HRO Current articles.docx

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1. Focus On Core Activities

In rapid growth periods, the back-office operations of a company will

expand also. This expansion may start to consume resources (human

and financial) at the expense of the core activities that have made your

company successful. Outsourcing those activities will allow refocusing

on those business activities that are important without sacrificing

quality or service in the back-office.

Example: A company lands a large contract that will significantly

increase the volume of purchasing in a very short period of time;

Outsource purchasing.

2. Cost And Efficiency Savings

Back-office functions that are complicated in nature, but the size of

your company is preventing you from performing it at a consistent and

reasonable cost, is another advantage of outsourcing.

Example: A small doctor's office that wants to accept a variety of

insurance plans. One part-time person could not keep up with all the

different providers and rules. Outsource to a firm specializing in

medical billing.

3. Reduced Overhead

Overhead costs of performing a particular back-office function are

extremely high. Consider outsourcing those functions which can be

moved easily.

Example: Growth has resulted in an increased need for office space.

The current location is very expensive and there is no room to expand.

Outsource some simple operations in order to reduce the need for

office space. For example, outbound telemarketing or data entry.


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4. Operational Control

Operations whose costs are running out of control must be considered

for outsourcing. Departments that may have evolved over time into

uncontrolled and poorly managed areas are prime motivators for

outsourcing. In addition, an outsourcing company can bring better

management skills to your company than what would otherwise be

available.

Example: An information technology department that has too many

projects, not enough people and a budget that far exceeds their

contribution to the organization. A contracted outsourcing agreement

will force management to prioritize their requests and bring control

back to that area.

5. Staffing Flexibility

Outsourcing will allow operations that have seasonal or cyclical

demands to bring in additional resources when you need them and

release them when you're done.

Example: An accounting department that is short-handed during tax

season and auditing periods. Outsourcing these functions can provide

the additional resources for a fixed period of time at a consistent cost.

6. Continuity & Risk Management

Periods of high employee turnover will add uncertainty and

inconsistency to the operations. Outsourcing will provided a level of

continuity to the company while reducing the risk that a substandard

level of operation would bring to the company.

Example: The human resource manager is on an extended medical

leave and the two administrative assistants leave for new jobs in a very

short period of time. Outsourcing the human resource function would

reduce the risk and allow the company to keep operating.


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7. Develop Internal Staff

A large project needs to be undertaken that requires skills that your

staff does not possess. On-site outsourcing of the project will bring

people with the skills you need into your company. Your people can

work alongside of them to acquire the new skill set.

Read more:http://www.ukessays.com/dissertations/management/human-resource-outsourcing.php#ixzz2PXBnCyEk

Example: A company needs to embark on a replacement/upgrade

project on a variety of custom built equipment. Your engineers do not

have the skills required to design new and upgraded equipment.

Outsourcing this project and requiring the outsourced engineers to

work on-site will allow your engineers to acquire a new skill set.

Recommended Next Read:How to Select an Outsourcing Vendor

As you evaluate youroutsourcingchoices, keep in mind that there

areadvantages to outsourcingand disadvantages of outsourcing. Look

at each one of the outsourcing disadvantages listed below and decidewhat impact that item would have on your business. If the outsourcing

disadvantages outweigh the advantages of outsourcing, then you

should avoid outsourcing those operations.

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
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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 coverthe 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 account.

Evaluate the outsourcing company carefully to make sure your data isprotected 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


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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 differentpeople. 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.

Why Outsource, Why Now?

In todays uncertain business climate, executives and organizations need to befinancially stronger, more adaptable, and more efficient to respond to shifting marketconditions. In other words, they need to maximize cash flow, maximize productivityand standardize compliance.Find out how outsourcing can help you achieve these goals. Get a spotlight onpayroll and HR outsourcing.

Table of Contents:

Resources - Maximizing cash flow

Outsourcing enables organizations to reduce the size of non-strategic functions and scale operations tomeet changing business needs. This ultimately improves gross margins and increases cash flow whichallows businesses to make investments that will better position themselves to not only survive the currenteconomic conditions but emerge as leaders when the economic conditions turn in their favor.

Peoplemaximizing productivity

Even before the current economic crisis struck, it was clear that HR professionals needed to create addedvalue by taking on a more strategic role and collaborating more closely with business managers. Yetmany people continue to spend their working lives on tasks that could easily be automated and handed

over to external providers.

ProcessStandardization and compliance

Companies that have strong internal processes are more flexible and can take advantage of competitiveopportunities more easily. Current market conditions may both present opportunities as well as forcecompanies to change their business models to adapt.


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http://www.es-international.adp.com

HR outsourcing new business opportunitySujata Dutta Sachdeva, TNNJul 10, 2007, 02.35am IST

NEW DELHI: It may be a dirty word, especially in organisations with a strong labour

union, yet HR outsourcing (HRO) is fast catching up.

