Contribute Foreign Currency To The Country

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02 Nov 2017

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The main purpose of this report is to analyze the outsource work in Srilanka in the IT/BPO industry and in Virtusa.

The benefits of the IT/BPO industry have been analyzed including the benefits from IT/BPO industry to the economic growth of the country as well as the benefits to the industry such as support from government. Apart from the benefits to the industry, IT/BPO industry also faces challenges due to factors like high work load, high cost, transportation etc. These challenges have been further evaluated. The culture of the organization has been given a brief description taking into consideration that Srilankan’s are family oriented and IT/BPO industry requires working odd hours.

The group norms and behaviors of individual in groups resulting due to different personality attitudes have been explained in the company selected.

Suitable explanation of the motivational factors and strategies undertaken by the company in order to retain the employees in the fast growing IT/BPO industry and for maximum performance of the employees have been made.

The challenges faced by the managers and leaders of Virtusa have been analyzed and suitable recommendations have been made for overcoming these challenges.

Table of Contents

Introduction

With a population of 20 million (census 2011) and the end of the civil war, Srilanka is emerging to be one of the best IT/BPO destinations. In the past decade; the SriLankan IT industry has shown a rapid growth. IT firms focus not only on local companies but also on international companies through BPO. For this the IT companies are forced to adhere to the standard of the global companies. Sri Lanka is ranked among the top 20 Global Outsourcing destinations by AT Kearney’s Global Service Location Indexing (2011). Sri Lanka has over 300 IT/BPO companies. The IT/BPO export revenue has shown an upward trend during the past years. Although IT/BPO operations create challenges such as cultural issues, social problems and work life imbalance, it also bring many advantages to the economy of the country.

Virtusa Corporation

Virtusa Corporation is a global IT company which provides end-to-end information technology services which includes system implementation, IT consulting and application outsourcing services through a global delivery model. Virtusa serves 2000 global companies in Telecommunication, Banking & Financial Services, Technology and Media, Insurance, Information & Education industries. 89 clients of Virtusa are in fortune 500 companies.

Benefits: IT/BPO industry

Some of the benefits by the IT/BPO industry are

Generate revenue to the economy

The IT/BPO industry is one of the highest growing sectors in SriLankan economy. The annual growth rate is recorded as 20% in terms of revenue. According to a survey done by export development boards (EDB), IT/BPO industry is the 6th largest revenue generator to the SriLankan economy generating revenue of 310million in 2010/2011 and expected to further increase to 1billion in 2015 thereby contributing to the growth of economy.

Fig:1 IT/BPO export revenue source: Export Development Board

As seen in fig, there is an increasing trend in the revenue generated by export. The revenue is expected to reach 1billion by 2015.

Create employment opportunities

Due to the rapid growth rate of the IT/BPO industry, there is an increasing demand of employment in this industry. According to National ICT Workforce Survey (2011), the number of people holding IT/BPO jobs has doubled from 34,000 to 63,000 and is targeted to increase to 100,000 in the next five years. The government has introduced programs to upgrade English language. More than 5500 graduates holding IT degree join the industry each year. IT/BPO industry provides job opportunities under different categories and the attrition rate is comparatively low.

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Fig:2 Source: ICT workforce survey

Virtusa have recorded an increase of 30% in employment this year. The current labor pool is 2500 employees and target to increase the workforce to 5000 employees in 2015.

Contribute foreign currency to the country

With the entry of increased number of foreign projects from all over the world, IT/BPO contribute to increasing generation of foreign income in the country which will increase the stability of the country.

Virtusa handles many foreign projects and US and UK are their main clients. The revenue generated from foreign projects accounts for 90% of the total revenue of the company.

Improve the education sector of the country

There are opportunities for institutes to offer increased number of programs which fall under this category as there is an increased demand for workforce. The demand for higher qualifications in this sector will definitely will go up thereby boosting the IT education sector as most of the institutes are collaborated with highly reputed universities in the world.

High standard of living

The remuneration package for IT/BPO jobs is comparatively high for professional qualified individuals. This further will result in increasing the standard of living of the people.

Environmental friendly industry

IT/BPO industry does not negatively influence the environment. Virtusa have won a bronze trophy at the National Green Award 2013 being the first ever IT company winning this award for climate change management, managing e-waste etc.

Support by the government to the IT/BPO industry

The government have shown positive feedback to the progress of the IT/BPO industry such as Tax exemptions, reduction of infra structural cost which have been proposed by SLASSCOM. The government also reduced income tax by 16%, reduction of internet tariff tax by 10%.

Challenges faced by the IT/BPO industry

IT/BPO industry faces many challenges irrespective of the advantages it brings to the industry

Lack of labor force

The demand of the labor force is very high in IT/BPO industry. In spite of the high talent pool in Sri Lanka, the labor force is not enough to fulfill the demands. Companies have faced difficulties in finding employees who are highly skilled and specialized in this area. Out of the 7million working labor force in Srilanka, more than 1million is working abroad (source: "Offshore to Sri Lanka", NASSCOM due to the high brain drain rate in Srilanka.

