BY Udit Dave MBA (Tech) I.

T NMIMS University, Mumbai

Outsourcing & Human Resources Defined

Outsourcing
1.

HRM
1.

2. 3.

The performance by outside parties, on a recurring basis, of tasks that would otherwise be performed inhouse Act of transferring the work to an external party Based on an obligation of results

2.

3.

Human Resource Management is the management of an organization's employees Deals With Various Aspects Of Organization Behavior Typical Tasks Include, Management & Consultation, Payroll and Payroll Administration, Benefits Coverage and

Background

Employee Assistance / Counseling FSA Administration COBRA

Healthcare Benefits Administration

Tightening labor markets and competitive product markets HR majorly into administration ; less into people orientation Power centre, not service centre Cost centre, not value adding profit centre Poor alignment of HR programs with business needs Need for strategic fit between business strategy and HR strategy 58% of companies outsource some HR function Already
Background Checks 0 10 20 30 40 50 60 70 80

What is happening to HR?

1/3 is going back to (employee champion roles)

Line

Ulrichs HR Roles Model

1/3 is getting automated (routine and repetitive information processing tasks) 1/3 can be outsourced (repetitive non value adding services)

What is left of HR in HR?

Specialist consultancy roles Change agent role

From An Organizations Perspective

Allows HR to focus on core competencies Creates strategic opportunities for HR professionals Improve quality, efficiency, and effectiveness Relief from administrative burdens Reduce operating costs
Do more with less
Upgrade, but not upsize Downsize, but not downgrade

Determining What To Outsource?

Learning From Henry Mintzbergs Model

1.

Interaction (outsource)

2.

Information gathering/processing (outsource)

3.

Decision-making and problem solving (do not outsource)

Which functions/sub-systems to outsource

Recruitment Preliminary screening and Short listing Training Target 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

Not to outsource
Decision making in each of the sub functions Leading change and transforming the organization

When & When Not To Outsource

When To Outsource

High HR service delivery costs No further investment in technology End administration of transactions and focus on strategic work Improve quality of HR services Strong business case Other business reasons

Wrong Reasons & Myths

Just because you are frustrated As a last resort, just because you have tried everything else Outsourcing is just a fad Outsourcing can be kept secret from employees Outsourcing is only for the largest companies

Pros and cons Of HROutsourcing

Pros 1. Cost and savings 2. Financial and operational flexibility 3. Need to focus on few things 4. Access to quality, expertise and better management skills 5. Staffing flexibility Cons Need greater coordination flow with agencies 2. Reduces organizational learning by depleting its skill base 3. Loss of control 4. Adverse affects on morale and motivation 5. Job insecurity
1.

Problems & Risks

Problems
1. 2.

Risks
1. 2. 3. 4. 5.

3.
4. 5. 6.

Integration with over all strategy Fragmented and piecemeal approach Absence of formal outsourcing process Limited cost analysis How to ensure that we achieve desired objectives Work flow, supply chain and logistics management critical to outsourcing process

Trust Confidentiality Dependency Spillover risks Relative proficiency

6.

Flexibility

HR-Outsourcing Trends & Examples

Specialization Globalization Standardization Regionalization

Consortia Buying Mid-market Mania Utility Model Evolution Consolidation & Partnering

E.g. Microsoft, Coca-Cola, Delloite