1) INTRODUCTION

Definition of HR Outsourcing

Human resources outsourcing is when a company gets an outside party to perform

some or all of their HR functions. Outsourcing can be used for a number of

different HR related activities. According to an August 2008 study conducted by

the Society of Human Resources Management (SHRM), the most commonly

outsourced HR functions are background checks, employee assistance programs,

and flexible spending accounts that allow employees to use pre-tax dollars to cover

medical expenses. HR outsourcing is on the rise. In the same SHRM study, 33

percent of HR professionals who participated believe their company will increase

their use of outsourcing within the next five years.

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What Is the Meaning of HR Outsourcing

HR outsourcing is the delegation of a human resources process or processes to an

external HR provider that specializes in this service. This provider takes charge of

managing and administering the outsourced services for its client.

In order to properly understand what human resources (HR) outsourcing means we

first have to properly know the meaning of the term “human resources”. When we

talk about human resources we are basically referring to the people that are a part

of an organization/business/company. In the past we would use the term to include

just an administrative function but nowadays HR includes basically everything that

is linked with people. HR outsourcing refers to the outsourcing of human resources

services. This includes but is not limited to managing pay checks, taxes, bonuses

and a lot more. 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 theonboarding 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.

Recruitment Process Outsourcing (RPO) is a form of business process outsourcing

(BPO) where an employer transfers all or part of its recruitment processes to an

external service provider. An RPO provider can provide its own or may assume the

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company's staff, technology, methodologies and reporting. In all cases, RPO

differs greatly from providers such as staffing companies and contingent/retained

search providers in that it assumes ownership of the design and management of the

recruitment process and the responsibility of results.

Occasional recruitment support, for example temporary, contingency and executive

search services, is more analogous to out-tasking, co-sourcing or just sourcing. In

this model, the service provider is just a source for certain types of recruitment

activity. The distinction between RPO and other types of staffing is that in RPO,

the service provider assumes control of the process.

Why Use HR Outsourcing

We basically use HR outsourcing in order to gain time. Statistics have shown that the average company is losing 25% of its time in managing human resources related problems. As you can imagine that is quite a lot of time that is lost. By using HR outsourcing that time is gained and it can be directed towards the processes that are actually making money for a company. This is the most concrete benefit that every CEO should be aware of.

Besides gaining time we also gain a better management. HR outsourcing connects you with a company that is specialized in human resources. This means that they can properly handle everything involved. In most situations a regular company would need a different department to handle just human resources. Keep in mind that human resources include medical compensations, regulations, bonuses, handling bills and even medical insurance. It is not at all as simple as you might believe. That is why there are companies that are specialized in HR services. We do need them when human resources can not be managed properly.

How to Find Good HR Outsourcing Providers

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Since we are dealing with a delicate department, when you are outsourcing human resources you want to make sure that you are hiring the best company for the job. In order to do this you need to research them properly and make sure that they have enough experience to handle your personal needs. Contact previous employers and learn why contracts were terminated. Ask for references and ask questions about the technology that they are using. HR needs to be automated to some extent so software used might be important.

The bottom line is that HR outsourcing is not as easy as you might have thought. You must always keep a close communication channel opened with the vendor and create a good outsourcing strategy to cope with everything that might appear along the way.

2) EVOLUTION OF HRO

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Human Resource Outsourcing is finally coming of age in India, despite the many

challenges, Riding on the success of the BPO and IT industries, India has always

been well positioned to be a leader in the HRO space. After a decade, the HRO

industry continues to evolve in a rather mixed way—while many well known IT

companies have joined the fray to give the necessary fillip and visibility to the

sector, there are a few factors that continue to hold back.

The HRO industry can be broadly classified into two segments—the enterprise

HRO (for multiple HR functions) and single process outsourcing. India has

witnessed more of single process outsourcing, particularly in payroll space and

benefits outsourcing. RPO (recruitment process outsourcing) and learning/training

are the other emerging functions. “The complexity in single process is lesser than

in enterprise segment and has witnessed maximum maturity in India. Payroll

processing is in fact the most matured practice in India as there are some decent

service providers in this space,” stated Rajesh Ranjan, Research Director, Everest

Group. A global consulting and research firm, the Everest Group conducts

worldwide studies on the HRO industry. From maturity prospect, the enterprise

HRO in India is still at a nascent stage though certain suppliers in India are

interested in building capability in this space.

