MGT 2201: Human Resource Management

Term Paper on

How Outsourcing HR Created A Profitable

Scenario For Nestlé And PeopleScape Ltd

Submitted By

Sajeed Mahmud Mahee

B1506045

Section: A (BBA 2015)

Date of Submission: 27-04-2017

 Letter of Transmittal

27th April, 2017

Ummya Salma
Lecturer
Faculty of Business Studies (FBS)
Bangladesh University of Professionals

Dear Mam,
In this term paper of ‘Human Resource Management’ course, I have tried to implement my
learning from this course. I would like to thank you for offering the opportunity to work on
the topic ‘How Outsourcing HR created a profitable scenario for Nestlé and
PeopleScape Ltd’. Despite some limitations, I made sure all the data and calculations are in
there are accurate and reliable.

If you have any further enquiry concerning any additional information, I would be very
pleased to clarify that. Thank you.

Sincerely yours,
Sajeed Mahmud Mahee
B1506045
Section: A (BBA 2015)

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 Acknowledgement

I was assigned to prepare this term paper for my Human Resource Management course. At
the beginning I would like thank to everyone who contributed towards preparing and
making this study successful. To prepare the report considerable thinking and information
input from various sources were involved.

I would like to express my sincere and immense gratitude to our respected faculty member,
Ummya Salma, Lecturer, Bangladesh University of Professionals. I am deeply indebted
to her whole hearted support. Her valuable suggestion and guideline helped me to prepare
the report in a well-organized manner.

Sincerely yours,
Sajeed Mahmud Mahee
B1506045
Section: A (BBA 2015)

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 Executive Summary

My term paper is based on the human resourcing processes of PeopleScape entitled ‘How
Outsourcing HR created a profitable scenario for Nestlé and PeopleScape Ltd’. I have
tried my best to cover every part of activities and the related process.
Apart from the broad objective, which is, to know how outsourcing HR created profitable
scenario for these two companies, some specific objectives have been obtained to conduct
the research properly. As it is a secondary data based report, so all the information stated
here might not be accurate.
PeopleScape Limited is a strategic business unit of Market Access Provider Limited. Over
the last 8 years PeopleScape is doing business as a human resource consultancy farm. It
facilitates its clients such as Unilever, Nestlé, Coca Cola, Robi etc. with almost all kinds
of HR services. Now many multinational and local companies are taking help from it as it
helps to use practical tools & technologies for ongoing operations. Besides, it provide cost
effective end to end service through specialized expertise. The major activities, that
PeopleScape does for Nestlé are providing contractual recruitment, controlling and
managing the market, preparing compensation report, maintaining leave and other benefits,
maintaining extant contract for contractual candidates. The overall process has created a
win-win situation for both organizations. From Nestlé’s point of view, it is getting eligible
and energetic candidates by obtaining proper recruiting process. On the other hand
PeopleSpace is showing the working capability to handle such multinational corporations
which will help them attract more clients, and thus get more profit.

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 Table of Content
No Page
1. Introduction 01
2 Objectives 02
3 Data Collection 02
4 Literature Review 03
5.0 Findings & Analysis 04
5.1 Tasks Carried Out At PeopleScape 04
5.2 Why Multinational & Local Companies 04
Come to PeopleScape
5.3 Core Activities of PeopleScape for Nestlé 05
5.4 Core Benefit of Nestlé From PeopleScape 06
5.5 Core Benefit of PeopleScape From Nestlé 07
6.0 Conclusion 08
7.0 Recommendation 08
Reference 09

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 Acronyms

HRM Human Resource

ROI Return on Investment

MAPL Market Access Provider Limited

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 1.0 Introduction

Outsourcing-the practice of using outside firms to handle work normally performed within a
company-is a familiar concept to many entrepreneurs. Small companies routinely outsource
their payroll processing, accounting, distribution, and many other important functions often
because they have no other choice. Many large companies turn to outsourcing to cut costs. In
response, entire industries have evolved to serve companies' outsourcing needs.
Outsourcing has very many options such as IT Outsourcing, Marketing Outsourcing, Services
Outsourcing, Financial Outsourcing and many others. Among various options, IT outsourcing
is the most widespread type of outsourcing we see among the industries.
PeopleScape Limited is a strategic business unit of Market Access Provider Limited (MAPL).
Over the last 8 years PeopleScape is doing business as a human resource consultancy firm.
They are doing their business on behalf of their clients such as Unilever, Nestlé, Coca Cola,
and Robi etc.
Nestlé Bangladesh Ltd. is a renowned organization that holds a strong position with their policy
of constant innovation and renovation. With the aim of providing the best quality food to the
people of Bangladesh, it is concentrating on their core competencies and their commitment to
high quality.
The scope of the study is to learn How outsourcing HR created a profitable scenario for Nestlé
and PeopleScape Ltd.

