aarti bhajan
TRANSCRIPT
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RESEARCH REPORT
ON
IMPACT OF OUTSOURCING HR ACTIVITIES ON
PRODUCTIVITY OF AN ORGANISATION
UNDER THE GUIDANCE OF
FACULTY GUIDE NAME:
Prof.Vivek Chaudhari
SUBMITED IN PARTIAL FULFILLMENT FOR THE AWARD OF
MASTERS DEGREE IN BUSINESS ADMINISTRATION
FROM U.P.TECHNICAL UNIVERSITY
BYArti Chauhan
M.B.A [0812470019]
Institute of Co-operative and Corporate Management, Research &Training,
Lucknow
www.iccmrt.ac.in
http://www.iccmrt.ac.in/http://www.iccmrt.ac.in/ -
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Acknowledgement
I take this opportunity to offer my indebtedness to all those whose sincere
cooperation and valuable guidance was there during my work in assigned area
and preparation of this report.
My sincere gratitude is also to Prof. R.K.Sharma of ICCMRT, Lucknow for his
support, guidance and resources without which this task was not easy to
accomplish in research report.
Last but not the least I express my sincere thanks to my parents for their
constant support and suggestions to accomplish my goals. I thank God for his
love and grace that enabled me to complete the project.
(Arti Chauhan)
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CONTENTS
PREFACE . 4
EXECUTIVE SUMMARY 5-11
About the topic
Objective of research
Impact on company
Introduction ... 12-17
What is outsourcing Activities to outsourced
Why outsource?
Overview 18-24
Payroll
Training
Risk
Definitions .. 27-29
Outsourcing success story .. 33-39
Strategic outsourcing .. 46-53
Research Methodology ... 54-61
Research Analysis ...... 62-82
Findings 83
Recommendation ....... 84-85
Bibliography . 86
Questionnaire . 87-88
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PREFACE
The project prepared gave me an opportunity of learning at Mahindra &
Mahindra Lucknow .
I learned and discussed important points that are related to my report. I
learned and study on different activities of P&A like payroll, training and
development, recruitment and selection.
The purpose of this report is to provide an accessible account of the key
issues currently confirming the industries. The report looks at a couple of the
basic function of personnel department and the perception of worker and
management regarding outsourcing of HR activities.
This report contains the pros and cons of outsourcing HR activities on an
enterprise.
At last ,I hope this Project Report will be very helpful to those reader who
are interested in the topic of outsourcing of HR activities.
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ExecutiveSummary
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About the topic
Outsourcing is subcontracting a process, such as product design or
manufacturing, to a third-party company. The decision to outsource is often made
in the interest of lowering firm or making better use of time and energy costs,
redirecting or conserving energy directed at the competencies of a particular
business, or to make more efficient use of land, labor, capital, (information)
technology and resources
Types of Outsourcing
Business Process Outsourcing
Information Technology - 28%
Human Resources 16%
Sales & Marketing 15%
Finance 11%
Administrative 9%
Least Commonly Outsourced Functions
Performance Management 3%
Strategic Business Planning 4%
Policy Development/Implementation 4%
Employee Communication Plans 10%
http://en.wikipedia.org/wiki/Subcontractinghttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Third-partyhttp://en.wikipedia.org/wiki/Costshttp://en.wikipedia.org/wiki/Core_competencehttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Efficienthttp://en.wikipedia.org/wiki/Labour_(economics)http://en.wikipedia.org/wiki/Capital_(economics)http://en.wikipedia.org/wiki/Technologyhttp://en.wikipedia.org/wiki/Resource_(economics)http://en.wikipedia.org/wiki/Subcontractinghttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Third-partyhttp://en.wikipedia.org/wiki/Costshttp://en.wikipedia.org/wiki/Core_competencehttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Efficienthttp://en.wikipedia.org/wiki/Labour_(economics)http://en.wikipedia.org/wiki/Capital_(economics)http://en.wikipedia.org/wiki/Technologyhttp://en.wikipedia.org/wiki/Resource_(economics) -
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The objectives of study are:
To realize economies of scale and achieve standardization of services.
To define the concept of outsourcing.
To describe the various procedure followed by Mahindra & Mahindra.
To assess the views of the worker and management in context of these
scheme.
Why Outsource?
Allow HR to focus on core competencies
Creates strategic opportunities for HR professionals
Improve quality, efficiency, and effectiveness
Relief from administrative burdens
Reduce operating costs
Impact on Companies
Employee reactions
HR executives taking part in operational and strategic decisions
Elimination of bureaucracy
Customer service improvements
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Growth of self-service platform
Slimming down staff
Cost savings
Findings
1. Cost-benefit advantage - lower cost of outsourcing viz-a-viz
outsourced content/processes
2. Confidentiality of processes - away from in-house leaks
3. Greater objectivity/credibility gain amongst employees
4. Confidence of top management on external professionalism and
proven expertise
Recommendations Clients must be clear about what it is sensible to outsource or not, to
meet their business needs. This responsibility should not be shared with HRO
providers, although consultants' advice may be useful where clients are
unsure what to do.
Outsourcing deals are typically constructed to last many yearsthe
client must think through the implications in the event of significant changes in
strategy, structure and operating environment. Clients must achieve real understanding of where and how HRO will
improve business performance, and when these performance gains may occur
over the lifetime of a contract.
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INTRODUCTION
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INTRODUCTION
What is Outsourcing?
The performance by outside parties, on a recurring basis, of tasks that would
otherwise be performed in-house.
Outsourcing is subcontracting a process, such as product design or
manufacturing, to a third-party company. The decision to outsource is often made
in the interest of lowering firm or making better use of time and energy costs,
redirecting or conserving energy directed at the competencies of a particular
business, or to make more efficient use of land, labor, capital, (information)
technology and resources
Human Resource Outsourcing
One very important trend in the recent times has been the growth of human
resource outsourcing. HR outsourcing is the outsourcing of peripheral but
necessary administrative tasks such as payroll, benefits, education/training,
http://en.wikipedia.org/wiki/Subcontractinghttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Third-partyhttp://en.wikipedia.org/wiki/Costshttp://en.wikipedia.org/wiki/Core_competencehttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Efficienthttp://en.wikipedia.org/wiki/Labour_(economics)http://en.wikipedia.org/wiki/Capital_(economics)http://en.wikipedia.org/wiki/Technologyhttp://en.wikipedia.org/wiki/Resource_(economics)http://en.wikipedia.org/wiki/Subcontractinghttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Third-partyhttp://en.wikipedia.org/wiki/Costshttp://en.wikipedia.org/wiki/Core_competencehttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Efficienthttp://en.wikipedia.org/wiki/Labour_(economics)http://en.wikipedia.org/wiki/Capital_(economics)http://en.wikipedia.org/wiki/Technologyhttp://en.wikipedia.org/wiki/Resource_(economics) -
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recruiting personnel, administration, to realize economies of scale and achieve
standardization of services.