Destination India

Many large global HRO service providers have a presence in India and see the

country as a key delivery location. In recent times, off shoring of HR outsourcing

has been gaining ground. “The HR directors in countries like US and UK are

questioned by their CEOs and CFOs why their HR cost is high. That is why off

shoring to a location like India makes sound business sense,” stated Ranjan. This

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apart, presence of a few big Indian IT companies having entered the market have

added to the success story.

R. U. Srinivas, Chief Executive Officer, Caliber Point, the wholly owned

subsidiary of Hexaware Technologies, acknowledged that the HRO industry in

India is still evolving. While the ability to deliver at a large global level with the

offshore component has attracted buyers, the growth has been in select processes

like payroll (few countries), benefits administration, recruitment, workforce

administration etc., but not some of the other parts of HRO. “The Indian service

providers capable of delivering the end-to-end HRO services are just a handful at

the moment while there are a large number of single/stand alone service

providers,” said Srinivas. He pointed out that domestic HRO is more established

and growing with some players beginning to standout. With some exceptions, the

captives in general do a lot more comprehensive HRO work than the typical third

party BPO player. Over the years, the big change has been that the large multi

process, multi country HRO deals are no longer being pursued by the large

companies alone. Mid sized market has also opened up.

“India has emerged as an ideal location for the HRO sector, along with many other

Asian countries, which have positioned themselves uniquely,” agreed Anshuk

Talwar, Senior Consultant, CTT, Hewitt Associates.

Hewitt Associates is the world’s leading provider of HRO and consulting services.

According to Talwar, while selecting a location for setting up an HRO center,

companies usually consider the following:

Talent—availability, cost and quality of talent

Infrastructure—telecom, power and real estate

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Incumbents—prevalence of other players in the sector

Environment—business and political

Clusters—supporting services such as recruitment, training firms

While India fares at the top when it comes to talent, apart from English language

there are no facilities for other Asian languages, as demanded by many APAC

multinationals. “They are therefore looking at vendors which can provide both

transaction and customer services in the local Asian languages. With this trend,

alternate locations like Malaysia and China are becoming more feasible,” pointed

out Talwar. Not surprisingly, infrastructure is yet another major issue. Talwar cites

the example of a large HRO client which refused to setup a center in a tier-II

Indian city as the infrastructure of the city was below international standards,

especially the airport, which due to construction and defense reasons was open for

only a few hours causing a major bottleneck for people arriving from the corporate

headquarters.

Key strengths and problem areas

The maturity of the IT industry and delivering consistent results in various

industries/functions has been the key strength for India. “Ability to excel in all the

three major components of HR outsourcing i.e., process, quality of data and the

right technology has been a winning proposition for Indian service providers,”

added Srinivas. The handicapping factor at times, he feels, is the multi-language

requirement to be serviced from offshore is a challenge. The other challenge is the

lack of standardization in HR practices between countries and within companies,

the legal issues surrounding employee taxation, retirement benefits, etc.

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The skills sets, the BPO environment, kind of Quality (Six Sigma/CMM model,

etc.), are the strengths that the HRO industry depends upon in India. “This apart,

the suppliers are biggest and show results in terms of delivery, cost advantage,

technology expertise (this plays a big role as buyers often do not have advanced

technology so an HR BPO enables access to that technology),” said Ranjan. The

problem areas are also not few—lack of domain knowledge (have to be aware of

changes in the US, particularly in case of payroll processing), benefits outsourcing

in the US is complex (one has to understand it to deliver the services). Then there

is the language issue—with HR helpdesk being a part of the function. The accent

angle plays a much more important role here than a call center because it is a

cultural factor and the employee feels a disconnect.

Manpower focus

The interesting thing about HRO is that it requires a number of very different skill

sets—not just HR alone. Srinivas reminded that apart from the technology

requirements, and the obvious HR skill sets, this also needs relationship skills,

accounting skills for a number of processes, legal awareness depending on the

process, language skill sets, etc. “It also requires a very global mindset to service

global customers,” asserted Srinivas.

For long the manpower focus of this industry has been to recruit and train entry

level staff in large numbers. “However, with this industry maturing, an increasing

focus is now being laid on grooming high performing employees for leadership

roles. This has becoming increasingly visible when the entire top management

team from one BPO moves to setup or manage operations of another BPO,”

averred Talwar. Therefore, a number of BPOs now identify high performing

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individuals for leadership roles and groom them with rotational assignments in

India and abroad and across different functions.

