Strategic Outsourcing Professionals

In the call center or transaction processing environment, employee attrition seems to always be a continuing struggle for operations. Historically, the industry sees high turnover for reasons that include low-pay, repetitive work, lack of career path and difficult customers. A theory with outsourcing operations in emerging economies is that attrition risk is reduced by providing better pay and opportunities where they otherwise did not exist. In my experience, this theory has not exactly been proven, and employee attrition seems to be just as much of a problem offshore.

When examining the economies and markets of where business operations are outsourced, it becomes apparent that attrition occurs for different reasons. The largest impact is economic growth of the emerging economy. An influx of competition drives wages upwards and produces turnover for incumbent vendors and/or captive centers. An even bigger problem is that employees do not feel loyalty to provide notice; they simply leave for a better opportunity. This becomes extremely costly when dealing with outsourcing operations and is a key performance indicator that needs to be managed and governed appropriately.

For managing attrition in an outsourcing paradigm, be sure to think of creative ways to protect the operations from experiencing this pain.

Here are a few tips to help with managing attrition:

• Define and develop an attrition metric that can be agreed to at contract. Look to drive vendor behavior with incentives and penalties associated around attrition.
• Drive individual behavior by developing incentive plans that can be lucrative for tenured resources. For example, in a sales paradigm, drive commission structures to be both quality and annuity based. The higher the quality rate coupled with the persistency of sales drives larger commissions over time.
• Track all attrition on a monthly basis; this should be the minimum amount of time used to measure attrition. It is important to track both voluntary and involuntary attrition across the skills, management structure and geographic location. Also, track an annualized rate on a monthly basis.
• Develop earned value metrics to validate the cost of replacing more experienced and tenured resources; new resources will have longer cycle times and be more prone to error; this adversely effects budget and operational costs.
• Develop a governance model that ensures resources feel a sense of corporate pride and ownership.

Attrition can be devastating to a business if not properly managed. To drive higher quality, increased customer satisfaction, better resource efficiency and lower costs, attrition management must be incorporated into an outsourcing governance model.

Within the Vendor Management discipline of a Global Operations organization, the process of a Quarterly Business Review (QBR) should be established to achieve high-quality performance and ensure a healthy, successful partnership with your vendor(s). While some people use the QBR as an excuse for a boondoggle (which isn’t always a bad thing), I feel that they are extremely valuable for managing your business; I wanted to share my viewpoints and guidelines for facilitating successful meetings and enriching partnerships.

The QBR process should be established immediately upon execution of a sourcing relationship. It acts as a forum for all parties to establish clear understanding of business goals, objectives, expectations and future direction for the business. This meeting should be viewed as an important tool to discuss and work through change activities for the benefit of performance improvement.

In my opinion, the QBR meeting should be setup in a similar fashion to what is outlined below:

• Established Agenda and Participants
• Develop Decks for Both Your Company and Vendor(s)
  • Strengths, Weaknesses, Opportunities, Threats (SWOT) Assessment
  • SLA Root Cause Analysis –Both Positive and Negative
  • Performance Improvement Planning
  • Project Updates/Proposals
  • System Enhancement(s)
• Corporate Initiatives
• Forward Planning and Strategy
• Appendix of Agreed to Performance Data
• Action Log for Meeting Follow-up(s)

When preparing for a QBR, I also suggest following these tips:

• Set the date for the meeting no later than five weeks in advance
• Set the agenda and participants in advance
• Share the decks prior to the meeting to ensure discussion points can draw actionable items by each company – remember, this is a collaborative process for the greater good.
• Do the QBR face-to-face (this can be challenging with cost center budgets)
  • Personally, I like to have vendor(s) visit us
• Document and share all actions and discussion points that evolved from the meeting
  Manage the actions to ensure improvement within the organization
  Enrich the relationship with some extracurricular activity

If you would like to read a similar article on managing a QBR, you can check out a site I like to frequent - 360VendorManagement. This author needs to remain anonymous, but he is a tenured professional and I respect his ideas and thoughts. Great minds think alike!