Especially, many Fortune 500 firms worldwide. No wonder, even though it's a niche

market, HRO is now worth a good $20 billion globally and growing. And the good

news for India is that nearly 50% of HRO business has an offshore component, so a

lot of it is actually coming to us.

This is despite the fact that most of HRO market is concentrated in US and Europe.In fact, two-thirds of the market is still US-based, while Asia has only 4-5% of the

buyers. The rest are in Europe. "There are around 160 active deals around the

world," says Gaurav Gupta, country head, Everest Group.

Gupta has just completed a global study on the niche HRO sector. He says, "Only 18

buyers account for 25-27% of the big business."

Experts say, last year eight big deals were signed. Even though HRO deals are being

signed mostly in US or Europe, 50% of these deals have some offshore component.

"A major chunk of this is coming to India. And 26% of HRO transactions have over50% of contracted services being provided from an offshore location," Gupta says.

HRO activities are grouped under two major processes. First - transactional

activities like HR related IT processes, employee data management, pay roll

functions and secondly - judgment-based processes like training, curriculum

designing, preparing job descriptions.

In India, suppliers have seen increased activity in the last two-three years. Banglaore

and Gurgaon have emerged leaders with the highest concentration of HRO suppliers.

That's because most big HR players like Hewitt Associates, Fidelty EmployerServices, Accenture, ACS, are located in these cities. Mumbai, Pune, Hyderabad and

Chennai too have attracted their share of centres.

Now Indian suppliers are are looking at partners to scale up their businesses. "The

domestic HRO market too will start opening in the future," feels Gupta.
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More Indian firms will realise the need to outshore some processes to free their HR

management time.

http://www.rediff.com

HRO, the next big opportunity for India

The global spend on business process outsourcing is estimated to be $234 billion in 2005, while globalhuman resources outsourcing (a comparatively new phenomenon) is estimated to touch $67 billion, which

is 29 per cent of the global BPO pie.

Out of the $3.6 billion revenue earned from information technology enabled services in 2004 by Indian

companies, revenues from HRO services were only 2 per cent or $70 million.

But HRO is projected as the fastest growing segment over the next three years with large-scale offshoring

already taking place and larger international players like Fidelity, Exult and Hewitt setting up operations in

India [Images].

The revenues in the HR outsourcing space are projected to increase to $3.5 billion by 2008 according to

a Nasscom-McKinsey survey.

Even if 10 per cent of HR outsourcing is offshored in the next 5 years, offshore opportunity can be

anywhere around $1.4 billion.

The first Indian company to exploit the potential of the HR BPO space is the Chennai-based Secova

eServices, co-founded by V Chandrasekharanand Venkat Tadanki.

V Chandrasekharan, Secova's co-founder and chief technology officer, talks on this next big HRO wave

and its future growth, in an exclusive interview with Shobha Warrier.

What is HR BPO? How does it function?

Business process outsourcing itself is a fairly new concept. HR is one of the areas where there is

significant amount of administrative activity.

HR BPO is getting outsourced to third party providers who can bring in the benefits of knowing the

domain. HR outsourcing as an activity has been prevalent in the United States for a fairly long time.

What kind of activities are covered under HR outsourcing?
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There are several players in the field. For example, the payroll part of a company is a fairly complex

exercise internally. So, if somebody in the US wants to start a company, they look for an outsourcer to

take care of the payroll.

They give the entire data to be processed by the outsourcer. Similarly, if you take HR as an activity, it

comprises of a group of activities, which include payroll management, training, staffing, benefits

administration, travel and expenses management, retirement and benefits planning, risk management,

compensation consulting, etc.

In the US context, HR outsourcing is a huge area. For instance, nearly about 29-30 per cent of the

outsourcing space is HR. In fact, it is much larger than customer care as an opportunity.

Have the US companies been outsourcing HR for a long time, or is it a new phenomenon?

HR outsourcing has been there in many countries for a long time, particularly in the US. The work was

outsourced to companies in the US itself. In the case of HR BPO, you need a front end in the US unlikecustomer care because if we have to process the pay roll, printing the cheques, filing the tax returns etc.

have to take place in the United States itself.

So, it is like having a US front-end led organisation with an off-shoring unit here.

Secova was the first Indian company to do HR outsourcing from India. How did you capture this

huge opportunity?

HR BPO is a huge opportunity. Its market size is close to around $60 million. Venkat, the CEO of this

company, was the co-founder of Daksh, which was a huge success in customer care. He felt we should

look at value-added opportunities as customer care space was getting crowded. So we started looking at

other opportunities.