The second wave

While payroll, benefits, pension administration and workforce administration have

been traditionally outsourced, the second wave is seeing the emergence of RPO,

learning and development and expatriate management. “Companies in this

downturn are looking at their entire HR function, identifying the administrative

and transactional functions and seeking vendors who can help in saving cost and

increasing efficiency,” stated Talwar. For example, in the case of learning &

development, companies expect the outsourcing provider to manage all transaction

activities, including organizing training venues, printing training content, food and

drinks at the venues, ensuring trainers (outsiders) are available, collecting training

feedback and providing analysis.

It is critical to remove apprehensions regarding outsourcing of HR functions to

India. It is also important to make probable clients aware of the work being

delivered from India and showcasing the success stories.

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3) ADVANTAGES OF HRO

The Human Resources Outsourcing and Professional Employer Organization

(PEOs) industry continues to grow as one of the fastest developing outsourcing

sectors, just behind IT outsourcing. Following one of the most challenging

economic years in recent history, businesses are looking for ways to reduce

overhead and improve efficiencies.

Human Resources Outsourcing benefits all levels of the organization:

For Executives

For Management

For Employees

Benefits to the Executives

Reduce Employment-Related Expenses

While there are hundreds of corporate cost-cutting areas to consider, labor costs

account for one of the largest operating expenses in a business. Beyond payroll and

tax overhead, other expenses are related to health insurance premiums, workers’

compensation insurance, recruiting fees, payroll processing, and legal costs.

Human Resources Outsourcing and PEO firms pool thousands of employees under

one roof and offer small and mid-sized business the economies-of-scale typically

found within large corporations. Furthermore, by consolidating multiple vendors,

companies can streamline operations and reduce overhead.

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Companies that engage an HR Outsourcing relationship typically experience

financial benefits in the following areas:

Workers’ Compensation insurance premiums

Health insurance costs

Employment Practices Liability Insurance

Legal fees

HR systems and infrastructure

Minimize Employment Risks

Studies show that there is a direct correlation between difficult economic periods

and increases in employment related lawsuits. Coupled with complex HR laws,

many employers struggle to comply with the ever-changing employment

legislation. HR Outsourcing firms are staffed with experts in a wide range of

employment areas. Their role is to assist employers comply with both Federal and

State laws, and to support them in the event of an employment lawsuit. Examples

of HR compliance support can include:

Updating human resources forms and documents

Ensuring compliance with payroll-related regulations

Training managers on hiring, terminating and disciplining policies

Auditing employee files and records

Creating and implementing OSHA compliant safety plans

Speaking confidentially with employees regarding complaints or grievances

Auditing human resources practices and policies

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Benefits for Management

Improved HR Efficiencies

In addition to hard cost savings, HR Outsourcing offers employers more efficient

HR systems resulting in soft-cost savings. In place of current management, the

HRO firm takes over some of the cumbersome administrative functions relating to

employment. These activities, while necessary and often times critical, do nothing

to add value to the company’s bottom-line. These functions can include:

Unemployment claims administration

COBRA management

Responding to employee inquiries

Employee health and benefits administration

Payroll administration

Tax filing and payments

Streamlining HR processes for the entire employee life-cycle

Now relieved of these non-productive activities, management can re-focus their

resources on revenue-generating activities.

Management Training

It is critical for management stay abreast of the rapidly changing employment

legislation in human resources, benefits, and tax laws. Furthermore, improved

motivational and supervisory techniques go far in increasing employee

productivity and dedication to the company. HR Outsourcing firms offer a wide

range of management and employee training courses to keep your staff on track.

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Whether it is mandatory harassment training and safety compliance, or how to deal

with difficult employees, a solid management training program is a must for every

organization.

Benefit for Employees

Health Insurance Benefits

As our economy improves, employers are looking for ways to incentivize and

motivate their staff. HRO firms provide small employers the unique opportunity to

offer their staff a robust and comprehensive array of employee benefits that are

typically available to only the largest corporations. These robust offerings include

a wide range of major medical plans and voluntary benefit offerings.

