Rasz

University or any other University.
PlaceA DESAI.
This dissertation is based on the original project study undergone and has not
formed the basis for the award of any other degree/diploma by Bangalore
University or any other University.
Dr. Kavitha Desai Dr.Kerron G. Reddy
PROFESSOR MBA, RESIGTRAR AIMS PRINCIPAL, AIMS
Place: Bangalore Place: Bangalore
Date: 4
th
May 2011 Date: 4
th
May 2011
4
CERTIFICATE OF APPROVAL
This dissertation report of NIRVAN titled THE IMPACT OF HR
OUTSOURCING ON VARIOUS HR FUNCTIONS WITH REFERENCE TO
IT INDUSTRY isapproved in quality and form and has been found to be fit for
the Partial Fulfilment of the Requirements of Bangalore Universityfor the Award
of Degree of Master of Business Administration.
INTERNAL GUIDE EXTERNAL EXAMINERS
Name: Dr. KAVITHA DESAI 1.Name:
Signature: Signature:
Date: 4
th
May 2011 Date:
2. Name:
Signature:
Date:
5
ACKNOWLEDGEMENT
First of all, I bow my head with full devotion, dedication, faith & gratitude to
the omnipotent,
omnipresent, omniscient and Almighty God for showering his unconditional blessings
upon me
as a result of which I am able to complete this project well in time.
I would like to convey my deep and profound sense of gratitude, thankfulness and
obligation to
my learned and self-esteemed guide Dr.Kavitha Desai, Prof. MBA Dept. and
Registrar,
AIMS,for her untiring help, constant encouragement and learned suggestions.
Vocabulary fails
to express my feelings, emotions and thoughts towards her greatness & kindness
which she
expressed towards me. Instead of her extremely busy and exhaustive schedule, she
always spared
her valuable time and guided me accordingly. She stood like a beacons light to
sail in the
uncharted sea of my dissertation project.
I would like to express my sincere thanks & gratefulness to all my respondents who
helped me
with their learned, experienced and valuable feedback by answering the
questionnaire of my
research topic which worked as the foundation stone to build this project.
I am extremely thankful to Honourable Prof.Kerron G. Reddy, Principal & CEO AIMS,
who
has provided me with all the required facilities to carry out the present research
work according
to the norms of Bangalore University and by nurturing my skills to execute the
requirements.
I express my sincere regards, respect and thankfulness to Prof. Ranganathan
Krishna Rao,
Program Director, MBA Department, who always supported me with his fatherly love &
affection. I pay my sincere regards and thankfulness to all the respected teachers
of MBA Dept.
& all the faculty members of AIMS particularly to Prof.Nagarajan & Dr.Bhartha
K.Afor their
valuable suggestions and blessings. I express my special thanks to our COO,
Mr.Priyanandan
Reddyfor his effective support, sympathy, love and affection throughout the course
of studies at
6
AIMS. I would also like to thank our Librarian Maam & all the library staff for
their cooperation while collecting the relevant literature on the subject.
I bow my head in the lotus feet of my respected father Prof. (Dr.) Dharm Raj Singh
(Gold
Medallist), Ex-H.O.D, P.G. Dept. of Kayachikitsa, Lucknow University,
Lucknow and my
respected & loving mother Dr.Sangeeta Singh(Gold Medallist) Ex-Associate Professor,
P.G.
Dept. of Kayachikitsa, Lucknow University, Lucknow who always stood with me in my
difficult
times and always taught me the lesson from a famous quotation, Arise , Awake and
stop not
till the goal is achieved! by Swami Vivekananda who had been a great saint and
visionary.
Lastly I bow my head down to earth with full faith, honour & devotion in the lotus
feet of my
honourable Gurudev H.H Swami Subodhananda Saraswati for his continuous
spiritual
enlightmentand divine blessings.
7
TABLE OF CONTENTS
Sr. No. TITLE Page No.
1 INTRODUCTION 1 14
1.1 INTRODUCTION TO THE RESEARCH TOPIC 1 2
1.2 THE THEORETICAL ASPECTS OF THE RESEARCH TOPIC
3 6
1.3 THE SUBJECT BACKGROUND OF THE RESEARCH TOPIC 6 11
1.4 OUTSOURCING 12
1.4 BE SPECIFIC ABOUT HR OUTSOURCING 12 14
2 RESEARCH METHODOLOGY 15 20
2.1 INTRODUCTION 15
2.2 STATEMENT OF THE PROBLEM 15
2.3 REVIEW OF LITERATURE 15 17
2.4 OBJECTIVES OF THE STUDY 18
2.5 SCOPE OF THE STUDY 18
2.6 RESEARCH DESIGN 18
2.7 SAMPLING PLAN 19
2.8 TOOLS FOR DATA COLLECTION 19
2.9 TOOLS FOR DATA ANALYSIS 19
2.10 LIMITATIONS OF THE STUDY 20
2.11 LAYOUT OF CHAPTERS 20
3 INDUSTRY PROFILE 21 30
3.1 HR OUTSOURCING INDUSTRY 21 23
3.2 THE BPO INDUSTRY 24 26
3.3 INDUSTRY PROFILE OF SOFTWARE & IT INDUSTRY 26 30
4 DATA ANALYSIS & INTERPRETATION 31 58
4.1 Department and Designation Profile of the respondents 31 32
4.2 Years of Work Experience of the respondents 33 34
4.3 Approximate HR strength in the organization 35
4.4 Response of the organizations towards HR outsourcing 36
8
4.5 Approximate no. of people outsourced by various organizations 37 38
4.6 Major HR functions outsourced by various organizations 38 41
4.7 Important reasons for outsourcing HR functions by various organizations 41 43
4.8 Important factors for choosing a third party supplier for HR outsourcing 44
45
4.9 Opinions on different aspects of HR outsourcing in relation to various HR
functions.
