Data                                     Insights                                Innovation    Talent Decision: Location M...
Talent Decision: Location Modeling and Results                                                        Data|Insights|Innova...
Talent Decision: Location Modeling and Results                                                                           D...
Talent Decision: Location Modeling and Results                                                                         Dat...
Talent Decision: Location Modeling and Results                                                                           D...
Talent Decision: Location Modeling and Results                                                                          Da...
Talent Decision: Location Modeling and Results                                                        Data|Insights|Innova...
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Global Talent Decision: Location Modeling and Results

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This paper analyzes the labor cost (salaries) for Business Process Outsourcing (BPO) functions at six possible locations in India. It quantitatively demonstrates the labor cost factor, which needs to be taken into consideration when selecting a location for a service organization.

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Transcript of "Global Talent Decision: Location Modeling and Results"

  1. 1. Data Insights Innovation Talent Decision: Location Modeling and ResultsZinnov Global Location & Talent Offering ( talent@zinnov.com )Zinnov Global Location and Talent Pool subscription offer provides data across 200 global cities on an ongoing basis.Our offer is powered by cutting edge research and modeling techniques. Access to our portal enables global leaders runseveral what-if scenarios and perform advanced peer group analysis. Our comprehensive solution include Zinnov pointof view reports, analytical models, statistical models enabled by a web based tool.Our ‘Labor Cost Analysis’ provides insights based on robust statistical analysis conducted by Zinnov econometricians.The following is document is a snippet of comphrehensive analysis conducted for 6 functions across 180 globallocations. To access the information please write to us talent@zinnov.com www.zinnov.com Page |1
  2. 2. Talent Decision: Location Modeling and Results Data|Insights|Innovation Global Talent Location Decisions Need for Talent Location Decision Due to the availability of rich talent pool across global locations, it has become essential for organizations to setup facilities at these global locations. This decision includes what, why, where & how to serve the rise in demand and considering factors such as cost minimization. Also, understanding of various risks associated with back and front office investments assume priority as this involves assessment of parameters including local workforce culture, eligible & qualified talent, employee expectations (salaries) along with preferred and expected work models etc., helps in evaluating decisions associated with globalization talent. Taking into consideration these requirements for location decision making, Zinnov has developed Global Talent Location Analysis. Zinnov’s Global Talent Location Analysis acts as a ready guide which helps companies decide upon suitable locations. The decision regarding suitable location should evaluate parameters such as office space (size), required units, technical infrastructure, logistics, workforce availability, etc. However, in this paper, we have highlighted only the labor cost (salaries) for Business Process Outsourcing (BPO) function at six possible target locations in India. Figure.1: Possible Target BPO Locations in India City Global Companies Presence (%) Chennai 5.00% Coimbatore 0.50% Hyderabad 2.50% Jaipur 0.10% Noida 2.00% Pune 3.00% Labor Cost Analysis of BPO Function by City, by Experience This paper presents a framework of six emerging BPO locations in India. It quantitatively demonstrates the labor cost factor, which needs to be taken into consideration when selecting a location for a service organization.Zinnov Confidential. No part of this report can be published, quoted or circulated without priorpermission from Zinnov P a g e |1
  3. 3. Talent Decision: Location Modeling and Results Data|Insights|Innovation Labor Cost Analysis – Freshers/ Limited Experience (0-3 Years) Figure.2: For 0 to 3 Years Labor Cost Analysis by City for “0 to 3 Years” Experience (BPO) Max Upper Quartile Salary ($) Lower Quartile Upper Quartile Upper Quartile Upper Lower Quartile Lower Quartile Quartile Lower Quartile Upper Median Quartile Upper Lower Quartile Quartile Lower Quartile Min City In the above figure (Figure 2), labor cost across six cities is compared. The above analysis also indicates the salary trend in each city. According to the labor cost analysis, Noida city has the largest salary range where more than 50% (everything above dark line which exhibits median)resources with the experience of 0 to 3 years fall under the salary range of USD 3,800- USD 4,400. On the other hand, in the same category, Jaipur city exhibits the lowest salary range with 50% resources falling under the salary range of USD 2,850- USD 3,100. Chennai exhibits an upside trend where as all other cities exhibit a downside trend (the position of the median inside the box indicates whether there are more values towards the upper or lower quartile). The size of the box for each city in figure 2 provides additional inferences on variability of salaries. Lowest variability can be expected from Chennai followed by Jaipur and Hyderabad. Surprisingly, Coimbatore indicates a large variability which is at par with Pune and Noida (these cities indicate most variability).Zinnov Confidential. No part of this report can be published, quoted or circulated without priorpermission from Zinnov P a g e |2
