress of Business Process

Outsourcing (BPO) industry worldwide and in the Philippines. The very first Philippine call

center was established in 1992 but it was only in 1995 when it started to tremendously

expand, servicing not only to the United States but also in Europe, Canada, Australia and

even Japan. India is considered the number one outsourcing country globally while the

Philippines is the acknowledged leader in customer service worldwide. The main

advantage is the Filipinos’ ability to converse in the English language which is

comprehensible to major countries. The country has the people and the proficiency to

cater to various back-office services. What attracts the investors more to the Philippines

is the cost of doing business which is significantly low. Though the cost is minimal, the

work outputs are greatly extensive. It is of utmost concern to know how this industry is

able to retain its staff and the reasons why professionals prefer to work in BPO companies

rather than be engaged in a local corporation. Though BPO industry is flourishing, it is

likewise evident that there is high attrition rate; hence, there is a necessity to explore the

motivations behind jumping from one BPO company to the other. The foremost emphasis
of this study is to aid the BPO industry to capitalize on its retention strategies and

effectively resolve attrition problem by analyzing the causes to uphold this industry and

diminish the adverse impact of such in global business operations. (Salguero, 2018)

Attrition in BPOs has terrible effects on the organization. The high attrition costs

increase the costs to the organization considerably. They have to combat the amount of

disruption due to unplanned exits. The more the people leave an organization, the more

it is a drain on the company’s resources like recruitment expenses, training and

orientation resources and the time. The high attrition rate also affects the productivity of

the organization. Therefore, it is extremely important to curb attrition not only for an

individual firm but also for the industry as a whole. Many researchers have worked

enormously on the IT & BPO sector, citing its challenges, issues, and opportunities in and

around employee performance, employee satisfaction, employee turnover etc.

(Srivastava et al, 2011)

Grossman and Helpman’s (2005: 135) statement, “We live in an age of

outsourcing,” clearly designates that outsourcing has now become an acknowledged,

accepted and established business strategy. One of the most familiar forms of

outsourcing is business process outsourcing BPO, i.e., transferring the operational

ownership of one or more of the firm’s business processes to an external supplier that, in

turn, administers the processes according to some predefined metrics (Ghosh and Scott,

2005; Stone, 2004). BPO or Business Process Outsourcing thus refers to the

rearrangement of entire business functions to some other service providers, primarily in

low cost locations. The service provider may be either self owned or a third party. This
relocation or transferring of business processes to an external provider is essentially to

accomplish increased shareholder value.

Some of the general services provided by the BPOs are Receivables and

Payables, Inventory Management, Order Processing, Cash flow Analysis, Reconciliation,

Data Entry, Payroll Processing, QuickBooks Accounting, Financial Statement Preparation

and Accounting Services. Some of the web-based services include live online sales and

order entry, E-commerce transaction support, Live online enquiry handling, Web

Design/Development.

The sustainability of the BPO sector in the Philippines is anchored on qualified

talent availability. The BPO industry is one of the fastest growing job-generating industries

in the country. In 2008, it has produced 187, 000 jobs and the industry expanded to

generating 446, 664 jobs in 2013. In 2015, the BPO sector generated 1.2 million direct

jobs and US$22 billion in revenues. (2017 Al Bawaba)

It is for these reasons that the researcher came up with a study on retention and

attrition rate on business process outsourcing. BPO is an industry where it creates and

offers a lot of opportunities for the unemployed. As stated above, BPO contributes

hundreds of millions in the country’s revenue. It also helps generate livelihood and provide

employment for the unemployed. The researcher believes that if the country flagship is to

open more employment opportunities there must be a collaboration in in research and

development to cater the future challenges in business process outsourcing.

