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    RESEARCH REPORT

    ON

    IMPACT OF OUTSOURCING HR ACTIVITIES ON

    PRODUCTIVITY OF AN ORGANISATION

    UNDER THE GUIDANCE OF

    FACULTY GUIDE NAME:

    Prof.Vivek Chaudhari

    SUBMITED IN PARTIAL FULFILLMENT FOR THE AWARD OF

    MASTERS DEGREE IN BUSINESS ADMINISTRATION

    FROM U.P.TECHNICAL UNIVERSITY

    BYArti Chauhan

    M.B.A [0812470019]

    Institute of Co-operative and Corporate Management, Research &Training,

    Lucknow

    www.iccmrt.ac.in

    http://www.iccmrt.ac.in/http://www.iccmrt.ac.in/
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    Acknowledgement

    I take this opportunity to offer my indebtedness to all those whose sincere

    cooperation and valuable guidance was there during my work in assigned area

    and preparation of this report.

    My sincere gratitude is also to Prof. R.K.Sharma of ICCMRT, Lucknow for his

    support, guidance and resources without which this task was not easy to

    accomplish in research report.

    Last but not the least I express my sincere thanks to my parents for their

    constant support and suggestions to accomplish my goals. I thank God for his

    love and grace that enabled me to complete the project.

    (Arti Chauhan)

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    CONTENTS

    PREFACE . 4

    EXECUTIVE SUMMARY 5-11

    About the topic

    Objective of research

    Impact on company

    Introduction ... 12-17

    What is outsourcing Activities to outsourced

    Why outsource?

    Overview 18-24

    Payroll

    Training

    Risk

    Definitions .. 27-29

    Outsourcing success story .. 33-39

    Strategic outsourcing .. 46-53

    Research Methodology ... 54-61

    Research Analysis ...... 62-82

    Findings 83

    Recommendation ....... 84-85

    Bibliography . 86

    Questionnaire . 87-88

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    PREFACE

    The project prepared gave me an opportunity of learning at Mahindra &

    Mahindra Lucknow .

    I learned and discussed important points that are related to my report. I

    learned and study on different activities of P&A like payroll, training and

    development, recruitment and selection.

    The purpose of this report is to provide an accessible account of the key

    issues currently confirming the industries. The report looks at a couple of the

    basic function of personnel department and the perception of worker and

    management regarding outsourcing of HR activities.

    This report contains the pros and cons of outsourcing HR activities on an

    enterprise.

    At last ,I hope this Project Report will be very helpful to those reader who

    are interested in the topic of outsourcing of HR activities.

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    ExecutiveSummary

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    About the topic

    Outsourcing is subcontracting a process, such as product design or

    manufacturing, to a third-party company. The decision to outsource is often made

    in the interest of lowering firm or making better use of time and energy costs,

    redirecting or conserving energy directed at the competencies of a particular

    business, or to make more efficient use of land, labor, capital, (information)

    technology and resources

    Types of Outsourcing

    Business Process Outsourcing

    Information Technology - 28%

    Human Resources 16%

    Sales & Marketing 15%

    Finance 11%

    Administrative 9%

    Least Commonly Outsourced Functions

    Performance Management 3%

    Strategic Business Planning 4%

    Policy Development/Implementation 4%

    Employee Communication Plans 10%

    http://en.wikipedia.org/wiki/Subcontractinghttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Third-partyhttp://en.wikipedia.org/wiki/Costshttp://en.wikipedia.org/wiki/Core_competencehttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Efficienthttp://en.wikipedia.org/wiki/Labour_(economics)http://en.wikipedia.org/wiki/Capital_(economics)http://en.wikipedia.org/wiki/Technologyhttp://en.wikipedia.org/wiki/Resource_(economics)http://en.wikipedia.org/wiki/Subcontractinghttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Third-partyhttp://en.wikipedia.org/wiki/Costshttp://en.wikipedia.org/wiki/Core_competencehttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Efficienthttp://en.wikipedia.org/wiki/Labour_(economics)http://en.wikipedia.org/wiki/Capital_(economics)http://en.wikipedia.org/wiki/Technologyhttp://en.wikipedia.org/wiki/Resource_(economics)
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    The objectives of study are:

    To realize economies of scale and achieve standardization of services.

    To define the concept of outsourcing.

    To describe the various procedure followed by Mahindra & Mahindra.

    To assess the views of the worker and management in context of these

    scheme.

    Why Outsource?

    Allow HR to focus on core competencies

    Creates strategic opportunities for HR professionals

    Improve quality, efficiency, and effectiveness

    Relief from administrative burdens

    Reduce operating costs

    Impact on Companies

    Employee reactions

    HR executives taking part in operational and strategic decisions

    Elimination of bureaucracy

    Customer service improvements

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    Growth of self-service platform

    Slimming down staff

    Cost savings

    Findings

    1. Cost-benefit advantage - lower cost of outsourcing viz-a-viz

    outsourced content/processes

    2. Confidentiality of processes - away from in-house leaks

    3. Greater objectivity/credibility gain amongst employees

    4. Confidence of top management on external professionalism and

    proven expertise

    Recommendations Clients must be clear about what it is sensible to outsource or not, to

    meet their business needs. This responsibility should not be shared with HRO

    providers, although consultants' advice may be useful where clients are

    unsure what to do.

    Outsourcing deals are typically constructed to last many yearsthe

    client must think through the implications in the event of significant changes in

    strategy, structure and operating environment. Clients must achieve real understanding of where and how HRO will

    improve business performance, and when these performance gains may occur

    over the lifetime of a contract.

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    INTRODUCTION

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    INTRODUCTION

    What is Outsourcing?

    The performance by outside parties, on a recurring basis, of tasks that would

    otherwise be performed in-house.

    Outsourcing is subcontracting a process, such as product design or

    manufacturing, to a third-party company. The decision to outsource is often made

    in the interest of lowering firm or making better use of time and energy costs,

    redirecting or conserving energy directed at the competencies of a particular

    business, or to make more efficient use of land, labor, capital, (information)

    technology and resources

    Human Resource Outsourcing

    One very important trend in the recent times has been the growth of human

    resource outsourcing. HR outsourcing is the outsourcing of peripheral but

    necessary administrative tasks such as payroll, benefits, education/training,

    http://en.wikipedia.org/wiki/Subcontractinghttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Third-partyhttp://en.wikipedia.org/wiki/Costshttp://en.wikipedia.org/wiki/Core_competencehttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Efficienthttp://en.wikipedia.org/wiki/Labour_(economics)http://en.wikipedia.org/wiki/Capital_(economics)http://en.wikipedia.org/wiki/Technologyhttp://en.wikipedia.org/wiki/Resource_(economics)http://en.wikipedia.org/wiki/Subcontractinghttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Third-partyhttp://en.wikipedia.org/wiki/Costshttp://en.wikipedia.org/wiki/Core_competencehttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Efficienthttp://en.wikipedia.org/wiki/Labour_(economics)http://en.wikipedia.org/wiki/Capital_(economics)http://en.wikipedia.org/wiki/Technologyhttp://en.wikipedia.org/wiki/Resource_(economics)
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    recruiting personnel, administration, to realize economies of scale and achieve

    standardization of services.

