Human Resources (HR) is an integral part of any company, and a Business Process Outsourcing (BPO) company is no different.
A Human Resource Management (HRM) team is responsible for maintaining the employer-employee relationship. This must be done throughout the phases of the employment cycle, from recruitment and onboarding to exit management.
Several unique HR challenges in the BPO industry may arise due to a high employee volume, high employee turnover, and rigid client requirements.
In this article, we’ll describe 10 factors that present a major challenge to the HR professional in BPO. We’ll also provide a potential solution for each.
10 significant HR challenges in BPO industry (+ Solutions)
Revenue in the Indian BPO sector has nearly doubled from $2.74 billion in 2016 to $4.7 billion in 2022. This growth in the Indian BPO industry is projected to reach $7.4 billion by 2027. It’s also predicted that spending will increase in the coming years as the focus of Indian BPO firms shifts to more knowledge-based and niche business process outsourcing.
To learn more about the BPO industry, check out our complete guide.
So, how does this affect the role of HR?
In the past, HR was primarily responsible for staffing and payroll. However, as global outsourcing has grown in popularity and complexity, the scope of HR functions has broadened. This change has brought a host of new challenges for HR in the BPO industry.
Let’s have a look at 10 such HR challenges.
1. Poor reputation of the industry
People commonly have negative opinions of working in BPO, believing it to be unpleasant work or an unsound career opportunity.
This is an obstacle HR personnel will likely face when recruiting and retaining employees.
The HR team can tackle this problem by:
- Ensuring a positive work environment.
- Communicating the benefits of working in BPO to potential and current employees.
- Allowing flexible work schedules.
- Offering competitive benefits.
Even employees who decide to leave should ideally exit with a positive view of the company and the BPO industry in general. This can help improve your company’s reputation in the eyes of employees, clients, and competitors.
2. Employee attrition
It’s typical for a BPO to employ a large workforce, which is a challenge in itself for the HR department. However, one of the biggest and most consistent challenges faced by HR managers in BPO companies is the need to constantly replace employees who leave.
The average employee attrition rate for the BPO industry tends to be around 30-35%. In the last decade, it’s reached as high as 55%.
In most cases, the HR department is tasked with improving talent retention and facilitating an easy exit process for employees who resign.
There are many factors that cause a high attrition rate. Sometimes employees only take a position in the outsourcing industry to earn an income until they find a different job. Many entry-level employees don’t see BPO as a valid career option. In some cases, they may find the work monotonous, the pay too low, or the office environment unfavorable. Younger employees are also more likely to job-hop than older employees.
Other factors that impact employee job satisfaction include:
- Company culture.
- Interest in the work.
- Being under- or overqualified for the position.
- Advancement prospects.
That’s why the HR department is tasked with constantly hiring and training new employees to keep the workforce’s size consistent.
Some staff members will inevitably part ways with the company. However, HR professionals can implement retention strategies such as:
- Improving employee engagement by adding fun activities and sharing goals to work towards.
- Providing training to improve employees’ competencies, which is valuable to employees and may increase company loyalty.
- Providing opportunities for growth and introducing BPO employees to the different verticals of the company.
- Appreciating quality work through incentives and rewards.
Remember that keeping your employees satisfied is good for business. A 2019 empirical study by the University of Oxford found that happy workers are 13% more productive. Good HR policies and employee benefits are sure to generate job satisfaction across the board and improve employee turnover rates.
Another option is to focus on broadening recruitment to include offshore. Hiring internationally means you could find eager workers in other countries and provide them with upskilling and reskilling. This can create a workforce of dedicated and loyal employees less likely to job hop. For example, India and the Philippines are popular destinations for outsourcing companies to hire.
Check out this related article about BPO employee retention.
3. Lack of standardized HR protocols
Every BPO organization is different, working across various industries and locations. So, there tends to be a lack of standardized practices for HR personnel to follow.
For example, there isn’t a standard set of rules a BPO company must follow in terms of:
- Benchmarks and milestones.
- HR policies (such as attendance, leave, health and safety, employee conduct, etc.)
- Pay structure.
- Employee benefits.
This means an HR team must discover for themselves what works and what doesn’t for the company. It can be a rocky trial-and-error process.
Solving this HR challenge may involve:
- Regularly researching HR policy trends.
- Asking employees about their pain points.
- Tweaking HR policies whenever they’re outdated or ineffective.
Doing this helps you be proactive about your protocols, rather than making changes only when something goes wrong or never making changes at all. This way, your employees are well-protected, and the business is covered from compliance issues.
4. Providing constant training
New BPO employees require training from or before day one to produce high-quality work. Additionally, existing employees may need ongoing training opportunities. This helps improve your competitive advantage in the industry.
However, training can be time-consuming and costly, especially if the rate of attrition is high. Companies can lose money when employees quit after receiving training.
Aside from the need for constant training and cost of this, you might be unable to find relevant, process-specific training and certifications offered by a third-party company. This means you may have to put it together yourself.
The HR team can develop resources to ensure employees are prepared for their jobs. Creating resources like instructional documents or tutorial videos can give employees something to refer back to. This way, managers won’t have to repeat the same information multiple times.
They should ideally do this in conjunction with other employee retention strategies to minimize capital lost by training employees who leave.