Background of the Study

Call centers can be a source of competitive advantage for organizations by

providing an opportunity to deliver, preserve, capture, and recapture customer

satisfaction (Butt, Doellgast & Kwon, 2015 and Kehres, 2011)

In published reports, the reasons for high turnover rates in call centers included

low salary (Bordoloi, 2014; Cleveland, 2005; Kehres, 2011), the lack of career paths

(Bordoloi, 2004; Cleveland, 2005; Hillmer et al., 2004, Kehres, 2011) burnout from odd

hours, repetitive work (Bordoloi, 2004; Kehres, 2011), heavy workload (Dwyer & Fox,

2006), a sense of powerlessness to make a difference or deliver quality work (Cleveland,

2005; Holdsworth & Cartwright, 2005; Holman, 2002; Kehres, 2011), lack of autonomy

(Batt, 2002;Kehres, 2011), inadequate training (Bordoloi, 2004; Cleveland, 2005; Kehres,

2011), insufficient resources (Dwyer & Fox, 2006; Kehres, 2011), managerial style

(Hillmer et al., 2004; Kehres, 2011), and stressful working environments (Cleveland,

2005; de Ruyter et al., 2001; Hillmer et al., 2004; Tuten & Neidermeyer, 2006; Kehres,

2011).

Chen and Silverthorne (2005) noted that job satisfaction and job performance

levels could be used to predict employees‟ intention to leave the job. The implication in

several studies was that job stress and job satisfaction is inversely related (de Ruyter et

al., 2001; Holdsworth & Cartwright, 2005; Tuten & Neidermeyer, 2002; Whitt, 2006;

Williams et al., 2001; Kehres, 2011). Udechukwu (2007) found that an employee’s‟

satisfaction level with the nature of the job tasks and the external aspects of job tasks

influenced turnover intention.

 The researcher believe that the government should welcome more players in

business process outsourcing as it contributes more in country’s revenue and it

diminishes unemployed people. BPO is an industry where credential is rarely being

considered because skills is more important than papers. It is the opposite of majority of

companies in the Philippines where they based on credentials of the applicant.

This study will be beneficial to call center agents because this paper will speak for

them. Moreover, it will be beneficial to the reader because it will provide them information

about reasons why people stay and leave BPO companies.

Statement of the Problem

This study aims to identify the factors affecting retention rate in BPO industry.

Further, it aims to analyze the perception of call centers on their roles.

1. What is the profile of call center agents as respondents in terms of:

1.1 Age;

1.2 Sex;

1.3 Location;

1.4 Educational attainment; and

1.5 Industry background/Professional work experiences;

2. What are the factors affecting retention rate in call center companies with

respect to the following criteria:

2.1 Accuracy of call forecasting

2.2 Plotting of schedule

2.3 Call duration requirement

 2.4 Metric attainment

2.5 Quality assurance process

3. What are the perceptions of call center agents on their role with respect to the

above-mentioned criteria as perceived by the respondents in terms of:

3.1 Physiological influences

3.2 Psychological influence

3.3 Social influence

Objectives of the Study

The objective of the study is to identify the actual reasons why people chooses to

work in business process outsourcing and identify the reason why people leave their job

in BPO. People have their own individual opinion towards people working in call center

companies; some are positive while some are negative. Nonetheless, this study also aims

to know if people working in call centers are affected by these opinions. The study will

use variables to achieve the objectives of this study.

Significance of the Study

This study will provide valuable information about perception of employees in job

satisfaction and the connection of job satisfaction to their intent to leave their job. The

information will be obtained through data analysis which can be used as an action plan

to develop organizational culture and effectiveness in BPO companies in the Philippines.

The study will also provide the leaders in BPO with information that will be helpful in
increasing retention rate within their company. This way, BPO companies can reduce

training and recruitment cost.

Turnover among offshore call center agents has been a growing concern (Gilson

& Khandelwal, 2005; Lee, 2005; O‟Dea Hein, 2008; Kehres, 2011). Through this study,

recommendations can be made to develop retention practices for agents. Further, the

result of the study will help the leaders in BPO understand the factors why call center

agent’s satisfaction and retention.