Rapidly changing market dynamics and global competitive pressures have
caused organizations to spend more time focusing on their core business.
Organizations are fast realizing that they can't be all things to all people. So
companies now, be it a software company, a service provider or a manufacturing
firm, decide what they are good at and outsource everything else, i.e., focus on
their core competency, and let someone else do the rest in a more efficient and
cost-effective manner.
As a result, human resources outsourcing is becoming increasingly prevalent.
The number of companies outsourcing HR activities continues to rise, and the
scope of outsourced HR activities continues to expand. HR outsourcing can
happen in HR functions, like payroll administration (producing checks, handling
taxes, dealing with sick-time and vacations), employee benefits (Health, Medical,
Life insurance, Cafeteria, etc), human resource management (hiring and firing,
background interviews, exit interviews and wage reviews), risk management, etc.
Outsourcing has become a common response to manage people and technology
resources strategically, enhance services, and manage costs more effectively.
Outsourcing noncore activities allows HR professionals to move away from
routine administration to a more strategic role. The organization can focus on
higher value-added activities while the outsourcing provider takes care of the
day-to-day administration. Critical internal resources, such as technology and
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talent, can be devoted to company's core business. Outsourcing reduces the
need for large capital expenditures in noncore functions. Thus, outsourcing
becomes a strategy for reducing the capital intensity of the business. This
strategy has gained popularity as companies aim to become more nimble and
gain the speed and flexibility necessary to compete in today's business
environment. A growing number of executives understand the benefits it can
bring in terms of not only cost savings, but also heightened strategic focus. Many
recognize outsourcing relationships as long-term partnerships created to further
the strategic goals of the organization
The HR outsourcing business opportunity is large and India is likely to garner a
larger and larger piece of this pie in the future. India, with its intrinsic advantages
such as low cost, ready pool of English speaking manpower and geographic
positioning, is emerging as a viable destination for HR outsourcing companies to
set up their businesses.
But still here people are not very clear about what exactly is manpower
outsourcing all about, and issues like quality and trust needs to be addressed
properly. Experts say the basic reasons hampering the growth of HR outsourcing
in India are confidentiality and cost factors. Moreover, the fear of losing jobs,
losing control over confidential data, ethics and quality of outsourcing vendors,
security breaches and overall confidence in the vendors deters many
organizations. The biggest problem - and this is why the HR outsourcing industry
in India is on the back foot - is the government and the industry's failure to tackle
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issues like data security and data privacy. This is where Indian HR outsourcing
companies face a major handicap. The Indian government is still grappling with
drafting a data protection law designed to quell growing privacy concerns from
their offshore clients.
However, the future seems to be very promising. It's set to become a $ 51 billion
market worldwide in 2005, representing 39 per cent of the total business process
outsourcing revenue. Estimates show that the latent size of HR outsourcing in
India is about $ 2 billion with a current market of $ 27 million and it is growing at
an alarming rate of about 50 per cent. India has immense potential as more than
80% of fortune 1,000 companies are discussing HR outsourcing as a way to cut
costs and increase productivity.
Right now, India is barely skimming the surface of the HR outsourcing market
potential. Indian life Hewitt (ILH), FIDELITY, EXULT and MAFOI are some of the
prominent HR outsourcing services providers in India and the clients include
giants of manufacturing, software and service industries like GE Capital, Ford
Motors, Hyundai Motors, Satyam Group, Infosys, Enron, Haldia Petrochemicals
and HSBC, to name a few, but many more needs to be added to that list.
HR outsourcing has a huge potential for employment also. Nasscom numbers
are a million software jobs by 2005; HRO would be about a 25 per cent of that.
Experts believe that in present times HR outsourcing is undergoing a transition
phase, it would still be sometime before we see increased levels of HR activities
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being outsourced to India as lack of domain knowledge and quality are some of
the critical issues.
ACTIVITIES TO BE OUTSOURCED
Payroll
Benefits
Recruiting, Staffing, & Search
Training
HRIS & Web-based services
: How many of you outsource all of your HR function?
: What led to the decision to consider outsourcing?
Why Outsource?
: Allow HR to focus on core competencies
: Creates strategic opportunities for HR professionals
: Improve quality, efficiency, and effectiveness
: Relief from administrative burdens
: Reduce operating costs
Other Benefits to HRO
: Access to outside HR expertise
: Greater diversity of HR services
: Leverage vendor investments in technology rarely available to HR organization
: Limit fiduciary, audit, and litigation risks and liabilities
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: Upgrade level of customer service
: Ease time pressure demands :Better, faster, cheaper
OVERVIEW
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Payroll
The term 'payroll' encompasses every employee of a company who receives a
regular wage or other compensation. Some employees may be paid a steady
salary while others are paid for hours worked or the number of items produced. A
payroll specialist calculates all of these different payment methods and the
appropriate paychecks are issued. Companies often use objective measuring
tools such as timecards or timesheets completed by supervisors to determine the
total amount of payroll due each pay period.
Setting up an effective payroll system is not especially difficult for trained
accountants, but it can be very time consuming. Some smaller businesses rely
on user-friendly computer software to set up a simple payroll system complete
with check printers and file storage. Larger companies may assign trained
accountants to handle payroll issues as part of their overall duties. But many
businesses without the means to maintain their own payroll systems choose to
farm out this task to outside specialists.
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HR Consultation services
Personnel Policies
Records Retention Consultation
Compensation/Benefits Analysis and Planning
Employee Training and Orientations
Succession Planning
Strategic Planning
Wage and Hour consultation
FMLA/OFLA Consultation
Employee Relations Consultation
Team Building and Issue Resolution Facilitation
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TRAINING
FEATURES
Increases knowledge and skills for doing a job.
