Second Trimester, AY 2010-2011
RESEARCH PAPER ON THE ATTRITION RATE
IN FINANCIAL SHARED
Prof. Maria Cequena
Title: Attrition Rate in Financial Shared Services Organization 1. What are the factors affecting the high attrition rate in shared services organization (SSO)? 2. What are the impacts of the increasing attrition rate in SSO? 3. How should shared services organization address the high attrition rate common in the industry to maintain employee retention? Attrition rate has been a common problem faced by the shared services industry. The increase in attrition rate among these companies could be alarming with the sustainability of offshore services in the Philippines. This research paper will identify the factors that cause the rise in attrition rate of shared services industry. Factors determined such as management/superior, compensation and benefits, career and personal growth are some common causes of attrition rate in a certain organization. These aspects shall be proven if are deemed applicable in Philippine shared services industry in the course of the study. This comprehensive study will focus only on the attrition of Philippine shared services particularly of the financial services such as Citibank, Deutsche and JP Morgan. Its purpose is to evaluate the factors that may hinder employee retention and its impact on management and the company as well. Lastly, after determining and testing the common causes of attrition rate, suggested ways on improving employee retention will be presented in order to help address the problem. CHAPTER 1: THE PROBLEM AND BACKGROUND OF THE STUDY
The 21st century highlights the growth of technology. Development of technology paved the way for the different inventions of cellphone, ipod, ipad, among others. Technology also opened opportunities for the rise of outsourcing companies. Multinational companies outsource parts of their operations in other countries to minimize costs and focus on their competencies. Philippines is known for the various outsourcing services provided worldwide, second to India. Over the past years, the BPO industry has expanded amongst the different industries in the world. Based from McKinsey & Co. reports, around $180 billion outsourcing services is needed by the end of 2010 (2005). This will strengthen the growing offshore services not only of the leading call centers but also of knowledge process outsourcing (KPO) based services such as legal, accounting, web design, medical transcription, and software development in the Philippines. The growth of these shared services operations in the country give rise to different companies as such providing competition within industry and job opportunities for people. Despite the growth of the industry, these shared services organizations still face problems with its people just like any other organization. Employee retention has been one of the primary human resource problems in the industry. The rigid competition of these companies in hiring the best people may affect the attrition rate of these firms. Given the dependency on workers, companies should minimize its employee turnover. Otherwise, this will affect the operations of the firm and will also incur several costs to the company. In fact the attrition rate of BPO in India, the leader in this industry is 7.8% higher than any other industry according to a report released by Hay Group (2008). Given the threat of attrition in the BPO industry of India, this would likely be a similar challenge other offshore service destinations. For instance, the shared services industry in the country has now been experiencing the same dilemma of India’s BPO sector. A number of companies such as Deutsche, JP Morgan and Citibank face and need to solve the increasing turnover of its employees. This research will determine the factors...