Employee Absenteeism in a Business Process Outsourcing Company

Employee Absenteeism in a Business Process Outsourcing Company

Christine Javar

Baguio Central University, Philippines

DOI: https://dx.doi.org/10.47772/IJRISS.2025.905000312

Received: 08 May 2025; Accepted: 09 May 2025; Published: 13 June 2025

ABSTRACT

Employee Absenteeism is a worldwide phenomenon which, either due to structural or functional problems in an organization, is an important subject on the international agenda. This phenomenon affects employees in the BPO industry in the Philippines. The demanding nature of the work, often involving irregular hours and high stress, contributes to frequent absences among employees. The purpose of this paper is to identify the leading factors of absenteeism, provide overview on how it affects the business as well as validate options provided as a strategy to minimize absenteeism. It is important for business to be aware of the reasons why employees incur absences to protect the business by imploring strategies to mitigate it to maintain profitability and efficiency.

INTRODUCTION

Business Process Outsourcing (BPO) is when companies delegate business operations to an external third-party, aiming to reduce costs, save time, and concentrate on essential business activities. The IT and Business Process Association of the Philippines (IBPAP) reports that the BPO sector contributes $29.1 billion to the local economy, representing 7.5% of the nation’s GDP. It also plays a critical role in job creation, generating 1.44 million direct and 3.61 million indirect jobs for Filipinos in 2021 alone.

Internationally, the Philippines stands out as the second-largest service delivery location, holding a 13% share in the global IT-BPM services market and ranking first in voice-related services. The BPO industry in the Philippines is poised for further growth, with analysts predicting an 8.8% annual growth rate, exceeding the global average of 7.7%. Experts anticipate the sector’s GDP contribution to rise from 7% to 8.4% in the coming years, given continued government support through favorable policies, tax incentives, talent development, and infrastructure investments.

IBPAP’s research suggests that concerted efforts to enhance the IT-BPM sector could result in a compound annual growth rate (CAGR) of 5.5% in revenue and 5.0% in headcount. By 2028, the BPO sector is expected to grow to $58.9 billion, creating over 1.1 million new jobs. Profit margins in BPO depend on the type of service, the outsourcer, and the commercial model agreed upon with the client.

Below are the different pricing models and how it affects the profitability of a BPO company.

Table 1.  BPO Pricing Models

In this case, BPO companies such as Concentrix needs its people or human resource in order to gain profit as a business. With the absence of its people, it will certainly affect the productivity, relations and as well as the profitability of the business.

Employee absenteeism, an often overlooked but costly issue, has numerous direct and indirect repercussions. Absenteeism refers to the lost work time when employees are absent despite being scheduled to work. When an employee doesn’t report for work as expected, this is known as an absence. Planned hours are those designated times when both the employer and the employee agree that work will take place. Gupta (2020) highlights that absenteeism is a critical indicator of employee morale, noting that rates above 5% are particularly concerning.

Companies face challenges when employees report sick or fail to show up unexpectedly. The impact of absenteeism is significant, affecting both employees and businesses. Managers may need to hire temporary staff, redistribute tasks, and deal with decreased overall productivity. Whether an employee fails to attend work as scheduled or neglects to inform their supervisors about an absence due to illness, supervisors must still manage the repercussions. Unaddressed poor attendance can have serious consequences.

In a study created by Kocakulah and Kelley (2016) in the US, it can be accounted that there are at least few reasons why employees incur absences such as family issues which includes elderly care and child care, stress from work whether it’s from workload or workmates, health or illness related issues, personal needs like regular check-ups and lastly about mental health concerns.

Absenteeism negatively impacts many businesses, particularly when salaried employees frequently miss work but continue to receive their pay despite not contributing. This situation results in financial losses, as businesses pay for unproductive time. Additionally, the cost of hiring replacement workers can exceed the original employee’s wages. According to Natter (2019), absenteeism forces companies to pay current employees higher wages for overtime or invest more time and money in training new staff.

In my organization within the BPO industry, leaders have observed that absenteeism significantly harms the company’s profitability and reputation with clients, as it affects our ability to meet commitments. This leads to other employees working overtime, which incurs additional costs to ensure the required headcount is met each day. Consequently, we are focused on addressing the common causes of absenteeism to manage this issue effectively. Research such as this is crucial for decision-making in a business process outsourcing company. Identifying the common reasons for absenteeism helps businesses develop targeted strategies to manage and reduce its impact.

 Statement of the Problem  

This study aims to assess the absenteeism in a business process outsourcing company.