46 47
4.10 Type of the legal service agreement standard included in HR Outsourcing
Contract
47 48
4.11 HR Functions Which Are Not Outsourced Or Being Outsourced Either Partially
or Completely
49 52
4.12 Opinion about the impact of HR Outsourcing on various HR attributes 52 53
4.13 Opinion about Outsourcing Options with Reference To organizational HR
Policies, Practices & Talent Needs of IT Industry
54 55
4.14 Opinion of HR Managers on whether HR Outsourcing may help to reduce the
Rate of Attrition in IT Organizations
56
4.15
Opinion of HR Managers on how well have your HR outsourced functions
fulfilled their objectives
57 58
5 SUMMARY OF FINDINGS 59 62
5.1 Findings about different aspects of HR outsourcing 59
5.2 Findings about important reasons for HR Outsourcing 60
5.3
Findings about important factors responsible towards choosing a third party
supplier for HR Outsourcing. 60
5.4
Findings about major HR functions being outsourced in the Indian industry
either completely or partially 61
5.5
Findings about the impact of HR outsourcing on various HR functions & on the
effectiveness of the HR department. 61
5.6 Findings about the co-relation between HR Outsourcing & IT industry 62
5.7 Findings about the effectiveness of HR function that is being outsourced. 62
6 SUGGESTIONS AND CONCLUSIONS 63 66
BIBLIOGRAPHY
9
9
ANNEXURE 10 10
10
LIST OF TABLES
TABLE
NO.
TITLE OF TABLES
PAGE
NO.
4.1 Department and Designation Profile of the respondents 31
4.2 Years of Work Experience of the respondents 33
4.5 Approximate no. of people outsourced by various organizations 37
4.6 Major HR functions outsourced by various organizations 38
4.7 Important reasons for outsourcing HR functions by various organizations 41
functions.
46
Contract
47
or Completely
49
4.12 Opinion about the impact of HR Outsourcing on various HR attributes 52
54
55
4.15 Opinion of HR Managers on how well have your HR outsourced functions
57
11
LIST OF GRAPHS
GRAPH
NO.
TITLE OF GRAPH
PAGE
NO.
4.1 Department and Designation Profile of the respondents 32
4.2 Years of Work Experience of the respondents 33
4.5 Approximate no. of people outsourced by various organizations 37
4.6 Major HR functions outsourced by various organizations 39
4.7 Important reasons for outsourcing HR functions by various organizations 42
functions.
46
Contract
48
or Completely
50
4.12 Opinion about the impact of HR Outsourcing on various HR attributes 52
54
56
4.15 Opinion of HR Managers on how well have your HR outsourced functions
57
12
EXECUTIVE SUMMARY
This Dissertation titled THE IMPACT OF HR OUTSOURCING ON VARIOUS HR
FUNCTIONS WITH REFERENCE TO IT INDUSTRY is based on an original study
conducted by me (Nirvan) of 4th semester MBA, student of Acharya Institute of
Management &
Sciences under the guidance of Dr.Kavitha Desai, Acharya Institute of Management &
Sciences Bangalore, Dept. of MBA.
HR outsourcing is an accepted managerial tool for re-structuring and re-focusing
the way an
organization does business. It is proved to be the catalyst for
organizations to drive
standardization of HR policies and practices. HR outsourcing is a boon for
enhancing various
organizational capacities and for overall improvement of different HR Functions of
different
organizations according to their various needs & requirements. It is an
excellent tool for
completing the different tasks, objectives and needs for which it has been
assigned.
HR Outsourcing & IT industries are inter-related and both are benefitted by mutual
co-ordination
& co-operation. The problem of Attrition is very well managed with the
help of HR
outsourcing in IT industry. Mid-market, or medium-sized, organizations find
HRO very
attractive because of the economic, strategic, operational, technology and risk
management
benefits.
HRO is a comprehensive solution that impacts process, technology and people.
Therefore, HRO
requires more thoughtful approaches to managing change, as well as an experienced
partner.
Navigating through the uncertainty leaves most HR leaders reaching out to providers
for help
because, in their words, "we don't know what we don't know." Experienced providers
are wellpositioned to share their proven expertise and the best practices that will
ensure success.
HRO has the ability to impact the entire organization - far beyond the HR
department - with a
reach that is often underestimated. From key stakeholders, such as an executive who
can benefit
from better information about the workforce, to the hourly worker who will interact
with HR in a
whole new way, HR's management of the HRO transition process will determine how
each of its
constituencies responds to a new world of work.
Making the decision to outsource human resource processes is a major
step for many
organizations. Once a company has decided to outsource one or more human resource
processes
and has selected a vendor, the next major task is to implement an
effective outsourcing
arrangement. Thus my study helped me to get a clear picture of HR Outsourcing in
the Indian
Context along with its future and feasibility.
13
CHAPTER-1
Introduction
14
Chapter-1
INTRODUCTION
1.1 INTRODUCTION TO THE RESEARCH TOPIC
1.1.1 Overview of 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.
1
HR outsourcing is a viable choice for small to mid-sized businesses looking to
limit staffing
burdens while maintaining high-quality human resources functions. HR is a
complex and
specialized field that performs necessary services for businesses with employees,
but the cost of
hiring qualified HR personnel may not always make financial sense. Outsourcing HR
functions
can provide the services and highly trained professionals that businesses
need, often with
significant cost savings over hiring full-time HR staff.
