Need Of Outsourcing

The need of Outsourcing can be defined with the following way:

(i) Cost Reduction:

Cost Reduction has been the predominant motive for outsourcing, a make-or-buy decision that is largely addressed through accounting information. The expectation that outsourcing will cut costs is consistent with the strategic management view of competitive resource allocation. Outsourcing decisions commonly target a minimum of 15% cost saving, sometimes it is in the range of 20-25%.

(ii) Need for Specialized Expertise:

In principle, outsourcing can provide “best-in-the-world” quality for specific activities or components.

(iii) Increased Flexibility to Manage the Business:

Outsourcing presents organizations with the opportunity to avoid the constraints of their own productive capacity in meeting changes in the volume of sales. Outsourcing HR also enables executives to cope with time-sensitive issues and competing demands.

(iv) Lowering of Rigidity and Cultural Change:

Another rationale is to develop less bureaucratic departments, which are often criticized for the constraints they impose on operational flexibility. Because of their size and focus, outsourcing firms are often more agile, and can deliver services more quickly than in-house HR staff.

(v) Technological Changes:

For a business to develop and sustain competitive advantage, it requires access to appropriate technologies, and often the ability to benefit from them. The development of technologies can be expensive.

HISTORY OF HR

Background:

The Human Resource (HR) is a critical aspect of employees’ well-being in any business. If a company fails to give due importance to this function, it s bound to face employee dissatisfaction, which will in turn affect the company adversely. With the increasing complexities in modern business, Business Process Outsourcing (BPO) is the norm of the day. Essentially, outsourcing is a management strategy that allows a company to concentrate on the core business activity, rather than spend time on the non-essential and routine functions.

Management guru Peter Ducker says that “The productive capacity of all business depends on three factors: The capital resource, the physical resource and the human resource. “ Thus, it makes immense business sense to outsource non-core activities. Of all the three resources, only the human resource possesses a productive capacity for which the upper limits are not defined. Therefore, the ingenuity with which a company uses its employees’ skills will define the limits of employee potential.

Evolution of HR outsourcing:

The concept of Outsourcing can be explained with the help of following examples:
(i) During Mahabharata Lord Krishna was outsourced by Pandava.
(ii) During Kurukshetra war Salya was outsourced by Kaurava.
(iii) During Ramayana Rishi Vishwamitra outsourced Lord Rama and Laxmana to complete his worship in the forest.
(iv) When Mata Sits was kidnapped by Ravana, Lord Rama outsourced Shrighive and his army to attack Ravana’s Lanka

In a dynamic global environment, competition in terms of knowledge-intensive services has taken the front seat. That is how the need for human creativity has suddenly been recognized by corporates. But human talent is reported to be falling short of demand. Although capital is freely available for investment, matching technical and managerial talent to manage such investments is found wanting. This phenomenon is driving companies to invent newer ways of overcoming the hurdles.

Conceptual framework of outsourcing:

Outsourcing HR can be defined as the act of utilizing an HR expert for the prime purpose of providing a company with expertise that can well execute HR functions such as payroll and benefit administration, recruitment etc., without adding fixed overhead. In generic terms, core business is the process, which is central to a company’s operations that create value for its stakeholders. These are the processes, which have been identified by the businesses’ strategic thinking as critical to excel, to meet or beat the competition. Being driven by this philosophy, companies during the early 1990s paid greater attention to business process re-engineering, and in the process, figured out that they were spending a lot of time and money in maintaining support and management processes. These process could as well have been availed from companies, from which it was the core business, at a much lesser cost. This realization led to the genesis of outsourcing.

It is nothing but transferring select functions or services and delegating their day-to-day management to a third party called the ‘supplier’ or ‘vendor’. It is merely way of getting something done by third party. Outsourcing is a long term commitment on behalf of the company delivering the service to the outsourcing company. Greater trust is therefore essential to succeed in an outsourcing engagement; else the customer is likely to suffer losses owing to vendor’s failure.

The fastest growing areas for outsourcing are:
Ø HR management
Ø Media management
Ø IT
Ø Customer service
Ø Marketing

The on going globalization process, and the resulting downsizing, re-engineering etc., has paved the way for the breakdown of ‘employer-employee relationship’. In a dynamic market, the so-called competitive advantage, recognized in one period, is fast becoming irrelevant. Similarly, the hitherto acquired knowledge and skills are rapidly becoming outdated. Simultaneously, firms are apprehensive that building up of such new skills, that too at short notices, will be difficult besides being pretty expensive. The net result is ‘outsourcing’ of talent.

HR OUTSOURCING – A REVOLUTION

HR OUTSOURCING – A REVOLUTION
Abstract

Human Resource Management has played an important role in the development of people. The scenario of Human Resource Management is changing day-by-day and human needs within the organization as individuals and in groups is also changing in significantly. Their roles, requirements and responsibilities continue to translate into new forms. In these circumstances, the human resource function plays a very important and strategic role as they have staff authority over the line managers in an organization. A changing business environment can influence the outcome of current operations, stakeholders and corporate strategy as a whole. The function of viewing and integrating business opportunities, stimulating employees, developing employee strengths and creating functional teams help the company’s vision and translates this concern into profit. HR strategy is no longer a distinct process from the business strategy and its processes.