    Rapidly changing market dynamics and global competitive pressures have

    caused organizations to spend more time focusing on their core business.

    Organizations are fast realizing that they can't be all things to all people. So

    companies now, be it a software company, a service provider or a manufacturing

    firm, decide what they are good at and outsource everything else, i.e., focus on

    their core competency, and let someone else do the rest in a more efficient and

    cost-effective manner.

    As a result, human resources outsourcing is becoming increasingly prevalent.

    The number of companies outsourcing HR activities continues to rise, and the

    scope of outsourced HR activities continues to expand. HR outsourcing can

    happen in HR functions, like payroll administration (producing checks, handling

    taxes, dealing with sick-time and vacations), employee benefits (Health, Medical,

    Life insurance, Cafeteria, etc), human resource management (hiring and firing,

    background interviews, exit interviews and wage reviews), risk management, etc.

    Outsourcing has become a common response to manage people and technology

    resources strategically, enhance services, and manage costs more effectively.

    Outsourcing noncore activities allows HR professionals to move away from

    routine administration to a more strategic role. The organization can focus on

    higher value-added activities while the outsourcing provider takes care of the

    day-to-day administration. Critical internal resources, such as technology and

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    talent, can be devoted to company's core business. Outsourcing reduces the

    need for large capital expenditures in noncore functions. Thus, outsourcing

    becomes a strategy for reducing the capital intensity of the business. This

    strategy has gained popularity as companies aim to become more nimble and

    gain the speed and flexibility necessary to compete in today's business

    environment. A growing number of executives understand the benefits it can

    bring in terms of not only cost savings, but also heightened strategic focus. Many

    recognize outsourcing relationships as long-term partnerships created to further

    the strategic goals of the organization

    The HR outsourcing business opportunity is large and India is likely to garner a

    larger and larger piece of this pie in the future. India, with its intrinsic advantages

    such as low cost, ready pool of English speaking manpower and geographic

    positioning, is emerging as a viable destination for HR outsourcing companies to

    set up their businesses.

    But still here people are not very clear about what exactly is manpower

    outsourcing all about, and issues like quality and trust needs to be addressed

    properly. Experts say the basic reasons hampering the growth of HR outsourcing

    in India are confidentiality and cost factors. Moreover, the fear of losing jobs,

    losing control over confidential data, ethics and quality of outsourcing vendors,

    security breaches and overall confidence in the vendors deters many

    organizations. The biggest problem - and this is why the HR outsourcing industry

    in India is on the back foot - is the government and the industry's failure to tackle

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    issues like data security and data privacy. This is where Indian HR outsourcing

    companies face a major handicap. The Indian government is still grappling with

    drafting a data protection law designed to quell growing privacy concerns from

    their offshore clients.

    However, the future seems to be very promising. It's set to become a $ 51 billion

    market worldwide in 2005, representing 39 per cent of the total business process

    outsourcing revenue. Estimates show that the latent size of HR outsourcing in

    India is about $ 2 billion with a current market of $ 27 million and it is growing at

    an alarming rate of about 50 per cent. India has immense potential as more than

    80% of fortune 1,000 companies are discussing HR outsourcing as a way to cut

    costs and increase productivity.

    Right now, India is barely skimming the surface of the HR outsourcing market

    potential. Indian life Hewitt (ILH), FIDELITY, EXULT and MAFOI are some of the

    prominent HR outsourcing services providers in India and the clients include

    giants of manufacturing, software and service industries like GE Capital, Ford

    Motors, Hyundai Motors, Satyam Group, Infosys, Enron, Haldia Petrochemicals

    and HSBC, to name a few, but many more needs to be added to that list.

    HR outsourcing has a huge potential for employment also. Nasscom numbers

    are a million software jobs by 2005; HRO would be about a 25 per cent of that.

    Experts believe that in present times HR outsourcing is undergoing a transition

    phase, it would still be sometime before we see increased levels of HR activities

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    being outsourced to India as lack of domain knowledge and quality are some of

    the critical issues.

    ACTIVITIES TO BE OUTSOURCED

    Payroll

    Benefits

    Recruiting, Staffing, & Search

    Training

    HRIS & Web-based services

    : How many of you outsource all of your HR function?

    : What led to the decision to consider outsourcing?

    Why Outsource?

    : Allow HR to focus on core competencies

    : Creates strategic opportunities for HR professionals

    : Improve quality, efficiency, and effectiveness

    : Relief from administrative burdens

    : Reduce operating costs

    Other Benefits to HRO

    : Access to outside HR expertise

    : Greater diversity of HR services

    : Leverage vendor investments in technology rarely available to HR organization

    : Limit fiduciary, audit, and litigation risks and liabilities

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    : Upgrade level of customer service

    : Ease time pressure demands :Better, faster, cheaper

    OVERVIEW

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    Payroll

    The term 'payroll' encompasses every employee of a company who receives a

    regular wage or other compensation. Some employees may be paid a steady

    salary while others are paid for hours worked or the number of items produced. A

    payroll specialist calculates all of these different payment methods and the

    appropriate paychecks are issued. Companies often use objective measuring

    tools such as timecards or timesheets completed by supervisors to determine the

    total amount of payroll due each pay period.

    Setting up an effective payroll system is not especially difficult for trained

    accountants, but it can be very time consuming. Some smaller businesses rely

    on user-friendly computer software to set up a simple payroll system complete

    with check printers and file storage. Larger companies may assign trained

    accountants to handle payroll issues as part of their overall duties. But many

    businesses without the means to maintain their own payroll systems choose to

    farm out this task to outside specialists.

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    HR Consultation services

    Personnel Policies

    Records Retention Consultation

    Compensation/Benefits Analysis and Planning

    Employee Training and Orientations

    Succession Planning

    Strategic Planning

    Wage and Hour consultation

    FMLA/OFLA Consultation

    Employee Relations Consultation

    Team Building and Issue Resolution Facilitation

    http://hrservices.itmatchonline.com/hrconsultation_services.phphttp://hrservices.itmatchonline.com/hrconsultation_services.php
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    TRAINING

    FEATURES

    Increases knowledge and skills for doing a job.

    Bridges the gap between job neegs and employee skills / knowledge

    and behavior.

    Job-oriented process, vocational in nature.