Insurance benefits include:

A comprehensive range of medical insurance plans, including:

o Multiple health insurance options, including HMO, PPO and HSA plans

o Dental insurance

o Vision insurance

o Life insurance

o Disability and alternative insurance

401 (k) Retirement Plan

Pre-tax Cafeteria 125 Plans

Flexible Spending Accounts (FSA)

Employee Assistance Programs

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Credit Union and financial services

Work/Life Balance

Beyond insurance benefits, employers recognize the unique needs of their

employees in a changing marketplace. More businesses are embracing the idea of

allowing employees greater flexibility in their employment relationship. From flex-

time to telecommuting, employers are aware of the value in allowing employees to

spend at least some of their working hours out of the office. There are many

beneficial outcomes in creating a flexible work environment:

Improves employee satisfaction. Employees are tired of the rat race, eager to take

control of their lives, and want to find a balance between work and life. A growing

number of employees would choose telecommuting over a pay raise.

Reduces attrition. Losing a valued employee can cost an employer in the tens of

thousands. The annual cost of employee turnover in the United States is a

staggering $5 trillion .

Decreases unscheduled absences. A large percentage of employees who call in

sick may not really be. They may do so because of family issues, personal needs,

and stress. Unscheduled absences could cost employers thousands of dollars per

employee/per year.

HRO and PEO firms have the experience and expertise to help clients create well-

balanced policies that take both the employee’s and the employer’s needs into

consideration. Steps that can be taken include:

1. Having clear guidelines for the telecommuting program;

2. Clarifying the “ground rules” for the telecommuting relationship;

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3. Having a formal training program;

4. Making your expectations clear; and

5. Providing frequent and constructive feedback.

Improved Performance

Finally, through their experience working with thousands of employees with

varying backgrounds and industries, the HRO firm can provide career path

guidance and development to help employees grow in their current positions.

Through well written job descriptions and effective performance reviews and

evaluations, employees will receive the direction they need to excel at work.

Additionally, employees are offered online access to their personal payroll,

anniversary and vacation data, all building their confidence and trust for their

employer. This ultimately leads to greater job satisfaction, improved performance,

and lower turnover.

Outsourcing, in its early days, seemed possible only by larger companies which

farmed out many low-end business processes. Since then, outsourcing has become

more of a norm than an option. Apart from the cost savings, outsourcing is seen as

a strategic move that can allow businesses to gain a competitive advantage.

It certainly has opened up opportunities for organizations to utilize skill sets and

expertise that they normally would not be able to access without large investments.

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It has also become a savior to startups and small businesses which have to work

with modest capital.

At the lower end of the spectrum, outsourcing back-end jobs such as data entry/

processing, customer support, payroll processing etc. have helped organizations

save a staggering amount of money. Now, there are service providers across the

globe who specialize in simple back-office services to high-end services like

manufacturing design and legal outsourcing, to name a few.

Before deciding to outsource, it is important to define what specific goals are to be

met. One should also be aware of the risks that outsourcing carries. All said and

done, outsourcing is definitely part of many companies' decision making process.

Some of the benefits of outsourcing are:

Lower cost

Lower costs are perhaps the prime benefit of offshore outsourcing. You can get

work done at a fraction of the cost that you would have to spend locally, while

getting better quality as well. Because of the differences in pay and standard of

living that exist between Asian and Western countries, labor costs are much lower

in Asia. On an average, you can expect about 60% cost savings if you outsource to

countries like India.

Skilled expertise

Finding skilled resources is one of the biggest challenges faced by companies

today, not to mention the investment required to train employees and the

attendant infrastructure required, which can rapidly drain funds. Outsourcing

frees companies from these hassles by providing access to skilled resources at

lower costs, with the additional benefit of not having the burden of managing

them directly.

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Time zone difference

Because of the time zone difference between Asian countries and the West, you

can get your work done while your business closes down in the evening. This is

especially beneficial for companies in the service industry that need to provide

round-the-clock customer support.

Focus on core competencies

As a company grows, administrative functions also grow. Managing back-office

operations and administrative functions takes the time and energy out of any

organization. Outsourcing frees companies from having to manage non-core

functions, and puts the focus back on their core competencies. Entrepreneurs and

enterprises alike have benefited from outsourcing repetitive and mundane tasks,

and have had more time and opportunity to grow their business.

Increased productivity and Efficiency

Outsourcing not only brings cost advantages but can also improve the efficiency

of business operations. If your business goals are properly aligned with the

deliverables in outsourcing, productivity and efficiency are bound to increase.

