Presentation by Malcolm Wagget, Chief Operating Officer

HSBC Global Resourcing, South Asia

October 7, 2005
 Agenda

Global/Indian ITeS-BPO Industry

HR Issues & Challenges

HSBC People Strategy

Summary
ITeS - BPO Industry
 ITeS-BPO in India – The Rising…

In 2003, 300 of the Fortune 500 employed offshore resources…

2003
Have nots Have
40% 60%

33% increase in
offshore 2004
Have nots Have
penetration year 20% 80%
over year

…in 2004, this figure has risen to 400

Source: NeoIT.Com
 Global Players in India

Research
Analytics,
Engineering

Shared
Services
(IT / HR / FA)

Customer
Relationship
Management

Back Office
Processing

Data Entry /
Transcription BFSI ICT Auto Healthcare Others
 2004…Turning point

Indian ITES / BPO – fastest growing segment

Forecasted to reach USD 5.7 billion in FY 2005

Domestic revenues are expected to double in FY 2005

Industry employee strength of over 250,000 and expected to grow by 40 percent in ’05

Employment in sector to exceed one Million by FY ’07-’08

India remains the most widely used off-shore location and is expected to see

maximum increase in spending in 2005…….Morgan Stanley

source: NASSCOM
 …..Witnessing Unabated Growth…

1,800
USD billion 4.1%
5% Grown at a CAGR of 28% over
INR billion
Share in India's GDP 3.5% FY 1998-2005
3.2%
1,275.8
1,200 2.7%
2.9%
3%
Share in India’s GDP has more
978.3
than doubled from 1.9% to 4.1%
1.9% 779.6

600 1.2%
1.5%
565.9
657.9
2%
expected to reach 7% by FY

253.1
361.8
28.2
2008
186.4 21.5
16.1
13.4
5.0 6.0 8.2 12.1
Expectation of USD 50 billion in
0 0%

export revenues by 2008

1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-
05E

Source: NASSCOM
…that is expected to continue
 Drivers of Growth

Competitive pressure Sustained cost advantage

Impact on profitability
Delivery process enhancement
Focus on more cost efficient
business model and improvement

Ability of Indian vendors to Resource flexibility

ramp up operations rapidly
Large pool of technically
Expanding service offerings
qualified, English speaking
Shift towards high value
resource
services
Issues & Challenges
 Issues & Challenges
Cost Advantages
Wage inflation & dwindling pricing

Infrastructure challenges

Data Security & Protection

Data protection and IP rights issues

Meeting International standards

Intellectual Property

Quality issues
Meeting customers expectations
 But most importantly…..

People – Attraction & Retention

Quality Talent

Language skills

Controlling attrition

Building the right culture

Proper hiring on time

Competency building
 HR Issues
While average attrition rates of 40-50% in the industry is very
high [cost of attrition is 1.5 times the annual salary]…

And the demand for quality talent is accelerating [245,100

people employed in March 2004, vis-à-vis 171,000 in ’03]

The availability of quality talent pool is growing at a slow

pace… [at an average, only 6 out of 100 aspirants are
eventually recruited].
 The Usual Tool Kit Approach…
Group Medi-claim Insurance Scheme Corporate Credit Card
Cellular Phone/Laptop
Personal Accident Insurance Scheme
Personal Healthcare [regular
Subsidized Food and Transportation
medical check-ups]
Company Leased accommodation Loans

Recreation, Cafeteria, ATM Educational benefits

Performance-based incentives
Flexible Salary Benefits
Flexi-time
Wedding Day/birthday gift
Regular get together and other
Employee Stock Option Plan cultural programmes
Employee Referral Scheme
 But Why Do People Really Leave?
Main reasons for attrition:
- Money – 10%
- Night shifts – 25%
- Monotonous/boring job-30%
- Others* – 35%
Source: NASSCOM ITES-BPO study
* Others include:
•  No growth opportunity/lack of
• promotion
• For higher education
• Misguidance by the company
• Policies and procedures are not
• conducive
• No personal life
• Uneasy relationship with peers
or managers
• Physical strain
HSBC People Strategy
HSBC People Strategy
 People Strategy

Our employee policies are geared towards attracting, developing and motivating
talented people
People are fundamental to our business and its success.
Identify, develop & retain high potential talent. 
Strengthen the link between performance & reward.
Progress diversity education & actions.
Prioritise Learning & Development on leadership, sales & relationship
management.
 Diversity Imperative
HSBC’s commitment to diversity

Diversity is central to our brand.

We have a competitive edge in the market because..
We value and manage diversity
We understand and advocate the quality of
individual service
Of the way we treat our employees.
We provide high quality customer services

HSBC employs and manages diverse people which, makes us a more rounded
and balanced organisation and enables us adapt to new situations.
 Best Employee Practices

Internal growth opportunities: internal ads and promotions

Committees: Sports, Culture, Environment

Foreign assignments, migrations, cross training, secondments

Employee Stock Options

Savings Related Share Options

Training programs

Personal Development Plans

 Learning & Development
…and not just training
More organic and the joint responsibility of employee and
HSBC. Learning and Development priorities are:
To become more:
Demand driven - Understand the needs of the business and be driven by your
needs.
Pro-active - An agile attitude in the way we design, develop and deliver new
products and services.
Value adding - Products primarily focused on the areas that add the greatest
value.
Connected - Working closer with the business to understand strategic and
operating plans.
 Reward & Recognition

 Superstar Award
 GIFT (Give It Fresh Thought)
 Extra Miler
 Quality Excellence Award

OPERATIONS SUPPORT FUNCTIONS

 ‘MFG team of the Quarter’  Team Leader Award
Award  Business Leadership Awards
Customer Service Awards
 Team leader Awards
 MFG Team of the Half Year Award
 Business Leadership Awards
 Customer Service Awards
 Compensation & Benefits

Other Benefits
Cash Benefits Provident Fund
Gratuity
Basic Salary
Hospitalization Insurance Cover (Premium
Flexible Allowance Package paid)
Staff Referral Scheme
Share Option Savings Scheme Staff Discounts & Special Offers
Personal Accident Insurance Cover
Bonus (Premium paid)
Transport Facility
Deferred cash bonus
Etc.
Night shift allowance
 Valuing our People

Employee satisfaction surveys, daily devotionals, coffee meetings with

Senior Management Team

Internal growth opportunities

Employee committees: Community / Sports / Cultural

Ideal balance of work/life; 5-day week, 34 paid leave per year

Reward and Recognition program:

For individual

For team
 In Summary

People strategy can no longer be about salaries – its about the whole

package. We need to :
Find the right people for the job – better recruitment processes

Provide a balance between performance expectations and growth aspirations

Provide a great work environment – good and instant rewards, bonding

programmes, flexible working hours and stronger career path.

Provide access to higher education and ongoing learning for the employees.

A more diverse workforce that includes age, experience and perspectives.

Treat your people as you would treat your valued customers

 Thank You
Any Questions?