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 2.0 Objectives of the Study

The main objective of this study is to understand how outsourcing can help a multinational firm
in many ways and how both the firm and outsourcing agency can get benefitted. The broad
objectives and specific objectives are given below,

2.1 Broad Objective

 To know how outsourcing HR created a profitable scenario for Nestlé and PeopleScape
Ltd.

2.2 Specific Objectives

 To know the tasks carried out at PeopleScape.
 To understand why multinational & local companies come to Peoplescape.
 To analyze core activities of PeopleScape for Nestlé.
 To analyze how both of them are getting benefitted.

3.0 Data Collection

I have prepared the term paper mainly based on secondary data.

 Different books, journals, survey, articles, analytical reports on the relation of these two
companies.
 Report published by both organizations

3.1 Limitation of the Study

There are limited study materials on the outsourcing scenario in the context of Bangladesh.
Besides, as it is a secondary data based report, so all the information provided here might not
be accurate.

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 4.0 Literature Review

Robert and Gordon (2012) claims that outsourcing has expanded considerably over the last two
decades. The reason behind this expansion is that economies of scale became more apparent in
the recent years than it was earlier. Outsourcing is a management approach that involves
delegation of an activity to an external service provider which was previously performed
internally (Lankford and Parsa, 1999). The activity must have been performed internally before
outsourcing to third party. If the activity is delegated to another vendor without performing
internally then it would be ‘externalization’ rather than outsourcing. The term outsourcing itself
shows from ‘out’ ‘source’ (i.e. external source). In the earlier phase of 1960, outsourcing was
merely considered as contractual agreements wherein a supplier does processing or is providing
services for another company. But, it is different from regular purchasing agreement as
outsourcing is not selling off a part of the business. The Out-contracted services or processes
must be replaced by the supplier in outsourcing. This is the basic difference between regular
purchasing agreement and outsourcing. Outsourcing is not simply a make it or buy it decision,
the activities outsourced must be of significant interest for the company (Bryce and Useem,
2006).
A company will decide to outsource an activity when such an activity can be performed by
other companies at a lower cost by using economies of scale (Kakabadse & Kakabadse, 2002).
Nowadays, companies use common sourcing strategy of outsourcing as a tactical quick fix at
the times of financial difficulty and rely on outsourcing strategy to come out of financial crisis
or provide cash infusions (Johnson, 2007). Outsourcing decision also erupts from the search
for competitive advantage. Porter (1980) views that a company needs to identify its competitive
advantage. Once the company identifies its core business activities then it can outsource other
non-core activities to focus more on core businesses.
According to Juma’h and Wood (2000), smaller companies are likely to gain the best results
from outsourcing. Their main motive is to prosper from the advantage of economies of scale.
Smaller companies often find it difficult to achieve economies of scale within their internal
activities and functions as they lack the ability. But, they are more flexible in absorbing change
and innovations into their organization. Thus outsourcing may come as a saviour for small
companies to achieve functional efficiency similar to those of large companies (Juma’h and
Wood, 2000). Juma’h and Wood (2000) argue that larger companies theoretically benefit less
from outsourcing as compared to smaller companies in terms of cost reduction as large
companies already enjoy the benefits of economies of scale in many cases or at least possess
the capability or expertise to achieve it internally. In despite of this, the most frequent users of
outsourcing are larger companies.There are apparently other reasons underlying for
outsourcing other than realizing benefits of economies of scale from competitive advantage.
According to Fan (2000) the other motives to outsource are: reduced costs, improved
managerial focus, improvised quality, enhanced flexibility to facilitate change. Fill and Visser
(2000) identifies the same drivers with some additions such as: increased knowledge and
capacity, potential for creating strategic business alliance, reduction of investment, technical
considerations, increased access to functional capacity, and fewer internal administrative
problems.