    Short-term activity, desinged essentially for operative.

    IMPORTANCE OF EMPLOYEE TRAINING

    REDUCTION IN COST OF PRODUCTION: Efficient workers do their works

    in the best possible manner. they make the maximum utilization of materials

    and machines. thus, the cost of production is reduced.

    MAXIMUM UTILIZATION OF MATERIALS AND MACHINES: Training

    teaches the employees of the enterprise the method of doing their job in the

    best possible manner.

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    MINIMUM POSSIBILITY OF ACCIDENT: Trained worker know the methods

    of doing their jobs in the required manner. the know-how to use the

    machines in the best possible manner. it reduces the possibility of accidents

    to the minimum.

    STABILITY IN ORGANIZATION: Training brings stability in organization,

    because it reduces the rate of absenteeism and labor turnover. it enables the

    worker to do their works in the absence of any supervision.

    HIGH MORALE: As the trained workers are capable in doing their jobs in

    most suitable manner and can understand the procedures and methods easily,

    it increases their morale. it gives them satisfaction in their work.

    IMPROVEMENT IN THE QUALITY AND QUANTITY OF PRODUCTION:

    Training increase the efficiency of employee which increases the quantity of

    production and improves its quality.

    MINIMUM NEED OF SUPERVISION: A trained worker can do his work

    himself efficiently. thus, the training reduces the need of supervision to

    minimum.

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    HELPFUL TO MANAGERS: As there is minimum need of supervision, it

    helps the managers of the enterprise to concentrate upon the important

    problems of enterprise. they have not to waste their valuable time on

    supervising the workes.

    Risks

    : Over promise and under deliver

    : Nonperformance of key function

    : Cost

    : Loss of institutional knowledge

    : Difficulty managing vendor relationship

    : Change in providers business or financial stability

    : Lack of fit with company culture

    : Organizational resistance or unreadiness

    Considerations

    : Core Competency?

    : Best in Class?

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    1. What is your vision for your HRM business?

    2. What metrics will measure progress toward vision?

    3. What business outcomes are needed from the HRM aspects of the

    business?

    Outsourcing Myths

    : Outsourcing is just a fad

    : Outsourcing can be kept secret from employees

    : Outsourcing is only for the largest companies

    : Messes must be fixed before outsourcing

    : Outsourcing is for everyone

    Trends in HR Outsourcing Market

    : Specialization

    : Globalization

    : Standardization

    : Regionalization

    : Consortia Buying

    : Mid-market Mania

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    : Utility Model Evolution

    : Consolidation and Partnering

    The Future of HRO

    1. Growth-Maturation of HRO market

    2. Increasing weight of non-cost drivers

    3. Commodization of HR functions

    4. New roles for internal HR departments

    5. New career opportunities for HR professionals

    6. Expansion of small/mid-sized HRO markets

    7. Demographic changes

    8. Improved HRO metrics

    9. Reshaping of industry

    Impact on Companies

    : Employee reactions

    : HR executives taking part in operational and strategic decisions

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    : Elimination of bureaucracy

    : Customer service improvements

    : Growth of self-service platform

    : Slimming down staff

    : Cost savings

    : Model will serve to guide other organizational functions (IT, accounting)

    Impact on HR Profession

    : Internal HR at significant disadvantage in cost per transaction

    : Loss of control of key processes

    : Enhanced credibility

    : Strategic focus

    : Decentralized structure

    : Internal politics HR as business partner

    : Move to customer service culture

    : Management and Organizational Development big picture view

    : New roles consultant and HR strategist

    : Develop competencies to remain valuable

    : HR is exposed and more visible as organizational function

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    : HR is far more measurable

    : Align HR strategy with corporate goals

    Definitions

    OUTSOURCING

    The transfer of the provision of services previously performed by in-house

    personnel to an external organization, usually under a contract with agreed

    standards, costs, and conditions. Areas traditionally outsourced include legal

    services, transport, catering, and security. An increasing variety of activities,

    including IT services, training, and public relations are now being

    outsourced. Outsourcing, or contracting out, is often introduced with the

    goal of increasing efficiency and reducing costs, or to enable the

    organization to develop greater flexibility or to concentrate on core business

    activities. The term subcontracting is sometimes used to refer to outsourcing.

    PRODUCTIVITY

    Maintaining a high productivity is the life of a successful business all around

    the world. No matter how much money you invest in your business without

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    productivity implementation strategies your business would not progress and

    would eventually collapse.

    Productivity in an industrial context is output of an aspect of

    production per unit of input.

    It is a method used to measure the quantity of output of worker, machine, or

    an entire national economy in the making of good, services, or commodities

    to produce income.

    When referring to productivity there are several concepts that we need to

    know:

    1. Economics productivity

    The amount of output created to produce per unit input used.

    2. Linguistics productivity

    It is the degree to which a grammatical process can be completed to new

    cases.

    3. Corporate finance productivity

    This is refers to the current year's sales to expense

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    BENEFITS OF PRODUCTIVITY

    In improving the productivity of a company, the business will gain many

    benefits. These can include:

    1. Increase in income/profitability.

    2. Lowering running costs/operational costs.

    3. Maximizing the use of all of the companys resources such as land,

    equipments/machineries, factory, workers, and etc.

    4. Gaining a greater share of the market.

    More cash flows mean more opportunity for the company to expand

    and grow.

    Other Definitions

    In-sourcing

    Off-shoring

    Co-sourcing

    Geo-sourcing

    Outplacement

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    WHY THE OUTSOURCING RUSH?

    What are the reasons for the growth in HR outsourcing? How do companies

    gain by outsourcing their HR activities? HR outsourcing is considered a

    viable option, if a company lacks internal expertise and confidentiality and

    requires unbiased opinion on human resources. Outsourcing is also gaining

    importance as most companies do not have the time or the expertise to deal

    with situations.

    Outsourcing has become popular because companies are finding that

    external vendors-through technology and economies of scale-can provide

    more efficient and cost-effective HR services than in-house departments.

    The best example of a firm that has reaped early benefits from outsourcing is

    BP. In 1999, it outsourced its activities to Exult in the USA and UK for

    services like payroll, recruiting, expatriation, records management, vendor

    management and relocation services for 63, 000 employees.

    The only function that remained in-house was BPs learning and

    development program in the United States. Over the last two years, the

    company has reaped many benefits from this arrangement. Payroll

    processing became more timely and accurate. Employees got their benefits

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    questions answered sooner. HR processes have been standardized across the

    company. And for the first time, BP has measurable data on which HR

    activities are effective.

