OUTSOURCING HR FUNCTIONS

OUTSOURCING

Outsourcing means contracting out of a business function to an external provider. In this sense, two organizations may enter a contractual agreement involving an exchange of services and payments. It is the ability of businesses to outsource to suppliers outside the nation, sometimes referred to as offshoring or offshore outsourcing. Outsourcing in the information technology field has two meanings:-

To commission the development of an application to another organization, usually a company that specializes in the development of this type of application.
To hire the services of another company to manage all or parts of the services that otherwise would be rendered by an IT unit of the organization.

Reasons for outsourcing:Cost Saving. Focus on core business. Cost restructuring. Improve quality. Capacity mgt. Access to talent. Reduce time to mkt. Risk Mgt. Tax Benefit. Operational expertise Improve quality.

OUTSOURCING HR FUNCTION

Human resources are the most critical assets of any organization as the organization's success lies in their hands. But in order to ensure that its employees remain satisfied, the company has to have a specialized human resources department that most of times proves to be a costly affair. That is why most companies today; decide to outsource their human resources management functions to offshore destinations.

HR outsourcing is a process in which a company uses the services of a third party to take care of its HR functions. A company may outsource a few or all of its HR related activities to a single or combination of service provides located in offshore destinations like India, China, Philippines, etc.

ADVANTAGES OF OUTSOURCING HR:-

It helps in cutting cost. Helps concentrate on core business. Helps in ensuring employee satisfaction. Companies can save their valuable time and resources. It facilitates some specialized activities such as training, payroll administration, employee database management, employee retention employee benefits

Some 76 percent of respondents surveyed said their organizations currently outsource one or more major HR functions, and 80 percent of those said they would do so again. In addition, nearly three-fourths (71 percent) of the surveyed companies that currently outsource HR said that they will extend or renegotiate contracts with their current outsourcing providers and 29 percent said that they will put their existing outsourced services out for a new bid but none said they plan to take services back in-house.

HR OUTSOURCING PROCESS:There are seven stages in this process: Planning Initiatives---The organization here assesses the associated risks. It then announces the initiative and the project team is formed. Advisors are engaged and the team is trained. Resources are gathered and issues related to resource management, information management and project management are addressed. Now the objectives are set.

Strategic implications ---vision, competencies, structure , strategy, value chain

and transformational tools are understood. then the determination of contract, rights and its termination date takes place.

Performance and costs analysis--- cost of activity is measured along with the
costs that would be incurred if the project fails. measurement of performance takes place along with the costs of poor performance. both costs and performance are benchmarked.

Selection of providers---set the qualifying and evaluation criteria. identification

of providers takes place that leads to their screening. RPF is drafted and proposals are evaluated based on qualifications & costs. the whole process is performed with diligence. at the end of the stage their is a determination of total costs for buying, short listing of providers & their finalization.

HR OUTSOURCING PROCESS CONTD

Negotiations---issues are addressed, term sheets are prepared and contract negotiation takes
place. once evrything is carried perfectly a relationship is announced.

Transition of resources---the team roles are adjusted and compared with transition plan.
transitional issues are than addressed. employees are met and offers or terminations take place. those who are selected are counseled and physically moved to the client location.

Managing the relationships---management styles are adjusted and an oversight council is

set up. definition and designing of agenda, schedule and performance reports take place. oversight roles are performed , poor performance is confronted and problems solved. finally a relationship is built.

KEY CHALLENGES IN OUTSOURCING HR FUNCTION

Difficulty in achieving efficient operations. Confidentiality tend to became the major issue. It actually requires different strategic mgt. & policies procedures. Organizations need to be more flexible. Adapting to the Cultural differences. Compensation, retirement benefits. Training & development.

QUERIES