Scope and Limitations of the Study

This study will focus on identifying the factors affecting retention rates in BPO and

their perception towards their job. A questionnaire checklist will be administered in

Eastwood City in Quezon City where BPO companies is rampant. Some of the companies

present in the area are Convergys, Accenture, IBM, Microsourcing, Stellar to name a few

which are major call centers vendors in the Philippines. This study will specifically

approach 30 respondents from different call center companies in the area. These 200

respondents will be selected systematically.

Definition of Terms

The following terms were conceptually and operationally defined:

BPO (Business Process Outsourcing)- is the contracting of non-primary business

activities and functions to a third-party provider. BPO services include payroll, human

resources (HR), accounting and customer/call center relations.

BPO is also known as information technology enabled services

Call forecasting- The purpose of the forecast is to predict workload so that we can get

the right number of staff in place to handle it. And there are many different situations in

the call center environment that require a forecast to be done. The most common scenario

for which we forecast is simply normal, day-to-day operations. But you may also require

a forecast for special situations such as planning for new call type(s), opening a new

center, a merger or acquisition, or a change in operating hours.

Call Queue- The strict definition of a call queue is that it’s where callers are placed on

hold, in a queue, while they wait to speak with a live agent. In other words, the call queue

is where customers are placed after completing any interactive voice response prompts

but before a call center representative has spoken with them. In more casual terms, this

would often be referred to as “being on hold.”

Chapter 2

Review of Related Literature

According to Goldie Gabrani (2018), every organization today is challenged with the

issues of employee attrition. Attrition is the reduction in the employee base of an

organization. This could be because of voluntary resignation or expulsion by the higher

management. It becomes important for the company to be prepared for the loss of

human power in whom company has invested and from whose help it has earned

revenue. Thus, it is a profitable idea to predict the risk involved with uneven attritions so

that management can take preventive measures and wise decisions for the benefit of
the organization. In this paper, a model based on Machine Learning techniques that

predicts the employee attrition has been designed. The model is implemented and is

thoroughly analyzed for the full profile of companies. It has been shown that the model

can be effectively used to maximize the employee retention.

Further, in the study of Lorenza Errighi, et al (2016), advances in information and

communication technology (ICT) have facilitated growth in the business process

outsourcing (BPO) sector, and the Republic of the Philippines ranks among the world’s

major BPO destinations. The sector’s economic influence in the country has tripled in the

last ten years. Low labour costs, a highly skilled workforce and competitive ICT

infrastructure have provided the major drivers of Athis growth. While contact centres

represent the most important subsector in terms of revenue and employment, higher

value-added subsectors are also growing. BPO is expected to expand rapidly in the

coming years, further strengthening the country’s participation in global supply chains

(GSCs). At the same time, it faces numerous challenges related to decent work. A

qualitative survey of the industry reveals four key findings: i) a real danger of skills

shortages threatens as employers struggle to find correctly trained workers and, once

they are hired, to retain them for longer periods; ii) employees report high-stress work

environments, with detrimental impacts on health, while HIV/AIDS is increasingly

prevalent among BPO workers; iii) more than 50 per cent of workers are women, but they

tend to be concentrated in low-paid, low-skilled jobs; and iv) trade union activities are

almost nonexistent in the BPO sector. In the global business scenario, BPO is on top of

the list today. The new age workforce comprises mostly of knowledge workers, who are
techno savvy, aware of market realities, materially focused and who have higher

propensity to switch jobs. The challenge of acquiring new talent and retaining the existing

talent is only going to intensify. (Priti Suman Mishra, 20017) It is clear from the review of

BPO research that solutions are required to some specific problems of practical

importance in the field of escalating attrition and retention in BPOs (Ankira Srivastava, et

al, 2011)

Attrition in BPOs has terrible effects on the organization. The high attrition costs increase

the costs to the organization considerably. They have to combat the amount of disruption

due to unplanned exits. The more the people leave an organization, the more it is a drain

on the company’s resources like recruitment expenses, training and orientation resources

and the time. The high attrition rate also affects the productivity of the organization.