Outsourcing providers with the right expertise and experience can actually help

streamline business processes and contribute to the bottom-line.

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Distribution of risk

When certain functions are outsourced, companies also distribute or do away

with the risks associated with running that particular function. For instance, if

payroll management is eating up your operational time and money, outsourcing

it to a payroll services provider gives you the freedom to focus your

concentration on other core activities of the business.

Improving customer service

Customer service is paramount to any organization. Through outsourcing you

can service your customers faster, provide better quality and decrease

turnaround time.

Better people management

Since outsourcing takes care of the skills necessary to run a particular business

process, your business is much more flexible in investing in key resources.

Instead of worrying about hiring people for your back office operations, you can

focus on getting resources to grow your core competencies.

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DISADVANTAGES OF HRO

1. Loss Of Managerial Control

Whether you sign a contract to have another company perform the function of an

entire department or single task, you are turning the management and control of

that function over to another company. True, you will have a contract, but the

managerial control will belong to another company. Your outsourcing company

will not be driven by the same standards and mission that drives your company.

They will be driven to make a profit from the services that they are providing to

you and other businesses like yours.

2. Hidden Costs

You will sign a contract with the outsourcing company that will cover the details

of the service that they will be providing. Any thing not covered in the contract

will be the basis for you to pay additional charges. Additionally, you will

experience legal fees to retain a lawyer to review the contacts you will sign.

Remember, this is the outsourcing company's business. They have done this before

and they are the ones that write the contract. Therefore, you will be at a

disadvantage when negotiations start.

3. Threat to Security and Confidentiality

The life-blood of any business is the information that keeps it running. If you have

payroll, medical records or any other confidential information that will be

transmitted to the outsourcing company, there is a risk that the confidentiality may

be compromised. If the outsourced function involves sharing proprietary company

data or knowledge (e.g. product drawings, formulas, etc.), this must be taken into

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account. Evaluate the outsourcing company carefully to make sure your data is

protected and the contract has a penalty clause if an incident occurs.

4. Quality Problems

The outsourcing company will be motivated by profit. Since the contract will fix

the price, the only way for them to increase profit will be to decrease expenses. As

long as they meet the conditions of the contract, you will pay. In addition, you will

lose the ability to rapidly respond to changes in the business environment. The

contract will be very specific and you will pay extra for changes.

5. Tied to the Financial Well-Being of Another Company

Since you will be turning over part of the operations of your business to another

company, you will now be tied to the financial well-being of that company. It

wouldn't be the first time that an outsourcing company could go bankrupt and leave

you holding-the-bag.

6. Bad Publicity and Ill-Will

The word "outsourcing" brings to mind different things to different people. If you

live in a community that has an outsourcing company and they employ your

friends and neighbors, outsourcing is good. If your friends and neighbors lost their

jobs because they were shipped across the state, across the country or across the

world, outsourcing will bring bad publicity. If you outsource part of your

operations, morale may suffer in the remaining work force.

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4) HR CONSULTINGAn HR strategist(s) does this with the goals of streamlining current HR and

identifying any room for improvement. This is a less comprehensive, but

potentially more effective option with HRO.

Online Payroll Processing

Processing payroll services is a very popular function of HRO. A provider will

service your company by handling all of your important payroll reporting and

processing needs. It typically includes employee tax filings, paycheck processing

as well as end of the year tax forms. Offering a wide variety company metrics to

help your company track and evaluate HR costs. Payroll processing is often

integrated with a full service HRO package.

Administration of Employee Benefits

Looking at the graph, 84% of companies are using HRO to satisfy their needs

with 401K services. Benefits administration will assist your company in the

planning and procurement of employee benefits packages. The purpose of benefits

administration is to support your employees and make sure that your company is in

compliance with all Government regulations. HRO service providers may also be

able to negotiate better rates on coverage of employee benefits.

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Human Resource Management Technology

A popular technology in HR outsourcing is a shared intranet, which will be

accessible by your company and the HRO provider. This will allow you to track

and maintain your HR needs. This allows for a common ground for the company

the HRO provider where all data and information will be kept. However, the

technology varies depending on the service provider and your HRO plan.

Recruitment

In addition to these functions, recruitment services are growing steadily in

popularity. With recruitment, a provider acts as a company's internal recruitment

function for all or some of its job recruiting. HRO providers will often manage the

complete recruiting and hiring process. This often includes going to the extent of

issuing background checks for potential employees. The outsourcing company will

leverage their knowledge of employee effectiveness to pair your business with

employees that fit your company culture and requirements.