5. Lack of career advancement
In a survey of millennials by Gallup, 87% of questionnaire respondents said that they feel career development is important in a job. Perceptions of career growth can have an impact on employee satisfaction.
Unfortunately, with the high staff volumes typical in BPOs, not everyone can advance at the same rate. Many don’t wait long enough to see growth, as only one in eight see BPO as a long-term career option.
Because of this, it can be challenging to keep BPO employees motivated and committed.
An HR manager can improve career growth prospects in the following ways:
- Defining a path for advancement and informing employees of what they can work towards.
- Providing upskilling and reskilling opportunities at all levels.
- Emphasizing job security.
- Introducing financial incentives for career milestones and communicating this to staff.
In other words, HR can help employees see the value of a career in BPO and encourage them to work towards future benefits.
6. Facilitating a comfortable work culture
Some business process work, such as call centers or data entry, can get repetitive. It’s up to the HR department to provide employees some relief from their work throughout the week.
Other problems may also arise in the workplace that HR must handle to ensure their employees are comfortable. For example, this can include conflict resolution or issues with the office infrastructure.
HR can foster a positive work culture to ensure employees are motivated and happy.
They can implement things like:
- Team building events.
- Healthy competitions.
- Lighthearted workplace occasions such as icebreakers and games.
- Office initiatives that encourage goodwill among staff.
This can help create a positive employee experience.
HR should also look out for stressors in the workplace and offer solutions. For example, if employees are becoming frustrated with old hardware, replacing it with new technology could make them happier and more productive.
7. Managing client expectations
Although HR generally deals with the relationship between a company and its employees, some aspects of client interactions fall to them too. In the BPO industry, client companies may have high or even unrealistic expectations for BPO service delivery regarding things like timeframes, quality, and benchmarks.
It becomes an HR challenge to ensure these expectations are realistic considering resources like time, employee availability, etc. Otherwise, employees could be overloaded with tasks, deadlines, and expectations they can’t complete.
It may be beneficial for HR teams to find a balance between optimism and realism when it comes to meeting client requirements.
They can encourage their employees to work hard and improve their performance to meet the client’s expectations. This enables constant improvement. However, if the client’s requests are unrealistic, they may need to recommend adjustments based on their human capital capacity.
8. Working within a tight budget
One of the main benefits of outsourcing for client companies is cost savings. So, clients may present a limited budget for the services they require.
Tight budgets may mean HR has fewer resources at its disposal to get work done and keep employees satisfied.
Tight budgets may require HR personnel to scale down recruitment and incentivize productivity. This way, you can pay your existing staff fairly while getting more work done with fewer resources.
Alternatively, the HR department may need to suggest budget changes to ensure employees’ needs are taken care of.
9. Measuring performance and productivity
With such a large workforce and many metrics to track, productivity reporting and performance management can be an HR challenge.
Traditionally, productivity is seen as a simple ratio of deliverables produced over time. However, this fails to account for several factors, like the quality of service or the relative difficulty of tasks. Productivity measuring shouldn’t be about tracking how much time is used but how effectively it’s used.
This means that an HR team has to know what metrics to measure to understand productivity, and they need a way to measure this across their entire workforce accurately.
So, how can HR reliably track employee productivity?
There are many handy tools on the market to help businesses with productivity tracking, such as time-tracking software – Time Doctor.
Time Doctor is a robust time tracking and productivity management software solution used by small businesses, like Thrive Market, and large companies, like Verizon and Ericsson, to boost productivity across the board.
Its time and productivity tracking features can help BPO vendors to:
- Create work schedules and track attendance and punctuality.
- Track total hours worked in a given period.
- Keep records of websites and applications employees use and rate their productivity.
- Track employees’ idle time (time without keyboard or mouse activity), calculate idle time percentages, and prompt staff with idle-time pop-ups.
- Check up on employees via optional timed screenshots and screencasts.
- Generate numerous detailed time and productivity reports, providing actionable insights into how your employees use their time.
When an HR manager assesses the various reports and metrics and notices issues, they can:
- Ask employees what the cause might be.
- Provide extra guidance or training to employees that are struggling.
- Encourage and reward high productivity.
Time tracking can also help HR managers promote a healthy work life balance. It can reveal if people work unreasonable hours or have too much on their plate.
Check out Time Doctor’s full list of features to discover how it can be an HR asset for BPO companies.
10. Ensuring compliance
HR compliance refers to adhering to all labor laws in your region(s) of operation. Sometimes BPO service providers operate in multiple locations, increasing the burden of compliance.
Employees also need to comply with specific laws and ethics, and it’s HR’s responsibility to ensure this happens. For example, HR must enforce employee compliance with non-disclosure agreements and data security protocols.
HR personnel can ensure compliance by doing the following:
- Regularly researching changes in laws and regulations.
- Educating employees about compliance.
- Providing ways for staff to report ethical concerns.
- Proactively updating and documenting all company policies.
- Communicating with staff about policy changes.
- Consulting with legal advisors about compliance at regular intervals.
The Human Resources department plays an indispensable role in any BPO company. The BPO sector also presents some unique challenges regarding HR. Some of these challenges relate to the high employee turnover rates, improving the workplace environment, measuring productivity, and compliance.
As BPO owners, you can use this information to understand the HR challenges and work with the HR department to overcome them.