Specifically, it sought to answer the following question:

1. Main reasons why employees incur absences in a business process outsourcing company
2. Absenteeism impact on the business
3. Suggestion of frontline leaders to address absenteeism.

Significance of the Study

The result of this study will be used as a basis for an effective intervention strategy to decrease absenteeism among BPO employees. Moreover, this study is conducted to benefit various stakeholders involved in business:  

Employees. Attendance is a big factor for an employee because showing up means getting paid. This will also help them realize the importance of their presence in a business.

Team Leaders. When frontline leaders identify main causes of absenteeism, they will be able to devise strategies in order to communicate better with the employees as well as to their managers on what’s best for the business  Managers and Leaders. Implementing interventions to decrease absenteeism aligns with the labor code as well as its mission to be become a tech powered company who champions its people. Hence, it positively impacts the brand experience of the company

Community. Community members benefit from an employee who knows their responsibilities and a company who knows how to champion their people A business with a reputation who cares for its people is a pride of the business process outsourcing company despite of how other industry perceived them.

Future Researchers. The future researchers can leverage the findings, methods, and insights from the study to deepen their understanding of BPO business model, address unanswered questions, and propel the field forward.

Overall, this research will support the Business Process Outsourcing company: the employees, team leaders, managers, leaders, community, and future researchers.

 METHODOLOGY

 Research Design

 This study will utilize a descriptive research design with a quantitative approach. As noted by Combes (2019), descriptive research aims to systematically and accurately describe a population, situation, or phenomenon. According to a paper by M. Hassan, this method involves collecting numerical data that can be analyzed using statistical techniques, providing a precise and accurate depiction of the population or phenomenon. It also seeks to understand the motivations and feelings of participants, aiding researchers in developing a better understanding of the subject.

Phenomenology, the study of the structures of consciousness as experienced from the first-person perspective, will be integral to this research. This approach focuses on experiences and their intentionality toward specific objects, with experiences directed toward an object through their content or meaning and appropriate enabling conditions.

Researchers will employ survey questionnaires targeted at team leaders managing at least 15 people in the BPO industry. The goal is to identify the primary reasons for absenteeism, understand its impact on the business, and provide recommendations to stakeholders. M. Hassan (2023) states that survey research involves collecting data from individuals using standardized questionnaires, gathering information on their attitudes, beliefs, and behaviors.

Locale and Population of the Study

The participants in this study will be the team leaders in Project Phoenix, as they directly receive employee call-ins regarding the reasons for their absences. This research focuses on identifying the factors contributing to employee absenteeism, so data collection will center on the organization’s frontline leads.

Additionally, stratified sampling will be employed due to the specific criteria required for the study participants, ensuring they can provide relevant information for the research questions. This method divides the population into subgroups that may differ significantly. It allows for more accurate conclusions by ensuring that every subgroup is well-represented in the sample. Participants must be active team leaders for at least one year or more to ensure they have sufficient management experience.

Data Gathering Tools

The researcher will utilize survey questionnaires to rapidly and efficiently collect data from the stratified sample using Microsoft Forms. The interview questions are formulated based on an extensive review of literature and related studies on employee absenteeism in the BPO industry and similar fields. The researchers will administer the questionnaires online, ensuring that respondents represent the target audience. This approach allows for clarification of ambiguous or unclear questions, leading to high response rates (Bhandari, P., 2023).

Reliability and Validity of the Research Instrument

The researchers acknowledge the necessity of ensuring the validity and reliability of their research instrument. To achieve this, the content validity of the interview guide will be reviewed by three experts in the field and evaluated by a statistician for reliability.

Data Gathering Procedures

After the research is approved, the researchers will request permission from the organization’s leaders to conduct the study. Following that, they will seek approval from the company’s operations manager and contact the selected individuals in the sample. Once these steps are completed, a Microsoft Forms link will be sent to the identified participants. Throughout the process, the researchers will maintain confidentiality and honesty.

Treatment of Data

The data that will be gathered through survey questionnaires will be analyzed using statistical analysis. According to M.Hassan (2023), it involves using statistical tools and techniques to analyze the numerical data collected during the research process. It will be used to identify patterns, trends, and relationships between variables, and to test hypotheses and theories.