Therefore, it is extremely important to curb attrition not only for an individual firm but also

for the industry as a whole. Many researchers have worked enormously on the IT & BPO

sector, citing its challenges, issues, and opportunities in and around employee

performance, employee satisfaction, employee turnover etc. (Yogesh Tiwari, et al, 2011)

BPO industry has experienced high attrition rates since inception. There are many factors

that lead to attrition in BPOs and much research has taken place time and again.

(Santoshi Sengupta et al, 2011)

The IT-BPO industry in the Philippines has experienced significant growth over the past

decade and has now established itself as a global leader it. However, despite being a

high growth sector, the industry is still troubled by high attrition rates annually. (Ariola,

2017) Aside from attractive salaries, the attractive work environment and benefits offered

by the BPO sector have motivated many young adults to seek employment in this sector.
Although, The BPO sector has opened up vast career opportunities for young adults, but

at the same time employment in the sector has an impact on young people's lives. With

the availability of higher disposable incomes, many young people have reported lifestyle

changes. (Devi, K.; Punitha, A.)

Recently, public awareness on shift work in the Philippines has increased with the quick

rise in the past ten years of the business process outsourcing (BPO) industry in the

country. The BPO industry provides services which include medical transcription,

computer animation, software development, engineering and architectural design, back

office operation, human resource management services, and other professional services,

with the contact center or call center sector as the biggest component (Sibal 2011; Lozano

– Kuhne, 2012). Professional organizations in the Philippine BPO industry include the

Animation Council of the Philippines Incorporated, Business Processing Association of

the Philippines, Contact Center Association of the Philippines, Gaming Development

Association of the Philippines, Health Information Management Outsourcing Association

of the Philippines and the Philippine Software Industry Association. The booming industry

which employs mostly shift workers has expanded at a fast rate in the last decade

contributing revenues of 350 million U.S. dollars (USD) in 2001 to 7.2 billion USD in 2009

(UPDPI/ILO 2010). The BPO industry in the Philippines currently employs around

400,000 employees (Bajaj 2011: Lozano – Kuhne, 2012). Most of these employees are

shift workers. Non-shift workers in the industry are usually those with administrative

positions. The Philippines surpassed India as the leading BPO provider in 2010 in the

pure voice-based revenue (Lal 2010). Continued growth of the industry is predicted with
a yearly increase of 25 to 30 percent in financial benefits (Bajaj 2011; Lozano – Kuhne,

2012).

The business process outsourcing industry expects to add as many as 70,000 jobs and

$1 billion in revenues this year, as it retools its workforce to weather the shift to artificial

intelligence, an industry group said Wednesday. The BPO industry will grow by 7 to 9

percent this year, higher than the projected 6 to 7 percent for the global industry as a

whole, the Contact Center Association of the Philippines said. Companies still see the

Philippines as an outsourcing destination due Filipinos’ English language skill, high

empathy for customers and tax incentives, said CCAP president Jojo Uligan. "We are

forecasting to add another $1 billion in revenues this 2018. That translates to an additional

70,000 more jobs," Uligan said. (Jessica Fenol and Warren de Guzman, ABS-CBN News,

2018)

Employees are the valuable asset for every organization. It is essential to protect this vital

resource as talented and motivated employee play a crucial role in overall growth and in

the success of the organization, but attrition is the biggest problem faced by BPOs in

modern era. Attrition rate in BPO sector is more than the attrition rate in any other sector.