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5) PROCESS OF HRO

8 steps of HR Outsourcing:

Setting Of Objectives - Many companies do not objectively analyze the needs before going into outsourcing HR process and later regret the decision. Each company is different and has different solutions for its problems. Understanding the underlying structure of an organization and how outsourcing will fit in it, forms the crucial first step of HR Outsourcing.

Implications on major stakeholders - HR outsourcing is not just a management's prerogative because it affects the entire company. Outsourcing of HR processes is much more complicated than outsourcing function related to, say things. Hence the implications on people's jobs and work roles are analyzed before finalizing the decisions. Many HR service providers absorb trained employees from the client's company too.

Analyze the benefits (both tangible and intangible) - There are more benefits of outsourcing apart from its cost effectiveness. Is your company in need of more efficient processes or is it lacking in innovation or is there manpower shortage. What benefits does the company expect to reap from the outsourcing? It helps to spell out the benefits right at the beginning.

Selecting vendors - Vendor selection is another crucial stage of outsourcing exercise. Do not go by recommendations and sales presentations only. An honest reference check is carried out to understand the service levels of the provider. It is all the more

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important, because here the failure of outsourcing directly affects the employee satisfaction.

Contracting - Once a vendor is selected, the agreement is drafted which formally lays out all the terms and conditions of the trade. This contract is signed by representatives of both, the service provider and the client.

Transfer of Resources - Based on the terms of contract, resources are transferred between the parties. It could mean transfer of resources, documents and manpower. Regardless, the client company needs to guide the service provider for some time.

Reviews and Relationship management - People processes begin with relationships. It is important for the client company to keep a check on the functioning of the vendor. Periodic reviews and audits are conducted to ensure smooth functioning of the outsourced processes.

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6) HR PROFESSIONAL SKILL AND INVOLVEMENT LEVELS

HR professionals consider their partnership working skills, business awareness

skills and change management skills to be either good or excellent in over 80% of

cases. There is less consensus surrounding vendor management skills, with 28%

considering their skills as developing or fair, and 13% declaring no skill at all.

• Most HR experts consider involvement in HRO to be either important or

very important. However, the majority of HR professionals have limited decision-

making involvement during HRO ventures. Where there is involvement, their main

decision making areas lean towards the realization phase of the HRO lifecycle –

monitoring, managing vendor relations and provision of end-user feedback.

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• HR professionals are aware of the positive impact they can have on HRO

ventures. They believe they can facilitate relational, long-term partnership working

with their external providers, and their distinct contribution includes a focus on

cultural fit during vendor selection, an increase in the focus on quality, and greater

trust emphasis in vendor relations.

Organizational status of the HR function HR outsourcing success

• Most HR professionals consider the HR function • Over half of the respondents

report that HRO has to be taken seriously within the organization, with enabled

them to adopt a more strategic role to 50% confirming that HR supports the

organization’s a limited extent. A minority consider it to have overarching

strategy. enabled them to adopt a strategic role to a great

• The HR professional’s background is diverse. Forty- extent. Yet 36% do not

consider HRO as a strategic eight per cent of respondents have occupied a range

enabler for the HR function. of business positions prior to their role in HR, while •

HRO success is mixed. Most respondents report only 39% confirm they have a

‘pure’ HR background. that HRO has been successful in some areas but

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• Seventy-one per cent of HR professionals indicate not others, with a minority

reporting no success at the function is represented at board level, with all (5%),

and only 7% declaring HRO an all-round the majority stating good relationships

with success story. the organization’s chief executive. One-third of respondents

consider this relationship to be excellent.

• Of those confirming excellent relations with the chief executive, 41% stem from

a broad-based business background, whereas 27% have always been employed in

the HR function.

• Only 19% consider HR to play an important administrative role, and a mere 13%

of HR professionals consider the HR function to be at the forefront of shaping the

organization’s strategic direction.

The skills required for HRO engagement

An HR outsourcing project can be broken down into various lifecycle stages.

These include:

• benchmarking

• planning

• vendor selection

• setting service-level agreements (SLAs)

• contract monitoring

• management of vendor relations

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• provision of end-user feedback.