1.1.2 Function
The primary function of human resources is to manage and provide everyday personnel
services.
From employee benefits management, payroll and administration, recruiting and
hiring, training
and organizational development, employment law and regulatory compliance, human
resources
is a full-time job that requires specialized training and on-going education. HR
outsourcing firms
provide a full range of vital services to businesses that can't afford a dedicated
human resources
staff or choose not to maintain HR functions in house.
1.1.3 Benefits
1
Ref.1. Society OF HR Management- Outsourcing Survey Report about HR Outsourcing
By
Alexey Klementive
15
For business owners and managers attempting to fulfil HR roles, performing human
resources
functions can take away from running the business. The allure of outsourcing non-
core business
functions such as HR is that it allows the company to concentrate on its main
business goals,
leaving other tasks to the specialists. HR outsourcing firms are experienced in
implementing the
most efficient and cost-effective methods and practices and may be able to provide
benefits,
payroll and other services at a lower cost than a company would on its own.
1.1.4 Service Levels
HR outsourcing companies generally offer different service levels--including a la
carte, bundled
or all-inclusive services--depending on your particular needs and budget. You can
contract
human resources outsourcing firms for a specified period of time, use then on an
as-needed basis
or contract them for specific one-time or occasional projects. Authoring employee
handbooks
and creating administrative systems and compensation programs are a few examples of
projectbased HR outsourcing services.
1.1.5 Cost and Value
Aside from staffing, there are costs associated with the setup of an HR department.
Software,
filing and information-gathering and storage systems, policy and procedure
creation, and
implementing the HR program itself cost time and money. When you factor in all
variables of
setting up and maintaining an in-house HR department, there is no guarantee that
the department
will run effectively. When a business outsources HR services, all the systems,
processes and
personnel are in place, providing a value-added element to the equation.
1.1.6 Professional Employer Organizations
Another outsourcing option that involves handing over the HR duties along with the
employees
is called a PEO (professional employer organization). In a PEO, the outsourcing
firm becomes
the legal employer, handling payroll, benefits, insurance and other employee
relations; it leases
the employees back to the company. Employees generally enjoy better benefits
because of group
rates, and the scenario allows business owners to concentrate solely on company
goals rather
than personnel issues. Some companies may also enjoy tax benefits and will save on
worker's
compensation and unemployment insurance because employees are the responsibility of
the
PEO.
1.2 THE THEORETICAL ASPECTS OF THE RESEARCH TOPIC
16
1.2.1 Human Resource Outsourcing
The increasing focus on HR's contribution to the performance of the wider business
has led to
more emphasis on cost reduction. HRO has grown out of this debate - from re-
engineering and
cost reduction on the one hand to a potential transformational capacity on the
other. HRO is an
evolving industry and can be defined as the purchasing by an organization of on-
going HR
services from a third-party provider that it would otherwise normally provide for
itself. HRO is a
strategic tool aimed primarily at chief executives. Though organisations may have
different
strategies and performance models, all will relate in some way to HRO. These can
involve the
following:
? Capability: for any organization where there is a need to either improve or
acquire HR
capability
? Scale: providing for large organisations with 50,000 or more employees well-
delivered
HR administration and services - and to justify the return on investment.
? Technology: for most organisations where technology can be acquired and leveraged
through shared services or outsourcing
2
.
1.2.2 HRO providers
While HRO providers may seem to offer little that is different between them,
differences do
occur in their size, culture, HRO methodology and track record. However, they offer
their
services in three distinct ways.
? Single-service or transactional solutions for a particular HR activity
? Multiple HR services as part of a large-scale deal
? Transformational deals which radically change the purpose and role of HR
Three different types of providers are active in the HRO market - pure HRO
specialists, Business
/ HR transformation firms and HR process technology suppliers.
2
Ref.2. Outsourcing the HR Function- Possibilities & Pitfalls a report by Anthoy
Hesketh on
behalf of Strategic Dimensions Associate, Corporate Research Forum (CRF)
17
1.2.3 Selling points of HRO
HRO providers use these main selling points.
? Increased efficiency of HR with estimated cost savings of up to 50%.
? Increased effectiveness of HR through operational improvements.
? Improved strategic focus from HR on business goals.
? The role of HRO in transforming the performance of HR and the business.
While many HRO users can point to improvements in the first two points, evidence is
lacking for
the impacts on strategic focus and business performance. This is a major problem
for the HRO
industry.
1.2.4 Strategic debates around HRO
These debates are on-going in HR outsourcing among user - or prospective
buyer -organizations, providers, HRO advisers and academics.
? The future purpose and contribution of HR because of the possibilities of
functions being
transformed, or part-outsourced, through HRO deals.
? The strategic and management complexities of HRO deals, especially so-called
megadeals.
? Deciding what is core and non-core in HR the critical competencies to be
retained
versus peripheral activities that might be outsourced.
? The difficulty that HR has in assuming more strategic or value adding
roles after
implementing HRO.
? The position of offshoring as it affects HRO decisions and raises emotive issues
such as
job losses and redeployment.
? The challenges of trying to manage HR process delivery on a global scale and
across
different cultures.
The HRO debate ultimately turns on the perceived quality of, and returns from,
investments in
the HR function. Those organizations under pressure to reduce costs are more likely
to consider
outsourcing at least part, if not all, of their HR administration.
18
1.2.5 The future of HR
HR itself is also locked in a debate over its future. Though some organizations
have evidence
that the function is an integral part of its capability to deliver business
success, many view HR as
? Over-resourced
? Inefficient
? Vulnerable to the cost reduction possibilities of HRO.