  4. 4. Talent Decision: Location Modeling and Results Data|Insights|Innovation Labor Cost Analysis – Middle Experience (3-7 Years) Figure.3: For 3 to 7 Years Labor Cost Analysis by City for “3 to 7 Years” Experience (BPO) Max Salary ($) Upper Quartile Upper Upper Quartile Upper Quartile Quartile Upper Quartile Upper Quartile Lower Quartile Lower Quartile Lower Quartile Lower Quartile Lower Quartile Lower Quartile Min City Figure 3 indicates that median salaries for 3 – 7 years of experience are not as volatile as in ‘0 to 3’ years of experience level. The figure also indicates that in labor costs for this category Chennai and Pune seem to be at par whereas Hyderabad lags behind. Noida city is the most expensive city as it has the largest salary range i.e., USD 9,000- USD 13,000. Jaipur has the lowest salary range in this category. However, all other cities (including Noida) don’t show variation of more than USD 500-USD 750 to its nearest competing city. The analysis shows the benchmark labor cost of around USD 7,000 for the middle experienced (3 to 7 years) category with in the country. Moreover, smaller cities such as Coimbatore and Jaipur in this category exhibit upside salary trend when compared to other cities. In the variability analysis of the salaries, all cities exhibit weakness for 3 to 7 years of experience in the BPO function. Though the above indicates that labor cost may differ greatly for freshers and less experienced resources, labor cost for experienced resources seems to be at par in all cities analyzed.Zinnov Confidential. No part of this report can be published, quoted or circulated without priorpermission from Zinnov P a g e |3
  5. 5. Talent Decision: Location Modeling and Results Data|Insights|Innovation Labor Cost Analysis – Experience (7-10 Years) Figure.4: For 7 to 10 Years Labor Cost Analysis by City for “7 to 10 Years” Experience (BPO) Max Difference > $1,000 Difference < $500 Salary ($) Upper Quartile Upper Upper Upper Quartile Quartile Quartile Upper Upper Quartile Lower Quartile Quartile Lower Quartile Lower Quartile Lower Quartile Lower Quartile Lower Quartile Min City Experienced category of 7 – 10 years for BPO function indicates that median salaries are volatile when compared to 3 to 7 years of experience level. This category pushes salary range up by 30-60% across the cities analyzed. Though, salary ranges in percentage terms doesn’t seem to be different from 3- 7 years level, absolute figures have jumped taking minimum to be slightly below $10,000 and maximum at $25,000. For this category, median salary ranges between USD12,000 to USD15,000. Analysis shows a benchmark labor cost of around USD13,500 and median variability of above USD 1,000 for the nearest competitive city. However, all cities exhibit downside salary inclination for this category indicating a saturation level. Similar is the case with variability of salaries in which all cities exhibit weakness. This also indicates that with the increase in the experience level, the difference in lower side of labor cost decreases. In this category, Coimbatore and Jaipur have lower labor costs whil Noida has the highest cost.Zinnov Confidential. No part of this report can be published, quoted or circulated without priorpermission from Zinnov P a g e |4
  6. 6. Talent Decision: Location Modeling and Results Data|Insights|Innovation Labor Cost Analysis – Highly Experienced (More than 10 Years) Figure.5: More than 10 Years Labor Cost Analysis by City for “More than 10 Years” Experience (BPO) Max Upper Quartile Salary ($) Upper Upper Upper Quartile Quartile Quartile Lower Quartile Lower Quartile Upper Lower Quartile Quartile Lower Quartile Upper Quartile Lower Quartile Lower Quartile Min City The final figure (5) concludes that Noida is an expensive city for the BPO function. When compared to other cities, the compensation figures across all experience levels in the city (Noida) are 30% higher. The city offers a salary in the range of USD 35,750 – USD 43,250 to resources who have an experience of more than 10 years, which makes it the city with the largest salary range. Once again, Jaipur has the lowest salary range in this category. As against, middle and low experience levels, median salaries for highly experienced categories differ a lot among cities with exception to Pune and Noida (where the difference is of less than USD 2,000). Further, as evident, neither heavy upper quartiles nor lower quartiles indicate stagnancy in salaries across all the cities. A similar pattern is observed in variability of salaries across the cities.Zinnov Confidential. No part of this report can be published, quoted or circulated without priorpermission from Zinnov P a g e |5
  7. 7. Talent Decision: Location Modeling and Results Data|Insights|InnovationZinnov Global Location & Talent Offering ( talent@zinnov.com )Zinnov Global Location and Talent Pool subscription offer provides data across 200 global cities on an ongoing basis.Our offer is powered by cutting edge research and modeling techniques. Access to our portal enables global leaders runseveral what-if scenarios and perform advanced peer group analysis. Our comprehensive solution include Zinnov pointof view reports, analytical models, statistical models enabled by a web based tool.Our ‘Labor Cost Analysis’ provides insights based on robust statistical analysis conducted by Zinnov econometricians.The following is document is a snippet of comphrehensive analysis conducted for 6 functions across 180 globallocations. To access the information please write to us talent@zinnov.com www.zinnov.comZinnov Confidential. No part of this report can be published, quoted or circulated without priorpermission from Zinnov P a g e |6

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