Bridges the gap between job neegs and employee skills / knowledge
and behavior.
Job-oriented process, vocational in nature.
Short-term activity, desinged essentially for operative.
IMPORTANCE OF EMPLOYEE TRAINING
REDUCTION IN COST OF PRODUCTION: Efficient workers do their works
in the best possible manner. they make the maximum utilization of materials
and machines. thus, the cost of production is reduced.
MAXIMUM UTILIZATION OF MATERIALS AND MACHINES: Training
teaches the employees of the enterprise the method of doing their job in the
best possible manner.
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MINIMUM POSSIBILITY OF ACCIDENT: Trained worker know the methods
of doing their jobs in the required manner. the know-how to use the
machines in the best possible manner. it reduces the possibility of accidents
to the minimum.
STABILITY IN ORGANIZATION: Training brings stability in organization,
because it reduces the rate of absenteeism and labor turnover. it enables the
worker to do their works in the absence of any supervision.
HIGH MORALE: As the trained workers are capable in doing their jobs in
most suitable manner and can understand the procedures and methods easily,
it increases their morale. it gives them satisfaction in their work.
IMPROVEMENT IN THE QUALITY AND QUANTITY OF PRODUCTION:
Training increase the efficiency of employee which increases the quantity of
production and improves its quality.
MINIMUM NEED OF SUPERVISION: A trained worker can do his work
himself efficiently. thus, the training reduces the need of supervision to
minimum.
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HELPFUL TO MANAGERS: As there is minimum need of supervision, it
helps the managers of the enterprise to concentrate upon the important
problems of enterprise. they have not to waste their valuable time on
supervising the workes.
Risks
: Over promise and under deliver
: Nonperformance of key function
: Cost
: Loss of institutional knowledge
: Difficulty managing vendor relationship
: Change in providers business or financial stability
: Lack of fit with company culture
: Organizational resistance or unreadiness
Considerations
: Core Competency?
: Best in Class?
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1. What is your vision for your HRM business?
2. What metrics will measure progress toward vision?
3. What business outcomes are needed from the HRM aspects of the
business?
Outsourcing Myths
: Outsourcing is just a fad
: Outsourcing can be kept secret from employees
: Outsourcing is only for the largest companies
: Messes must be fixed before outsourcing
: Outsourcing is for everyone
Trends in HR Outsourcing Market
: Specialization
: Globalization
: Standardization
: Regionalization
: Consortia Buying
: Mid-market Mania
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: Utility Model Evolution
: Consolidation and Partnering
The Future of HRO
1. Growth-Maturation of HRO market
2. Increasing weight of non-cost drivers
3. Commodization of HR functions
4. New roles for internal HR departments
5. New career opportunities for HR professionals
6. Expansion of small/mid-sized HRO markets
7. Demographic changes
8. Improved HRO metrics
9. Reshaping of industry
Impact on Companies
: Employee reactions
: HR executives taking part in operational and strategic decisions
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: Elimination of bureaucracy
: Customer service improvements
: Growth of self-service platform
: Slimming down staff
: Cost savings
: Model will serve to guide other organizational functions (IT, accounting)
Impact on HR Profession
: Internal HR at significant disadvantage in cost per transaction
: Loss of control of key processes
: Enhanced credibility
: Strategic focus
: Decentralized structure
: Internal politics HR as business partner
: Move to customer service culture
: Management and Organizational Development big picture view
: New roles consultant and HR strategist
: Develop competencies to remain valuable
: HR is exposed and more visible as organizational function
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: HR is far more measurable
: Align HR strategy with corporate goals
Definitions
OUTSOURCING
The transfer of the provision of services previously performed by in-house
personnel to an external organization, usually under a contract with agreed
standards, costs, and conditions. Areas traditionally outsourced include legal
services, transport, catering, and security. An increasing variety of activities,
including IT services, training, and public relations are now being
outsourced. Outsourcing, or contracting out, is often introduced with the
goal of increasing efficiency and reducing costs, or to enable the
organization to develop greater flexibility or to concentrate on core business
activities. The term subcontracting is sometimes used to refer to outsourcing.
PRODUCTIVITY
Maintaining a high productivity is the life of a successful business all around
the world. No matter how much money you invest in your business without
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productivity implementation strategies your business would not progress and
would eventually collapse.
Productivity in an industrial context is output of an aspect of
production per unit of input.
It is a method used to measure the quantity of output of worker, machine, or
an entire national economy in the making of good, services, or commodities
to produce income.
When referring to productivity there are several concepts that we need to
know:
1. Economics productivity
The amount of output created to produce per unit input used.
2. Linguistics productivity
It is the degree to which a grammatical process can be completed to new
cases.
3. Corporate finance productivity
This is refers to the current year's sales to expense
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BENEFITS OF PRODUCTIVITY
In improving the productivity of a company, the business will gain many
benefits. These can include:
1. Increase in income/profitability.
2. Lowering running costs/operational costs.
3. Maximizing the use of all of the companys resources such as land,
equipments/machineries, factory, workers, and etc.
4. Gaining a greater share of the market.
More cash flows mean more opportunity for the company to expand
and grow.
Other Definitions
In-sourcing
Off-shoring
Co-sourcing
Geo-sourcing
Outplacement
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WHY THE OUTSOURCING RUSH?
What are the reasons for the growth in HR outsourcing? How do companies
gain by outsourcing their HR activities? HR outsourcing is considered a
viable option, if a company lacks internal expertise and confidentiality and
requires unbiased opinion on human resources. Outsourcing is also gaining
importance as most companies do not have the time or the expertise to deal
with situations.
Outsourcing has become popular because companies are finding that
external vendors-through technology and economies of scale-can provide
more efficient and cost-effective HR services than in-house departments.
The best example of a firm that has reaped early benefits from outsourcing is
BP. In 1999, it outsourced its activities to Exult in the USA and UK for
services like payroll, recruiting, expatriation, records management, vendor
management and relocation services for 63, 000 employees.
The only function that remained in-house was BPs learning and
development program in the United States. Over the last two years, the
company has reaped many benefits from this arrangement. Payroll
processing became more timely and accurate. Employees got their benefits
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questions answered sooner. HR processes have been standardized across the
company. And for the first time, BP has measurable data on which HR
activities are effective.
