Outsourcing HR in Recession & Surviving and Thriving in Recession

With recession hitting the market, companies need to be more practical and strategic in their business process. Of late, companies have started realizing that HR recruitment, selection, retention etc., is quite a cumbersome process calling for high amount of time and resources and inflicting cost. Thus, they are warming up to the idea of outsourcing HR function to offshore firms. Multinational companies are saving millions of dollars by outsourcing HR. All cultural differences are addressed while streamlining the work.

Advantages associated with outsourcing the HR departments include:

Great Reduction in Costs

HR outsourcing (HRO) converts fixed cost to variable cost and can produce quality performance in low cost. Companies have started realizing that offshoring HR department to low-cost areas will help in reducing cost while maintaining the quality of performance. Gradually, offshore outsourcing firm becomes an inbuilt function of the organization and the combined effect of their partnership further strengthens the process of the company.

Simple Global Models

Outsourcing takes HR functions to a global scale. With entrance of global service providers in the market competition has become tough; however the service delivery model has become mature and highly satisfactory for global clients. Outsourcing helps in moving HR executives from local role to global. Few advantages of global engagements for HR are:

• Expertise: HR Managers of varied expertise from all over the globe improves the recruitment process.
• Cost Effective: As stated earlier, hiring HR personnel from low-cost countries helps in providing same or better service at lower price.
• Workplace diversity: Globally functioning HR brings employees from across the globe and makes the work environment culturally more diverse.

In a tough competitive global market, the benefits of global HR model are too valuable for a company to miss.

Best of Breed Solutions

With outsourcing talent hunt has become broad spectrum. Now finding the desired candidate satisfying all selection criteria is not the main area of focus, instead, best-of-bread approach is taken to find the leaders in the field.

Risk Mitigation

Many a times companies faces crisis due to sudden loss of the key HR person. A tight labor market delays finding a suitable replacement. Hiring and training a new person for knowledge transfer becomes difficult and costly in recession. An outsourced HR engagement helps to almost terminate these problems. In HRO, hiring new replacements and training them are the responsibilities of the service provider, thus, ensuring a continued hassle-free service.

Value Addition

Generally, in-house HR functions are primarily visualized as cost-centre; whereas, HRO models chiefly focus on strategies which would improve business and reduce cost. Unlike in-house HR personnel, outsourced HR team does not get caught up in internal issues and thus can concentrate on cost-reduction, talent acquisition, training and retention. This results in the following benefits:

• Increases process efficiency by concentrating on important issues.

• Increases flexibility of business and makes it more dynamic.

• Increases employee satisfaction and productivity.

• Increases the business network and help gain market access.

• Increases sales and business during recession.

In the current volatile market the need to focus on core business activities has become an absolute necessity. To cater to core activities, companies are opting to outsource non-core process like Human Resource management.
Like every process, outsourcing too has its own pros and cons. Few disadvantages of HR outsourcing are:

• It requires lots of coordination with the service provider.

• It reduces the scope of learning for an organization.

• It reduces the control over the support function thus affecting the integrity of the company.

To minimize these disadvantages organizations has to understand their ultimate motive of outsourcing. A clear vision of goal and transferring only the functions and not responsibilities will certainly prove to be fruitful in smooth outsourcing of HR functions. This is no cakewalk and requires a great deal of knowledge, planning, skill and commitment.

Source: http://www.nowpublic.com/