HR outsourcing raises questions over HRs future skills, capabilities and
career paths. Its
developments are creating pressures for practitioners to shift from being
reactive and
administrative problem-solvers to more proactive, value-driven business partners.
1.2.6 Shared services

Research revealed much discussion about the definitions and position of shared
services. For our
purposes, it is defined as the transfer or insourcing of HR services and their
resources to a
separate unit within the business - and often with a separate P&L system. Shared
services is
often adopted by organizations who are against outsourcing as a matter of principle
- but still
seek some of the transformational and streamlining advantages connected with
outsourcing.
Alternatively, some organizations use shared services as a halfway house to prepare
the specific
lines of HR they intend to outsource.
1.2.7 The HRO logic
No amount of preparation, however extensive, can safeguard outsourcing deals
completely.
Leaders need to clarify what their core logic is for creating value by
demonstrating the
following.
? How HRO can enable the organization to meet the requirements of its stakeholders
- be
they internal (employees) or external (customers).
? How outsourcing will transform the way the HR function works in a
radical and
sustainable way.
19
? Crucially, how transforming the HR function will influence the planning,
operations and
performance required by the business model.
1.2.8 Managing the transition
In some organizations, HRO is akin to changing the engine while the plane is still
in the air
which is a potentially catastrophic exercise. The consequences of HRO must be
thought through
- before agreeing a contract. Handing over single, multiple or all HR service
processes represents
for many organizations their first experience of complex projects - project
management is a
critical HR capability for HRO to work well. A successful transition minimizes
employee angst -but botched handovers could have longstanding repercussions on
relationships with providers,
employees, other stakeholders and corporate image.
1.2.9 Governance of HRO performance
Managing and measuring performance after HR outsourcing is pivotal to the
relationship
between HRO client and provider. Performance measurement in HRO traditionally
concerns the
following.
? Efficiency: mainly through cost reductions.
? Effectiveness: through improved service outcomes against criteria in
service level
agreements (SLAs).
? Transformation: indicators of deeper change at the level of the
organization, its
employees, systems - and at intangible levels.
? Strategic governance: evaluating the management of performance -
including the
decision rights, rules and agreed management processes defined with and
before
providers are engaged.
1.3 THE SUBJECT BACKGROUND OF THE RESEARCH TOPIC
1.3.1 Impact of HR Outsourcing on Business Performance
20
Human resources outsourcing evolved from hiring payroll processing companies in the
1990s to
delegating tasks previously performed by human resources assistants and
specialists, such as
recruiting, coordinating benefits and handling unemployment claims. Some small
businesses
outsource entire human resources departmental functions; however, many companies
outsource
singular processes.
1.3.2 Outsourcing HR Processes
Small businesses to large corporations decide for one reason or another that
outsourcing human
resources functions is a way to improve efficiency and minimize staffing
costs. Large
organizations that employ thousands of people may find it's simpler to outsource a
process, such
as payroll, rather than employ two to three payroll clerks and purchase
sophisticated technology
than engage the services of a company that focuses entirely on
processing payroll. Small
companies might decide that outsourcing human resources processes is more cost-
effective and
efficient than creating a human resources department while the business is focused
on other
projects associated with starting a new business. "Inc." magazine contributor Priya
Ganapati says
data from Everest Research Institute in Dallas suggests a significant
percentage of small
businesses are finding human resources outsourcing is the answer to avoiding labor
costs and
expensive technology. "HR outsourcing among small businesses has gone up
considerably: Of
the 65 HR outsourcing deals between 1998 and mid-2004, that the report analyzed, 37
involved
small businesses," Ganapati writes. The growth rate of HR outsourcing is likely to
increase as
more small businesses focus on their product and service offerings instead of
staffing an inhouse human resources department.
3
1.3.3 HRO Effect on Business Performance
3
Ref.3. A Handbook of HR management practices, 8
th
edition 2002, by M. Armstrong.
21
Business performance is an important consideration when small business owners weigh
the pros
and cons of HRO. One school of thought is that a small business can focus its
energy and
expenditures on developing the product it sells. This enables a small company to
allocate its
resources to areas that include engineering and research and development, instead
of recruiting
staff, maintaining personnel files and other human resources tasks. The other
school of thought
has more to do with human capital and talent--a small business owner may find
herself without
the talent she needs to build an efficient human resources department. In this
case, HRO resolves
the dilemma small business owners face during the search for an in-house human
resources
expert. In the first scenario, a small business directing its focus on product
design and sales may
determine the expense of HRO can be easily justified by more attention given to
product sales. A
small business that doesn't have the requisite talent to lead a human resources
department can
justify the expense of HRO by the confidence in the level of competency HRO
companies offer.
1.3.4 Continued Impact on Business Performance
When small businesses initially utilize HRO services for transactional processes,
the selection of
a strategic human resources leader can become a priority. The search for human
resources
administrative practitioners without expertise in HR strategic management
can then take a
backseat for now. An HR strategic partner should be the first hired for development
of a human
resources department. OutsourcingInformationTechnology.com editor Beth Rosenthal
observes,
"Small-to-medium businesses may have a hard time recruiting highly skilled staffers
without the
benefits they expect. Outsourcing allows SMBs to offer benefits typically available
only at
bigger companies." Upon making the decision to outsource HR functions while you
build a
successful, profitable company, you can resume your search for an HR executive.
Once your
company carves a position in the market with your product offering, your executive
leadership
team--including your human resources executive--can then begin to work
collaboratively to form
a full-service human resources department and bring in-house those
previously outsourced
functions. Still, you may discover that outsourcing some human resources functions
is in the best
interest of the company. As your business grows, resources committed to HRO may
turn into a
wise, long-term decision that improves the services your human resources
department can
provide to its internal customers, your employees.