We were looking at HR, finance accounting as two significant areas. If we look at the BPO pie, after

customer care, HR is the largest. We also believed that HR is new and when we did a detailed analysis,

we found that saw that 70-80 per cent of all HR activities are rule based, repeatable and are required to

be done for large groups of employees, ideal for off-shoring.

As soon as we got the funding from IL&FS, we set up a centre in Chennai in November 2003.

Were the companies reluctant to offshore HR?

They raised several questions. They wanted to know how we would handle security concerns. Both

Venkat Tadanki and Bob Parke, vice president, strategy & business processes, are based in the US.

Bob is a US citizen and has been in the HR domain for a long time, so it was easy to convince the

customers. When they meet the customers, they make the customers understand what we are talking

about. We have that domain confidence. We also have a US front end organisation now.


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In HR BPO, is it very important to have a US front-end office?

It is important to have a US front-end office as it helps in our operation- delivery processes.

You said HR BPO is a huge opportunity for India. Is it because the US-based companies are

looking at offshoring as the most cost competitive thing to do?

Yes, we are only in the early part of the cycle. It is not like customer care where so many players are

involved right now.

Some of the early indicators are that larger players like Fidelity, Hewitt and Exult have set up their delivery

centres in India. That's a clear indicator that a lot of work is going to come this way. I don't think

customers are going out and demanding for an offshore vendor. That may not happen.

What is happening is, the moment we talk about the best-shore advantage, it is seen as a good

alternative. The flood of companies coming to set up call centres is not there in HR for sure, at least for

now.

Gartner Inc says that India has the potential to take at least 10-15 per cent of the US share of $51

billion. Do you feel this is a big opportunity for India to tap?

Absolutely, it is growing at 14 per cent per annum. The other significant factor is that if you take the total

HR spend, out of Rs 100, what is offshored is only Rs 6! It is just 6 per cent. That shows the kind of

opportunity that can be tapped.

If you look at Nasscom figures, the delivery happening out of India is miniscule. HR outsourcing is

happening mostly within the US now. We have to look at the US as the number one target market. That is

the biggest regulatory system.

Are you looking at the bigger companies in the US?

No, we are presently looking at only the 'mid-market' segment which itself is worth $20 billion, and under

serviced. Mid-segment definition in HR parlance is a company that has 2,000 to 25,000 employees.

So, in some sense, we will have a Fortune 100 company in revenue terms but they fall under the mid-

segment as far as HR is concerned when the number of employees is less.

Some of our clients are Fortune 500 and Fortune 1000 companies. Of the $20 billion, there is a market

potential of $14 billion for 'payroll' and 'benefits administration' which is a significant opportunity for Indian

vendors.

http://www.rediff.com
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Global research has proven that one of the top time consuming issues which take maximum Promoter /

CEO / Founder bandwidth are People Related. These issues are deeper and need focused execution of

Core HR framework.

ndia to be biggest HR outsourcing hubByReji John Oct 05 2009 , Mumbai

Tags:BPO,HR,HRO,Indian outsourcing firm,Jobs and career,Outsourcing,Careers

Economic slowdown has forced corporate organisations in the US and Europe to be concerned about

every penny they spend. Human resources is one area they are looking at while cutting costs. There is,

therefore, a marked change of mindset among chief executives of human resource outsourcing (HRO)

buyers in the US and Europe.

Traditionally reluctant to take services from offshore locations, they are now expected to leverage

offshoring more in second-generation deals. The first generation deals were signed during the 2004-2006and most of them were for six to seven years. They will be renewed, repatriated or transferred to new

suppliers between 2010 and 2012. According to a global study by Everest Group, a global consulting and

research firm, heads of these companies are now open to receiving human resources services from low-

cost offshore locations. As a result, India is set to be one of the biggest destinations.

The HRO market can be broadly classified into discreet HRO and enterprise HRO, with the former

involving outsourcing of a single process and the latter being end-to-end. In the current environment,

HRO buyers are under pressure to further reduce HR costs. This is leading to more buyers willing to

receive HR services from low-cost offshore locations now. Given the increased maturity of India as a

offshore HRO location, we expect first-generation HRO buyers to either start using India as a delivery

location, especially for back-office HR processes, or increase its usage in second generation deals, said

Gaurav Gupta, principal and country head, Everest Group.

The study looked into more than 111 HRO contracts with a combined contract value of about $6 billion.

We are looking at those deals in which multiple aspects of HR are outsourced and do not include an

organisation just getting the payroll or training outsourced, said Rajesh Ranjan, research director,

Everest Group. He was hopeful of tremendous growth and put the numbers at roughly 15,000 against

3,000 a few years ago.

Tata Consultancy Services, Wipro, Caliber Point, a subsidiary of Hexaware Technologies, and Infosys are

some big Indian HRO suppliers. Hewitt, Convergys, Accenture and IBM are some global players with

delivery locations in India.

http://www.mydigitalfc.com
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