Functions of HR Outsourcing

Most commonly outsourced HR functions are:

(i) Recruitment:

Innovative strategies have to be put in operation to place the right person on the job.

(ii) Training and Development:

Training must foster newer, interactive and customized training packages.  Training is no longer ‘employee-driven’, instead, it has become business or customer driven.

(iii) Industrial Relations:

As the businesses are marching towards downsizing, right-sizing and launching better productive measures, there is a need for close collaboration between the managements and the unions, if need for close collaboration between the managements and the unions, if need be by constituting joint task forces to tackle issues as and when they emerge.

 HR Outsourcing Factors

As mentioned earlier, outsourcing has become one of the basic requirement of an business organization.  While outsource the HR function every organization have to keep certain components in to serious consideration so that appropriate functioning of the organization can continue.  Every organization have to take the view from pros and cons of the outsourcing.  The some of the positive and negative factors influencing the HR outsourcing activities in the organization has been discussed below.

Reasons To Outsource

(i)Organizationally Driven reasons

 

Ø  Enhance effectiveness by focusing on what you do best

Ø  Increase flexibility to meet changing business conditions, demand for products and services and technologies

Ø  Transform the organization

Ø  Increase product and service value, customer satisfaction, and share-holder value

 

(ii)Improvement-driven reasons

 

Ø  Improve operating performance

Ø  Obtain expertise, skills, and technologies that would not otherwise be available

Ø  Improve management and control

Ø  Improve risk management

Ø  Acquire innovative ideas

Ø  Improve credibility and image by associating with superior providers

 

(iii)Financially Driven Reasons

 

Ø  Reduce investments in assets and fee up these resources for other purposes

Ø  Generate cash by transferring assets to the provider

 

(iv)Revenue-driven reasons

 

Ø  Gain market access and business opportunities through the provider’s network

Ø  Accelerate expansion by tapping into the provider’s developed capacity, processes, and systems

Ø  Expand sales and production capacity during periods when such expansion could not be financed

Ø  Commercially exploit the existing skills

 

(v)Cost-Driven reasons

 

Ø  Reduce costs through superior provider performance and the provider’s lower cost structure

Ø  Turn fixed costs into variable costs

 

(vi)Employee-driven reasons

 

Ø  Give employees a stronger career path

Ø  Increase commitment and energy in non core areas

 

Don’t For Hr Outsourcing

 

Ø  Don’t outsource strategic, customer, or financial management

Ø  Don’t let the goal of cost savings dominate everything else

Ø  Don’t think that outsourcing is the answer to every problem

 

Excuses Not To Outsource

 

(i)Uncertainty

 

Ø  Significant uncertainties exist

Ø  Existing costs are not well understood

Ø  Anticipated savings will never materialize

Ø  Providers’ excellent reputations are undeserved

Ø  Superior providers to the existing internal unit do not exist

 

(ii)Loss of control

 

Ø  Will lose control over provider

Ø  Will become dependent on providers

Ø  Will lose cross-functional skills, informal networks, and corporate learning

 

(iii)Conflict

 

Ø  Will lose core competencies

Ø  Will lose confidentiality

Ø  The conflicting interests between the parties will never work

Ø  Providers could expand into our business

 

(iv)Employee unhappiness

 

Ø  Will fail to fulfill corporate responsibility to preserve jobs

Ø  May undermine employee loyalty (what kind of message will this send to the rest of the employees?)

Ø  Will lessen commitment to our community

Ø  Will damage morale of all employees, not just those outsourced

 

 

 

Factors hampering HR Outsourcing are:

Ø  The fear of losing jobs

Ø  Loss of sensitive and important information to public/competition

Ø  Ethics and quality of outsourcing vendors

Ø  Possibility of security breaches at both ends

Ø  Cost-benefit equation is still not clear

Ø  Lack of psychological acceptance