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 5.0 Findings & Analysis

5.1 Tasks Carried Out at PeopleScape

Human Resource Management is a very wide area of management, HR is not only to hire and
fire people, today HR means putting right person in the right position at the right time and
satisfy them to keep in the organization. PeopleScape is a complete HR firm and it offers almost
all the HR Services. Some of those are:

 Recruitment & Headhunting (Local & international)

 Payroll processing & Management
 Performance Appraisal System & management
 Training & Development
 Change Management
 Benefit Management
 Exit Process Management
 Salary Survey
 Staffing Operation Management
 Policy Designing and Formulation
 Talent Mapping
 Job Evaluation & Reference Check

5.2 Why Multinational & Local Companies Come to PeopleScape

 PRACTICAL TOOLS & TECHNOLOGIES FOR ONGOING OPERATIONS
Several large HR consulting projects are basically a wide-ranging analysis resulting in a report
and recommendations. All companies don’t need reports; they need rally round in receiving
the job done. As such, companies should look for HR consultants who can help with current
operations, and provide strategic solutions that generate bang today, and offer access to easy-
to-use HR technologies.

 END‐TO‐END SERVICE
Firms classically don’t need just a part of the mystery; they desire an end-to-end solution. As
well, it’s unreasonable to manage many different consulting partners—they need one vendor
who can handle the dimension of the HR needs. Preferably a company should get all its HR
consulting from one or two vendors who know their business intimately, and can be relied on
to provide consistently excellent service. In selecting HR vendors, companies should look for
a consultant who can deal with a wide range of needs, not just one who can only deal with the
strategy portion or a single, immediate issue.

 COST EFFECTIVENESS
High-end HR consultants can cost thousands of dollars a day even when the consultants
delivering the work are quite junior. Firms simply can’t justify these kinds of costs. It’s not
unreasonable for Firms to ask consultants to demonstrate—in a straightforward way—that
there is a very definite ROI for their work.

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  SPECIALIZED EXPERTISE
Average sized firms typically are often staffed with HR generalists who have a good broad
knowledge of HR. However, at times they will need specialized expertise in areas.

5.3 Core Activities of PeopleScape for Nestlé

 CONTRACTUAL RECRUITMENT

Contractual recruitment is an important part of PeopleScape for Nestlé. Contractual job defines
as an agreement between an employer and an employee. At the time the employee is hired that
outlines the exact nature of their business relationship, specially what compensation the
employee will receive in exchange for specific work perform. PeopleScape recruit employees
on the basis of contract for Nestlé. In the contract job period, salary and other benefits are
defined from PeopleScape. The time limit starts from 6 months to 2 years. The time period
mainly depends on the job category. PeopleScape also be bound for all the liabilities of the
contractual employees.

 CONTROLLING AND MANAGING THE MARKET

Having a vast part of liabilities of Nestlé on their employees, product, distribution and
customers, in that point of view PeopleScape is controlling the market. At the point of
employee, PeopleScape recruits employees, trains them for the specific job, and all the salary
related all responsibly managed by PeopleScape.

 PREPARING COMPENSATION REPORT

The compensation report and all salary based documents are controlled and managed by
PeopleScape for Nestlé. All the employees of regular and contractual from head office and also
of the all distribution field get the salary from PeopleScape. So, all the benefits and all the
compensation related deals are operated by PeopleScape. Keeping all reports of compensation
is included the part of core activities.

 MAINTAINING LEAVE AND OTHER BENEFITS

PeopleScape also maintain the duty of Nestlé employees’ leave and other benefits as the
responsibility belongs with employees. So, the responsibility of the employee leave and others
benefits are also maintained by PeopleScape. They have the power authority to control
employees all activity also.

 EXTANT CONTRACT FOR CONTRACTUAL CANDIDATES

PeopleScape maintain an extant contact for contractual candidates. They have to maintain a
contractual relationship with the present contractual candidates for the betterment of the
contractual candidates.

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  RESPONSIBLE FOR ALL THE RISK AND RESPONSIBILITY REGARDING OF
SALARY AND RECRUITING

Though contractual candidates are working in Nestlé but the responsibilities of the employees
are maintained by PeopleScape. Any kind of query regarding the job period is solved by
PeopleScape. Employees are bound to report to their boss along with PeopleScape. Salary,
benefits and other facilities are provided by PeopleScape itself.