Outsourcing is a management strategy that allows a company to concentrate on the core business activity, rather than spend time on the non-essential and routine functions. Outsourcing creates several HR challenges for firms. Although it often helps companies slash costs, employees may face layoffs when their jobs are framed out to the lowest bidder. The productive capacity of all business depends on three factors: The capital resource, the physical resource and the human resource. Obviously, it makes immense business sense to outsource non-core activities. Of all the three resources, only the human resource possesses a productive capacity for which the upper limits are not defined. Therefore, the ingenuity with which a company uses its employees’ skills will define the limits of employee potential.

In a dynamic global environment, competition in terms of knowledge-intensive services has taken the front seat. That is how the need for human creativity has suddenly been recognized by corporates. But human talent is reported to be falling short of demand. Although capital is freely available for investment, matching technical and managerial talent to manage such investments is found wanting. This phenomenon is driving companies to invent newer ways of overcoming the hurdles. This paper has been prepared for detail presentation and discussion in the seminar on

Marketing of social issues is more challenging than product or service marketing:

Product or service marketing is not against the prevailing beliefs of the community or the target market involved. Therefore it is relatively easier to explain the benefits of the product or service involved. On the contrary most of the social issues aim at changing the prevailing beliefs fundamentally.

Therefore, even if it is for the benefit of the target market of the community involved, it becomes quite difficult in changing their prevailing beliefs for example, the community which has drawn a boundary between males and females of a family and has been suppressing female's fundamental right of education due to religious reasons, due to family structures and responsibilities for so long, it becomes very difficult to fundamentally change their prevailing belief. Even if it is totally for their benefit unlike the professional product or services marketing in which the marketer also expects a profit out of it, it is very difficult to break this ice-layer and to get through their decades old belief and practices.

In the same way products, which are more touchable, it is relatively easier to show and market their touchable benefits. Professional services benefits can also be cannibalized with reasonably less difficulty.

But in the case of social issues, because it is a task of holding the bottle inverted, totally against the target market's beliefs, it becomes even tougher to tangibility the benefits as their benefits are considered to be curses by the target market. For example few communities would never use vaccination, would never take pregnant woman to hospital and would never adopt proper sanitation.

Major reasons for the growth of service sector in India:

    In recent times the service sector is increasing at a very fast pace. After the liberalization in the year 1991, the contribution of service sector is continuously increasing in the growth of our economy. However, agriculture is still dominating the Indian economy. Service sector are growing not only in volume but also in sophistication and complexity. The growth of service industry is the result of combination of several reasons, they are,

• Increasing affluence(wealth)
  

Here with the increasing affluence, there has been an increase in the demand for those services, which the customers used to perform by themselves. For example, service provided by the gardener, servants, car driver etc.

• More leisure(free time) time
  

This factor has lead to an increase in those services which are related to entertainment, because of increase in leisure time in today's people life. For example tourism industry has grown because of more leisure time available to the people.

• Greater life expectancy(hope)
  

With increase in the average life of the people, there has been an increase in the service which is related to field of health care, for example medical services, pathology laboratory, nursing homes. Health care services etc.

• Greater complexity of the product
  

With the growing complexity of the product, there has been an increase in the services which are indirectly supporting the maintenance of these complex products. For example Air-conditioner, car, computer, and other complex products require service every yearly of every half yearly.

• Higher percentage of working women
  

With the passage of the time, there has been an increase in the working women. This has indirectly leaded to increase in the growth in the services such as, domestic servants, baby sittings, etc.

• Increasing complexity of life
  

This has lead to an increase in the services of marriage bureau, legal service, income –tax consultants, placement services, etc.

• Increasing number of new products
  

There are certain products which, if invented will lead to growth in the service sector .computer being the invention of the 21^st century has lead to software industry which is totally a sieve industry.

 

    Thus, above mentioned factors are responsible to the increase in the growth of the service sector.

Concept of Decision Making

What is decision making?

·         Decision – making is the process of identifying and selecting a course of action of solves a specific problem.

·         In the context of organization and management, the decision making can be defined as the managerial process of selecting a particular course out of several alternative courses; for achieving the organization goals. Thus decision process reduces the gap between the evaluating status and the desired status of the organization; by solving problems and key advantages of opportunities.

·         In organization managers are the decision makers; however God is greatest decision maker. Decision making is stressful exercise, managers experience remarkable nervous tension and pressure during decision making.

·         Decision is one of the most important managerial functions. It is integrated to all managerial functions like planning, organizing, staffing, leading and controlling

·         Managers manage by making decisions and getting them implemented. Managers have to maintain balance between timeliness and quality of decisions. Timeliness manes decision should be made at the right time not earlier, not later quality of decision means effective decision and selecting and implementing right alternative for accomplishing the problem solution.