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Human Resource Outsourcing in IT Industry in

Indian Context

INTRODUCTIONA Working Definition of Outsourcing

What is Outsourcing?( Introduction)

OUTSOURCING “The strategic use of outside resources to perform activities traditionally handled by internal staff and resources” Dave Griffiths


HRO in Indian context

• India is second largest exporter of software products and services in the world so there is potential market for outsourcing especially HRO

• HRO is completely new field in Indian context

• Multinational companies, public sector and government are taking interest in this area.

• Underlying size of HRO in India is about $2 billion with a current market of $27 million and it is growing at a rate of about 50 per cent.

• In India, mostly HR outsourcing is used for payroll, employee benefits, recruitment, training and development.


Literature Review

LITERATURE REVIEW WAS DONE :

to understand how today’s HR firms offer a wide variety of services to companies how companies focus on their core business activities and still establish and

maintain good HR policies

INFERENCES FROM LITERATURE REVIEW:

HR outsourcing is contingent upon factors like flexibility, availability of adequate resources, affordability, and acceptability (openness to information-sharing) etc.

HR outsourcing is a double-edged sword and should be viewed in totality keeping in mind the pros and cons it has

HR outsourcing provides companies with the ability to gain access to experienced and knowledgeable professionals.

Literature Review(Contd..)

HR outsourcing provides state-of-the-art technological solutions to improve customer service

HR outsourcing enable HR to deliver greater overall value to the organization. Roughly nine out of ten large companies and eight out of ten midsized companies

found value in outsourcing certain HR benefits administration functions. Human Resources Technology Outsourcing Allows Businesses to Manage

Expenses, Reduce Risks and Focus on Their “People” Goals to Drive Results Macro Issues and Uncertainties Are Not Deterring Businesses from Investing in

HR Outsourcing Employee and Manager Use of HR Technology Is Expanding, Allowing for

Improved Accuracy, Growth and Effectiveness


Why outsource?

• Cost-effective

• Business need to focus on core competencies, growth and talent management.

• Reducing staff’s administrative burden.

• The expertise provided by their external partners.

• effective way to bypass organizational politics


Models of outsourcing

• ASO: An ASO is third party provider of common human resource activities. In this companies can choose, which services to outsource and which to manage in house. It provides flexibility.

ASO does not make co-employer relationship.• PEO: It takes care of all the human resource activities. A PEO also assumes all

associated liabilities and legal responsibilities of its clients. A hired PEO becomes co-employer with a client company i.e. PEO will have some control over client’s employees.


Process for HR outsourcing:


METHODOLOGY

Sample size : we have approached some working professionals of IT industry and some BPOs, mainly the HRs of the company. We forwarded our survey to 120 professionals out of which we got 30 responses.

First of all, we read the research paper, journals and articles related to our topic in order to understand our topic and get some relevant data if possible.

Then, we made a questionnaire, which we forwarded online to 120 working professionals of different companies like Genpact, Infosys, HCL BPO, Wipro and we got 30 responses, on which we did our analysis.

Further in order to gain deep insight we took telephonic and email interview of 4 HRs of companies like Genpact, Satyam Mahindra, IBM and I-Gate.

We also had conversation with human resource outsourcing company to know their perspective on the topic.


Results & Analysis

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16

1) What HR processes is your company currently outsourcing?

Count

• Currently most of the IT or BPO firms are outsourcing there payroll, recruitment, talent management, performance management etc.

• As companies want to focus more on strategy formation, they are outsourcing these functions in order save cost as well as to focus on growth and expansion.


Results & Analysis(Contd…)

It is evident from the graph, that human resource outsourcing is becoming a growing trend.

Apart from HR, other functions which company prefers to outsource are logistics, finance and accounting, customer service etc.

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10

20

30

2) Which business process do you think is most important to

be outsourced?

Count



As per the previous response, companies are willing to outsource their HR activities, so some other functions which companies want to outsource are Talent Management, Investigation compliance, performance management and so on.