1.3.5 Choosing HR Outsourcing Services
There are numerous HR outsourcing services that you can consider and it is
sometimes very
difficult to properly know what to choose. You need to properly understand
everything involved
22
and in order to do this it is your responsibility to be informed at all times. We
basically have two
main types of HR Outsourcing Services: Core Human Resources and Talent
Administration.
1.3.6 Core HR Outsourcing Services
We are using the term Core human resources because in this case we are talking
about those
services that are crucial for most companies out there. We are dealing
with 4 core HR
outsourcing services:
? Payroll Administration This includes everything related to payrolls from filing
taxes to
managing the payroll of special projects.
? Benefits Administration This is a little more difficult to understand for some
owners as
most believe there is no need for such a department. Such HR outsourcing services
include pensions, share plans and even welfare. Signing a contract is not always
enough
to handle employee benefits in time
? Workforce Administration These HR outsourcing services are the foundation of a
good
human resources management plan. We are talking about employee data management,
relations, disciplinary services, unemployment administration and a lot more. This
is the
one core HR service that most people outsource.
? Leave Administration Your employees will take leaves of absence as they are
entitled
to do so in some cases. On the other hand, there might also be leaves that are not
good for
the company. A good management of leaves is needed in order to keep a close grasp
on
human resources and employee satisfaction.
1.3.7 Talent Administration HR Outsourcing Services
When it comes to the talent you have on board, you want all people to feel good and
always
know that they will get compensation for what they do. In this case we have 4 main
talent
administration HR outsourcing services that you can choose from:
1. Relocation and Handling Assignments HR outsourcing services can manage
everything
involved from travel assistance to the entire program development.
2. Performance Management and Training Your employees need to be monitored so
that
you know their performance levels at all times. Also, you do want to know when
training
is needed and want someone to do it properly. HR outsourcing services can deliver.
3. Recruiting Administration It is usually quite hard to hire new staff. You lose
a lot of time
going through CVs and handling interviews. This is the one talent administration HR
23
outsourcing service that can really offer benefits. These firms can handle all your
hiring
needs and you will not lose a second. You can make sure that the best people are
always
hired and this is something that you really want to have incorporated. Even if you
do not
use HR outsourcing services for full talent administration, we recommend that you
at
least consider recruiting administration.
4. Compensation Administration This includes a lot of math. It is needless to say
that a lot
of time is wasted in monitoring the compensations you would need to pay someone. A
good HR outsourcing service will use various methods to keep control of everything
from
taking surveys to executive administration.
HR outsourcing services can bring in a lot of benefits especially when we consider
management.
It is crucial that human resources are properly handled in every single company out
there. A
failure to do this can lead to loss of time and money. To make it even worse, an
improper
management can cause your employees to not work at their full potential. This is
exactly why
you should use HR outsourcing services if you cannot properly handle this
operation.
1.3.8 Benefits of HR Outsourcing
HR outsourcing has really become a worldwide phenomenon. We see more companies
doing it
daily and this can only bring in benefits. The problem is that few people really
know what HR
outsourcing means. We have seen a lot of company owners that thought that only
talking to a
company to look for some staff for them was human resources outsourcing. Even this
process is
not really HR outsourcing in some circumstances. Before you think about the
benefits of HR
outsourcing you really need to understand what this concept means. Only after that
can we
properly understand the benefits offered. Through the outsourcing of some or all
core human
resources functions a company is almost immediately able to cut costs and minimize
the time
that is needed for them to perform properly. In the last few years we saw that the
common HR
tasks that are outsourced are payroll administration, attendance tracking, time
tracking, tax filing
and tax payments. The tricky subject stands in the fact that human resources are
now viewed at a
much larger scale than they were in the past. Internal human resources departments
are bigger
and have a more important role in a company. This immediately translates in an
increase of costs
in maintaining and even implementing HR functions internally. The good news stands
in the fact
that companies are now available to outsource a part of their HR tasks or even all
of them to a
specialized HR outsourcing provider. This practice does save both time and costs.
We can also say that besides the two benefits of HR outsourcing mentioned above, a
company
will also have others that they should consider. Through HR outsourcing they can
focus their
efforts on more business oriented tasks and they can get rid of a lot of activities
that are difficult
24
to manage and consume a lot of time. Through HR outsourcing you can be sure that
your
employees are always receiving the best possible in class human resources
services. This
includes retirement plans, rewards programs, recognition programs and health
benefits. All this
is obtained at lower costs than ever before. To make everything even better, HR
outsourcing
providers also bring in a lot of support and experience when dealing with complex
issues that
might appear. If a company cannot have its own HR in-house department it should
definitely opt
for HR outsourcing.
1.3.9 The HR Outsourcing Process
Any organization making a significant commitment to HRO is making a decision with
farreaching implications-not just for HR, but for the entire organization. For this
reason, it is crucial
that all stakeholders involved in the HRO process be involved from the outset and
that there is
clarity in relation to the goals and objectives that the organization expects to
achieve. As a
starting point, a multi-departmental steering team, consisting of representatives
of all potential
users of the service provider, should be formed and convened. Ideally, HR will
either lead the
decision-making process or be crucial to it. Other key members of the steering team
should
include high-level managers and executives with a vested interest in all aspects of
human capital
asset management and its return on investment, including operations,
information systems
technology, finance, accounting and logistics. The goals and expectations of the
outsourcing
process should be developed and defined in a detailed project plan.
1.3.10 Types of HR Outsourcing
In the past, HR outsourcing was thought of as hiring a vendor to provide a service.