As a result, its core HR staff has been slashed by 65 percent-from 100 to 35
people. Such success stories have propelled companies like Sony, AT&T
and American Express to outsource HR activities. One of the main reasons
for HR outsourcing that most companies quote is that such outsourcing helps
them to get rid of routine transactional HR work. Some of the companies
which have gone ahead with even manpower hiring outsourcing practices
are Cisco, GE, Honeywell, Sun.
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BENEFITS OF OUTSOURCING
When a number of companies are outsourcing their HR activities, there must
be certain benefits associated with it. The major advantage is the cost and
the time factor. According to India Life Hewitt, Vice-President, Leo
Fernandes, For large organizations to service their mammoth payroll by
themselves is a huge drain on their resources. Outsourcing this one activity
alone is huge direct cost saving for large legacy companies which could be
in the range of 20 to 40 per cent."
The major benefits of HR outsourcing are as follows:
Fosters Innovation
Increased speed to market
Improved quality
Focus on core competence
Cost reduction
Reduced administrative costs
Improved customer service
Insufficient staff
Conserve Capital
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HR Outsourcing Success -tips to avoid the pitfalls
Outsourcing is a hot topic on many HR Director's 'To Do' lists, but it has
been slower to take off than Finance or IT Outsourcing. So what are the key
differentiators that drive outsourcing as a preferred option for HR and
warrant extra attention during the outsourcing process?
Firstly HR processes tend to have fuzzy boundaries. Ask 10 HR Directors to
define what tasks fall into payroll and which into the HR admin department
and you will get 10 different answers.
There is a tendency for customised offerings, designed to meet a client's
specific policies, procedures and priorities for HR. There is no 'one size fits
all' where HR is concerned.
Thirdly HR has multiple inputs and outputs. Data passes between HR and
authorities, employees, managers, the finance department, the production
department, trade unions, debtors, former employers and many other parties.
Finally HR is subject to frequent and stringent legal changes. Non-
compliance can result in considerable fines and can also lead to onerous
audits elsewhere in the company.
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So HR outsourcing is not so straightforward.but these simple tips can help to
ensure success when outsourcing HR services.
1. Clarify the unspoken truths
Some HRO providers have a strong 'can-do' attitude, but given the
fragmented nature of HR, their experience may be lacking in substance. A
supplier may deliver vaguely similar services to those you wish to transition.
They may deliver the same services but on a much smaller scale. You don't
want to become their guinea pig. They may offer 'comprehensive services',
but this may not mean that everything is included.
Be sure to understand the supplier's background and experience. Is their
experience mostly in systems implementation, process improvement or
actual service delivery? Ask whether the supplier has actually transitioned
certain services or simply 'bought them in'. Visit the service which will
actually deliver your services. In reality these may consist of 20 people who
have never transitioned or delivered HR services like yours, and may be
different from the 'showcase centre'.
Finally understand the supplier's approach to automation. A sad fact of HR
processes is that not all can be automated, but suppliers may charge extra for
manual processes. Build a detailed list of scenarios and ask how each would
be handled, and most importantly charged for.
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2. Don't change all of your processes and systems at once
It is very tempting to implement a single system for your entire HR
department and outsource everything at once. Because HR systems are
extremely interdependent, project slippage in one system can lead to manual
work, additional programming and training in interim systems. Outsourcing
brings disruption and risk in the early days, adding multiple processes and
projects increases this risk considerably.
Consider instead outsourcing some processes as-is, or having a staggered
implementation. This will require additional work to establish new interfaces
and hand-offs, but this investigation is valuable in ensuring the systems and
processes are fully understood, and will increase the quality of your
outsourcing in the long term.
3. HR people don't like project plans - build a diverse project team
Stereotypical? Yes. Realistic? Indeed! It is no secret that HR people are less
comfortable with rules, structure and excel sheets than their Finance and IT
counterparts. An outsourcing project involves multiple workstreams
covering technical, process and change management areas. It needs a lot of
structure and rigour, as well as strong empathy and a sense of humour.
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Choosing team members for there preference for order and structure, or their
interpersonal skills, as well as their experience, can help the whole team to
function better, consider a broader range of issues and progress at the right
pace. A strong project kick-off programme will help team members to
understand, respect and leverage each other's views, skills and preferences.
5. A little outsourcing experience is a dangerous thing - build a diverse
project team
A team member with a little outsourcing experience may use this as a
reference point for a much bigger European deal. This 'blinkered' view
risks the team missing key points specific to European outsourcing such
as the extent of diversity in HR law and practice between countries, the
complexity of legal changes and statutory reporting in certain countries
and the role of Works Councils.
The answer is to build a team including people with broad experience of
outsourcing, and also those with no experience, but with the skill to
question the decisions the team is making.
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6. Be aligned on what 'partnership' means
HR Outsourcing deals tend to last for at least 5 years, so it is critical to
have a strong relationship with your outsourcing provider. 'Partnership' is
a commonly used term, but should not mean 'best friends with'. A strong,
long term relationship should be built around a strong contract which
meets the needs of both parties. It can be very tempting to always defer to
the wishes of the supplier in the desire to build a 'partnership', but this is
detrimental in the long term.
Be sure the project team are clear on the rules of engagement with the
supplier. Explain that partnership means building a mutually beneficial
business relationship. That it is ok to give in on some things but be sure
not to give in on others. Build a list of what you are prepared to give way
on and what not. And be sure to track your starting position - what you
ask for when first selecting a supplier and any negotiated points
throughout selection and contracting. This will help you to have an
unbiased view of how balanced your partnership is.
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6. Negotiation - give your team strength
Negotiating is tough at the best of times and HRO contracts are complex and
specific. Your team may have been brought together for its HR experience,
not its negotiating skills. This makes for a stressful time. One HR manager
recently agreed many things in the supplier's interest, simply because they
lacked basic negotiating skills and had formed a 'kinship' with the supplier.
Ensure all members of the negotiating team have negotiating training.
Ensure that the team has strong roles and responsibilities - who can make
agreements and concessions, who can take detailed notes, who can call time-
out on a discussion. Set clear ground rules - no side discussions or offline
discussions, a democratic process for making decisions, a defined process
for changing an agreement once made.