Ethical Considerations

The ethical foundation of this research will prioritize the well-being, autonomy, and dignity of all participants involved. To ensure ethical standards, proper communication will be done by the researcher. Moreover, this study emphasizes the voluntary nature of participation, ensuring that individuals have the right to withdraw from the study at any point without facing any negative consequences. The participants will make their decisions freely and without external pressures. Also, privacy and confidentiality will be maintained strictly considering anonymizing data whenever possible to protect the privacy of participants. Adherence to these ethical recommendations will not only uphold the principles of integrity and respect but also contribute to the credibility and validity of the research findings.

RESULTS AND DISCUSSION

It was inferred that employees working in the BPO industry is quite challenging as they would need to switch their body clock to meet the requirements of the work. Here the results and findings that the researcher gathered from the online survey sent to the different team leaders who had more than a year experienced handling a team.

Figure 1. Main Reasons of Absenteeism in the BPO Industry

On the table it shows the different reasons of absenteeism based on extensive research done by the researcher. It shows that in the business process outsourcing industry the main reasons of absenteeism are health issues. Working graveyard shifts and rotating shifts often leads to sleep disturbances, which can have severe health consequences. Chronic sleep deprivation can damage the structure of human DNA, increasing the risk of numerous diseases such as cancer, diabetes, cardiovascular issues, neurological disorders, and pulmonary diseases. This is particularly important, as many workers in these roles exhibit symptoms of various health issues, likely due to their demanding schedules and irregular sleep patterns. It’s crucial for employers and employees to recognize the importance of proper sleep hygiene and consider strategies to mitigate the negative effects of shift work, such as scheduling regular health check-ups, promoting healthy sleep environments, and providing education on the importance of sleep. (Torres, 2019).

 Workplace stress and child care comes second on the list. Workplace stress talks about the demand of the job specific with their confidence at work and relationship with their teammates and leaders.  Child care is for parents who need to take care of their child who are still at least below 7 years old and usually this happens for first time parents and single parents.

 There were very few reasons due to elderly care specific to parents and personal errands referring to emergency reasons like land disputes or others.

 Researcher also ask leaders on what are the other reasons not mentioned, they’ve answered denied leave requests whereas employees already had planned activities, financial issues, schedule conflicts specially for those who are working students and the weather conditions on the area specially the Philippines is situated in the Ring of Fire which normally being hit by typhoons, at least 18 to 20 per year.

Figure 2. Impact of Absenteeism to Business Process Outsourcing Company

With those reasons mentioned above, researcher highlighted the impacts of absenteeism in the business process outsourcing company based on extensive research. Normally, they’re paid by how many agents are login to and if incurred any absences, losses will be there and will also have impacts not just to the business but also with the whole business itself including the people around.

According to research from Marshall University (T. Bryan,2017), The issue of absenteeism often flies under the radar for many companies, but its impact can be profound. When employees are frequently absent, it disrupts the workflow, reduces overall productivity, and affects team morale. This can lead to inefficiencies as tasks get delayed or improperly managed.

Moreover, the financial implications are significant. Companies may incur additional costs by hiring temporary staff, paying overtime, or even training new employees to cover for those who are absent. This not only affects profitability but can also harm the company’s reputation and reliability with clients. Addressing absenteeism proactively can help mitigate these negative effects and improve overall business performance.

Figure 3.  Strategies to Minimize Absenteeism Health Issues

Absenteeism due to health issues in the BPO sector is significantly high, primarily because of the work schedules. Since BPOs typically operate according to offshore clients’ timings, employees struggle to adjust their biological clocks. They must sleep during the day, disrupting their entire daily routines, which many find difficult to handle.

 The researcher developed potential solutions based on thorough research, and most respondents agreed with the proposed measures. Additionally, programs such as health and wellness initiatives, stress management workshops, and workplace health promotions are crucial in the BPO industry to ensure employees can maintain their well-being. This is a key reason why all BPO companies offer Health Maintenance Organization (HMO) plans to their employees.

Figure 4.  Strategies to Minimize Absenteeism – Workplace Related Issues

This study examines workplace-related issues such as employee confidence, relationships between employees and leaders, and business processes, including leave policies, rewards and recognition, and communication channels.

 As indicated by the data, 95% of respondents support the proposed solutions to address absenteeism in the BPO industry related to workplace issues. Achieving better work-life balance means discussing work only during work hours and allowing employees their personal time during breaks, lunch, and days off. Recognition and rewards can acknowledge employees’ performance either through monetary incentives or simple recognition posts. Enhanced communication channels should foster openness among leaders and colleagues while maintaining respectful boundaries. Implementing stricter leave policies should clarify expectations and align with business operations. Finally, training and skills development programs aim to boost employees’ confidence and enhance their abilities to perform their jobs effectively.

