HR Process Outsourcing and Your Organization..

Business Process Outsourcing

HR Outsourcing

HR is a strategic business function in most organizations and hence outsourcing the processes related to it is a task that requires ample thought and decision. There are several concerns that most HR decision-makers normally have with regards to confidentiality of employee information, loss of control over their internal resources and knowledge also the quality of work delivered remains a major concern.

Several organizations in the employee range of 1,000-5000 are outsourcing their Human Resource processes as a cost-control strategy. HR is primarily a non-profitable cost centre in the organization, and hence qualifies itself as the best area to be outsourced to a third party. More and more companies are now subcontracting the backend HR functions including compensation and benefits administration, recruitments, expense management, payroll and statutory compliances.

As per market statistics, HR is one of the most aggressively growing segments in the Business Process Outsourcing (BPO) market. The primary driving factors behind the increasing adoption of HRO (for not just the redundant backend tasks but even for performance management, talent management, training etc.)-

Efficiency Enhancement: Efficiency is undoubtedly a primary driver in the outsourcing business. Mostly, efficiency depends upon the outsourcing service provider’s capability to enable technology additions to the usual HR platforms and processes.

Cost Benefits: Majority of the outsourcing decisions are intended at direct cost benefits to the company. However, one needs to know that solely basing an outsourcing decision on price benefits does not guarantee success.

Understanding the varied Benefits of Outsourcing..

The Essential Benefits of Outsourcing Your Non-Core Processes and Functions

Organizational Growth: Optimize Your HR

Improve Business Turn around

1. Real-time access. The nature of business is highly dynamic; there are continuous changes and fluctuations without any guaranteed stability. It is almost impossible to assess the circumstances of the business nature. Outsourcing offers a certain level of scalability to help solve the enviable situation of significant growth. If there is a strong team for handling the projects outsourced, then the organization’s growth can be achieved in a better manner.

2. Better Gains: We are all under constant pressure to deliver more productivity and establish new benchmarks. Through the usage of outsourcing services, the existing staff of the company can be aligned in order to handle the outsourced projects. The company’s staffs take care of the outsourced team, and thereby enhancing the productivity and output of each and every member of the team.

3. Attention to the core issues: The growth of a business is quite dependant on the success of your products/services. Companies need to keep ramping up their support infrastructure, in order to witness their desired growth levels. Organizations need to maintain their focus on growing their customer base and conducting relevant market study on the same for driving even more growth and profitability. An efficient strategy to go about this is to outsource part/whole of the non-core business functions to a responsible third-party such as Mynd Solutions.

4. Generating greater value per person due to higher flexibility: Generating optimal profitability through a limited number of employees is a vital tactic. The reason being that with very little staff you stand the chance of delivery failure and on the other side, with higher number of employees there is a possibility of overcrowding and wastage of resources.

On the other end of the spectrum, Outsourcing offers the flexibility to determine and forecast approximate staff levels needed. This flexibility allows you to keep the FT’s at a stable rate of utilization across the year. As a result, the non-productive team of each team member gets decreased.

The Dominance of India as a Globally Preferred Outsourcing Destination...

        India: “The Preferred Outsourcing Destination”

India remains the most preferred Outsourcing Country and contributes to 65% of the BPO off shoring market. NASSCOM (The National Association of Software & Service Companies) has conducted several surveys in recent past in the outsourcing industry. Many positive outcomes have been reported as part of this survey, especially for the companies engaged in the outsourcing industry. Majority of American and European companies have selected India as a preferred destination to outsource their work, while nearly 50% Fortune 500 companies choose to outsource IT related processes to Indian outsourcing firms.

Despite the recent emergence of other contending lower-cost outsourcing destinations such as the Philippines, Mexico and China etc.; the Indian subcontinent has retained its leadership position as a prime provider of “Affordable yet superior quality” outsourcing services. The Indian outsourcing industry is witnessing a rapid growth rate of nearly 30% per annum. This growth is primarily attributable to a skilled and knowledgeable young workforce, rapid infrastructure growth and some beneficial economic and government policies.  

The Cost Benefit Factor

India gains heavily on the point of labor costs as compared to the developed countries where the wages for skilled personnel are relatively much higher. The low labor cost factor helps companies achieve substantial savings on their expenses. Due to this sort of flexibility available in terms of labor wages, companies are empowered with the ability to enhance their profitability.

The Best Talent Pool of the World- Both in Quantitative and Qualitative Terms…

India is a young nation, with more than 80% of the population under the age of 30 years. This young population is progressively enhancing their education levels and hence contributes to the development of the largest Global pool of Skilled Human Resources. Another fact that contributes to the dominance of the country in the International Outsourcing Market is the fact that India is the world’s Largest English speaking country. Hence, India secures and seals its leadership position with the Human Resources playing a prime role in the same.