Each of these stages will require a different set of skills from the HR professional

involved. We wanted to assess the involvement levels of HR professionals

throughout each of these lifecycle stages. To do this, we needed to discover the

skill areas HR professionals deem as important to the HR outsourcing lifecycle and

the proficiency of the HR professional in these skills.

Risk

RPO can only succeed together with a well-defined corporate staffing strategy. A

company must manage its RPO activities, providing initial direction and continued

monitoring to assure good results. An RPO solution may not work if the company's

existing recruitment processes are performing poorly, or if the service provider

lacks the necessary recruitment processes or procedures to work with the client. In

these situations, it is better for the company to undergo a recruitment optimization

program me.

Cost and quality can be issues, The cost of engaging an RPO provider may be

more than with internal recruiting staff, as the outside provider is likely to have

higher business overhead. Poorly implemented RPO could reduce the effectiveness

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of recruitment, if the provider does not understand the business situation. Service

providers may fail to provide the quality or volume of staff required, especially in

industry sectors where there are staff shortages. RPO providers do not necessarily

act as custodians of their clients’ employer in the way that a strongly aligned

retained search firm or internal recruiting resource would. Many RPO

organizations perform their staffing functions and service offsite or offshore,

disconnecting the provider from the client company's growth and recruiting

strategy, and some of the momentum and energy associated with the rapid up

scaling of a workforce through recruitment may dissipate. Additionally, placing all

recruitment in the hands of a single outside provider may discourage

the competition that would arise if multiple recruitment providers were used.

Case study

Liberty Wines is one of the UK’s foremost wine importers and suppliers.

Employing 80 people in the UK and Ireland, it supplies a wide range of premium

wines to restaurants, regional wine merchants and multiple grocers and

specialists. In 2010 it was awarded the ‘On Trade Wine Supplier of the Year’

trophy for the second year running.

The Challenge In 2009, Liberty Wines had grown to 65 employees and handling

HR and payroll tasks was becoming increasingly time consuming and complex.

Responsibilities were split between a number of people across the business who

were carrying them out in addition to their other duties.

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As an international business, it was essential for Liberty Wines to have specialist

HR expertise to draw upon, yet it was not financially viable for them to employ

their own in-house HR and payroll specialists. The Solution After reviewing a

number of options,

Liberty Wines decided to take up specialist HR Outsourcing company package for

small organizations. This provides them with a dedicated HR Administrator to take

care of their day-to-day HR tasks, a fully managed payroll service and specialist

HR Management support when they require it. They also use leading-edge web

based HR system with employee self-service.

The Results Liberty Wines now has best-practice, legally compliant HR practices,

employment letters and policies. Their assigned HR professional handles their

day-to-day HR tasks, including issuing employment contracts, checking right to

work, administering the Company pension scheme and maintaining the HR

database. Employees are able to book holidays and submit timesheets online via

self-service, and managers can view employee information and live absence

reports for their teams. Payroll is entirely outsourced, freeing up internal finance

to concentrate on value added tasks.

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7) CONCLUSION

When choosing an outsourcer a company must remember to focus on the overall objectives of

the organization. It is important that a company chooses an outsourcer that

understands the corporate culture and image and will therefore strive to uphold

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these areas. It is also imperative that companies build a good relationship with their

outsourcer to avoid miscommunication and leaking of confidential information. In

developing an outsource contract, companies should also be proactive and build an

exit strategy into the contract highlighting on what grounds a party can terminate the

contract. With these factors in mind a company can greatly benefit from outsourcing and

maintain a sound relationship with their outsourcer.

Outsourcing of benefits management is one of the main HR functions outsourced

by large and small companies. Many companies outsource benefits management as

it can be a complicated process due to legal compliance. There are several

governmental laws and regulations associated with pension and healthcare plans.

The outsourcer would ensure that the client is in full compliance of tax and

governmental regulations. Outsourcing of benefits management also allows

companies to offer a better quality of service for employees, since the outsourcer

has a wealth of knowledge and expertise in the benefits area. Outsourcing is an

accepted management tool for restructuring and refocusing the way an

organization does business.

8) BIBLIOGRAPHY

Read more:   What Is the Meaning of HR Outsourcing? | eHow.com   http://www.ehow.com/about_6563497_meaning-hr- outsourcing_.html#ixzz2KTLzGGUY

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http://hroutsourcingstrategy.com/

http://caribbeanresumes.com/career_tools/articles/outsource-or-not-outsource

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