Articles, essays, and talks

This blog features a collection of my articles, essays, and research studies on business, management, and social issues and subjects published in local (Philippines) and international publications. It also includes selected speeches and talks to academic and professional audience. (The views and comments in this blog do not reflect those of my past, present, and future employers)

Friday, October 12, 2007

Ethical Issues in BPO

(Published in the "Business Mirror" under the Mirror Image column, Oct 10, 2007)
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The Philippines emerges as one of the favorite destinations for the estimated $150-billion business-process outsourcing (BPO) industry, according to a recent global study by Diamond Management and Technology Consultants. The consulting firm projects the local BPO sector to grow 50 percent in the next three to five years.

In this hypergrowth BPO sector, similar to other fast-growing industries like the telecommunications- industry growth in the late ’90s, firms focus their time, resources and energy on hiring and building up of operations. In this break-neck pace, what many companies neglect are the ethical norms and standards that they need to uphold.

One ethical issue that BPO firms need to contend with involves ensuring employee safety, health and welfare. The irregular working hours of BPO employees, specifically call-center agents, is taking a huge toll on their health, resulting in a condition known as shift-work-sleep disorder. This occurs when an employee’s work schedule requires him or her to work when the body wants to sleep, and then try to sleep when the body expects to be awake. The symptoms of this disorder are tiredness, difficulty in sleeping, and reduced level of alertness according to sleepeducation.com web site.

Likewise, medical experts like Dr. Lim Li Ling, deputy director, sleep disorders unit, Singapore General Hospital, warn that ageing would set in very early for sleep-deprived youth working continuously on night shifts in BPO firms. Also, their overall performance could be affected due to lack of proper sleep.

Apart from health effects, sleep disorders can also affect the social and family life of many BPO employees, according to Dr Prithakachari, a neurology specialist. Catching up on sleep during the day or during free time can cause one to be irritable, which can hurt one’s relationships with others.

A 2006 issue of Contact News Magazine, a local publication for contact centers, cited a number of anecdotes on the ill effects of working at night among call-center agents, such as illicit office affairs and rampant pregnancies, which many agents blame on the long working hours that naturally bring people together.

Another ethical issue is the hiring practices of some BPO firms here and abroad. Considering that human-resources (HR) consultants are handsomely paid by BPOs—to the tune of P5,000 to P15,000 for every candidate selected—ethics have been cast aside for monetary benefits.

One example is India-based EXL Service, which was the victim of such an unethical HR practice. To their consternation, the company discovered that rival BPO companies could go to any length to procure the list of employees. A rival BPO tried to bribe EXL’s transport vendor, since this vendor had the company’s complete list of employees and their addresses.

EXL Service vice president (HR) Deepak Dhawan said, “Ever since the incident occurred, we’ve taken adequate security measures to see that this sort of a breach won’t happen again.”

The huge incentive to successfully hire BPO employees has led to poaching. This worldwide problem of the BPO industry has resulted in higher attrition rates and higher cost of hiring.

The stiff competition for talent also results in laxity in hiring practices, which has been disastrous in many respects. A rude wake-up call in the Indian BPO sector happened in 2006 when a handful of BPO employees was arrested for illegally transferring funds from customer accounts. In this case, the ethical responsibility of BPO firms to ensure that information is tightly secured for their clients was compromised.

One industry move that’s worth emulating is that of the BPO organization in India. Recognizing the need to establish and uphold ethical standards in the BPO industry, the National Association of Software and Service Companies (NASSCOM), the BPO trade body in India which is credited for the growth in the Indian BPO, recently launched the “Best Practices in Ethics’ Framework” for the BPO industry.

This has been designed around the following principles to which all the member-companies will voluntarily adhere: employee-friendly policies; safety and security of employees; code of ethics in hiring; corporate social responsibility; and industry initiatives. The ultimate aim of this initiative is to create a set of guidelines which will help in attracting and retaining talent and solving the issue of attrition.

It is commendable that our local lawmakers are stepping up to address some of the issues. Sen. Mar Roxas II has filed Senate Bill 2071 that seeks to amend three provisions in the Labor Code to help BPO workers. He is pushing for free transportation and free medical assistance for call-center agents and other night workers to ensure safety and fitness to work.
Additionally, the proposed bill also suggests that call-center employees be allowed to work under compressed or flexible time arrangement.

It is, likewise, laudable that many BPO firms are providing welfare facilities for their workers. But they should also provide health and safety training, apart from sleeping quarters and transportation.

It is also imperative that there be an agreement among BPO firms to formulate a code of ethics in hiring to minimize, if not eliminate, poaching among industry players.

Best practices and methodologies in hiring are, likewise, necessary to prevent “bad” hiring of BPO employees that may compromise the security of information provided by BPO clients.

Upholding the ethical responsibilities of BPO firms to their employees, clients, and even competitors and peers will reap benefits by ultimately reducing attrition and improving client satisfaction. Recognizing the need for effective manpower development is key to the growth of the BPO sector.

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“Mirror Image” is a rotating column featuring writers from the DLSU Professional Schools Inc. Reynaldo C. Lugtu Jr. teaches management and marketing courses in the MBA Program of De La Salle Professional Schools. He may be e-mailed at rlugtu2002@yahoo.com or visit his blog at http://rlugtu.blogspot.com/ (link to the Business Mirror article, link to other citations)

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2 Comments:

At 9:58 PM, Blogger Kevin Ray said...

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At 4:08 PM, Anonymous james wilkins said...

BPO, in view of the public nature of broadcasting and its significant influence on society, aims to deal, on a voluntary basis, with complaints and ethical issues surrounding broadcasting from an independent, third-party standpoint promptly and effectively as an advocate for viewers’ and listeners’ basic human rights, while also ensuring freedom of speech and expression in broadcasting, with the goal of contributing to accurate broadcasting and higher broadcasting ethics.BPO currently operates the following committees: the Committee for the Investigation of Broadcasting Ethics, which holds discussions to improve broadcasting programs and performs corroboration with respect to alleged falsified broadcasting; the Broadcast and Human Rights / Other Related Rights Committee (BRC), which aids parties whose human rights are infringed upon by broadcasting; and, the Broadcast Committee for Youth Programming, which organizes opinion exchanges and conducts surveys and research designed to improve broadcast programs targeting the youth.
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