Amit’s e-world

Firstly, I would like to dispel the thought that this is an official award.  Nevertheless, Managing Strategic Innovation is perhaps the best planned module in the MBA, in terms of the faculty involvement, content and practitioner integration. There were three case studies for which we had practitioners coming in; for the AXA case, we had the CEO of the firm come in, for the Domino printer case, we had the R&D manager & the technical manager of the company with us; for the F1 case, we had a manager from Renault with us. If you are a F1 fan, you will thoroughly enjoy the MSI experience. Being a F1 fan myself, it was very interesting for me to understand the importance of innovation in F1. Infact there were some very good facts in the form of trending charts that showed how the average speed on the Monaco circuit has been rising since F1 started. Very interestingly, the regulations force F1 in the next year to be slower than the previous year. But a year after that, the car manufacturers bounce back to find another loophole not covered in the regulations & beat the all-time highest speeds.

As far as the faculty involvement goes, it is perhaps the only module in which all lecturers are present in the class even when there isn’t a scheduled time for them to speak. They do pitch in with their comments at appropriate times. However, what stands out in my mind is the remarkably short turnaround time for the WACs that were conducted 2 days back. By far, this has been the quickest marking of the WAC by any faculty so far.

The city car simulation was one the most useful experiences in terms of learning compared to the other simulations conducted in the MBA thus far. The reason for my belief was that, not only did it help us understand what we did wrong, but there was also an opportunity to listen to the other teams & learn what they did right. And also the fact that the simulation did not end with that. There were inputs from the faculty about the comments made by the teams of what they felt were the right things they did.

There are two school of thoughts here that I would like to discuss.

On the one hand, a recession is likely to force companies to cut costs and therefore offshore would boom. On the other hand, it is likely that a recession would force a company to discontinue quite a few projects some of which may be outsourced ones, impacting offshoring negatively.

The former scenario looks more likely from a historical perspective, as one would remember that the 2000-2001 dot com bubble burst and the terror attack jolted offshoring just a bit, & then there was a such a large spurt of work that most offshore companies in India found it difficult to cope. I had just joined Infosys in 2002, when it was believed that the slowdown was still not over, and I experienced first-hand the amount of effort software engineers had to put in, to ensure that Infosys got respectable profit margins on contracts aggressively negotiated by clients. During this period, the billing rates for software companies were also at the lowest. However, six years since then, offshoring has grown leaps and bounds in the U.S. At this stage, companies that have been involved in offshoring their work for a long time, have offshored possibly everything they could, keeping the strategic bits with themselves. If a recession were to happen now, it is unlikely that such companies would suddenly start outsourcing more work, because they probably wouldn’t find anything more to outsource.

Talking about the second scenario, I want to bring forth something very relevant that came out from my discussion with a Programme Manager in a UK firm today (as an aside, this was part of our Project & Programme Mgmt elective where we are supposed to interview practitioners.. was good to be on the other side of the table). It was the fact that whenever, there was a budget cut in the firm, the first projects to be slashed were those that were strategic or high-potential, because it was difficult to stop something that affected operations or support. If you try to relate which of these projects are the more likely ones to have been outsourced, it wouldn’t be too difficult to guess that it would be the latter. Therefore, while I expect offshoring to be affected adversely, I do not believe the effect will be as adverse as the degree of recession itself.

To cut the long story short, I would expect that the answer to the question depends on the percentage of companies in the different stages of offshoring. Companies that have been long enough with enough offshore maturity, would probably prune their offshore work though not too sizably. While for other companies that have yet to begin their journey in offshoring or have just taken their first step, a recession will provide the necessary ‘excuse’ / ‘justification’ to drive their organisations towards offshoring.

I have been quite active on LinkedIn Answers for the last few days. There was a very interesting question on the reason for high attrition in BPOs and I gave a shot at it.

According to me, the most significant reason for the high attrition is the cannabilising culture that is fostered in call centres. HR managers at call centres promote a culture of fun and lifestyle for a relatively young employee group. This manifests into employees wanting to maintain the same lifestyle even beyond the luxuries bestowed on them by the company. This results in employees jumping from one company to another for a mere 10-15% hike in salaries. It is not surprising that the Vice-President of Convergys, while speaking to our MBA batch recently, acknowledged this problem, and regarded attrition in India as a problem big enough for the company to re-consider its growth strategy in the APAC.

Another problem not unique to the BPO industry is the slowness of the internal promotion / salary revision system compared to the on-demand wage and level hikes people can get from other BPOs. It is not surprising that most people resign just after receiving pay-hikes from existing employers, as it improves their prospects of earning even higher salaries in the next job.

The only way to reduce attrition in the BPO sector is to focus on differentiation. The ‘fun’ element is now ubiquitous, and has to be replaced by something else that might appeal to the young target audience. How about creating a scheduling model that allows more employees to work in day shifts (I believe preliminary statistics show an effort made by employers to improve work timings). How about exploring the possibility of "Work from home" in this sector.

The time when the management of a call centre can say with conviction why somebody should work for them and not their competitors, the problem of attrition will have been managed.