Figure 5.  Strategies to Minimize Absenteeism – Personal Reasons

Figure 4 shows two possible solutions based on extensive research as ways to minimize absenteeism to employees specific to Flexible works hours and creating commitment which most of the respondents agreed to be an effective way.

Flexible Work hours which are being discussed specific to 4 by 11 which means 4-day work week with 11 hours working hours aiming to maintain a work life balance as well as creating commitment specific to the importance of the job they have to them, for their family and of course with the business.

 Absenteeism due to health issues, workplace related issues and personal reasons in the BPO industry is a challenge to maintain profitability and efficiency. Therefore, recommendations on this research should help minimize its effect in the industry in the long run.

CONCLUSION AND RECOMMENDATIONS

Addressing absenteeism in the BPO industry is crucial for several reasons:

• Productivity and Efficiency: Regular absenteeism hampers workflow continuity and diminishes productivity. Consistent attendance is essential for maintaining seamless operations and efficient processes.
• Financial Impact: Absenteeism often leads to increased expenditures, including overtime payments for other employees, hiring temporary replacements, and possible delays in meeting client deadlines. Addressing absenteeism can aid in controlling these extra expenses.
• Employee Morale: High absenteeism rates can impact team morale negatively, as others may have to handle extra duties, causing burnout and diminished job satisfaction. Addressing this issue can cultivate a more positive and motivated work environment.
• Client Satisfaction: Frequent absences can compromise the quality and timeliness of services provided to clients, potentially harming the company’s standing and client trust. Ensuring consistent attendance helps sustain high service standards and client satisfaction.
• Health and Well-being: By addressing fundamental reasons for absenteeism, such as medical issues or work-life balance, companies can boost the overall wellness of their employees, fostering a healthier and more involved workforce.
• Legal and Compliance: Observing labor laws and regulations concerning attendance and leave policies is necessary to prevent legal troubles and ensure employees are treated fairly.

Eliminating absenteeism requires continuous system analysis by management. BPOs should be in tune with the employees’ perspectives and their working environment. This means truly understanding employees’ needs to create effective policies and job designs. Managers should be equipped with counseling skills or ensure the availability of a counselor to support and motivate employees.

Managing absenteeism effectively is essential for the ongoing success and development of BPO companies. These companies should strive to balance profitmaking with societal and employee well-being. Cultivating a sense of organizational purpose among employees can help them feel valued. BPOs need to support employees in adapting to changes and developing relevant skills. Leaders should have a strong vision and mission, and be capable of translating these into concrete actions. Being ambitious yet creative in their operations, BPOs should welcome new ideas from their workforce. Top executives must communicate effectively with all employees to gauge their needs. Future studies could look into the effects of rewards and recognition policies on absenteeism, and how a cafeteria reward scheme might help reduce it, considering individual preferences.

REFERENCES

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APPENDICES

QUESTIONNAIRE

Dear Respondents, Greetings!

The undersigned is an MBA student of Baguio Central University who are conducting research entitled, “Employee Absenteeism in A Business Process Outsourcing Company”. The main purpose of this research is to identify main reasons of absenteeism and how it affects the business. This study also aims to get suggestions or recommendations from our frontline leaders to minimize its effect. .  

In connection with this, may we request your cooperation by answering the questionnaire that takes about 15 minutes to complete? Rest assured that the information provided will be treated with utmost confidentiality and anonymity.  Thank you for your kind cooperation and support.

Respectfully yours,

Christine V. Javar  

Researcher

Main Reasons of Absenteeism in the BPO industry 

Direction: Please put a check mark ( ) on the appropriate column of your response about the main contributor of absenteeism on your own teams.

Impact of Absenteeism to Business

 Direction: Please put a check mark ( ) on the appropriate column of your response about the impact of absenteeism with the business.

 Numerical Scale             Descriptive          Equivalent Symbol

         5                          Strongly Agree                      SA

         4                                   Agree                             A

         3                                  Neutral                            N

         2                                 Disagree                          DA

          1                          Strongly Disagree                SDA

Effectiveness of possible strategies based of frontline leaders to minimize absenteeism

Direction: Please put a check mark ( ) on the appropriate column of your response about the effectiveness of the following strategies to minimize of absenteeism.

 Numerical Scale             Descriptive          Equivalent Symbol

         5                          Strongly Agree                      SA

         4                                   Agree                             A

         3                                  Neutral                            N

         2                                 Disagree                          DA

          1                          Strongly Disagree                SDA

 Output of the Study