Before we speak about HR Outsourcing , it is essential to know what outsourcing really means and why businesses have embraced the same with open arms.
Outsourcing refers to a process by which an organization subcontracts its work to a third-party service provider
. This work can be done by the parent company itself, but is “outsourced” primarily for certain obvious benefits;
- Cost Optimization
- Save on Time - by letting more focus on Core Business Challenges
- Improve Efficiency by outsourcing jobs to specialists.
Work is also outsourced to save time and energy and to improve overall efficiency. Investment consultancy firm McKinsey & Co. has predicted that global outsourcing industry would be worth more than $180 billion by 2010. - Economy Watch
Hence its not surprising that more organizations are moving towards to an outsourcing model for their non-core functions - resulting in huge volumes of business moving from highcost developed nations to low cost emerging nations.
Now, coming back to our original question "Will Outsourcing Kill HR?" - especially when HR is seen as a non-core function by most organisations?
HR by itself may not see an end with outsourcing - but there has already been a paradigm shift in the way that organization have started to view HR. HR as a function has become far more complex than what it was a few decades ago when it was considered useful ( but not necessarily as partners) primarily for three functions - 1. Recruitment and 2. Addressing employee concerns ( Industrial Disputes) and 3. Administrators of personnel programmes ( Health and Welfare).
An ever expanding HR function has also meant that a great deal of an organisation's energies is today spent on :
1. Workforce Planning and Talent Acquisition
2. Talent Development through Training / Career Programs/ Performance Management
3. Talent Engagement
Of the above mentioned areas - a majority of them could be effectively outsourced. For instance through outsourcing the Talent Acquisition process - External Vendors could provide firms with access to a wider and more diversified talent pool - they could also ease the pressure on HR Managers with respect to managing day-today manpower requirements by providing a ready-to-deploy workforce and result in significant cost reduction as well!
Most importantly, Outsourcing would also relive HR personnel of their routine yet time consuming activities and enable them allocate more time to the crucial employee engagement initiatives. Hence, in an organizational perspective it would be ideal for firms to completely outsource their HR functions. However, this is not without its own downside.
In my next post, we would discuss on the Downsides of HR Outsourcing.
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