With the new
focus on outsourcing, there is more of an opportunity to partner with the vendor to
provide the
service on a longer term basis rather than just a one-time vendor contract. HR
outsourcing can
include:
Discrete services:In this instance, one element of a business process or a single
set of highvolume repetitive functions is outsourced to a third-party
administrator. Examples of discrete
services could include the annual open enrollment process, flexible
spending accounts or
employee background checks.
Multi-process services:The complete outsourcing of one or more functional human
resource
processes would be an example of multi-process outsourcing (also called blended
services). As
such, the outsourcing of either health and welfare benefits administration or
defined retirement
25
plan to a third-party administrator would be an example of multi-process or blended
services
outsourcing.
Total HR outsourcing: Total HR outsourcing represents the transfer of the majority
of HR
services to a third party, to include recruitment, payroll, HRIS, benefits,
compensation and
communications, as well as the transition of HR management and staff. However, HR
executive
management would normally remain in place within the organization, along
with strategic
planning related to people management and other key HR functions at the
discretion of
management.
1.4 OUTSOURCING
? The performance by outside parties, on a recurring basis, of tasks that would
otherwise be
performed in-house.
1.4.1 Other Definitions
1.4.2 In sourcing This refers to when companies look at their pool of employees
to find those
who may be tapped to do certain needed jobs. They may offer these employees extra
training or
they may merely find the employees that already possess the skills to take on
specialty work.
1.4.3 Off shoring - Off shoring simply means having the outsourced business
functions done in
another country. Frequently, work is off shored in order to reduce labor expenses.
Other times,
the reasons for off shoring are strategic -- to enter new markets, to
tap talent currently
unavailable domestically or to overcome regulations that prevent specific
activities domestically.
1.4.4 Co sourcing Co sourcing is where a business function is performed by both
internal staff
and external resources, such as consultants or outsourcing vendors, with
specialized knowledge
of the business function.
1.4.5 Out placement- Outplacement is a term used to describe the efforts made by a
downsizing
company to help its redundant employees through the redundancy transition and help
them reorientate to the job market. A consultancy firm usually provides the
outplacement services.
26
1.5 BE SPECIFIC ABOUT HR OUTSOURCING
Outsourcing contract negotiations require very specific task and service-level
descriptions, and
defining the why, what, who, where, when and what if can clarify things
significantly:
1.5.1 Need for Outsourcing
The decision to outsource is based on two business factors: value proposition and
market-based
outsourcing. The most common value proposition is reducing cost savings.
Other value
propositions include increasing operational efficiency, improving customer service,
improving
employee satisfaction, growing revenue or reducing capital expenditures.
Market-based
outsourcing is a comparison between internal skills and abilities and the
capabilities of providers
in the marketplace. The decision to outsource is based on whether an external
provider can do
the job better, cheaper or faster.
1.5.2 Outsourced Functions
Customers can determine what to outsource by having a clear idea of the
most common
performance management functions. Performance management functions can be segmented
into
user-centric processes and management-centric processes. User-centric
processes include
individual performance objective management, individual performance evaluation,
competency
mapping, self-paced e-learning and decision support, and career planning.
Management-centric
processes include organizational performance management, compensation
management,
assessment management, learning management and training administration, and
succession
planning. In general, all of the user-centric performance management processes lend
themselves
to automation and outsourcing. Management-centric performance management functions
also
can be outsourced. Learning management and assessment management, in
particular, lend
themselves to outsourcing. Since vendors specialize in one or more of these
functions, customers
can map the functions they intend to outsource to the capabilities of the vendor.
This makes the
vendor selection process relatively straightforward.
4
4
Ref.4. Theory to design successful outsourcing relationships by M.S. Logan (2000)
27
1.5.3 Types of Outsourcing Partners
According to a 2004 study by the Gartner Group, there are three types of
outsourcing partners:
application service providers (ASPs), traditional external service providers and
business process
outsourcing (BPO) companies. It is common for companies to have all
three types of
relationships and several outsourcing partners. An ASP hosts the technology and the
services
appear to employees like an internal function. A traditional external service
provider brands the
service as its own, but the customer still controls deliverables. A BPO owns the
entire business
process and has near-complete control, often called end-to-end outsourcing. It
also has to be
decided that who will manage the outsourcers from the inside.
1.5.4 Work place of the Outsourcer
Outsourcers are not always physically located outside your companys facilities.
Occasionally
companies prefer a representative of the outsourcing firm to be present on-site.
But it is far more
likely that outsourcers will work outside the buyers physical facility. Many
governments have
passed or are drafting laws governing the offshoring of business, so it is prudent
to check
existing regulations prior to engaging an offshore outsourcer. Defining where the
outsourced
personnel will work is an important legal aspect of the outsourcing agreement.
1.5.5 Duration of the Outsourced Project
Specifically defining service milestones is crucial to both the customer and the
outsourcer.
Business-process cycles are always time-bound, and customers and outsourcers alike
are always
constrained by time. Defining these time-bound constraints in terms of
deliverables and
milestones is a strong point of outsourcing firms since milestones map directly to
payment
cycles. Customers should be willing to ask themselves, What is driving the date?
Dates are
sometimes set by internal priorities (hard dates), but often dates can be flexible.
Being flexible
about time constraints allows teams to proactively deal with unanticipated
challenges.
1.5.6 Precautions for Possible Future Problems
28
Expect the unexpected is a good motto to have on an outsourcing
project. Experienced
outsourcers will probably want to put a change management clause in the contract.
This is
because they know from experience that business needs change and it happens all the
time.
Answering questions to such problems will result in development of specific goals
that can be
used to develop measurable performance expectations and contractual obligations.
