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Vaibhav Mhatre

MMS II System 117

HR Outsourcing
Outsourcing: Outsourcing is defined as a management pattern that consists of contracting out a particular in-house business process or processes to an external provider or providers. While these processes are purchased from said providers, the ultimate responsibility for the processes still rests with the purchasing company. Outsourcing is an option that's being explored by an increasing number of companies for reasons that include increased efficiency and cost savings. The precise services that are earmarked for outsourcing will depend on the company and/or the outsourcing options available in that particular market. HR Functions: Human resources management refers to the organizational features designed to deal with all of the issues involving the employees who make up an organization. These key features include hiring, employee compensation, benefits, training and development, safety and wellness, employee performance management vis--vis company standards, evaluation, sanctioning and firing. Virtually any HR function can be outsourced. Where most of the day-to-day people management functions have already been devolved to line managers, there may be a case for outsourcing the entire remnants of the central HR function. The most commonly outsourced HR activities are: 1. Recruitment Process Outsourcing Recruitment Process Outsourcing is a form of business process outsourcing (BPO) where an employer outsources or transfers all or part of its recruitment activities to an external service provider. The Recruitment Process Outsourcing Association defines RPO as follows: "when a provider acts as a company's internal recruitment function for a portion or all of its jobs. RPO providers manage the entire recruiting/hiring process from job profiling through the onboarding of the new hire, including staff, technology, method and reporting. A properly managed RPO will improve a company's time to hire, increase the quality of the candidate pool, provide verifiable metrics, reduce cost and improve governmental compliance." Advantages:

Freedom from adhering to strict rules and regulations. Optimal resource utilisation. Structured and fair performance management. Value creation, operational flexibility and competitive advantage.

Vaibhav Mhatre

MMS II System 117

Disadvantages: Deficiencies in Company Knowledge: Nothing can replace the intimate, day-to-day knowledge gained when your recruiter spends every day the midst of the action. An outsourced recruiter only spends a small amount of time getting to know your business and its personnel requirements versus an internal, companybased recruiter. With limited knowledge of what your company does, this deficiency can make it difficult for even the best personnel specialist to locate a candidate that truly fits the companys business model. Staff Compatibility Challenges: In addition to the lack of company knowledge, an outsourced recruiter often is at a disadvantage by not knowing the personalities of the companys current staff. Compatibility between managers and co-workers often is the key to smooth business operations. External recruiters do not have the opportunity to watch how the staff interacts together or to learn the personality types which can lead to a larger challenge in placing suitable employees for the long term. Divided Loyalties: With an internally based recruiter, there is no question where their loyalty lies. They are employed by and for the benefit of the company. However, an outsourced recruiter often is playing both sides of the fence. He is both hawking a candidate and trying to fill a position which can produce a divided sense of loyalty. Although there are external recruiters that work hard to place the right candidate in the right position, the question of divided loyalty will always be lurking in the background. Fee-Based Motives: An April 2012 Business Insider article revealed that most recruiters spend a paltry six seconds to evaluate the average resume. This type of behavior shouldnt be unexpected when the major motive for placing a candidate is receiving a fee. The quicker the placement and the greater the number of placements drives the outsourced recruiters income and this motive may not produce the best results for the mission critical task of building a quality staff.

2. Human Resources Information System A Human Resources Management System (HRMS) or Human Resources Information System (HRIS), refers to the systems and processes at the intersection between human resource management (HRM) and information technology. It merges HRM as a discipline and in particular its basic HR activities and processes with the information technology field, whereas the programming of data processing systems evolved into

Vaibhav Mhatre

MMS II System 117

standardized routines and packages of enterprise resource planning (ERP) software. On the whole, these ERP systems have their origin on software that integrates information from different applications into one universal database. The linkage of its financial and human resource modules through one database is the most important distinction to the individually and proprietary developed predecessors, which makes this software application both rigid and flexible. Advantages: An HRIS or HRMS monitored by qualified specialists who know technology and HR functional and tactical processes can manage compliance with federal and state laws, streamline processes for recruitment and selection, and produce analyses, data and reports for internal and external use. Other advantages of an HRIS include the ease of use for qualification computer technology specialists, accuracy of information and the ability to perform HR audits using any combination of parameters. The employee and manager selfservice features are excellent ways to free up the time of your human resources staff members for project work and other duties. Employees and managers can locate answers and information quickly without the need to consult an HR representative every time.

Disadvantages: An HRIS also can be a problematic for small businesses in which some employees must wear many hats. HRIS involves human error during information input, costly technology to update your system and malfunctions or insufficient applications to support your human resources needs. There is a demand for computer and technology specialists with general information technology knowledge, and finding a qualified specialist with human resources functional area knowledge can be difficult. With such a demand, your cost to hire an HRIS specialist may be far above the average salary for a computer technology specialist. The cost per-hire for another employee in a specialized field may be a stretch for some small businesses.

3. Training and Development In an increasing challenging world economy, many organisations are focused and energised on maintaining and growing their market position. This will often require significant internal resource commitment within the company. As such companies are often required to do more with less as they attempt to identify innovative and dynamic strategies to maintain their competitive advantage.

