Will Outsourcing Kill HR?

The Business of Outsourcing

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.

Keep Reading....

Culture and Systems - Who Comes First?

Every organisation has a unique way of working - perhaps it reflects the way its people think ( or believe). Over the years these practices solidify with time and become part of the organizational fabric. These time-tested methods of working are followed with a vengeance, with most of them believing that this is the Best way to get things done.

You might be wondering the reason for this prelude. Well, let me explain.

A top executive of a five decade old services company, in an interview confided on how he had miserably failed to run one of his pet initiatives across the company. Though the initiative would have brought many good things to the organisation, most people within his rank detested the need for any such change.

In the absence of any significant support from his own colleagues, the initiative ultimately hit a roadblock and is now cooling its heels in the cold storage.

So, was the Executive wrong in trying to bring such dramatic changes to his company's way of working? Or was it merely a result of poor planning and execution? Or was there a deeper and unseen reason for such protests?

A Legend Passes Away - Prof Udai Pareek

The legend of OD and HR is no more. Our tributes to the great man.

End of the Recession - People on Top

With the world coming out of the recession/slowdown, Corporate leaders should better prepare themselves for a large scale exodus of Talent. Here is why...

The employment scenario has begun to see some significant changes recently with improvements in the hiring numbers of some of the largest and most prominent Indian corporates. A great deal of this hiring seems to be happening in the entry and the mid-level executives indicating a strong and reviving economy. Strangely enough, compensation and benefit offerings have returned to the pre-crisis level ( and has substantially improved in certain industry sectors). So, has the worst passed us by? - Perhaps "Yes" by looking at the rising employment figures.

During my interactions with several potential candidates for my clients, most of them stated as to how they were contemplating changing their Jobs or shifting their careers altogether after the crisis is past - and this feeling is more so with those organisations who had resorted to wide scale layoffs and retrenchment during the crisis.

This would mean that organisations that had made the economic slowdown an excuse to exploit employees, now stand the risk of losing their most critical resources - People. It is perhaps time that these companies gear up for the mass exodus of key talent from across the board and one could expect the whole jigsaw of the job market rearrange itself as the good times evolve.

However the truely robust and visionary companies, which have stood their grounds (especially on core values and ideolgies) during the bad times would come out unscathed and stronger than before. It would be interesting to watch which Indian companies possess true metal and which ones were on the " also ran " category.

On People and Judgements Contd...

Talking about Judgements, take a look at the Tata Sumo Grande Ad!

Things are indeed more than what meets the eye!

Check out the cool website here.......