India, once upon a time we were leading rather ruling BPO/KPO markets. In recent past, situations are changed a lot. We are now competing with China, Phillipines, Sri Lanka and so on...

Almost all BPO/KPO organizations are struggling to keep their cost down for better margins and provide same value to their customers at reduced costs. Being in a Six Sigma BlackBelt role, I face a question everyday.... What else we can consider for cost reduction?

Salaries - We are in competitve world, cannot play with salaries

T&E - Yes, upto some extent but we have already worked on that

Recuitment & Trainings - Yes, upto some extent but we have already worked on that..

For any people depended organization, above three are the major cost areas. All the companies already worked on these 3 areas and now looking for few more cost junks to concentrate.

IT, Accommodation, SEZ units, Transportation, Employee additional allowances etc.. are few more areas which can be looked out.

For any cost reduction project, we can think about metrics like Value and Volume. Is there any better metric available to consider?

If yes, What could be best suitable metric for cost reduction projects?

Lets discuss....

This is a very thoughtful topic however, what you have listed above are very broad categories which cover numerous substantial cost heads for every organization / business unit / centre, e.g for IT, there could be a lot of solutions available to tackle identified problems like telephony costs, networking costs, software licences, hardware costs etc. Also, to reduce cost, there are few additional areas which can be looked at like Attrition (being one of the biggest cost head for any organization to back fill along with the cost of loss of tenured talent), Power cost, Seat Utilization (to manage RE & SO costs effectively) & have more people using the same seat during different times of the days.

 

Every project that we undertake will have a different metric which will help us calculate savings / effectiveness of the project & these metrics have to be put into perspective instead of simply being compared to the baseline, e.g. for gauging the effectiveness of an Attrition reduction project, %age attrition should measured against the benchmark instead of purely the HC leaving the organization. Likewise, for Power Cost reduction initiative, Power Cost / HC or Power Cost / sqm area should be compared as the HC or area using electricity would definitely change over the course of 1 year or so.

 

So, this is a very hot topic but how to tackle the situation to maximize the benefits for the organization, has to be a very thought through approach.

 

Thanks.

Amit Devgon

Very good topic....