Vaibhav Mhatre

MMS II System 117

Learning and Development (L&D) and talent management programs are often required on a global scale. This in itself can present a set of unique challenges and requires a skill set that organisations may not wholly possess internally. Even if this isnt the case, the amount of effort required using internal resources can grow significantly over a short period of time, drawing essential expertise away from business critical strategies. One solution being adopted increasingly by large organisations, is to partner with a global organisation with a proven reputation of providing fully managed training services.

Advantages: Lower training costs It is estimated that on an average companies can save up to 20% per trained employee by outsourcing training For a 1000 employee location with an average training spend of Rs5000 per employee and an attrition rate of 20%. The training cost is projected at Rs 6 million annually. Outsourcing training per 1000 employee location, you could save up to Rs 1.2 million annually. Organizational Effort is focused on core competencies Administrative tasks follow the 80-20 rule for your training department; they take up almost 80% of your training teams time but impact their productivity to the organization by only 20%. In many cases, a disproportionately large focus on these activities also becomes a cause of attrition of your key training talent. Outsourcing the non-key activities for your training department helps it to focus on performance related training and coaching for your key talent when it is needed. Training Content at the speed of thought As Businesses, your clients and especially your competition move at the speed of Thought How can your organization, your employees and their skills & learning not move at the same pace. Training departments need now more than ever to keep abreast of the latest regulatory environment, technical skills and competencies that your organization needs to operate in now, and in the future. Outsourcing to training experts not only helps you operate in the now environment but also lets you operate in a predictive manner in the training space. Experts keep up to speed on the latest in their operational domain, much like you and many times are at the cutting edge of research.

Disadvantage

Vaibhav Mhatre Cost

MMS II System 117

Although saving on costs is often one of the reasons cited for outsourcing non-core functions, outsourced training services can be expensive. Training companies may charge hundreds of dollars per employee for a one-day training course. Executive training programs tend to be more expensive. If a company requires training services infrequently, maintaining a separate training department is impractical and outsourced training would be the only cost-effective option. Companies that use training services frequently should do a cost-benefit analysis to determine if they should continue outsourcing or hire training professionals as full-time employees or as consultants to the human resources department. Control Companies lose control when outsourcing support functions, such as customer service and training. The training services provider decides on the format and content of its training programs, which typically contain generic examples and case studies. For example, a car dealership may send its sales representatives to a training course that may contain few examples on how to convert car dealership visitors to customers. Training companies usually retain copyright of all training materials, which means that companies may not be able to customize the manuals or presentation slides for future internal training needs. These restrictions make companies dependent on third parties for creating a skilled workforce, which is a key success factor for all businesses. It also adds to the training costs if changes in technologies or regulations make previous training courses obsolete. Productivity Productivity suffers when employees leave work to attend training sessions. Although the core objective of training is to improve long-term performance, companies may take a short-term hit in terms of schedules and customer service. Project schedules may slip if key employees are away on training, and customer service may suffer because people are not available at their desks to respond to customer calls and emails. The training has to be timely and relevant. For example, if a company is planning to implement an enterprise resource planning system, it should start the training as the first system modules are being implemented so that employees immediately have the chance to apply what they have learned. Considerations

Vaibhav Mhatre

MMS II System 117

Internal training does not necessarily mean a separate training department. For example, a couple of internal subject matter experts could work on the training manuals, attend train-the-trainer courses to learn the basics of public speaking and facilitating training sessions, and then conduct the training courses in-house. Outsourcing training or any other function should not be an automatic decision. Management should authorize outsourcing only if it provides a significant improvement over current capabilities.

Onshore and Offshore Business Outsourcing Onshore: Onshore outsourcing is a business model that uses an external but local company for one or more internal business processes and services. Onshore outsourcing enables an organization to use a local company for IT and IT enabled products, services, operations and support. This helps companies to reduce internal IT infrastructure and support staff while meeting any legal or operational requirements that may apply. Onshore outsourcing is also known as domestic outsourcing or near-shore outsourcing. Offshore: Offshore outsourcing is the practice of hiring an external organization to perform some business functions in a country other than the one where the products or services are actually developed or manufactured. It can be contrasted with offshoring, in which the functions are performed in a foreign country by a foreign subsidiary. Opponents point out that the practice of sending work overseas by countries with higher wages reduces their own domestic employment and domestic investment. Many customer service jobs as well as jobs in the information technology sectors (data processing, computer programming, and technical support) in countries such as the United States and the United Kingdom - have been or are potentially affected. Reasons of selecting onshore and offshore: Regardless of whether a company selects an offshore or onshore relationship the reasons are typically the same:

Vaibhav Mhatre

MMS II System 117

Reduce and control operating costs Improve company focus on its core competencies and strategic imperatives Access to world-class capabilities and best of breed technology Re-allocate internal resources to higher-value purposes Address the issue of limited internal resources Accelerate re-engineering/transformation efforts Manage more effectively a difficult or problematic function

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