Outsourcing of HR functions

Outsourcing of HR functions

Many small and medium-sized enterprises (SME) and few big companies outsourced their HR functions. Now that most of these organisations are seeing revival, few questions cross our minds as: a) If the engagement is not working well, do we take back the outsourced functions? b) If the returns on outsourcing are good, do we outsource more? c) What remains to be done by HR in such a scenario? 

Let us first look at few reasons for outsourcing.

- The organisation does not see the capability as a core competency
- To reduce the costs
-  To optimise the time taken to complete a task

We have seen organisations subcontracting the transport department, catering department, physical security, etc. These areas continue to be outsourced, as they are non-core to the organisation. In few cases such as guest house management, business cards printing, hiring of an audio system for a training program, etc., what really matters is the size. If the size is substantially high, it may not be a bad idea to have them managed internally. One should continuously carry out cost analysis to arrive at the best possible option. It is always a better proposition to outsource only the HR operations such as payroll processing, conduct of the training programmes, recruitment process such as conducting assessments.

Partner with line:

In IT and ITES organisations, taking care of the principal resource which is “PEOPLE” is the key for the success of the organisation, beyond any doubt. With the advent of technology such as HRMS packages, most organisations went the lean way reducing the HR staff despite drastic increase in the workforce. The touch time between the Line staff and the HR has come down. It is no brainer that only by sitting alongside the line executives, can HR practitioners take part in the day-to-day decision making about the running of business units. Few organisations have two managers for every project team.
One manager is responsible for the delivery and the other is to manage people.

Enhance the business:

HR should come out with aligning the organization structure and the processes to maximize the business goals. Let us look at a case here. In pursuit of meeting the targets, the sales teams often accept the tight deadlines of the client without taking the delivery team into confidence, and invariably the project runs into rough weather and more importantly the gap between the sales engine and the delivery team widens. HR can design an incentive scheme for both the teams wherein a 360 degree feedback is used to arrive at deciding on the final pay-out of incentives. This will not only build the relationships among the teams but also reduces the risk for the organisation.

Engage the workforce:

It is very important for the organisation’s HR to engage employees especially in the current situation. Employees in Knowledge Industry have more information available, they have more options, and the attitudes of these employees are diverse in nature when it comes to work and life priorities. It becomes more complex as the organisations should prepare themselves to welcome the “New Generation” talent. The new generation workforce likes to spend their time at the social networking sites. HR should ensure the leadership team blogs with all the employees on a regular basis.  

Focus on culture:

Creating and sustaining the organisation’s culture will be the key role of HR. It is not about copying the best practices followed in the Industry to make the organisation successful. The distinct HR practices of the organisation should help create unique competencies that differentiate products and services and in turn drive competitiveness.
The HR team should forecast the behaviour of the organisation and help the Management to take decisions to minimise attrition. Even before a policy is launched HR team should conduct a feed forward and understand the consequences of initiating such a policy. The mood of the employees should be known to the HR teams at any point in time.

(The writers Talwar and Roy are Senior Vice President and General Manager, respectively, at Talent Management, ITC Infotech)