Operations Management

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I. Background

Company Profile

         Integreon Managed Solutions, Inc. (Integreon) is a global company providing integrated document, content, knowledge and legal support solutions.  It is a “legal process outsourcing” (LPO) firm – a term derived from BPO or business process outsourcing.   The LPO sector is said to be the next evolution in the provision of services.  

        LPO is the industry in which in-house legal departments or organizations outsource legal work from areas where it is costly to perform, such as the United States or Europe to areas where it can be performed at a significantly decreased cost. LPO is a high-end industry that has been growing rapidly in the recent years.

        Integreon is considered to be the “standard bearer” in the LPO sector. In 2008, the Brown-Wilson's Black Book of Outsourcing named Integreon as the #1 Knowledge Process Outsourcing Company in the world, while in May 2009, leading analyst firm, Frost & Sullivan, presented Integreon the Excellence in Knowledge Process Outsourcing Award.

        Headquartered in Los Angeles, California, Integreon also has service centers in the UK, South Africa, India, China, and the Philippines.  In the Philippines, Integreon is an affiliate of LiveIt Investments Ltd., the holding company for Ayala Corporation’s investments in the business process outsourcing (BPO) sector. It was registered with the Securities and Exchange Commission (SEC) in 2007, and at present, it has around 500 plus employees in the Philippines.

Company Structure

        Integreon Philippines is a relatively small company.  It has a short hierarchy – from the Country Head to the associates.  It also has very few departments – the major one being the Legal Department.  The other departments - HR and IT, only offer back-office support.        

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Figure 1. Organizational Structure of Integreon Philippines

II. Case Description

Problem Statement

        The global LPO market is currently estimated to be worth more than $2.4 billion and it is expected to continue growing.  Indeed, consolidated financial statements of Ayala Corporation would reveal increasing annual revenues for Integreon.  

        However, the continued growth of Integreon is contingent on it overcoming its biggest human resources problem i.e., high turnover – which is posing a serious threat to growth and profitability. Many of Integreon lawyers leave even in the first year of their employment, and there seems to be a desperate shortage of people in the industry.  In fact, while the company has registered for 700 seats with the Philippine Economic Zone Authority (PEZA), they have never been able to fill-up these seats.    

        Our goal in this study is to understand the causes of the high turnover, and to recommend ways to address the critical issue of employee retention. Specifically, this study aims to answer the following:

(1) What is/are the common reason/s for the high attrition rate in Integreon?

(2) What are the applicable operational management strategies that can be implemented  

      to encourage employee retention?

Research Methodology

        A descriptive research methodology was used for this study.  Interviews were conducted on one (1) current employee and one (1) former employee of Integreon, to get an accurate account of the nature of the work being done in the Company, and the efforts of HR to address the problem of employee turnover.

Surveys were also administered to a convenient sample (composed of current & former employees) known by the researchers. For this report, the purpose of the survey was to collect additional data about Integreon - its hiring process, trainings, and culture.  A section of the survey also obtained demographic information about the selected employees who responded to the survey.  

III. Case Synopsis

         Integreon Managed Solutions, Inc. (Integreon) is a “legal process outsourcing” (LPO) firm, in which in-house legal departments or organizations outsource legal work to the company. The LPO industry is deemed to become the next evolution in the provision of services since it is growing rapidly in the recent years.  Integreon, after receiving world-class recognitions for being the top Knowledge Process Outsourcing Company, is considered a key player in the LPO sector.

        However, behind the success of Integreon, it faces an internal challenge of high turnover in its employees.  An alarming trend is that Integreon lawyers leave even in the first year of their employment. Furthermore, there seems to be a desperate shortage of people in the industry.

High turnover has costs associated with it, including recruitment, training and salary, and operational delays. It also impacts the management chain wherein co-workers need to pick up the lags while managers need to devote time on finding new employees.  Lastly, when a knowledgeable employee leaves, taking experience and customer service ability with him, it can lead to customer loss. These threats now pose a great concern to Integreon’s future growth and stability.

        Results of this study suggest that the collective reason for the high attrition rate in Integreon is the nature of work itself and the limited avenues for career development.  Unlike other legal jobs, work at Integreon was classified as low-skill, repetitive, mechanistic and uninteresting.  Moreover, Integreon’s process of promotion is sluggish and trainings are also very seldom conducted.  

        To encourage employee retention, the group proposed process and quality management and customer-driven process strategies to stabilize Integreon’s high turnover issue.  It is primarily recommended for Integreon to optimize its hiring and recruitment process.  In addition, Integreon must also improve the caliber of its training programs and conduct it on a regular basis.