    As a result, its core HR staff has been slashed by 65 percent-from 100 to 35

    people. Such success stories have propelled companies like Sony, AT&T

    and American Express to outsource HR activities. One of the main reasons

    for HR outsourcing that most companies quote is that such outsourcing helps

    them to get rid of routine transactional HR work. Some of the companies

    which have gone ahead with even manpower hiring outsourcing practices

    are Cisco, GE, Honeywell, Sun.

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    BENEFITS OF OUTSOURCING

    When a number of companies are outsourcing their HR activities, there must

    be certain benefits associated with it. The major advantage is the cost and

    the time factor. According to India Life Hewitt, Vice-President, Leo

    Fernandes, For large organizations to service their mammoth payroll by

    themselves is a huge drain on their resources. Outsourcing this one activity

    alone is huge direct cost saving for large legacy companies which could be

    in the range of 20 to 40 per cent."

    The major benefits of HR outsourcing are as follows:

    Fosters Innovation

    Increased speed to market

    Improved quality

    Focus on core competence

    Cost reduction

    Reduced administrative costs

    Improved customer service

    Insufficient staff

    Conserve Capital

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    HR Outsourcing Success -tips to avoid the pitfalls

    Outsourcing is a hot topic on many HR Director's 'To Do' lists, but it has

    been slower to take off than Finance or IT Outsourcing. So what are the key

    differentiators that drive outsourcing as a preferred option for HR and

    warrant extra attention during the outsourcing process?

    Firstly HR processes tend to have fuzzy boundaries. Ask 10 HR Directors to

    define what tasks fall into payroll and which into the HR admin department

    and you will get 10 different answers.

    There is a tendency for customised offerings, designed to meet a client's

    specific policies, procedures and priorities for HR. There is no 'one size fits

    all' where HR is concerned.

    Thirdly HR has multiple inputs and outputs. Data passes between HR and

    authorities, employees, managers, the finance department, the production

    department, trade unions, debtors, former employers and many other parties.

    Finally HR is subject to frequent and stringent legal changes. Non-

    compliance can result in considerable fines and can also lead to onerous

    audits elsewhere in the company.

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    So HR outsourcing is not so straightforward.but these simple tips can help to

    ensure success when outsourcing HR services.

    1. Clarify the unspoken truths

    Some HRO providers have a strong 'can-do' attitude, but given the

    fragmented nature of HR, their experience may be lacking in substance. A

    supplier may deliver vaguely similar services to those you wish to transition.

    They may deliver the same services but on a much smaller scale. You don't

    want to become their guinea pig. They may offer 'comprehensive services',

    but this may not mean that everything is included.

    Be sure to understand the supplier's background and experience. Is their

    experience mostly in systems implementation, process improvement or

    actual service delivery? Ask whether the supplier has actually transitioned

    certain services or simply 'bought them in'. Visit the service which will

    actually deliver your services. In reality these may consist of 20 people who

    have never transitioned or delivered HR services like yours, and may be

    different from the 'showcase centre'.

    Finally understand the supplier's approach to automation. A sad fact of HR

    processes is that not all can be automated, but suppliers may charge extra for

    manual processes. Build a detailed list of scenarios and ask how each would

    be handled, and most importantly charged for.

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    2. Don't change all of your processes and systems at once

    It is very tempting to implement a single system for your entire HR

    department and outsource everything at once. Because HR systems are

    extremely interdependent, project slippage in one system can lead to manual

    work, additional programming and training in interim systems. Outsourcing

    brings disruption and risk in the early days, adding multiple processes and

    projects increases this risk considerably.

    Consider instead outsourcing some processes as-is, or having a staggered

    implementation. This will require additional work to establish new interfaces

    and hand-offs, but this investigation is valuable in ensuring the systems and

    processes are fully understood, and will increase the quality of your

    outsourcing in the long term.

    3. HR people don't like project plans - build a diverse project team

    Stereotypical? Yes. Realistic? Indeed! It is no secret that HR people are less

    comfortable with rules, structure and excel sheets than their Finance and IT

    counterparts. An outsourcing project involves multiple workstreams

    covering technical, process and change management areas. It needs a lot of

    structure and rigour, as well as strong empathy and a sense of humour.

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    Choosing team members for there preference for order and structure, or their

    interpersonal skills, as well as their experience, can help the whole team to

    function better, consider a broader range of issues and progress at the right

    pace. A strong project kick-off programme will help team members to

    understand, respect and leverage each other's views, skills and preferences.

    5. A little outsourcing experience is a dangerous thing - build a diverse

    project team

    A team member with a little outsourcing experience may use this as a

    reference point for a much bigger European deal. This 'blinkered' view

    risks the team missing key points specific to European outsourcing such

    as the extent of diversity in HR law and practice between countries, the

    complexity of legal changes and statutory reporting in certain countries

    and the role of Works Councils.

    The answer is to build a team including people with broad experience of

    outsourcing, and also those with no experience, but with the skill to

    question the decisions the team is making.

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    6. Be aligned on what 'partnership' means

    HR Outsourcing deals tend to last for at least 5 years, so it is critical to

    have a strong relationship with your outsourcing provider. 'Partnership' is

    a commonly used term, but should not mean 'best friends with'. A strong,

    long term relationship should be built around a strong contract which

    meets the needs of both parties. It can be very tempting to always defer to

    the wishes of the supplier in the desire to build a 'partnership', but this is

    detrimental in the long term.

    Be sure the project team are clear on the rules of engagement with the

    supplier. Explain that partnership means building a mutually beneficial

    business relationship. That it is ok to give in on some things but be sure

    not to give in on others. Build a list of what you are prepared to give way

    on and what not. And be sure to track your starting position - what you

    ask for when first selecting a supplier and any negotiated points

    throughout selection and contracting. This will help you to have an

    unbiased view of how balanced your partnership is.

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    6. Negotiation - give your team strength

    Negotiating is tough at the best of times and HRO contracts are complex and

    specific. Your team may have been brought together for its HR experience,

    not its negotiating skills. This makes for a stressful time. One HR manager

    recently agreed many things in the supplier's interest, simply because they

    lacked basic negotiating skills and had formed a 'kinship' with the supplier.

    Ensure all members of the negotiating team have negotiating training.

    Ensure that the team has strong roles and responsibilities - who can make

    agreements and concessions, who can take detailed notes, who can call time-

    out on a discussion. Set clear ground rules - no side discussions or offline

    discussions, a democratic process for making decisions, a defined process

    for changing an agreement once made.

    7. Knowledge transfer - HRO takes time!

    HR processes are typically dependent on a number of different inputs and

    factors. Processes and procedures vary considerably from one company to

    the next. It is much harder to write 'rules' and build a knowledge base for HR

    transactions than for other functions. HRO providers with a systems

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    background may underestimate the importance of detailed knowledge

    capture, stating 'we'lldo the processes our way; we don't need to understand

    how you do them'. This increases the risk that important steps are missed,

    which can impact not only the success of the outsourcing, but also employee

    morale and even the reputation of your company.