It is very important to control this attrition rate. Many retention schemes are applied in

BPOs for retaining employees. A single tool like training alone is not sufficient for

employee retention. The best results for employee retention can be achieved by applying

different tools strategically. Employee Retention involves taking various measures to

encourage employees to remain in the organization for the maximum period of time. It is

a process in which the employees are encouraged to remain with the organization for the

maximum period or until the completion of the project. Employee retention is beneficial
for the employee also & for the organization also. It is known fact that retaining the best

employees ensures customer satisfaction, increased product sales, increased

productivity, satisfied colleagues and reporting staff, effective succession planning and

deeply embedded organizational knowledge and learning. Employee retention matters,

as organizational issues such as training and investment, lost knowledge, insecure

employees and a costly recruitment process are involved. Hence, failing to retain a key

employee is a costly proposition for an organization. (Kavita D. Chordiya)

Shivangee Singh & Pankaj Kant Dixit (2011), Employees comprise the most vital assets

of the company. In a work place where employees are not able to use their full potential

and not heard and valued, they are likely to leave because of stress and frustration. They

need transparent work environment to work in. In a transparent environment where

employees get a sense of achievement and belongingness, where they can best utilize

their potential and realize their skills. They love to be the essential part of such

organization and the company is benefited with a stronger, reliable work-force harboring

bright new ideas for its growth. Anil Kumar Hagargi (2011), Retention has become key

tool for success, but retention has become a tough job for the sector as attrition is on the

rise due to various reasons. Employer should concern the people and provide flexible

shift and weekend off so that employees will feel comfortable & the next day they will be

able to spend some time with their family. Retention has become a key challenge for the

BPO industry. With the help of retention, the company can save investment on

recruitment and can turn it as cost effectiveness. As the sector is open and people has

various choice to work therefore attrition is on the rise & to minimize it, the sector should
plan the career path of people and provide them rewards and promotions on time and

keep them satisfied so that employees should not think about alternative employer

R. Gayathri (2012), Most of the employees leave an organization because of frustration

and constant disputes with their superiors or with other team members. In some cases,

low salary, lack of growth prospects and motivation compel are some of the reasons

behind quitting their jobs. The management must try its level best to retain those

employees who are really important for the system and are known to be effective

contributors. It is the responsibility of the line managers as well as the management to

ensure that the employees are satisfied with their roles and responsibilities and the job is

offering them a new challenge and learning every day. In the present scenario,

identification of employee retention has become a crucial element. In study it is found that

most of the employees in BPO’s are retained due to the following factors such as

competitive compensation, Encouragement and Recognition, well equipped and safety

environment, infrastructure, potential talent and the prospective roles. If organization is

going to practice these factors, the employee retention will be possible.

(Arvinder Kaur &Shivani Gupta (2012), Women employees constitute about one-third of

the total workforce in Call Centre and BPOs in India. Though there is major economic

contribution of women to the BPO industry, yet several challenges and problems faced

by the women employees still remain to be addressed. The women employees are

satisfied with the safety and security measures. They are quite satisfied with the

infrastructure, supervision, employee-employer relationships. They are not satisfied with

the salary, perks, requisites and promotion prospects. They are also not satisfied with the

grievance redressal system. But the employers are continuously making efforts to provide
the safe and secure work environment to women employees. The efforts are in

accordance with various laws and legislations enacted in Indian for security, protection

and equality at work. Still there are certain expectations which need to be looked upon

and the congenial work environment and culture should be provided to women

employees. The woman is a creator and now she has adopted the role of earner for the

family. The society & family support is must for boosting their spirits and equal treatment

at work place is equally important for them to achieve success. Employee satisfaction

and retention is major challenge in these days and employers shall concentrate primarily

on satisfaction of the employees.

Attrition has terrible effects on the company. The high attrition costs considerably increase

the costs to the organization. They have to deal with the amount of disruption due to

unplanned exits. The more people leave an organization, the more it is a drain on

company’s resources like recruitment expenses, training and orientation resources and

time. The high attrition rate also affects productivity. Hence, it is extremely critical to curb

attrition not only for an individual company but also for the industry as a whole. (Arindam

Bhattacharjee & Bishal Hetampuris, 2013)

CONCEPTUAL FRAMEWORK

INPUT PROCESS OUTPUT

A. Existing A. Development A. Improved

employee of retention employee
retention strategies of retention
strategies of BPO strategies of
BPO BPO
companies B. Interpret the companies
B. Perception of data
B. Acceptability
the public
of identified
towards call C. Administration employee
center agents of retention
C. Questionnaire- questionnaire - strategies
checklist checklist

Conceptual model of factors affecting retention rate in BPO industry and analysis of
perception of call center agents towards their role
 Chapter 3

METHODOLOGY

Research Design

This study will adapt two research designs such as qualitative and quantitative

research designs.