29
CHAPTER-2
Research
Methodology
30
Chapter-2
RESEARCH METHODOLOGY
2.1 INTRODUCTION
Outsourcing is an accepted management tool for restructuring and refocusing the way
an
organization does business. It challenges management to build a more flexible
organization
centred on the core competencies of the business. In making the determination that
a business
has more to gain by having certain "non-core" aspects of the business outsourced to
a thirdparty service provider, the organization transfers responsibility for one or
more activities or
functions that would normally be performed in-house to a qualified vendor, for a
specified
period of time and at a negotiated fee, in accordance with terms stipulated in a
service level
agreement (SLA). In essence, the organization is making a decision to send certain
parts of
the business out to a provider whose "core competency" is that part of the
business.
2.2 STATEMENT OF THE PROBLEM
To study the impact of Human Resource Outsourcing on the effectiveness
of the HR
functions in Indian industry. Transitioning to an outsourcing arrangement can pose
a unique
set of risks that must be proactively managed, given the complexities
associated with
transferring significant operational processes to a vendor while maintaining on-
going service
to internal customers.
2.3 REVIEW OF LITERATURE
Realizing the vision of HRO by Nahapiet, J. and Ghoshal, S. (1998). Social
capital,
intellectual capital, and the organizational advantage, Academy of Management
Abstract
"What is our vision for the company five years after HRO implementation, and how do
we get
there?" The real opportunity exists for those companies that ask themselves these
important
questions at the outset. Of course, each adopter's vision for the company five
years from initial
transition will differ. When HR partners with a provider that has deep HR
expertise, it is better
able to move to transform and focus on strategic, high-return initiatives such as
succession plan,
organization design, team effectiveness, leadership development, talent
management,
performance management and development planning. The most successful change
management
programs enable the HRO adopter to achieve the goals that they set out to achieve -
without
running the risk of allowing fate to take over.
31
HRO change management: Systematic execution of a strategic decision by
Willcocks,
L.P., and Kern T. (1997). IT Outsourcing as Strategic Partnering
Abstract
If leveraged effectively, HRO can prove to be the catalyst for
organizations to Drive
standardization of HR policies and practices. It Gives HR leaders more capacity to
focus on
organizational development, change management and executive coaching as
underpinnings of
how HR and business leaders work together. Increase HR's value to the
organization by
supporting its focus on strategic opportunities. Ideally, change management begins
as early as
the presale relationship, when a vendor conducts analysis and due diligence to
understand an
organization's unique requirements. An experienced vendor will help HR leaders make
internal
communications around HRO exploration purposeful, productive and tailored to the
employer's
culture.
HR BPO drivers and inhibitors by Bondarouk, T.V., Ruel, H.J.M, The International
Journal of Human Resource Management (2009).
Abstract
The belief that outsourcing can cut costs attracts enterprises to HR BPO like moths
to a flame.
Like the moths, these enterprises can become enlightened, but they can
also get burnt.
Enlightenment comes when the enterprise seeking to cut costs discovers
other beneficial
outcomes that outsourcing can provide, such as the ability to focus on the core
business and
improve service levels. Companies turn to process outsourcing for a variety of
reasons. They
include high cost of transactions, too much time spent on daily
operations, high cost of
upgrading applications, disintegrated processes, difficulty in hiring or retaining
process staff and
lack of timely or accurate reports. Begin with the end in mind. Determine the
capabilities that the
enterprise needs to align the workforce with business strategy. Then, build the
portfolio of
applications to meet this vision. Keep in mind the strategy and direction of the
enterprises core
integrated HRMS provider when making the niche solution vs. integrated solution
decision.
Trust, openness, autonomy, strategic collaboration, pro-activity,
benchmarking and career
development are some other buzzwords prevalent in the field of HR. The main issue
according to
me is building self-regard. Of late, driving the new economy organizations in
frenzy is the
growing malaise of the rate of employee turnover, which I felt can be correlated
to low selfesteem. It is thus worthwhile to take a deep look into this concept and
its implications in both
individual and corporate contexts.
32
HRO Change Management: Embrace Systematic Approaches to Transforming HR in the
Mid-Market by McFarlan, F.W. and Nolan, R.L. (1995). How to manage an
IT
outsourcing alliance.
Abstract
The adoption of end-to-end human resource outsourcing (HRO) is a strategic decision
that offers
tremendous opportunity for medium-sized organizations. However, it's
critical that the
organization use systematic approaches to build support for the new direction -
approaches that
use communication to build momentum and excitement among employees and HR staff,
and
training to ensure that the solution delivers the desired results. While many HRO
adopters say
that they view this level of attention to change management as an important option,
without the
right focus or dedicated resources, change management often falls by the wayside.
Thoughtful, disciplined approaches to introducing HRO into the company's existing
environment
are not something that's just "nice to do." They help focus on the people-related
issues of an
outsourcing decision and enable employers and their provider partners to
build a stronger
relationship that helps ensure a successful rollout. As part of an on-going
process, they also
enable HR to better manage its relationships and interactions with
internal customers and
stakeholders, and successfully realize the organization's longer-term vision of
transformation
through HRO.
Some Measures to Raise the Motivation Levels of Employees by Kern, T. and Blois,
K.
(2002). Norm development in outsourcing relationship.
Abstract
Recognizing the contributions of outstanding achievers will induce others to try
hard. Criteria for
selecting outstanding achievers should be transparent. Effective HR measures in the
areas of
training, career development etc. equip the workforce better and also increase
their self-esteem
and morale. The need of the hour is not only to enable the employees to grow in the
learning
organizations, the concept of which is fast attaining celebrity status in this age
of knowledge
economy, but also to take care that the employee has substantial self-esteem.