7. Knowledge transfer - HRO takes time!
HR processes are typically dependent on a number of different inputs and
factors. Processes and procedures vary considerably from one company to
the next. It is much harder to write 'rules' and build a knowledge base for HR
transactions than for other functions. HRO providers with a systems
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background may underestimate the importance of detailed knowledge
capture, stating 'we'lldo the processes our way; we don't need to understand
how you do them'. This increases the risk that important steps are missed,
which can impact not only the success of the outsourcing, but also employee
morale and even the reputation of your company.
Be sure to allow sufficient time for Knowledge Transfer and ask your
supplier detailed questions about their Knowledge Transfer process. Your
contract terms should ensure that failure to adequately capture and transfer
knowledge will have financial implications for the supplier. Most
importantly, work together, so that your employees understand and support
the knowledge transfer process.
8. Implementation - establish clear ownership of the local organisation
Each country should be responsible and accountable for the successful
implementation of the outsourcing project. Local HR organisations
understand better the intricacies of their countries, and can better mitigate
the specific local risks. If local leadership do not feel ownership for the
project there will be much more resistance at grass roots level.
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This means involving key country leaders in the project in the early stages,
including the supplier selection. Establish clear lines of responsibility
between the central and local teams. The central team may own the contract
negotiations, while the local team may own the success of the knowledge
transfer process.
HR Outsourcing is a key enabler for HR departments to fulfil their vision
and meet their commitments to the broader company. Ask lots of questions
of your potential suppliers around their experience, skills, and knowledge
transfer methodologies. Beware of crossing the line between successful
partnership and 'best friends'. Be realistic about the scope to be outsourced,
and place high importance on a strong knowledge transfer process. Finally,
build a diverse and balanced project team, with clear operating principles
and be sure to involve the local organisation early on in the project. It isn't
simple, but with good planning and a strong implementation team HR
Outsourcing can bring enormous benefits.
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THE INDIAN SCENARIO
Indian companies are also not lagging behind in outsourcing their HR
activities. LG Soft India has outsourced its PF management, Escosoft has
outsourced payroll processing, execution of training programmes and survey
conduction. Depending on their need, outsourcing can be transactional or
HR Consulting. In India transactional outsourcing is more prevalent .
In the value chain, it falls at the lower-end compared to HR consultancy,
although it happens to be an essential function. According to Harish Chopra,
whose firm Harish Chopra & Associates has garnered a large chunk of
financial sector HRO over the years: An investment bank would prefer to
recruit investment bankers rather than HR specialists. And given their
minimum salaries and establishment costs, HR administration would cost
them twice as much 4.
The HR outsourcing fever has not only spread to large companies but many
small and medium sized companies are also welcoming this trend. Salary
and Benefits Processing, Benefits Administration, and Compensation
Benchmarking & Design are the most frequently outsourced HR activities in
India. According to a study conducted by the Institute of Management
Accountants (IMA) in mid 1990s, mid-sized companies spent more on the
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routine transactional work in finance and accounting services than large
companies and maintain 79 percent more headcount.
This kind of cost is felt even more in the routing HR work. According to the
survey more that 87 percent of the funds mid-sized companies budget for
finance and HR go towards routine processing transactions, rather than
policy making strategies and analysis that could move their business
forward. This is clearly counterproductive for organizations set on high
productive model
INDIA AS AN HR OUTSOURCING DESTINATION
India is emerging as a major player in HR outsourcing. Though there are
hardly five to six names in this market, they are trying to make a mark for
themselves and tap the potential of providing HR outsourcing services.
Companies like Mahindra and mahindra are expanding their horizons by
extending their services to the indian region. However, overseas HR
servicing companies are beginning to view the Indian market as a viable
investment destination, where they can set up their operations and cater to
the rest of the international market. The $450-million Exult Inc. started a 70-
people outfit in Mumbai. From the tactical and straightforward handling of
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payroll and benefits, HR services providers are moving into the strategic
world of BPO. HR-enablers are helping HR managers free themselves from
the routine jobs and work towards taking employee services to a higher
level.
India, with its intrinsic advantages such as low cost, ready pool of English
speaking manpower and geographic positioning is emerging as a viable
destination for HR outsourcing companies to set up their businesses. The HR
outsourcing business opportunity is large and India is likely to emerge as a
major player in this market. Patni Computer Systems is looking to leverage
its work done on 401K pension plans to get into HR. Daksh has started
payroll processing. The $5-billion payroll processor, Automatic Data
Processing is also planning to start operations in Hyderabad
The various HR processes that companies are venturing into include data
entry, payroll processing, staffing, training, resume management,
compensation, employee communications, pension plans, leave
administration and HR data analytics. The popular delivery models for HR
services outsourcing are self service, call center back up or shared services
involving high caliber HR professionals Who play a consultative role to line
managers.
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When compared to other regions, India holds an advantage in HR
outsourcing because of cost factor and education of the workers.
IS THE MARKET STILL UNEXPLOITED IN INDIA?
Despite all these figures and numbers mentioned above, HR outsourcing is
still considered to be unexploited. There are a number of deterrents that are
keeping companies from moving to HR outsourcing.
The basic reasons hampering the growth of HR outsourcing in India are
confidentiality and cost factors. Many companies outsource only a bit of
their requirements because of the above two factors.
Besides, the fear of losing jobs, losing control over confidential data, ethics
and quality of outsourcing vendors, security breaches and overall confidence
in the vendor deter many organizations. According to V. Kartikeyan, the
director-human resources of Texas Instruments India,
Some companies can also be reluctant because they may not have an
adequate grip over the cost-benefit equation of outsourcing. Companies need
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to be convinced before they can outsource select HR activities. 6 The basic
cultural mindset and the acceptance at the psychological level add to the
deterrents. An in-house HR person handles certain situations that an
outsourcing agency cannot handle well (things like building employee
incentive programmes, taking care of recognition for employees).
At times, many employees would want someone in-house to resolve their
work-related problems or disputes. All this is only possible if there is an in-
house HR team, which interacts with the employees on a daily basis. Quality
at times forms another roadblock. The issues of pricing also play an
important role as there is no standards benchmark for pricing and it varies
from vendor to vendor. Doing reference check helps a lot in this case.
THE FUTURE AHEAD
The future of HR outsourcing in India is poised to be very effective because
of its intrinsic advantages such as low cost, ready pool of English speaking
manpower and geographic positioning is emerging as a viable destination for
HR outsourcing companies to set up their businesses. While currently there
are only a few major players the trend seems to be catching up as companies
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are showing marked interest to improve on services such as pay roll benefits
as well as complete HR delivery. Companies are looking to outsourcing the
complete range of HR delivery and designing products on policies,
compensation, structure, and recruitment. Indian companies are not only
providing services for the clients abroad but are also catering to the local
market. Moreover these players are moving up the value chain.