World-Class Services- Local Prices

At the advent of the outsourcing century since the year 2000 onwards, MNC’s had chosen India to outsource their requirement, keeping in mind the resultant cost benefits.  However, later on it was noticed that companies extended their outsourcing contracts and continued with their Indian providers due to continually good service delivery levels. Quality of services offered and time-to-market drove global customers to continue with Indian Outsourcing Companies

Government Stability and Favorable Policies

Government supports the outsourcing industry in India through several helpful policies on power, telecom, taxation, special zones and industrial parks are improving both communication and infrastructure systems. The IT industry is being supported continually by the Information Technology Act IT which also leading to a growth in the outsourcing industry.

Rapid time-to-market of Indian Companies

India, being in a different time zone ahead of most Western world countries gains by this time difference and offers the most rapid time-to-market. The time difference allows early completion of work, timely fulfillment of deadlines and hence quick turnaround. The above mentioned factors lead to satisfied customers.

India boasts of the best in Infrastructure and technological capabilities

Urban India has well developed infrastructure in terms of cellular networks, telecom and Internet in all major towns and cities. Customers are offered leading edge technology, tailor made solutions for all applications and business functions including Business Process Management, Finance & Accounts, and HR Outsourcing etc. 

The many benefits of Human Resource Outsourcing..!!

The Human Resources department of any organization is definitely an indispensable part of its smooth functioning, and is responsible for executing several critical functions including hiring, payroll processing, compensation & benefits administration and HR related country-specific compliance. For both small and large firms outsourcing a strategically vita

l business function like HR could be a difficult choice to make, keeping in mind the probabilities of losing complete control over their valued assets- the human resource as well as the possibility of a decline in the quality of task execution by the prospective vendor. However, actually the contrary is mostly true for majority of organizations whether SME or large. The simple reason for the same which most enterprise owners and managements do not realize, is that the HR is a non-profitable cost center and thereby it is indeed the most suitable among all business functions to be outsourced!

Trends indicate most organizations with employee headcounts ranging between 1000-10000+ are adopting HR outsourcing in order to reduce their costs.  Many MNC’s including Fortune 500 corporate are outsourcing their non-strategic/ administrative HR functions for instance, Payroll processing, Employee Self Service activities and Benefits administration etc to offshore. HRO is slowly emerging as one of the most rapidly growing segments in the outsourcing market

Some questions to be pondered on before considering the decision of outsourcing Human resource activity

1.     Does your prospective HRO Service provider hold a strong market reputation and credibility?

2.     Do the services offered by the provider seem economical keeping your company budgets in mind?

3.     How strong are the financial and technical expertise levels of our prospective vendor?

4.     Are your HR department employees over burdened leading to a lower productivity rate?

5.     Are your cumbersome/unproductive HR administrative activities taking up a major share of your HR management’s time and creating hindrances in taking strategic HR decisions/policy implementation/framework designing etc.?

If most of the answers seem to be going in favor of adopting outsourcing, then it’s high time your organization does indeed go in for HR outsourcing!

Benefits of outsourcing your HR function to a reliable service provider

1.     Cost Saving- The most common reason for outsourcing any function in an organization remains cost savings. HR outsourcing enables companies to save substantial amounts of money as hiring of new employees in the HR team is not required, as and when the company is witnessing growth and increase in size

2.     Efficiency Improvements- If your outsourcing provider is innovating itself using technology as an enabler, the efficiency of the entire outsourcing process is improved comprehensively, as compared to vendors that stick to standard and traditional platforms.

3.     Smooth Functioning of HR Processes- Outsourcing your HR department ensures that additional information overload or any sudden requirement coming up in the organization can be addressed smoothly with the third party vendor taking care of time consuming administrative tasks. Hence, the normal business operations are not adversely affected

4.     Preventing HR Processes from Adverse Turnover Effects – HR outsourcing would mean that any employee’s leaving the organization would not hamper the core HR processes in any which way. HRO allows companies to manage their turnover issues in a hassle free manner.

5.     Reduce Overheads – HRO also facilitates the reduction in high overhead costs also by decreasing sudden, unplanned additional expenses. These expenses can be managed by the HRO provider at a relatively lower cost.

6.     Training Existing Employees on new functions – When new technologies/functions/tasks are added in an organization, the HRO partner can also train and develop the existing employees till the level of the new technologies and place trained professionals in their place in the meantime. Thus, HR outsourcing can help in driving the holistic growth of your company.