0

4

8

3) In HR what processes do you like to outsource other than the currently

Outsourced processes?

Count



According to the working professionals the main reason behind outsourcing is to have the ability to focus on business/strategy, so that they can focus on their growth and expansion.

Other reasons can be cost saving, to improve performance, to gain access to the new HR technology/expertise and so on.

0102030

4) What do you think are the main reasons for a company to outsource HR?

Count



As we can see that the professionals undoubtedly believe that the main advantage of HRO is that helps in reducing cost, which in turn increases the profit margin.

They also believed that outsourcing helped them in focusing on the strategies, planning which is necessary for the growth of their business in this competitive age.

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10

20

30

5) What are the Advantages of HRO?

Count



As HRO helps in cost saving/ reduction of cost, which in turn helped the companies in increasing their revenue/ profit margin.

20

7

3

6) Has the Revenues Increased after implementation of HRO?

Yes

No

We are not Outsourcing



The company which outsources their talent management or recruitment process strongly agrees that workforce quality is positively affected after outsourcing.

Strongly Disagree

Disagree

Neutral

Agree

Strongly Agree

We don't Outsource

0 2 4 6 8 10 12

7) Rate on the Scale of 1 to 5 (1-Strongly Disagree, 5-Strongly Agree), that there is improvement in the quality of workforce

after Outsourcing.

Count



We have also asked in the questionnaire about the kind of difficulties parent company is facing while outsourcing is the non-disclosure, as company has to share some confidential data with the partner firm, which is very critical for both.

Impersonal to work and giving up control are some other limitations of HRO.

18

5

19

20

25

8) Are you facing any difficul-ties/Challenges in HRO

process? Giving Up Control

Employee Leasing Risk

Impersonal to work

Non-disclosure

Others

No



As we can see 15 out of 30 respondents says that their companies are interested in increasing their outsourcing activities in the upcoming future which is a positive signal for this developing field.

9

315

2

9) Your Outsourcing intentions over the next year

No Change

Likely to decrease

Likely to increase

Will start Outsourcing



Due to its positive results, 17 out of 30 respondents agreed that they will recommend it to others also.

179

31

10) Will you recommend HRO to others?

Absolutely YesReluctantly YesProbably NoAbsolutely No


HRO company perspective ( Peoplestrong)

According to them the major causes of HRO are as follows:Focus on core ActivitiesCost and efficiency saving: Reduced overhead:Operational control:Staffing Flexibility:.Continuity and risk-managementDevelopment of internal staff

Disadvantages of outsourcing:Risk of exposing confidential dataHidden costsLack of customer focus


HRO company perspective ( Peoplestrong)

Keys to successful outsourcing:Customer satisfactionDefinability and measurabilityShare the riskDelivery and quality.ScalabilityStability and variabilityPredictabilityVelocity (reaction to change) and staffing


FINDINGS

• Currently, payroll is the most outsourced HR function, 50%.Recuirement process, talent management (training) etc. are some other prominent areas.

• It is clearly evident from the results of responses that HRO helps companies to focus on their core business and it saves cost as well (cost reduction).

• According to research paper, larger organization tends to outsource higher.


Limitations

9) Your Outsourcing intentions over the next year

• Fewer amounts of data available.

• Problem in data collection.

• As it is completely new area, it is yet to be explored


RECOMMENDATION

According to Black Book Model ,we recommend outsourcing HR operational functions to it industries as :-

• Provide advice on employment law changes and amendments • Manage employment disagreements, disciplinary actions and/or

personal objection cases • Provide advice • Manage change • Manage recruitment processes • remuneration & salary reviews • Job evaluations• Job descriptions • 24/7 HR helpline 17


CONCLUSION

• There is growing trend of Human Resource Outsourcing in Indian IT industries and BPOs.

• Companies are currently paying more attention on outsourcing payroll, recruitment, and administrative work.

• But in future they want to have a long term and stable relation with outsourcing firms and they want outsource the recruitment process (RPO) which is booming now, talent management and so on.

• Outsourcing depends on the size of the organization.


Documents

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