Qualitative research is a type of research that collects and works with non-

numerical data and that seeks to interpret meaning from these data. It also investigates

the quality of relationship, activities situation or materials (Denzin and Lincoln, 2005). This

study deals with non-numerical data meaning data are collected in the form of words. On

the other hand, quantitative research explains phenomena by collecting numerical data

that are analyzed using mathematically based methods (Alliaga, 2000).

These two research designs were chosen by the researcher because it best served

to address the objectives and purpose of the study.

Participants of the study

This study will specifically approach call center agents or people working in the

business process outsourcing industry. The participants of the study will include agents

and non-agents which involves team leaders and those that working in the back office.

Aside from those that are working in BPO, the participants of the study would also include

those that have resigned from BPO companies to identify reasons why people leave BPO

industry.
 As agreed, there must be 30 participants of study. In selecting the participant of

the study, the researcher will use convenience sampling to select participant that are

willing, and suitable respondents of the study.

Instrument used

To attain the specific objectives of the study, the researcher will conduct the

following procedures:

The researcher will design a questionnaire checklist which will be anchored in the

objectives and purpose of the study.

The questionnaire that will be used in collecting data in this study has an attached

“consent to participate”. This consent to participate contains information regarding

purpose of the study, personal information to collect and its purpose, confidentiality,

privacy of provided information and the rights of the respondent. On the last part, there is

a clear statement where the respondents need to sign if they wish to voluntary participate

as respondents of the study. This “consent to participate” is to respect the confidentiality

and anonymity of the respondents of the research, seek informed consent and avoid harm

to the respondents.

The questionnaire will be divided into three parts. The first part will be composed

of the variables regarding the profile of the respondents such as age, sex, location,

educational attainment and industry background. The second part will be composed of

two columns. The first column will contain open ended questions while the second column

displays the possible and appropriate responses from the respondents.

Validation of instrument

The developed questionnaire checklist will be validated by experts through face-

to-face validation. In the validation process, copies of the questionnaire will be given to

the validator-experts. They will run through the content of the questionnaire very carefully

to ascertain the appropriateness and adequacy of the questionnaire-checklist.

After the questionnaire checklist was validated, a pilot test will be carried out using

5 respondents. This will be done in order to see how the subject will react to the

questionnaire; whether the items are clear enough and easily understood; whether there

is the need to include more items in certain areas or whether are some items to which

they would not like to respond; as well as workability of the method used.

After the validation and pilot testing, the instrument will be revised base on the

suggestions of the validators-experts and from the respondents of the pilot test will be

taken into large consideration.

Data Gathering Procedure or Data Gathering Method

After the pilot testing and all necessary modification, the questionnaires-checklist

will be administered directly to the identified participants of the study. Two hundred-

copies of the questionnaire will be given out and will be collected back. The collected data

will be analyzed and interpreted using computer software.

Statistical Treatment of Data

To interpret the data effectively, the researcher will employ the following statistical

treatment. The Percentage, Weighted Mean and T-test are the tools that will be used to

interpret the data.

1. Percentage

This will be used to determine the frequency counts and percentage distribution of

personal related variables of the respondents.

2. Average Weighted Mean

This will be used to determine the assessment of the respondents with regards to their

personal profile

3. T-test

This will be helpful in making comparison of two or more means which enables a

researcher to draw various results and predictions about two or more sets of data.
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https://search.proquest.com/docview/899248754/5A315A1A80764DE2PQ/2?accountid=

173015

https://www.techopedia.com/definition/13776/business-process-outsourcing-bpo

https://3ccontactservices.com/what-is-a-call-center-queue/