    Be sure to allow sufficient time for Knowledge Transfer and ask your

    supplier detailed questions about their Knowledge Transfer process. Your

    contract terms should ensure that failure to adequately capture and transfer

    knowledge will have financial implications for the supplier. Most

    importantly, work together, so that your employees understand and support

    the knowledge transfer process.

    8. Implementation - establish clear ownership of the local organisation

    Each country should be responsible and accountable for the successful

    implementation of the outsourcing project. Local HR organisations

    understand better the intricacies of their countries, and can better mitigate

    the specific local risks. If local leadership do not feel ownership for the

    project there will be much more resistance at grass roots level.

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    This means involving key country leaders in the project in the early stages,

    including the supplier selection. Establish clear lines of responsibility

    between the central and local teams. The central team may own the contract

    negotiations, while the local team may own the success of the knowledge

    transfer process.

    HR Outsourcing is a key enabler for HR departments to fulfil their vision

    and meet their commitments to the broader company. Ask lots of questions

    of your potential suppliers around their experience, skills, and knowledge

    transfer methodologies. Beware of crossing the line between successful

    partnership and 'best friends'. Be realistic about the scope to be outsourced,

    and place high importance on a strong knowledge transfer process. Finally,

    build a diverse and balanced project team, with clear operating principles

    and be sure to involve the local organisation early on in the project. It isn't

    simple, but with good planning and a strong implementation team HR

    Outsourcing can bring enormous benefits.

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    THE INDIAN SCENARIO

    Indian companies are also not lagging behind in outsourcing their HR

    activities. LG Soft India has outsourced its PF management, Escosoft has

    outsourced payroll processing, execution of training programmes and survey

    conduction. Depending on their need, outsourcing can be transactional or

    HR Consulting. In India transactional outsourcing is more prevalent .

    In the value chain, it falls at the lower-end compared to HR consultancy,

    although it happens to be an essential function. According to Harish Chopra,

    whose firm Harish Chopra & Associates has garnered a large chunk of

    financial sector HRO over the years: An investment bank would prefer to

    recruit investment bankers rather than HR specialists. And given their

    minimum salaries and establishment costs, HR administration would cost

    them twice as much 4.

    The HR outsourcing fever has not only spread to large companies but many

    small and medium sized companies are also welcoming this trend. Salary

    and Benefits Processing, Benefits Administration, and Compensation

    Benchmarking & Design are the most frequently outsourced HR activities in

    India. According to a study conducted by the Institute of Management

    Accountants (IMA) in mid 1990s, mid-sized companies spent more on the

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    routine transactional work in finance and accounting services than large

    companies and maintain 79 percent more headcount.

    This kind of cost is felt even more in the routing HR work. According to the

    survey more that 87 percent of the funds mid-sized companies budget for

    finance and HR go towards routine processing transactions, rather than

    policy making strategies and analysis that could move their business

    forward. This is clearly counterproductive for organizations set on high

    productive model

    INDIA AS AN HR OUTSOURCING DESTINATION

    India is emerging as a major player in HR outsourcing. Though there are

    hardly five to six names in this market, they are trying to make a mark for

    themselves and tap the potential of providing HR outsourcing services.

    Companies like Mahindra and mahindra are expanding their horizons by

    extending their services to the indian region. However, overseas HR

    servicing companies are beginning to view the Indian market as a viable

    investment destination, where they can set up their operations and cater to

    the rest of the international market. The $450-million Exult Inc. started a 70-

    people outfit in Mumbai. From the tactical and straightforward handling of

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    payroll and benefits, HR services providers are moving into the strategic

    world of BPO. HR-enablers are helping HR managers free themselves from

    the routine jobs and work towards taking employee services to a higher

    level.

    India, with its intrinsic advantages such as low cost, ready pool of English

    speaking manpower and geographic positioning is emerging as a viable

    destination for HR outsourcing companies to set up their businesses. The HR

    outsourcing business opportunity is large and India is likely to emerge as a

    major player in this market. Patni Computer Systems is looking to leverage

    its work done on 401K pension plans to get into HR. Daksh has started

    payroll processing. The $5-billion payroll processor, Automatic Data

    Processing is also planning to start operations in Hyderabad

    The various HR processes that companies are venturing into include data

    entry, payroll processing, staffing, training, resume management,

    compensation, employee communications, pension plans, leave

    administration and HR data analytics. The popular delivery models for HR

    services outsourcing are self service, call center back up or shared services

    involving high caliber HR professionals Who play a consultative role to line

    managers.

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    When compared to other regions, India holds an advantage in HR

    outsourcing because of cost factor and education of the workers.

    IS THE MARKET STILL UNEXPLOITED IN INDIA?

    Despite all these figures and numbers mentioned above, HR outsourcing is

    still considered to be unexploited. There are a number of deterrents that are

    keeping companies from moving to HR outsourcing.

    The basic reasons hampering the growth of HR outsourcing in India are

    confidentiality and cost factors. Many companies outsource only a bit of

    their requirements because of the above two factors.

    Besides, the fear of losing jobs, losing control over confidential data, ethics

    and quality of outsourcing vendors, security breaches and overall confidence

    in the vendor deter many organizations. According to V. Kartikeyan, the

    director-human resources of Texas Instruments India,

    Some companies can also be reluctant because they may not have an

    adequate grip over the cost-benefit equation of outsourcing. Companies need

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    to be convinced before they can outsource select HR activities. 6 The basic

    cultural mindset and the acceptance at the psychological level add to the

    deterrents. An in-house HR person handles certain situations that an

    outsourcing agency cannot handle well (things like building employee

    incentive programmes, taking care of recognition for employees).

    At times, many employees would want someone in-house to resolve their

    work-related problems or disputes. All this is only possible if there is an in-

    house HR team, which interacts with the employees on a daily basis. Quality

    at times forms another roadblock. The issues of pricing also play an

    important role as there is no standards benchmark for pricing and it varies

    from vendor to vendor. Doing reference check helps a lot in this case.

    THE FUTURE AHEAD

    The future of HR outsourcing in India is poised to be very effective because

    of its intrinsic advantages such as low cost, ready pool of English speaking

    manpower and geographic positioning is emerging as a viable destination for

    HR outsourcing companies to set up their businesses. While currently there

    are only a few major players the trend seems to be catching up as companies

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    are showing marked interest to improve on services such as pay roll benefits

    as well as complete HR delivery. Companies are looking to outsourcing the

    complete range of HR delivery and designing products on policies,

    compensation, structure, and recruitment. Indian companies are not only

    providing services for the clients abroad but are also catering to the local

    market. Moreover these players are moving up the value chain.