Virtusa being one of the leading companies in IT/BPO industry have a huge demand for talented labor pool as they provide service to many highly reputed companies.

Infrastructure

Infrastructure such as electricity, transport and data communication is a basic need for the smooth operation of the IT/BPO industry.

The electricity charges are relatively high and most IT/BPO companies are expected to work 24*7. IT/BPO have to work long hours during weekdays as well as public holidays. As a result electronic equipment’s will be used extra hours than normal work hours thereby involving additional cost.

Fig:3 Source: AT Kearney Analysis

The employees work long hours and on shift basis and are difficult to provide transportation facilities since no buses or trains operate after 7pm. High costs are incurred by the companies to provide these facilities.

Data communication rates are comparatively high and IT/BPO businesses are voice based as they have to deal with clients from all over the world.

Virtusa provides transportation to all employees who work after 7pm irrespective of the cost. The company works on 80/20 project teams that is 20% of the project work force are based on the outsourcing country and 80% in Srilanka. Therefore these 20% communicate with the clients thus reducing the day to day data communication cost.

Lack of awareness in rural areas

Only a handful of BPO operations operate in villages in Srilanka as most of the IT/BPO operations are based in and around Colombo. This is a challenge for IT/BPO industry as rural workforce also includes individuals with different skills and talent but most of the people in rural areas are unaware of the IT/BPO industry. The government has to take steps to enhance rural areas in this industry.

Work life imbalance and social problems

One of the primary issues faced by IT/BPO industry is work life imbalance due to the increase in difficulty of work, increased working hours, advancement of technology, and change in the attitude of the people. Employees seek more flexibility in work due to the difficulty in managing personal and professional life. Social problems like inability to spend time with family are another concern. According to Grady & McCarthy (2008), work life imbalance is resulted due to increased work pressure, irregular working hours and absence of policies to support work life balance.

The staffs in Virtusa work on a shift basis with a working hour of 9 hours a shift and staffs are expected to work on holidays as well. However certain measures have also been taken in order to minimize the burden of work in Virtusa like time management programs.

Culture, group norms and behavior of IT/BPO industry

The culture of the organization is an important aspect where contribution by knowledge workers is essential. Most IT/BPO company has Open and flexible culture which make employee satisfied and support superior performance. As Srilankan’s are family oriented, working long hours affect culture. Innovative culture influences the performance of labor force in IT/BPO industry in Srilanka. Daniels (2011) states that innovative culture is not possible without team work. IT/BPO Company’s allocate specific teams to handle different offshore projects. As Adler, Hechscher and Prusak (2011) have mentioned, contribution among the team members are more when they have trust among each other. This trust is created by the managers thereby helping the employees understand each other.

Culture, group norms and behavior in Virtusa

Virtusa has an open culture policy where the staffs can reach the managers and share their problems and opinions rather easily. In addition to following open-door policy, some manager’s don’t use separate cabins for themselves but work with the project team itself. This is possible because the company have a flat structure where the employee addresses the subordinates, seniors and even the CEO with their first name. To prevent cultural barriers when dealing with offshore clients, Virtusa works on 80-20 team allocation policy where the on sight team deals with all the communication to the clients.

Groups

For every project, separate teams are allocated in Virtusa. Normally the project team members range from 20-300 members. However the benchmark is 50-100 members in a team. Each project team has a project manager and functional managers. Groups are expected to work together to bring the best results before the expected deadlines.

Group Norms and behaviors

Virtusa doesn’t encourage political issues between groups within the premises. When staffs enter the premises, they are expected to work on the project as a team regardless of the work life imbalance and stress. Work life imbalance is non-negotiable but Virtusa provides assistance from other teams if required and additional resource will also be offered if necessary. Separate teams are provided with specific floor in the premises thereby building the trust and co-operations among employees. Individuals learn from observing others as their models even from their childhood, thereby generating different behavior among different individual (Albert Bandura, 1976). Every Virtusan is expected to prevent any conflict from arising due to their different attitudes and behavior and work to achieve the goals and objectives of the company.

Motivating strategies in Virtusa

For the retention of employees in this sector, companies adopt many motivating strategies. Virtusa motivates its employees with both intrinsic and extrinsic motivation factors.

Compensation

People are motivated mainly by money, "piece rate" suggest that employees should be paid according to the amount of work produced (Frederick Winslow Taylor, 1895). For this employees must be evaluated throughout the year by performance appraisal and depending on the performance will be given monetary reward. Virtusa has 360 degree appraisal process which involves self-assessment, superior assessment and subordinate assessment as well. The labor force in Virtusa is paid relatively high.

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Fig:4 Source: island news (2011)

Opportunity for advancement

Virtusa provides a huge opportunity for carrier advancement. The company carries out promotion cycle twice every year (April and October). In order to be eligible for the promotion, the employees are expected to complete specific time period. Staff trainings are also provided.