Mafoi has emerged as a major HR outsourcing center (Refer exhibit on HR outsourcing
at Mafoi consultants). It is estimated that currently the organized sector of HR is catering
to only two percent of the whole market . This is the right time for the players to tap this
emerging market.
Strategic Sourcing
Research conducted by the International Data Corporation (IDC) indicates
that the role Human Resources plays is becoming increasingly complex, and
is thus sparking a need for HR outsourcing.
New technologies, globalisation strategies and lack of a skilled employee
pool are some of the factors complicating HR's roles, IDC says, and many
companies are outsourcing some of their HR functions to help deal with
these challenges.
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Further research on the benefits of outsourcing abounds and has been
conducted by companies like the Gartner Group, the Bureau of National
Affairs and Accenture. In the recent Accenture survey of more than 800
executives in the US and Europe, 86% said outsourcing gives them more
control over business results in a variety of critical areas, the most important
being the ability to plan. According to a leading Accenture partner, Industry
leaders are beginning to view outsourcing as a prescription for change versus
an antidote to rising costs.
According to Gartner Research conducted in 2003, the out in outsourcing
is to be replaced by strategic as the nature of business evolves to meet an
ever-faster changing pace. We have positioned ourselves as strategic HR
partners since inception, focusing on a strategic sourcing service that
provides a flexible option for clients.
Benefits
Benefits of strategic sourcing through The People Business Group include:
Enhanced Performance by staying ahead by using the proven
expertise in the key areas that are the business focus of the external
partner.
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Released Potential whereby key players have more time to focus on
their performance, as extra and time-consuming tasks are removed
and the outsourced partner is responsible for the full management of
the staff on site.
Immediate productivity, as the experienced consultants on site at your
organisation is able to assimilate immediately into the workplace and
become productive and effective.
Lower Overheads because of the elimination of the cost of providing
services in house, or support services, training costs, fringe benefits,
use of company resources, management time, transport, staff welfare
and other associated costs with permanent employees (e.g leave pay,
recruitment costs).
Objectivity and extreme confidentiality in dealing with the HR and
payroll issues a company faces on a daily basis, as the external
consultants are able to remain outside of the situation and provide the
service more efficiently.
Continual coverage and availability of experienced resources. In the
event that a consultant goes on leave or is off sick, another resource is
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immediately assigned to the company to ensure continuity, unlike in
the case of a permanent employee.
Contract-To-Hire And Recruiting Agencies
You may be wondering how staffing companies recruit applicants. They can
recruit in a number of ways. They may advertise in newspapers, through job
fairs,virtualcommunities, and online job boards
You may have seen ads in newspapers for contract-to-hire positions. A
majority of these ads are placed by staffing companies to recruit applicants
or contractors. They normally dont reveal the name of the hiring company
until they set you up with an interview.
Job fairs are a second method used to find potential applicants. If youre
interested in attending a job fair, you normally find them advertised in
newspapers. You may even do a search on the Internet for job fairs in your
area.
Online job forums are an effective recruiting method. The service is
generally free and does not take very much time to post. The recruiter
normally posts the job description, requirements, and the contact
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information. Applicants generally are asked to send a copy of their resume
and a cover letter explaining why they think they are a good fit.
The fourth recruiting method is online job boards. These are similar to
newspaper ads, but are placed online at employment sites. You can expect
the ads to read much like a newspaper ad.
Contract-To-Hire: Why Use A Staffing Agency?
There are many benefits to using the services of a staffing company. Staffing
companies have staffing and recruiting teams. Their job is to recruit, pre-
screen, and test individuals. By the time an applicant is sent on an interview,
that person has already been tested thoroughly and his skills have been
assessed. Staffing companies are interested in keeping their clients;
therefore, they work hard at matching an individual with the company or
position that best suits him. Everyone wins in this case. The staffing
company keeps the client happy; the applicant thrives on his job because
hes capable of performing the duties well, and the hiring company gets a
capable, productive potential employee.
Another benefit to using a staffing companys services is that they are
responsible for conducting credit and background checks. Especially if your
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business deals with sensitive, confidential information, you can feel
confident that contractors sent to you have already gone through all the
screening checks.
Still another benefit, if for whatever reason you decide that things are not
working out, you simply terminate the contract. There is no legal obligation
to keep the contractor any longer than you need or wish to keep him. If you
are the contractor, using a staffing company benefits you, because if you
decide that you dont want to continue with a certain company, you too can
terminate the contract without any legal obligations.
Contract-To-Hire Employment
This type of position is becoming more popular and easy to find. If you
prefer to seek employment on your own rather than through a staffing
company, you can still succeed. You would proceed the same way as with a
direct hire position.
Look in newspapers. Make sure that the contact information is for the hiring
company and not for a staffing agency. Go to online employment sites and
enter a search for the term contract-to-hire in your area. Larger companies
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sometimes have job fairs. You can do a search for job fairs in your area as
well, and make sure you attend.
Having your resume ready, your work history, and references along with a
cover letter increases your chances of finding a position. Resumes and cover
letters take time to put together. If you have these items ready, you can
forward them as soon as you see an ad. All you will need to do is update the
position on the resume. The cover letter may require a few more updates
such as the position, contact person, and maybe their address. Make sure you
have the correct date.
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RESEARCH
METHODOLOGY
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RESEARCH
METHODOLOGY
RESEARCH PROBLEM
I have selected that IS PRODUCTIVITY INCREASE THROUGH HR
Outsourcing as research problem for my research report.
As a research problem is the situation that causes the researcher to feel
apprehensive, confused and ill at ease. It is the demarcation of a problem
area within a certain context involving the WHO or WHAT, the WHERE,
the WHEN and the WHY of the problem situation.
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RESEARCH OBJECTIVE
How productivity relates with performance appraisal. In addition, the major
factors of performance appraisal, which have taken a part in increasing
productivity of the organization.
RESEARCH DESIGN USED
As research design is simply the framework or plan for a study i.e. used
as a guide in collecting and analyzing the data. Research design can be
grouped into three categories-exploratory research, descriptive research and
casual research.
I have used exploratory research design in my project.
