HR Outsourcing
Human resources are the most critical assets of any organization as the organization's success lies in their hands. But in order to ensure that its employees remain satisfied, the company has to have a specialized human resources department that most of times proves to be a costly affaire. That is why most companies today; decide to outsource their human resources management functions to offshore destinations.
What is HR Outsourcing?
HR outsourcing is a process in which a company uses the services of a third party to take care of its HR functions. A company may outsource a few or all of its HR related activities to a single or combination of service provides located in offshore destinations like India, China, Philippines, etc.
In this sense the HR outsourcing service providing firms or hr outsourcing company can be divided into four categories depending on the services they offer as, PEOs (professional employer organization), BPOs (business process organization), ASPs (application service providers), or e-services. In these categories the PEOs are the ones that assume full responsibility of a company's hr functions where as others such a BPOs, ASPs and e services provide web based hr solutions like database maintenance, HR data warehousing, maintaining records, developing and maintaining hr software's etc.
Advantages of HR Outsourcing
HR outsourcing including personal outsourcing case studies have indicated that managing human resources involves specialized activities such as training, payroll administration, employee database management, employee retention, employee benefits and a lot more that many companies either don't have the proper resources or time to manage on their own. By outsourcing their HR functions companies can save huge amounts of money and be free of complications that are otherwise involved in maintaining an internal HR department. By doing so, companies can concentrate on their core competencies saving their valuable time and resources. By Outsourcing to third world developing nations such as India, China, Philippines, Mexico, Ireland etc companies can exploit the cheap labour and infrastructure facilities available in those lands and in turn cut down on man power costs, reduce operational costs and capital expenditure.
Some advantages are stated below-
• Concentrate on Core Business -Back office operations of a company are highly tedious and need specialized attention. Most of them are critical for the company's progress. By outsourcing their back office operations businesses can concentrate on their core competencies while their back office operations are being managed smoothly by a specialized third party company.
• Skilled manpower at lower rates -Outsourcing gives an organization the chance to get access to skilled and trained man power at extremely lower rates that will lead to an increase in productivity and save costs in a major way.
• Advanced technologies at lower rates- There are many technologically developed offshore destinations that can give the companies access to high tech newly developed technologies at very affordable rates. This in turn can help them progress at a rapid pace.
• Tax benefits- By selecting the right BPO destination companies can save up on taxes in turn cutting their costs.
• Increased productivity- By employing skilled manpower in more numbers at lower costs companies can highly boost up their productivity in turn resulting into better customer satisfaction and increased profitability.
• Beat Competition- In a fast paced economy a company needs to provide the best service to its customers in order to retain them and do all this by keeping the rates low. Outsourcing in this case can help the company maintain lower rates with better service thereby helping them to stay abreast of the competition. These outsourcing advantages are well an indication that the outsourcing market has a great future.
Negative effects of Outsourcing
Over the past 20 years outsourcing as a phenomena has developed at a very fast pace. The growth of IT, aiding globalization and thereby generating multinational societies has given rise to situations where cut throat competition tends to take the better of us. One face of this competition is the frenzy of research and development, to cut costs and provide better services, which has manipulated itself into outsourcing. The situation seems more threatening every added day as more companies follow suite to the actions of their rivals.
Impact of Offshoring Jobs
With outsourcing the jobs are sure to go. The third world countries do get benefited because of this, but what about the people in the first world nations. They do feel unrest and no assurances are going to keep them from frowning about their precious job that was taken away. Here again the policies are to blame. Offshore outsourcing backlash on communities was bound to happen not because the jobs are getting outsourced, but because the way the jobs are being outsourced offshore today. People are not able to grasp the implications with a pinch of salt that is way too salty.
Other Drawbacks of Outsourcing
At this point it will be logical to highlight some very rampant drawbacks of outsourcing.
Firstly there is a situation today where employees have started fearing job losses. This gives rise to lower motivation and thereby decline in services. After all who would like to serve an organization that he feels is going to sack him for all his services. An employee can give the company 100% if and only if he feels that he is an integral part of the organization and not some dummy to be sacked when ever the company feels like. One more point here is that a sacked employee could even join hands with competitors and bring to light the weaknesses of the company.
Outsourcing can also lead to the alterations of well established job processes that can lead to unnecessary delays and conflicts. Lack of coordination between people having different cultural backgrounds and different time zones can also lead to time losses.
Looking at all these drawbacks, outsourcing really does not seem to be the magic answer for cutting costs. On the contrary outsourcing is way more complicated and can lead to drastic situational developments in the afterward. The governments of first world nations at this point need to analyze this situation and help develop a fair playing ground for organizations taking into consideration the negative effects of outsourcing offshore.
Risks in Outsourcing
Although the outsourcing statistics provide us with a positive picture there are certain problems associated with outsourcing. The major ones can be classified as follows:-
• Geographical problems- Offshore outsourcing can lead to many problems that are associated with the geographical location of the offshore destination. Some of these problems can be language problems, accent problems, political instability, change in laws and regulations, labour laws, cultural issues and so on.
• Infrastructure and operational problems- Infrastructural and operational problems can be in the form of improper communication infrastructure, improper disaster recovery capacity of the country, power generation capacity, non renewable resources availability and so on. So before selecting an offshore destination, it becomes inevitable for anyone to check out on all these statistics for offshore outsourcing and factors for the success of an outsourcing project.