    Mafoi has emerged as a major HR outsourcing center (Refer exhibit on HR outsourcing

    at Mafoi consultants). It is estimated that currently the organized sector of HR is catering

    to only two percent of the whole market . This is the right time for the players to tap this

    emerging market.

    Strategic Sourcing

    Research conducted by the International Data Corporation (IDC) indicates

    that the role Human Resources plays is becoming increasingly complex, and

    is thus sparking a need for HR outsourcing.

    New technologies, globalisation strategies and lack of a skilled employee

    pool are some of the factors complicating HR's roles, IDC says, and many

    companies are outsourcing some of their HR functions to help deal with

    these challenges.

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    Further research on the benefits of outsourcing abounds and has been

    conducted by companies like the Gartner Group, the Bureau of National

    Affairs and Accenture. In the recent Accenture survey of more than 800

    executives in the US and Europe, 86% said outsourcing gives them more

    control over business results in a variety of critical areas, the most important

    being the ability to plan. According to a leading Accenture partner, Industry

    leaders are beginning to view outsourcing as a prescription for change versus

    an antidote to rising costs.

    According to Gartner Research conducted in 2003, the out in outsourcing

    is to be replaced by strategic as the nature of business evolves to meet an

    ever-faster changing pace. We have positioned ourselves as strategic HR

    partners since inception, focusing on a strategic sourcing service that

    provides a flexible option for clients.

    Benefits

    Benefits of strategic sourcing through The People Business Group include:

    Enhanced Performance by staying ahead by using the proven

    expertise in the key areas that are the business focus of the external

    partner.

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    Released Potential whereby key players have more time to focus on

    their performance, as extra and time-consuming tasks are removed

    and the outsourced partner is responsible for the full management of

    the staff on site.

    Immediate productivity, as the experienced consultants on site at your

    organisation is able to assimilate immediately into the workplace and

    become productive and effective.

    Lower Overheads because of the elimination of the cost of providing

    services in house, or support services, training costs, fringe benefits,

    use of company resources, management time, transport, staff welfare

    and other associated costs with permanent employees (e.g leave pay,

    recruitment costs).

    Objectivity and extreme confidentiality in dealing with the HR and

    payroll issues a company faces on a daily basis, as the external

    consultants are able to remain outside of the situation and provide the

    service more efficiently.

    Continual coverage and availability of experienced resources. In the

    event that a consultant goes on leave or is off sick, another resource is

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    immediately assigned to the company to ensure continuity, unlike in

    the case of a permanent employee.

    Contract-To-Hire And Recruiting Agencies

    You may be wondering how staffing companies recruit applicants. They can

    recruit in a number of ways. They may advertise in newspapers, through job

    fairs,virtualcommunities, and online job boards

    You may have seen ads in newspapers for contract-to-hire positions. A

    majority of these ads are placed by staffing companies to recruit applicants

    or contractors. They normally dont reveal the name of the hiring company

    until they set you up with an interview.

    Job fairs are a second method used to find potential applicants. If youre

    interested in attending a job fair, you normally find them advertised in

    newspapers. You may even do a search on the Internet for job fairs in your

    area.

    Online job forums are an effective recruiting method. The service is

    generally free and does not take very much time to post. The recruiter

    normally posts the job description, requirements, and the contact

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    information. Applicants generally are asked to send a copy of their resume

    and a cover letter explaining why they think they are a good fit.

    The fourth recruiting method is online job boards. These are similar to

    newspaper ads, but are placed online at employment sites. You can expect

    the ads to read much like a newspaper ad.

    Contract-To-Hire: Why Use A Staffing Agency?

    There are many benefits to using the services of a staffing company. Staffing

    companies have staffing and recruiting teams. Their job is to recruit, pre-

    screen, and test individuals. By the time an applicant is sent on an interview,

    that person has already been tested thoroughly and his skills have been

    assessed. Staffing companies are interested in keeping their clients;

    therefore, they work hard at matching an individual with the company or

    position that best suits him. Everyone wins in this case. The staffing

    company keeps the client happy; the applicant thrives on his job because

    hes capable of performing the duties well, and the hiring company gets a

    capable, productive potential employee.

    Another benefit to using a staffing companys services is that they are

    responsible for conducting credit and background checks. Especially if your

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    business deals with sensitive, confidential information, you can feel

    confident that contractors sent to you have already gone through all the

    screening checks.

    Still another benefit, if for whatever reason you decide that things are not

    working out, you simply terminate the contract. There is no legal obligation

    to keep the contractor any longer than you need or wish to keep him. If you

    are the contractor, using a staffing company benefits you, because if you

    decide that you dont want to continue with a certain company, you too can

    terminate the contract without any legal obligations.

    Contract-To-Hire Employment

    This type of position is becoming more popular and easy to find. If you

    prefer to seek employment on your own rather than through a staffing

    company, you can still succeed. You would proceed the same way as with a

    direct hire position.

    Look in newspapers. Make sure that the contact information is for the hiring

    company and not for a staffing agency. Go to online employment sites and

    enter a search for the term contract-to-hire in your area. Larger companies

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    sometimes have job fairs. You can do a search for job fairs in your area as

    well, and make sure you attend.

    Having your resume ready, your work history, and references along with a

    cover letter increases your chances of finding a position. Resumes and cover

    letters take time to put together. If you have these items ready, you can

    forward them as soon as you see an ad. All you will need to do is update the

    position on the resume. The cover letter may require a few more updates

    such as the position, contact person, and maybe their address. Make sure you

    have the correct date.

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    RESEARCH

    METHODOLOGY

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    RESEARCH

    METHODOLOGY

    RESEARCH PROBLEM

    I have selected that IS PRODUCTIVITY INCREASE THROUGH HR

    Outsourcing as research problem for my research report.

    As a research problem is the situation that causes the researcher to feel

    apprehensive, confused and ill at ease. It is the demarcation of a problem

    area within a certain context involving the WHO or WHAT, the WHERE,

    the WHEN and the WHY of the problem situation.

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    RESEARCH OBJECTIVE

    How productivity relates with performance appraisal. In addition, the major

    factors of performance appraisal, which have taken a part in increasing

    productivity of the organization.

    RESEARCH DESIGN USED

    As research design is simply the framework or plan for a study i.e. used

    as a guide in collecting and analyzing the data. Research design can be

    grouped into three categories-exploratory research, descriptive research and

    casual research.

    I have used exploratory research design in my project.

    EXPLORATORY RESEARCH

    Exploratory research studies are also termed as formulating studies. The

    main purpose of such studies that of formulating of the problem for more

    precise investigation or of developing the working hypotheses from an

    operational point of view. An Exploratory Research focuses on the discovery

    of ideas and is generally based on secondary data. It consists;

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    Search of secondary data and literature

    Survey

    Case study

    SEARCH OF SECONDARY DATA AND LITERATURE:-

    The quickest and most economical way is to find possible hypotheses from

    the available literature. The past researcher may be suitable sources of

    information to develop new hypotheses. The researcher can search them for

    his research purposes.