EXPLORATORY RESEARCH
Exploratory research studies are also termed as formulating studies. The
main purpose of such studies that of formulating of the problem for more
precise investigation or of developing the working hypotheses from an
operational point of view. An Exploratory Research focuses on the discovery
of ideas and is generally based on secondary data. It consists;
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Search of secondary data and literature
Survey
Case study
SEARCH OF SECONDARY DATA AND LITERATURE:-
The quickest and most economical way is to find possible hypotheses from
the available literature. The past researcher may be suitable sources of
information to develop new hypotheses. The researcher can search them for
his research purposes.
SURVEY:-
Survey means the survey of people who have had practical experience with
the problem to be study. These individual can be top executives, sales
manager, wholesaler and retailer processing valuable knowledge and
information about the problem environment.
CASE STUDY: -
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The case study method is a technique by which individual factor weather it
be an institution or just an episode in the life of an individual or a group in
its relationship to any other in the group.
RESEARCH INSTRUMENT USED
I have used the following research instruments in my project:-
QUESTIONNAIRE: -
The term questionnaire usually refers to a self-administered process
where by the respondent himself read the question and records without
the assistance of an interviewer.
OBSERVATION METHOD: -
The observation method is useful to know the reaction of
handicapped information.
INTERVIEW: -
The interview method of collection data involves presentation of oral-
verbal stimuli and reply in terms of oral- verbal response.
SAMPLING TECHNIQUE USED
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When field studies are under taken in practical life, consideration of time
cost and some other factors almost invariably lead to a selection of
respondents. The selected respondents constitute a sample and the selection
process is called sampling technique.
A sample design is definite plan determined before any data are actually
collected for obtaining a sample from a given population. Samples can be
either probability sample or non-probability sample.
I have selected simple random sampling in my project,
SIMPLE RANDOM SAMPLING
This type of sampling is also known as chance sampling or probability
sampling where each item in the population has an equal chance of being
selected in the sample.
SAMPLE SIZE
When a survey is undertaken and when it is not possible to cover the entire
population the researcher has to answer the basic question how large
should be sample be? The sample size decision is related directly to research
cost.
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The intended sample size is the number of participants planned to be
included in the trial, usually determined by using a statistical power
calculation. The achieved sample size is the number of participants enrolled,
treated, or analyzed in the study.
I have taken 50 people in my sample size, as the sample size should be
neither so small nor so large.
METHOD USED FOR DATA COLLECTION
The task of data collection begins after a research problem has been defined
and research design chalked out. While deciding about the method of data
collection to be used for the study the researcher should keep in mind two
types of data-
1. Primary data
2. Secondary data
1. PRIMARY DATA-
Those data that have been observed and recorded by the researchers for
the first time in their knowledge.
Sources;
Questionnaire
Interview method
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2. SECONDARY DATA-
Those data that have been compile by some agency other than user.
Sources;
Case study
ANALYTICAL TOOLS USED
The term analysis refers to the computation of certain measures along with
searching for patterns of relationship that exists among data group. Analysis
is essential for a scientific study and for ensuring that we have allrelevantdata for making contemplated comparisons. Therefore, I have used
Tabulation, Graphs & Charts in my project.
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RESEARCH ANALYSIS
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RESEARCH ANALYSIS
Types of Outsourcing
Business Process Outsourcing
Information Technology - 28%
Human Resources 16%
Sales & Marketing 15%
Finance 11%
Administrative 9%
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All Others 22%
Least Commonly Outsourced Functions
: Performance Management 3%
: Strategic Business Planning 4%
: Policy Development/Implementation 4%
: Employee Communication Plans 10%
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0 2 4 6 8 10Employee Communication
Plans
PolicyDevelopment/Implementation
Strategic Business Planning
Performance Management
Series1
Aware of the objective of outsourcing HR activities
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0
10
20
30
40
50
60
70
80
90
Very much Some what Don't know
Strategic Outsourcing helps the organization in achieving goal
Very much 85%
Some what 13%
Don't know 2%
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0
10
20
30
40
50
60
70
80
90
Yes No Don't know
Yes 79%No 20%
Don't know 1%
Strategic Outsourcing affect the working efficiency of employees
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Yes 84%
No 16%
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Strategic Outsourcing is able to develop high result orientation
approach
0
10
20
30
40
50
60
70
80
90
100
Yes No
Yes 94%
No 6%
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The system will also contribute in potential appraisal
0
10
20
30
40
50
60
70
80
Yes No Don't know
Yes 72%
No 20%
Don't know 8%
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Outsourcing Decision making in the organization is based on
0
10
20
30
40
50
60
70
80
90
Performance Experience Both
Performance 4%
Experience 12%
Both 84%
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TRAINING ANALYSIS
AWARE ABOUT THE TRAINING PROGRAMME
0
10
20
30
40
50
60
70
80
90
100
YES
NO
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PERFORMANCE IMPROVES THROUGH TRAINING PROGRAME
0
10
20
30
40
50
60
70
80
90
YES
NO
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What can be increased through training
QUALITY
PRODUCTIVIT
Y
PERSONNEL
GROWTH
MANAGEMENT
DEVELOPMEN
T
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IS THE TRAINING IMPORTANT FOR THE MANAGEMENT
DEVELOPMENT
Agree
Neutral
Disagree
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IS TRAINING MORE EFFECTIVE BY THIRD PARTYSPECIALIZED IN IT ?
0
10
20
30
40
50
60
7080
90
YES
YES
NO
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How Common is HRO?
58% of companies outsource some HR function2
: 91% of companies with $1 billion+ annual revenues are now considering
HRO3
: HRO grew 28% from second half of 2004 to first half of 20054
Other Types of HR Outsourcing
: Pension Benefits Administration 55%
: Temporary Staffing 54%
: Retirement Benefits Administration 47%
: Payroll & Software Services 48%
: Recruiting, Staffing & Search
Non-executives - 30%
Executives - 29%
: Employee Relocation 29%
: Training and Development 21%
: Incentives 19%
: HRIS & Web-based Services 15%
: Reference Checks
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: PEOs and ASOs
: Sourcing Consultants & Legal Services
: Screening & Workplace Security
: Process, Project, and Systems Management
Audience Survey
: How many of you outsource part of your HR function?
Payroll
Benefits
Recruiting, Staffing, & Search
Training
HRIS & Web-based services
: How many of you outsource all of your HR function?