5.4 Core Benefit of Nestlé from PeopleScape

 PROPER RECRUITING PROCESS

Nestlé Bangladesh is getting a proper systemic recruitment process from PeopleScape as the
main job of PeopleScape is the recruitment part. As a result, Nestlé is getting a systematic
process of recruitment and also a reliable source for their recruitment, PeopleScape is bound to
present them a proper recruitment Process.

 GET ELIGIBLE AND ENERGETIC CANDIDATES

To have a systematic process of recruitment, Nestlé Bangladesh is getting bucks of talented

and energetic candidates. PeopleScape is also responsible for the training of the employees. On
that point, Nestlé Bangladesh is getting eligible and energetic candidates.

 RISKLESS AND LESS LIABILITY FOR THE CANDIDATES

When all the liabilities and responsibility goes to PeopleScape, then Nestlé comes in riskless
and less liabilities for employee and also for the candidates. The activities from short listing to
training, all activities are done by PeopleScape.

 MARKET DEMAND INCREASING

PeopleScape is also creating a demand scenario for the new generation by offering some
contractual job which also help preventing the unemployment. PeopleScape is offering for the
quality oriented candidates so that the company’s quality can be increase.

 ECONOMIC GROWTH HIGH

The economic growth is also becoming high for the quality of candidates and the market
demand. It is also increasing the profitable margin. In 2005 economic growth of PeopleScape
and Nestlé were 55% and 60% respectively. In 2009 they were 65% and 87% and in 2014 they
increased to 80% and 89% respectively.

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5.5 Core Benefit of PeopleScape from Nestlé

 INCREASED PROFITABLE MARGIN

PeopleScape is working for Nestlé as a contractual company. PeopleScape renews the contract
for every year. A yearly payment and all the deal done by PeopleScape with Nestlé make a
profitable earning for PeopleScape.

 INCREASED THE REPUTATION FOR THE MULTINATIONAL MARKET

As Nestlé is a reputed multinational company in business market, so working with Nestlé as a

working partner, PeopleScape is earning a market value in the multinational market.

 EXPERIENCED TO WORK WITH MULTINATIONAL COMPANY

In real business world, multinational companies are well structured environment based
company. So working with that environment, PeopleScape is learning to work in a strategic
ally that also helps to create a systematic environment in the business.

 SHOWS THE WORKING CAPABILITY TO HANDLE SUCH MULTINATIONAL

CORPORATIONS

Working with well reputed multinational company is also a challenge for PeopleScape to show
the working capability and knowledge. This capability also shows the market that how
PeopleScape is work oriented company.

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 6.0 Conclusion

Human Capital is becoming more vital for economic development of Bangladesh in mobilizing
capital and other resources. PeopleScape is also extending such contributions to the
advancement of the socioeconomic condition of the country. Nestlé and other Multinational
companies in Bangladesh are doing their business in a profitable margin and the high economic
growth by the help of some 3rd party companies like PeopleScape who are working for them
to build a qualitative figure. Today PeopleScape is growing with a rapid pace in this human
capital sector and the employees are the leaders who are assigned to choose the very best from
the existing market to fulfill the client’s needs through a good recruitment system.

7.0 Recommendations

 HR/administration and management system should be strengthened. It would be helpful for

both outsourcing agencies and organizations that are benefited by those agencies.
 One of the main reasons for selecting outsourcing as a recruitment method by companies
is low pay scale. They don’t have to pay much for the outsourcers. Still reasonable salaries
should be provided.
 Other companies should choose outsourcing as a recruitment tool as it will ensure constant
flow of human resources for the organizations.
 Outsourcing agencies like PeopleScape should follow stronger procedure to find right
people for the right job to ensure efficient workforce.
 Business organizations should inform the outsourcing agencies properly about their desired
employees. Therefore, they should give a clear, detailed and honest information regarding
the job.

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 References

 http://dspace.bracu.ac.bd/xmlui/handle/10361/2457
 https://www.ukessays.com/dissertation/examples/business/company-outsourcing.php
 https://www.researchgate.net/publication/228240513_Research_on_Offshore_Outsourcin
g_A_Systematic_Literature_Review
 https://www.researchgate.net/publication/228240513_Research_on_Offshore_Outsourcin
g_A_Systematic_Literature_Review.

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