HR outsourcing

1. HR Outsourcing
Dr. G C Mohanta, BE(Mech), MSc(Engg), MBA, PhD(Mgt)
Professor
Al-Qurmoshi Institute of Business Management,
Hyderabad - 500005

2. HR Outsourcing
Any activity in which a company lacks internal
expertise and confidentiality, can be outsourced.
Outsourcing is a strategic decision to give a task or
activity to an independent contractor who determines
how best to do the task or activity.
The firm and the independent contractor become partners
and may establish a long-term relationship.

3. Why Outsource HR
Tightening labour markets and competitive
product markets – pressure to reduce head count
Cut costs
Add value
Do more with less
Upgrade, but not upsize
Downsize, but not downgrade
HR itself is becoming the target of belt tightening
Shed routine administrative tasks and focus on
talent management

4. Which Functions/Sub-systems
to Outsource
Recruitment – preliminary screening and short listing
Training – Trg. Needs identification, content
development, delivery, logistics, third party evaluation
Performance management - on line – automation
Compensation – pay roll and compensation surveys
Safety - inspections
Welfare – transport, security, catering
Labour contract – contract employees doing the job which
was earlier done by regular employees
Which function not to outsource
Decision making in each of the sub functions
Leading change and transforming the organization

5. Advantages & Disadvantages
of Outsourcing
Advantages
Cost reduction & savings
Financial and operational
flexibility
Need to focus on few things
Access to quality, expertise
& better management skills
Staffing flexibility
Disadvantages
Need greater coordination
flow with agencies
Reduces organizational
learning by depleting its
skill base
Loss of control
Adverse effects on morale
and motivation
Job insecurity

6. Factors Hampering HRO
Cost factor & Confidentiality
The fear of losing jobs
Loss of sensitive information to public/competition
Ethics and quality of outsourcing vendors
Possibility of security breaches
Cost-benefit equation not clear
Lack of psychological acceptance

7. Factors Hampering HRO
Cost factor & Confidentiality
The fear of losing jobs
Loss of sensitive information to public/competition
Ethics and quality of outsourcing vendors
Possibility of security breaches
Cost-benefit equation not clear
Lack of psychological acceptance