: What led to the decision to consider outsourcing?
Why Outsource?
: Allow HR to focus on core competencies
: Creates strategic opportunities for HR professionals
: Improve quality, efficiency, and effectiveness
: Relief from administrative burdens
: Reduce operating cost
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Other Benefits to HRO
: Access to outside HR expertise
: Greater diversity of HR services
: Leverage vendor investments in technology rarely available to HR
organization
: Limit fiduciary, audit, and litigation risks and liabilities
: Upgrade level of customer service
: Ease time pressure demands
:Better, faster, cheaper
Impact on Your Career
: Transformation from transactional administrator to business partner that sets
strategy
: Develop competencies to negotiate and manage vendor relationships
: Demonstrate ability to provide business solutions for employee and customer
problems
: Change bureaucratic culture
: Develop strategic expertise necessary to manage human capital
: Deliver exceptional customer service
: Sharpen your skills
: Build/Develop your network
: Stay on top of trends and their implications
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: Utilize vendors now so that they can help you later .
Satisfaction
Recent survey of 129 large companies representing 2 million employees:
: 89% satisfied with outsourcing arrangement
: 85% achieved hoped-for benefits
: Additional 20% achieved unexpected benefits
0 20 40 60 80 100
achieved unexpected
benefits
achieved hoped-for
benefits
satisfied
Series1
Overview of Process
1. Planning
2. Exploring strategic initiatives
3. Analyzing costs/performance
4. Selecting providers
5. Negotiating terms
6. Transitioning resources
7. Managing relationships
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: Prepare HR
Develop and communicate new HR strategy
Define new roles and responsibilities
Restructure HR
Hire new employees to fill skill gaps
Provide training for employees in new roles
: Prepare Organization
Develop HR strategy within overall organizational strategy
Communication plan
Resolve issue of whose payroll individuals are now on
- Are HR employees actually employees of provider?
- Does head of HR work for company or provider
: Assessment
Self examination
SWOT of department
Organizational scan
: Define opportunities and benefits
: Build the business case consider all costs and impacts on organization
: All functions that are not core competencies should be considered for HRO
nothing is sacred
: Consider the driver behind HRO decision
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Analyzing Cost/Performance
: Understand market trends and competitive position
: Identify goals and objectives
: Determine added value
: Gather baseline HR costs and metrics
: Compare current HR operations to benchmarks
: Determine which processes have highest strategic importance and add most
value
Negotiating Terms
:Good contracts make good partners
: Maintain heat of competition during negotiation
: Reasonable, but clearly established, expectations
: Well-documented deliverables regarding every aspect of deal
: Attorney involvement
Specifications of Contract
Contract Duration
Exact beginning and ending dates
Financial penalties for early termination
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Parties to the Contract
Allow for additions or deletions (in case of acquisitions or
divestitures)
Require vendor to name all subcontractors and give you right of
approval for those introduced later
Services Performed
Specify all functions to be provided
Outline all support services
Ensure escalation process and dispute governance included
Performance Standards
Tweak standard performance guarantees
Reinforce performance guarantees through at-risk fees
:Hold-Harmless Statement
: Fees
: Data Security
: Communication Review
: Contingency Plans
: Audits
: Final Contract Review
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Findings
Till that time, HR outsourcing in India remains to be a gold mine waiting tobe unearthed.
1. Cost-benefit advantage - lower cost of outsourcing viz-a-viz outsourced
content/processes
2. Confidentiality of processes - away from in-house leaks
3. External expertise as compared to existing in-house expertise
4. Time advantage - timely process completion commitments and easier
time-to-market processes/products/services.
5. Focus internally on innovative/creative/strategic work and to do away
with in-house with mundane, time consuming processes
6. Greater objectivity/credibility gain amongst employees
7. Confidence of top management on external professionalism and
proven expertise
8. Strategic intent of doing away with high, permanent salary/pay loads
9. Client preference, especially overseas clients
10. Branding/credibility enhancement by associating globally renowned
outsourcing Companies
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Recommendations
This Corporate Research Forum research identified six trends that will dominate
the future of HRO:Increased outsourcing of higher value HR processes such as
recruitment.
Increased use of shared services models.
Performance issues surrounding HRO deals.
Continued evolution of electronic HR activities.
Emergence of new HR roles and competencies.
Continued debates over HR and HRO measurement.
The report makes recommendations, in particular pointing to areas where
mistakes have been made:
Clients must be clear about what it is sensible to outsource or not, to meet
their business needs. This responsibility should not be shared with HRO
providers, although consultants' advice may be useful where clients are
unsure what to do.
Outsourcing deals are typically constructed to last many yearsthe client
must think through the implications in the event of significant changes in
strategy, structure and operating environment.
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Clients must achieve real understanding of where and how HRO will
improve business performance, and when these performance gains may
occur over the lifetime of a contract.
Robust governance systems should be created that spell out the parties'
responsibilities.
There should be timely and honest communication with employees about
the purpose, benefits and processes of outsourcinganticipating and
addressing their likely areas of concern, particularly employees within the
HR function.
HR must ensure it has undertaken serious "homework" in mapping its
processes before embarking on HRO. Measurement of provider service
and of improvement require clarity about the start point.
The new roles emerging have new skill requirements to manage
relationships with HRO providers effectivelyposts such as HRO business
partner and chief outsourcing officer are being created.
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BIBLIOGRAPHY
DESIGNING AND MANAGING HUMAN RESOURCE SYSTEM
.Udai Parek & T.V.Rao
PERSONNEL MANAGEMENT
..C. B. MAMORIA
INTERNET
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Questionnaire
1). How often will you process payroll for your
employees?
Weekly
Monthly
Biweekly (every other week)
Semimonthly (2 times per month)
2). Are most of your employees paid on an hourly or salaried basis?
Hourly
Salary
Evenly mixed
3) Are you aware of the objective of strategic outsourcing?
Very much
Some what
Dont know
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4) Is strategic outsourcing helps the organization in achieving goal?
Yes
No
Cant say
5) Do strategic outsourcing affect the working efficiency of employee?
Yes
No
6) Whether the strategic outsourcing is able to develop high result
orientation approach?
Yes
No
7)Outsourcing decision making in the organization is based on
Performance
Experience
Both
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Give your Suggestion for the strategic outsourcing.