Good Article i came across..........
The severe shortage of manpower is inversely proportional to the growth of the HR outsourcing industry in India. Simply defined, outsourcing is the process of subcontracting operations and support to an organisation outside the company.
While earlier, only large companies tried out HR outsourcing, now even mid-sized companies are looking at outsourcing HR. The market for HR outsourcing in the APAC region has grown from $1.14 billion in 1999 to $2.56 billion in 2004. HR is now emerging as one of the most outsourced business processes in the developed world.
The key drivers for HR outsourcing are cost savings and freeing up time for strategic HR processes. In India, P&G outsources payroll and labour contracts. Airtel outsources its customer care function, Mahindra Finance outsources its product distribution and delivery services. McDonalds India outsources its payroll, benefit management, recruitment and legal compliance processes. Domestic corporates like GE, Wipro, Satyam and Infosys are already using outsourcing firms for recruitment, training and competence building.
Says Mohinish Sinha, associate director and head HR practices, PWC, “Outsourcing introduces measurements in the HR process. It changes the way a CEO views HR functions, the way HR managers see their own processes in terms of returns offered. Outsourcing also brings HR in the line of sight of the CEO enabling him to understand and conduct his business better.”
Internationally, HR outsourcing is gaining strength with the US growing the fastest at 32 % per annum. Agrees, Brian Wilkinson, common wealth zone manager, Vedior, an international human resource consultancy,“Internationally, the trend to outsource HR functions is gaining momentum. Recruitment processes, assessments, benefit management, labour contracts, expect such processes to be outsourced more and more.”
The Conference Board report (which is based on a survey of over 120 companies on North America and Europe with over $1 billion revenues) claim that over two-thirds of the respondents have outsourced at least one of their major HR functions and do not plan to take it back in-house. The Gartner report predicts global HR outsourcing to touch $58 billion in 2005!
It is not difficult to see why HR outsourcing is catching on. Says a Hewitt study, approximately 60% to 80 % of a HR professional’s time is spent on administrative activities, 30% on talent management and employee relationships and just 10% on strategising. Outsourcing can reverse this ratio.
There are other benefits of HR outsourcing. With outsourcing, HR departments can change their image from cost centre to efficiency centres. Says McDonald India’s country head, HR , Vijay K Srivatsava, “If we were to handle these processes inhouse, we would need at least 2 managers for benefit management and payroll, a lawyer for legal compliance, a chartered accountant for accountancy related aspects of payroll and benefit management besides clerical staff. By outsourcing my team saves costs and is able to focus more on strategic issues.”
Despite the advantages, excessive HR outsourcing does pose some concerns: Depletion of skill base, loss of control, adverse effect on motivation and the need of greater coordination with agencies are some of them. HR consultancies suggest that recruitment, training, performance management, compensation, safety, welfare, labour contract are the functions that can be outsourced. Decision making and leading change via strategy are functions that, they believe, should not be outsourced.
Says KT Prasad, VP , HR, ITC, “Today, every organization is aiming at achieving productivity by enhancing return on investments and achieving the economies of scale. In this context, it makes business sense to focus only on the organizations’ core competencies and outsource non-critical business activities. Therefore, routine administrative tasks, although important, can be outsourced to third party vendors.
Organisations have realised the value of outsourcing IT. As Indian companies begin to face increasing cost pressures, the global practice of HR outsourcing will intensify in India.
Rgds,
Chaitali
From India, Vadodara
34The severe shortage of manpower is inversely proportional to the growth of the HR outsourcing industry in India. Simply defined, outsourcing is the process of subcontracting operations and support to an organisation outside the company.
While earlier, only large companies tried out HR outsourcing, now even mid-sized companies are looking at outsourcing HR. The market for HR outsourcing in the APAC region has grown from $1.14 billion in 1999 to $2.56 billion in 2004. HR is now emerging as one of the most outsourced business processes in the developed world.
The key drivers for HR outsourcing are cost savings and freeing up time for strategic HR processes. In India, P&G outsources payroll and labour contracts. Airtel outsources its customer care function, Mahindra Finance outsources its product distribution and delivery services. McDonalds India outsources its payroll, benefit management, recruitment and legal compliance processes. Domestic corporates like GE, Wipro, Satyam and Infosys are already using outsourcing firms for recruitment, training and competence building.
Says Mohinish Sinha, associate director and head HR practices, PWC, “Outsourcing introduces measurements in the HR process. It changes the way a CEO views HR functions, the way HR managers see their own processes in terms of returns offered. Outsourcing also brings HR in the line of sight of the CEO enabling him to understand and conduct his business better.”
Internationally, HR outsourcing is gaining strength with the US growing the fastest at 32 % per annum. Agrees, Brian Wilkinson, common wealth zone manager, Vedior, an international human resource consultancy,“Internationally, the trend to outsource HR functions is gaining momentum. Recruitment processes, assessments, benefit management, labour contracts, expect such processes to be outsourced more and more.”
The Conference Board report (which is based on a survey of over 120 companies on North America and Europe with over $1 billion revenues) claim that over two-thirds of the respondents have outsourced at least one of their major HR functions and do not plan to take it back in-house. The Gartner report predicts global HR outsourcing to touch $58 billion in 2005!
It is not difficult to see why HR outsourcing is catching on. Says a Hewitt study, approximately 60% to 80 % of a HR professional’s time is spent on administrative activities, 30% on talent management and employee relationships and just 10% on strategising. Outsourcing can reverse this ratio.
There are other benefits of HR outsourcing. With outsourcing, HR departments can change their image from cost centre to efficiency centres. Says McDonald India’s country head, HR , Vijay K Srivatsava, “If we were to handle these processes inhouse, we would need at least 2 managers for benefit management and payroll, a lawyer for legal compliance, a chartered accountant for accountancy related aspects of payroll and benefit management besides clerical staff. By outsourcing my team saves costs and is able to focus more on strategic issues.”
Despite the advantages, excessive HR outsourcing does pose some concerns: Depletion of skill base, loss of control, adverse effect on motivation and the need of greater coordination with agencies are some of them. HR consultancies suggest that recruitment, training, performance management, compensation, safety, welfare, labour contract are the functions that can be outsourced. Decision making and leading change via strategy are functions that, they believe, should not be outsourced.
Says KT Prasad, VP , HR, ITC, “Today, every organization is aiming at achieving productivity by enhancing return on investments and achieving the economies of scale. In this context, it makes business sense to focus only on the organizations’ core competencies and outsource non-critical business activities. Therefore, routine administrative tasks, although important, can be outsourced to third party vendors.
Organisations have realised the value of outsourcing IT. As Indian companies begin to face increasing cost pressures, the global practice of HR outsourcing will intensify in India.
Rgds,
Chaitali
From India, Vadodara
Dear Chaitali
The article you have posted is certainly very well written. It educate us about the various studies done for HR outsourcing which gives a broader picture. I found it a good read. Also, If you don't mind......could you plz let me know from where you have got this article.
Thanks & Regards
Nishtha
Keep sharing such good articles and studies.
From India, Vadodara
The article you have posted is certainly very well written. It educate us about the various studies done for HR outsourcing which gives a broader picture. I found it a good read. Also, If you don't mind......could you plz let me know from where you have got this article.
Thanks & Regards
Nishtha
Keep sharing such good articles and studies.
From India, Vadodara
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
How to Make Home Office Work for You.pdf
Healthy Office Ergonomics Workshop.doc