HR Outsourcing - The Emerging Trends
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Authors
Authors: Sanjib Dutta
Senior Faculty Member
ICMR (IBS Center for Management Research).
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Is the Market Still Unexploited in India?
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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 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 (table 1.2) the trend seems to be catching up as companies 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.7 This is the right time for the players to tap this emerging market.
Table 1.2
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Major Indian Companies that are into HR outsourcing |
Source: www.nasscom.org
6] Outsurce2india.com Management Trends in Outsourcing.
7] A step ahead Human Resource outsourcing moves up the value chain, Business India, September 29 - October 12, 2003