Thursday, March 13

Bonding the best way: BPOs look at reworking employee contracts

In the early battles against attrition, some companies resorted to bonds to keep people around where departing employees would pay a fine for breaking the contract. But now, employers are rethinking the strategy. They are linking overseas travel, education leaves and training opportunities with the amount of time a worker owes a company. "Bonds will get tied not to employment, but the nature of on-the-job training provided to employees," says Ashutosh Sinha, recruitment director at business process outsourcing (BPO) giant Convergys Corp.

Also known as "service agreements", bonds generally require an employee to stay with a company for a year or two, and pay the company if he or she decides to leave. In the 1990s and early 2000s, companies such as Tata Consultancy Services Ltd (TCS) and Wipro Ltd were notorious for demanding up to a few lakhs from employees who left before their contract was up, and TCS even fought a lawsuit over the practice in a California court. The industry's shift away from the practice, observers say, is partly a legal move. Third-party trainings or trips abroad may be the only types of bond contracts that an employer can legally enforce, according to Sanjay Kamlani, a co-chief executive officer of Pangea3, a legal outsourcing company in Mumbai. A bond contract in any other instance is "nothing more than a scare tactic," he says. Observers also say contracts with strings attached can be win-win for both employer and employee; BPO and technology workers can now join companies and pledge to stick around, in exchange for getting a bump up the skills ladder or the opportunity to learn new skills abroad.

The exchange of training for commitment has become more common at mid-size companies. Globerian India Pvt. Ltd , an outsourcing company that handles medical billing for clients in the US, for example, got burnt after it covered several employees to get certified in the Six Sigma method of problem solving-the employees left as soon as they finished the course. "They get certified, and their value goes up," says Thenny Mejia, a senior vice-president at Globerian. Now the company uses bonds for both Six Sigma trainees and for its medical coders, who have to go to the US to get certified before they can start working with medical records. Pangea3 also asks for a bond, if it spends a lot of money to send an employee abroad.

The effort to tie bond contracts not just to training courses and overseas exposure but also to full degree programmes is led by Genpact Ltd. Officials in the recruitment and BPO space say Genpact recently instituted a five year bond tied to partial tuition reimbursement for in-house MBA and other certificate programmes, but the firm said it "would not be in a position to talk about the contract." But even the use of specialised bond contracts is grow ing rare, according to recruiters. "They're trying to safeguard themselves," says Vinod Meghrajani, head of IT and related services at the human resources consulting group MaFoi Management Consultants Ltd.

But now, companies are looking at softer aspects to make a person stick around. Convergys is now considering getting rid of its bond all together. TCS, too, experimented with getting rid of some of its stringent bond requirements. But the rationale for bonds in the BPO world is still a sound one, Convergys' Sinha says. "In the IT industry, for instance, people pay for certain training to get into jobs. Here it is free for them," Sinha says.

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