Human resources are the most critical assets of any organization as the organization's success lies in their hands. But in order to ensure that its employees remain satisfied, the company has to have a specialized human resources department that most of times proves to be a costly affaire. That is why most companies today; decide to outsource their human resources management functions to offshore destinations.
What is HR Outsourcing?
HR outsourcing is a process in which a company uses the services of a third party to take care of its HR functions. A company may outsource a few or all of its HR related activities to a single or combination of service provides located in offshore destinations like India, China, Philippines, etc.
In this sense the HR outsourcing service providing firms or hr outsourcing company can be divided into four categories depending on the services they offer as, PEOs (professional employer organization), BPOs (business process organization), ASPs (application service providers), or e-services. In these categories the PEOs are the ones that assume full responsibility of a company's hr functions where as others such a BPOs, ASPs and e services provide web based hr solutions like database maintenance, HR data warehousing, maintaining records, developing and maintaining hr software's etc.
Advantages of HR Outsourcing
HR outsourcing including personal outsourcing case studies have indicated that managing human resources involves specialized activities such as training, payroll administration, employee database management, employee retention, employee benefits and a lot more that many companies either don't have the proper resources or time to manage on their own. By outsourcing their HR functions companies can save huge amounts of money and be free of complications that are otherwise involved in maintaining an internal HR department. By doing so, companies can concentrate on their core competencies saving their valuable time and resources. By Outsourcing to third world developing nations such as India, China, Philippines, Mexico, Ireland etc companies can exploit the cheap labour and infrastructure facilities available in those lands and in turn cut down on man power costs, reduce operational costs and capital expenditure.
Some advantages are stated below-
• Concentrate on Core Business -Back office operations of a company are highly tedious and need specialized attention. Most of them are critical for the company's progress. By outsourcing their back office operations businesses can concentrate on their core competencies while their back office operations are being managed smoothly by a specialized third party company.
• Skilled manpower at lower rates -Outsourcing gives an organization the chance to get access to skilled and trained man power at extremely lower rates that will lead to an increase in productivity and save costs in a major way.
• Advanced technologies at lower rates- There are many technologically developed offshore destinations that can give the companies access to high tech newly developed technologies at very affordable rates. This in turn can help them progress at a rapid pace.
• Tax benefits- By selecting the right BPO destination companies can save up on taxes in turn cutting their costs.
• Increased productivity- By employing skilled manpower in more numbers at lower costs companies can highly boost up their productivity in turn resulting into better customer satisfaction and increased profitability.
• Beat Competition- In a fast paced economy a company needs to provide the best service to its customers in order to retain them and do all this by keeping the rates low. Outsourcing in this case can help the company maintain lower rates with better service thereby helping them to stay abreast of the competition. These outsourcing advantages are well an indication that the outsourcing market has a great future.
Negative effects of Outsourcing
Over the past 20 years outsourcing as a phenomena has developed at a very fast pace. The growth of IT, aiding globalization and thereby generating multinational societies has given rise to situations where cut throat competition tends to take the better of us. One face of this competition is the frenzy of research and development, to cut costs and provide better services, which has manipulated itself into outsourcing. The situation seems more threatening every added day as more companies follow suite to the actions of their rivals.
Impact of Offshoring Jobs
With outsourcing the jobs are sure to go. The third world countries do get benefited because of this, but what about the people in the first world nations. They do feel unrest and no assurances are going to keep them from frowning about their precious job that was taken away. Here again the policies are to blame. Offshore outsourcing backlash on communities was bound to happen not because the jobs are getting outsourced, but because the way the jobs are being outsourced offshore today. People are not able to grasp the implications with a pinch of salt that is way too salty.
Other Drawbacks of Outsourcing
At this point it will be logical to highlight some very rampant drawbacks of outsourcing.
Firstly there is a situation today where employees have started fearing job losses. This gives rise to lower motivation and thereby decline in services. After all who would like to serve an organization that he feels is going to sack him for all his services. An employee can give the company 100% if and only if he feels that he is an integral part of the organization and not some dummy to be sacked when ever the company feels like. One more point here is that a sacked employee could even join hands with competitors and bring to light the weaknesses of the company.
Outsourcing can also lead to the alterations of well established job processes that can lead to unnecessary delays and conflicts. Lack of coordination between people having different cultural backgrounds and different time zones can also lead to time losses.
Looking at all these drawbacks, outsourcing really does not seem to be the magic answer for cutting costs. On the contrary outsourcing is way more complicated and can lead to drastic situational developments in the afterward. The governments of first world nations at this point need to analyze this situation and help develop a fair playing ground for organizations taking into consideration the negative effects of outsourcing offshore.
Risks in Outsourcing
Although the outsourcing statistics provide us with a positive picture there are certain problems associated with outsourcing. The major ones can be classified as follows:-
• Geographical problems- Offshore outsourcing can lead to many problems that are associated with the geographical location of the offshore destination. Some of these problems can be language problems, accent problems, political instability, change in laws and regulations, labour laws, cultural issues and so on.
• Infrastructure and operational problems- Infrastructural and operational problems can be in the form of improper communication infrastructure, improper disaster recovery capacity of the country, power generation capacity, non renewable resources availability and so on. So before selecting an offshore destination, it becomes inevitable for anyone to check out on all these statistics for offshore outsourcing and factors for the success of an outsourcing project.