Communication

In addition to money, employees are also motivated by better communication between staffs and managers, working in groups, showing interest in others and involvement of managers as well (Elton Mayo, 1930’s). Virtusa encourages its labor force to work as a team

Recognition

For the accomplishment by the employees in their work, the employees must be recognized and praised by the managers which will result in the employees getting motivated. According to Frederick Herzberg (1959), recognition is an important motivational factor. Virtusa have built a social platform called "Millennial" where the employees can access to experts, can interact. Their work is recognized by the managers by functionality "RAVE" on V+.

Health and Security

Assuring the employees job security and providing a healthy working environment motivates employees. Virtusa provides snacks for employees for working after 7pm and dinner after 9pm. Transportation is also provided after 7pm and all employees have health insurance. For job security employees are provided with job contracts.

Social needs

When physiological needs and safety needs are taken care of, there is a need for love and belongingness like need for friend, have fun, be part of family (Abraham Maslow, 1954). Different employees have different ways to fulfill this need outside the working environment. Virtusa practice many extra activities like Virtusa dinner night with live music, office trips, and Christmas party etc. to fulfill the social needs of the employees and motivate them.

Challenges faced by managers and leaders in Virtusa

The role of managers is very high in IT/BPO companies to ensure companies growth. The leaders in Virtusa are transformational leaders who are able to make changes in order to achieve the organizational goals and objectives. However some of the challenges faced by the managers are

Ensure high quality service

When dealing with foreign clients, it is important to maintain the work quality since their expectations are very high. So it becomes very challenging for the managers to hire quality hard workers since they could only observe few things at the interview level like the CV, and other data and records and the performance in interview and not the performance they do in the job. Even in Virtusa when they get new projects they do hire new staffs and they need to make sure that the staffs perform up to the expectations.

Handling underperforming staffs

Virtusa handles only huge projects where they can earn maximum. This increases stress among the project members due to high pressure and they are expected to concentrate fully on the work which sometimes demotivates the staffs. This will definitely affect the work. Therefore managers find it very challenging to manage the stress of these staffs and ensure a smooth operation.

Managing outstanding employees

Virtusa has a huge workforce and among them there are few exceptionally performing employees and Virtusa finds it very challenging to hold them since they do expects more like recognition for their performance and talents and making sure they have a path in their career. Since expertise and talent plays a vital role in work quality Virtusa needs to hold them, without letting them go to other organizations since the demand for experts are high in the industry

Highly qualified employees

A manager might get his post due to the experience he had. But in some projects of Virtusa, there are people who are highly qualified than the project manager which is very challenging since they come-up with new ways and if the manager does not accept that, a conflict might arise.

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Conclusion

After the end of the civil war, Srilanka is a rising nation in the IT/BPO industry. The IT/BPO industry is the 6th largest revenue generator as per Export Development Board report. The industry also generates foreign income by handling foreign projects. The competitively high salary will increase the standard of living of the people. Due to the high demand of projects, there is need for more staffs as a result IT/BPO industry provides many employment opportunities for the people. The government of Srilanka is also taking measures for developing this industry by reducing tax incentives and even enhancing the IT education sector in the country.

Apart from the benefits, IT/BPO industry also faces many challenges mainly due to the high work load to meet deadlines. The high stress of the staffs results in work life imbalance and social problems. The industry also faces lack of skilled labor force mainly due to the high demand, lack of awareness in rural areas and increase in migration rate to other countries for better opportunities.

The culture of the organization contributes to the organization in achieving goals and objectives. Most of the present day IT/BPO firms including Virtusa have an open culture where the power distance between the managers and the junior employees are relatively low. The employees are allocated into groups for different projects consisting of 50-100 staffs. The attitudes of different individuals are different. However, every individual is expected to bring maximum output by working as a team. Since the expectations from the clients are high, staffs have to work odd hours including public holidays like Poya days.

Virtusa have adopted different motivating strategies for retaining its employees and bringing out the best from the employees. Virtusa assures that the staffs are provided with trainings and staffs are provided carrier advancement and incentives. The commitments made by the staffs are highly recognized by Virtusa. The social needs of the staffs such office trips, interactions with others etc are also provided by Virtusa.

The role of the managers and leaders are crucial in the success of the organization. Managers have to ensure that right people are recruited who have the right skills needed for the post. The managers have to play a crucial role in handling stressed staffs and for the retention of high performance staffs.

Recommendation

The IT/BPO industry needs to provide better remuneration package for the staffs and better opportunities for carrier development so that the number of people migrating abroad reduces.

The government have to take action to reduce the infra structural cost like the electricity cost for an industry like IT/BPO where it is necessary to work even in the off peak hours.

Staffs need to be provided with programs for managing time for their social needs and to manage professional and personal life easily.

Big companies should initiate rural IT/BPO which will benefit both the company by recruiting skilled labors and the rural areas.

To overcome challenges faced by Managers

In order to recruit the staffs with high performance, candidates must be selected not on the basis of only qualification and performance in interview. Instead for the selection of candidate, the candidates should be given task to check their performance and capability as well.

Managers should take effective steps in motivating staffs like providing training, providing social needs, recognition for the work they do, better communication etc

Managers should provide staffs with better carrier opportunities and better salary packages for outstanding employees in order to retain them from transferring to other companies.

The ideas of qualified employees must also be taken into consideration if it is for the better of the company.



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