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.