    SURVEY:-

    Survey means the survey of people who have had practical experience with

    the problem to be study. These individual can be top executives, sales

    manager, wholesaler and retailer processing valuable knowledge and

    information about the problem environment.

    CASE STUDY: -

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    The case study method is a technique by which individual factor weather it

    be an institution or just an episode in the life of an individual or a group in

    its relationship to any other in the group.

    RESEARCH INSTRUMENT USED

    I have used the following research instruments in my project:-

    QUESTIONNAIRE: -

    The term questionnaire usually refers to a self-administered process

    where by the respondent himself read the question and records without

    the assistance of an interviewer.

    OBSERVATION METHOD: -

    The observation method is useful to know the reaction of

    handicapped information.

    INTERVIEW: -

    The interview method of collection data involves presentation of oral-

    verbal stimuli and reply in terms of oral- verbal response.

    SAMPLING TECHNIQUE USED

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    When field studies are under taken in practical life, consideration of time

    cost and some other factors almost invariably lead to a selection of

    respondents. The selected respondents constitute a sample and the selection

    process is called sampling technique.

    A sample design is definite plan determined before any data are actually

    collected for obtaining a sample from a given population. Samples can be

    either probability sample or non-probability sample.

    I have selected simple random sampling in my project,

    SIMPLE RANDOM SAMPLING

    This type of sampling is also known as chance sampling or probability

    sampling where each item in the population has an equal chance of being

    selected in the sample.

    SAMPLE SIZE

    When a survey is undertaken and when it is not possible to cover the entire

    population the researcher has to answer the basic question how large

    should be sample be? The sample size decision is related directly to research

    cost.

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    The intended sample size is the number of participants planned to be

    included in the trial, usually determined by using a statistical power

    calculation. The achieved sample size is the number of participants enrolled,

    treated, or analyzed in the study.

    I have taken 50 people in my sample size, as the sample size should be

    neither so small nor so large.

    METHOD USED FOR DATA COLLECTION

    The task of data collection begins after a research problem has been defined

    and research design chalked out. While deciding about the method of data

    collection to be used for the study the researcher should keep in mind two

    types of data-

    1. Primary data

    2. Secondary data

    1. PRIMARY DATA-

    Those data that have been observed and recorded by the researchers for

    the first time in their knowledge.

    Sources;

    Questionnaire

    Interview method

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    2. SECONDARY DATA-

    Those data that have been compile by some agency other than user.

    Sources;

    Case study

    ANALYTICAL TOOLS USED

    The term analysis refers to the computation of certain measures along with

    searching for patterns of relationship that exists among data group. Analysis

    is essential for a scientific study and for ensuring that we have allrelevantdata for making contemplated comparisons. Therefore, I have used

    Tabulation, Graphs & Charts in my project.

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    RESEARCH ANALYSIS

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    RESEARCH ANALYSIS

    Types of Outsourcing

    Business Process Outsourcing

    Information Technology - 28%

    Human Resources 16%

    Sales & Marketing 15%

    Finance 11%

    Administrative 9%

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    All Others 22%

    Least Commonly Outsourced Functions

    : Performance Management 3%

    : Strategic Business Planning 4%

    : Policy Development/Implementation 4%

    : Employee Communication Plans 10%

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    0 2 4 6 8 10Employee Communication

    Plans

    PolicyDevelopment/Implementation

    Strategic Business Planning

    Performance Management

    Series1

    Aware of the objective of outsourcing HR activities

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    0

    10

    20

    30

    40

    50

    60

    70

    80

    90

    Very much Some what Don't know

    Strategic Outsourcing helps the organization in achieving goal

    Very much 85%

    Some what 13%

    Don't know 2%

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    0

    10

    20

    30

    40

    50

    60

    70

    80

    90

    Yes No Don't know

    Yes 79%No 20%

    Don't know 1%

    Strategic Outsourcing affect the working efficiency of employees

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    Yes 84%

    No 16%

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    Strategic Outsourcing is able to develop high result orientation

    approach

    0

    10

    20

    30

    40

    50

    60

    70

    80

    90

    100

    Yes No

    Yes 94%

    No 6%

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    The system will also contribute in potential appraisal

    0

    10

    20

    30

    40

    50

    60

    70

    80

    Yes No Don't know

    Yes 72%

    No 20%

    Don't know 8%

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    Outsourcing Decision making in the organization is based on

    0

    10

    20

    30

    40

    50

    60

    70

    80

    90

    Performance Experience Both

    Performance 4%

    Experience 12%

    Both 84%

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    TRAINING ANALYSIS

    AWARE ABOUT THE TRAINING PROGRAMME

    0

    10

    20

    30

    40

    50

    60

    70

    80

    90

    100

    YES

    NO

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    PERFORMANCE IMPROVES THROUGH TRAINING PROGRAME

    0

    10

    20

    30

    40

    50

    60

    70

    80

    90

    YES

    NO

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    What can be increased through training

    QUALITY

    PRODUCTIVIT

    Y

    PERSONNEL

    GROWTH

    MANAGEMENT

    DEVELOPMEN

    T

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    IS THE TRAINING IMPORTANT FOR THE MANAGEMENT

    DEVELOPMENT

    Agree

    Neutral

    Disagree

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    IS TRAINING MORE EFFECTIVE BY THIRD PARTYSPECIALIZED IN IT ?

    0

    10

    20

    30

    40

    50

    60

    7080

    90

    YES

    YES

    NO

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    How Common is HRO?

    58% of companies outsource some HR function2

    : 91% of companies with $1 billion+ annual revenues are now considering

    HRO3

    : HRO grew 28% from second half of 2004 to first half of 20054

    Other Types of HR Outsourcing

    : Pension Benefits Administration 55%

    : Temporary Staffing 54%

    : Retirement Benefits Administration 47%

    : Payroll & Software Services 48%

    : Recruiting, Staffing & Search

    Non-executives - 30%

    Executives - 29%

    : Employee Relocation 29%

    : Training and Development 21%

    : Incentives 19%

    : HRIS & Web-based Services 15%

    : Reference Checks

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    : PEOs and ASOs

    : Sourcing Consultants & Legal Services

    : Screening & Workplace Security

    : Process, Project, and Systems Management

    Audience Survey

    : How many of you outsource part of your HR function?

    Payroll

    Benefits

    Recruiting, Staffing, & Search

    Training

    HRIS & Web-based services

    : How many of you outsource all of your HR function?

    : What led to the decision to consider outsourcing?

