Thoughts on growing trend of HR Outsourcing in India

Times Ascent recently had a write up on the growing trend of Human Resources Outsourcing (which is something more than just temping) which is catching on in India with firms like XecuteHR , HuSys and PeopleStrong getting bigger and bigger projects and not just from the Micro and Small & Medium Enterprises sector.

Here is the article.

HRO – growing popular each day
by Monarose Sheila Pereira

The concept of human resource outsourcing is growing popular with each passing day. However, there are disadvantages to this concept too along with the numerous advantages, say experts.

Human Resource is now the golden career option. Companies are realizing the importance of hiring, training and retaining their employees, therefore giving tremendous importance to the HR Portfolio. HR outsourcing has been picking up in a big way too. Teams of highly experienced professionals provide clients with customised HR solutions which range from short-term based solutions, to an on-going HR relationship with the client. However there are advantages and disadvantages to HR consultancy.

According to Consultant Gautam Ghosh, the advantages of HR Outsourcing are of different types – because different types of HR work can be outsourced. “Payroll Outsourcing helps freeing up HR and Finance people from doing operational work and to instead focus on high end work. C&B Survey outsourcing is the norm because competitors are comfortable sharing information with a third party and not with organisations directly. Third party recruiters and Executive Search Consultants have huge databases that internal recruiters rarely posses. Training outsourcing, specially for high end training means using the high cost resources only when needed and not spending a salary or management time for trainers on the time. Coaching outsourcing is critical because often employees need to share information that they would not be comfortable sharing with an internal employee,” he expresses.

Consultant Trevor Ferandes believes that in order to become more responsive to the needs of the business, HR must increase its strategic capability, or pursue alternative models that will free resources to support business strategy. “Delivering an integrated and compliant HR service is highly complex. HR commonly scores poorly with the business, since its focus has traditionally been on transactional and administrative processes. In most cases, building a world class HR function is not a core competency or strategic priority for most organisations. Outsourcing gives them access to world class skills and allows them to focus on what they do best – product and service innovation,” he says.

HR can deliver the right mix of core and non-core HR services efficiently and effectively. By allowing the organisation to keep in-house what it does well and outsource what it does not, the outsourcing option facilitates access to proven ideas and solutions and thereby increases performance through disciplined use of standard processes and solutions. This helps maintaining the HR focus on value-added activities in sync with the organisation’s requirements.

However, besides the advantages, there are disadvantages to HR outsourcing too. Ghosh informs, ”The disadvantages of HR outsourcing is that it forces HR department to rethink its core role, and give up the earlier comfort of being ‘administrative expert’ and build new skills, which many are not able to do; and their business sees that they are no longer adding any value or stepping up to the ‘business partner’ role.”
Fernandes says “Cost is a critical consideration, but it is a mistake to evaluate HR outsourcing primarily on the basis of financial savings. Companies should consider broader enterprise requirements.”

Personnel and HR Director Tulsidas B Patel, believes that besides the cost of consultancy being very steep as compared to hiring your own staff; the most important factor going against companies opting for consultancy is that HR is a very confidential field and many companies would not like to compromise on this important aspect.

So with the field growing, the pros and the cons fighting for viability, companies now have a good low down on information to help them make their options.

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