No Overtime For Indian BPOs

While it may be the show piece of India’s entrepreneurial talent and technological prowess, when it comes to compensating employees for overtime work, India’s fabled BPO sector does a bad job even when compared to the infamous sweatshops of urban India. This comes in a report from Economic Times.
A Noida-based BPO pays its employees Rs 12.50, which equals approximately 33 cents, and Rs 50 which is equal to approximately 1 US Dollar, for 4 hours of OT, which is often mandatory. It says these low overtime rates are despite the fact that the hourly billing rates are fairly good. However, this trend is particularly visible in small BPOs. Large BPOs fare much better paying Rs 100 which is equal to $2 US, per 1 hour of overtime. For each national holiday worked, these players pay a 2 days salary with a compensatory day off. Sometimes they pay an Rs 250 or US $5 per extra Saturday worked over and above the day’s salary.
From our own HR research in many other BPOs, the OT figures continue to be dismal. A low OT will have an impending effect on the quality of work done by the employees, which will ultimately seriously affect the service deliverables. We often advise our clients to be more flexible in terms of paying reasonable OT and other perks to help encourage them to be engaged toward the company. There are many BPOs who are still shying away from even paying a small amount of OT. They are simply adjusting themselves by giving a $1 worth Sodexho pass voucher, which is a meal voucher in India, for the entire day of extra work. Let’s just hope this article will wake those BPOs up.

Back Office HRO Solutions

In recent news, NJ based Netfabrics Holdings Inc. announced it has set up an Indian subsidiary, Netfabric Technologies India P Ltd to deliver BPO and HRO solutions for its clients. Aviva, the British insurance company, plans to move nearly 2,900 business process outsourcing (BPO) seats from third-party providers EXL and WNS to Aviva Global Services (AGS). Aviva has already transferred 1,600 employees from a third partner, 24/7 Customer, to AGS.
Many others like the above companies operating in the US and the UK are opting to set up their own companies in countries like India as subsidiaries to carry on their back office processes. They consider it a wise move to give outsourcing contracts to their own set ups so that they can retain the profits within the company and it also ensures the interest of security of data. This move is particularly seen with larger listed companies so that they can persuade their shareholders easily. A holding and subsidiary relationship is what companies are seeking in today’s world considering the fact that outsourcing to a third party is not giving them the right profits as budgeted. This is an easy option, especially in India, because all companies operating under service category (with certain exceptions) enjoy the 100% automatic route of foreign investment. However, in certain cases, companies do not prefer this move on account of the fact that this attracts the transfer pricing and taxes may be dearer for them. There are plenty outsourcing companies which are operating as a captive units of their parent companies in India. The advantages these companies enjoy are enormous. They can choose the right talent for the right job, they escape paying the service fee from third party companies, they can be assured with data security and they can also build a global organization with the same core values across the company irrespective of location. They can be ensured that their process knowledge can be retained within the company since they adopt in-house training rather than train a third party company staff. Moreover, HRO change management becomes an easy exercise with this option.