CHAPTER ONE

1 INTRODUCTION

1.1 Background of the Study

Employee retention, according to another definition, is a process in which employees are urged to stay with the company for a longer period of time (Bibi, Ahmad and Majid, 2019). When it comes to outsourcing, the workforce is always a major consideration for any organization. As a result, it is critical for firms in the client nation to preserve stability and retain their valued human resources for as long as possible. In this regard, Sri Lankan IT-BPO firms are experiencing significant issues with staff turnover. Year after year, the attrition rate rises, resulting in a loss of client confidence. A number of criteria were discovered through a literature study as having a significant influence on the choice to leave a job. Employee turnover is complicated by the fact that departing employees take their skills, knowledge, and competencies to another company, possibly a competitor (Singh, 2018).
Since scholars and psychologists identified it in the early 1900s, low employee retention has been a problem for businesses. Employers make an effort to create and implement effective policies to retain a competent staff that is valuable to the company (Nagarathanam, 2018). Employee turnover is a well-studied topic. However, there is no one-size-fits-all explanation for why individuals quit organizations. Turnover is described as the ratio of the number of organizational members who left during the time in question divided by the average number of individuals in that organization throughout that period. Staff turnover (ST) is a significant problem in any industry. This is a very typical occurrence in the IT industry.
The contracting of particular IT functions from one organization to another is known as information technology business process outsourcing (IT-BPO). The development of Information and Communication Technology (ICT) has increased the globalization of outsourcing. One of the major drivers of outsourcing decisions is cost, with developed-country firms looking to save money by moving corporate activities to underdeveloped nations. For the last several years, BPO initiatives have benefitted Sri Lanka much as a growing country. Sri Lankan administrations, on the other hand, have been concentrating on facilitating the transfer of IT-BPO projects to the nation and promoting Sri Lanka as a worldwide IT hub. Sri Lanka's IT industry has been rapidly growing in recent years. With a focus on the sector's expansion, the country expects to reach a $5 billion export volume by 2020. Job generation is assured in this area since the country has a bright future in this sector. Currently, the country has almost 300 firms with an IT background, creating a total of 200000 work possibilities. The growth of this industry is remarkable, considering computer literacy in the country was about 38% in 2012, and it is now producing almost 1000 companies. Globalization and liberalization are thought to have an influence on Sri Lanka's population.
In this circumstance, the IT industry is more vulnerable to diversification as a result of personnel transfers. As a result of the creation of a global workplace in the nation, many firms are investigating the Sri Lankan market, and more employment possibilities for IT experts are being generated in the country. In this context, the adoption of staff retention may assure the success of the IT business by obtaining competitive advantages. In the recent past, the country made significant progress in literacy and educational growth, setting a record of 90 percent adult literacy. The country's natural beauty and strategic position make it an attractive destination.

1.2 Problem Justification

Employee retention can be concerned as a well-planned systematic process of looking after the requirements of the employees with the hope of keeping them remained within the organization for a longer time period. Employees who work in the Information Technology sector possess a significant pool of skills and knowledge. They bring up novelties, inventions to the world, where the organization could be able to achieve competitive advantages over rivals while such novelties fulfil the requirements of customers. The innovative brains of employees are more important to the IT sector as this sector does not rely upon the systematic procedure of operations. IT sector can not be traditional or consistent. IT sector always needs to go for novelties with the technological advancements in the world thereby employees must be extraordinary. Generally, The hiring employees to the IT sector has a very advanced capacities so that remaining them within the organization is essential to escalate the company’s success.
Employees in this sector have a tendency to be engaged for a brief amount of time due to the readily available job opportunities. One of the primary causes of this tendency might be a lack of communication with workers and psychological knowledge of them in their various work environments. Managing the retention of potential workers is seen as one of the most important ways for a business to gain a competitive edge. Employee turnover is an indication of a lingering problem that has yet to be handled in a business. Employee retention is simply an organization's ability to keep its personnel. Low employee morale, a lack of a clear career path, a lack of recognition, bad employee-manager relationships, and a variety of other difficulties might all be factors. Every employer is required by law to make an attempt to decrease employee turnover.
Companies lose their permanent staff base as a result of attempting to obtain greater compensation from another business. It results in a loss of experience in the sector. As a result, this is important for analysis in the service industry to guarantee successful knowledge management.