    Why Outsource?

    : Allow HR to focus on core competencies

    : Creates strategic opportunities for HR professionals

    : Improve quality, efficiency, and effectiveness

    : Relief from administrative burdens

    : Reduce operating cost

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    Other Benefits to HRO

    : Access to outside HR expertise

    : Greater diversity of HR services

    : Leverage vendor investments in technology rarely available to HR

    organization

    : Limit fiduciary, audit, and litigation risks and liabilities

    : Upgrade level of customer service

    : Ease time pressure demands

    :Better, faster, cheaper

    Impact on Your Career

    : Transformation from transactional administrator to business partner that sets

    strategy

    : Develop competencies to negotiate and manage vendor relationships

    : Demonstrate ability to provide business solutions for employee and customer

    problems

    : Change bureaucratic culture

    : Develop strategic expertise necessary to manage human capital

    : Deliver exceptional customer service

    : Sharpen your skills

    : Build/Develop your network

    : Stay on top of trends and their implications

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    : Utilize vendors now so that they can help you later .

    Satisfaction

    Recent survey of 129 large companies representing 2 million employees:

    : 89% satisfied with outsourcing arrangement

    : 85% achieved hoped-for benefits

    : Additional 20% achieved unexpected benefits

    0 20 40 60 80 100

    achieved unexpected

    benefits

    achieved hoped-for

    benefits

    satisfied

    Series1

    Overview of Process

    1. Planning

    2. Exploring strategic initiatives

    3. Analyzing costs/performance

    4. Selecting providers

    5. Negotiating terms

    6. Transitioning resources

    7. Managing relationships

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    : Prepare HR

    Develop and communicate new HR strategy

    Define new roles and responsibilities

    Restructure HR

    Hire new employees to fill skill gaps

    Provide training for employees in new roles

    : Prepare Organization

    Develop HR strategy within overall organizational strategy

    Communication plan

    Resolve issue of whose payroll individuals are now on

    - Are HR employees actually employees of provider?

    - Does head of HR work for company or provider

    : Assessment

    Self examination

    SWOT of department

    Organizational scan

    : Define opportunities and benefits

    : Build the business case consider all costs and impacts on organization

    : All functions that are not core competencies should be considered for HRO

    nothing is sacred

    : Consider the driver behind HRO decision

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    Analyzing Cost/Performance

    : Understand market trends and competitive position

    : Identify goals and objectives

    : Determine added value

    : Gather baseline HR costs and metrics

    : Compare current HR operations to benchmarks

    : Determine which processes have highest strategic importance and add most

    value

    Negotiating Terms

    :Good contracts make good partners

    : Maintain heat of competition during negotiation

    : Reasonable, but clearly established, expectations

    : Well-documented deliverables regarding every aspect of deal

    : Attorney involvement

    Specifications of Contract

    Contract Duration

    Exact beginning and ending dates

    Financial penalties for early termination

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    Parties to the Contract

    Allow for additions or deletions (in case of acquisitions or

    divestitures)

    Require vendor to name all subcontractors and give you right of

    approval for those introduced later

    Services Performed

    Specify all functions to be provided

    Outline all support services

    Ensure escalation process and dispute governance included

    Performance Standards

    Tweak standard performance guarantees

    Reinforce performance guarantees through at-risk fees

    :Hold-Harmless Statement

    : Fees

    : Data Security

    : Communication Review

    : Contingency Plans

    : Audits

    : Final Contract Review

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    Findings

    Till that time, HR outsourcing in India remains to be a gold mine waiting tobe unearthed.

    1. Cost-benefit advantage - lower cost of outsourcing viz-a-viz outsourced

    content/processes

    2. Confidentiality of processes - away from in-house leaks

    3. External expertise as compared to existing in-house expertise

    4. Time advantage - timely process completion commitments and easier

    time-to-market processes/products/services.

    5. Focus internally on innovative/creative/strategic work and to do away

    with in-house with mundane, time consuming processes

    6. Greater objectivity/credibility gain amongst employees

    7. Confidence of top management on external professionalism and

    proven expertise

    8. Strategic intent of doing away with high, permanent salary/pay loads

    9. Client preference, especially overseas clients

    10. Branding/credibility enhancement by associating globally renowned

    outsourcing Companies

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    Recommendations

    This Corporate Research Forum research identified six trends that will dominate

    the future of HRO:Increased outsourcing of higher value HR processes such as

    recruitment.

    Increased use of shared services models.

    Performance issues surrounding HRO deals.

    Continued evolution of electronic HR activities.

    Emergence of new HR roles and competencies.

    Continued debates over HR and HRO measurement.

    The report makes recommendations, in particular pointing to areas where

    mistakes have been made:

    Clients must be clear about what it is sensible to outsource or not, to meet

    their business needs. This responsibility should not be shared with HRO

    providers, although consultants' advice may be useful where clients are

    unsure what to do.

    Outsourcing deals are typically constructed to last many yearsthe client

    must think through the implications in the event of significant changes in

    strategy, structure and operating environment.

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    Clients must achieve real understanding of where and how HRO will

    improve business performance, and when these performance gains may

    occur over the lifetime of a contract.

    Robust governance systems should be created that spell out the parties'

    responsibilities.

    There should be timely and honest communication with employees about

    the purpose, benefits and processes of outsourcinganticipating and

    addressing their likely areas of concern, particularly employees within the

    HR function.

    HR must ensure it has undertaken serious "homework" in mapping its

    processes before embarking on HRO. Measurement of provider service

    and of improvement require clarity about the start point.

    The new roles emerging have new skill requirements to manage

    relationships with HRO providers effectivelyposts such as HRO business

    partner and chief outsourcing officer are being created.

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    BIBLIOGRAPHY

    DESIGNING AND MANAGING HUMAN RESOURCE SYSTEM

    .Udai Parek & T.V.Rao

    PERSONNEL MANAGEMENT

    ..C. B. MAMORIA

    INTERNET

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    Questionnaire

    1). How often will you process payroll for your

    employees?

    Weekly

    Monthly

    Biweekly (every other week)

    Semimonthly (2 times per month)

    2). Are most of your employees paid on an hourly or salaried basis?

    Hourly

    Salary

    Evenly mixed

    3) Are you aware of the objective of strategic outsourcing?

    Very much

    Some what

    Dont know

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    4) Is strategic outsourcing helps the organization in achieving goal?

    Yes

    No

    Cant say

    5) Do strategic outsourcing affect the working efficiency of employee?

    Yes

    No

    6) Whether the strategic outsourcing is able to develop high result

    orientation approach?

    Yes

    No

    7)Outsourcing decision making in the organization is based on

    Performance

    Experience

    Both

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    Give your Suggestion for the strategic outsourcing.