Without this all the
retention policies of the organizations will meet a sorry fate.
33
2.4 OBJECTIVES OF THE STUDY
? To study the different aspects of HR outsourcing
? To study the important reasons for HR Outsourcing
? To study the important factors responsible towards choosing a third party
supplier for
HR Outsourcing
? To study the major HR functions being outsourced in the Indian industry either
completely or partially
? To study the impact of HR outsourcing on various HR functions & on
the
effectiveness of the HR department
? To study the co-relation between HR Outsourcing & IT industry
? To study the effectiveness of HR function that is being outsourced
2.5 SCOPE OF THE STUDY
The scope of study includes the following points:
? To explore the different possibilities about HR outsourcing and its various
aspects
? To explore the impact of HR outsourcing on various HR functions
? To explore the possibilities of co-relation between HR Outsourcing & IT
? To explore the future possibilities of HR Outsourcing
2.6 RESEARCH DESIGN
Research design is a detailed blue print used to guide the research
study towards its
objectives. Descriptive research has been used for this study. The major
purpose of
descriptive research is description of the state of affairs, as it exists as
present. This means
asking questions to people who are believed to possess the desired information. It
measures
the magnitude of peoples knowledge, attitudes and opinion towards the present
research
study.
34
Research design simply means a search for facts & answers to questions and
solutions to the
problems. It is a prospective investigation. Research is a systematic and logical
study of an
issue or problem through scientific method.
2.7 SAMPLING PLAN
Sampling Method
Simple random sampling is used which is the simplest method of sampling for social
researches. It is used in simple experiments that require a single sample to be
taken from a
given population or a representative sample frame. The people in the sample frame
must all
be accessible and available. It is used when the target group is sufficiently
large.
Sample universe
The sample universe is comprised of the HR managers and employees
working in IT
companies in both services and manufacturing sector in India.
Sample size
The sample size is restricted to 100 respondents due to time constraint.
2.8 TOOLS FOR DATA COLLECTION
Sources Of data collection
Primary data is collected through questionnaires and secondary data is collected
through
enterprise portals and websites related HR outsourcing and also through various
journals,
magazines and related books.
2.9 TOOLS FOR DATA ANALYSIS
Data Analysis has been done with the use of statistical tools and results are
presented through
tables, charts and graphs. Simple percentage method is used to analyze and
interpret the data.
The analyzed & interpreted data is presented in the form of tables, charts &
graphs.
Tables:-Presentation of data in vertical column & horizontal rows.
Graphs:-Graph is a pictorial representation of the data.
35
2.10 LIMITATIONS OF THE STUDY
? The sample which we took does not represent the whole population as the numbers
of
respondents were very less
? The limited experience was another constraint on the quality of the research
? Respondents were from specific areas and did not cover the whole of India
? Sample size is small because of time constraint
? The primary data is based on the questionnaires which can be influenced by
personal
bias and subjective for individuals
2.11 LAYOUT OF CHAPTERS
Chapter 1- INTRODUCTION
This chapter includes the theoretical aspect of the study and introduction
to the research topic. It also discusses about the subject background of the
research which has been carried out.
Chapter 2- RESEARCH METHODOLOGY
This chapter includes the brief introduction, statement of the problem,
review of literature, objectives of the study, scope of the study, research
design, sampling plan, Tools for data collection, tools for data analysis,
limitations of the study and layout of chapters.
Chapter 3- INDUSTRY PROFILE
This includes brief introduction about the outsourcing practices and their
results in HR sector.
Chapter 4- DATA ANALYSIS AND INTERPRETATION
It includes Analysis and interpretation of data. Analysis is carried on by
preparation of Tables, Graphs and Charts.
Chapter 5- FINDINGS AND SUGGESTION
36
It contains the Summary of findings and Suggestion. This chapter gives
summary of findings of the study along with the suggestion.
Chapter 6- CONCLUSION
This chapter gives conclusion of the study.
CHAPTER-3
Industry Profile
37
CHAPTER-3
INDUSTRY PROFILE
3.1 HR OUTSOURCING INDUSTRY
3.1.1 REASONS FOR STRONG OUTSOURCING INDUSTRY
Nowadays HR outsourcing is really something that is needed for most small to medium
sized
companies. This is mainly because everybody is doing it and the benefits that are
gained from
doing this cannot be achieved if it is handled internally. HR outsourcing is really
strong at the
moment and there is no sign that this will change in the immediate future. The
sheer benefits that
can be obtained cannot be taken lightly.
The main reason for which HR outsourcing is needed at the moment is the fact that
most
companies cannot do it properly alone. It is very hard to stay up to date with all
the regulations
that have to be considered and the possible employee benefits that should
implemented. Through
HR outsourcing we can easily avoid any problem and we can maximize the time we have
to
dedicate to those business functions that are actually generating us profit.
The HR outsourcing industry is useful because it can help to keep the HR functions
in control at
all the times. If a good HR provider is hired it can basically solve all the
problems related to HR.
Also, if some problems still appear it is the responsibility of the provider to
deal with them. Thus
we can basically shift responsibilities to gaining time and money. So there is no
reason why the
HR outsourcing industry would not continue to be strong in the years to come as
long as such
benefits exist.
3.1.2SOME FACTS ABOUT HR OUTSOURCING INDUSTRY
38
58% of companies outsource some HR function
91% of companies with $1 billion+ annual revenues are now considering HRO
HRO grew 28% from second half of 2004 to first half of 2005
Note: SHRM Human Resource Outsourcing Survey Report:
Almost 6 out of 10 organizations practice HR Outsourcing but 1/3 of organizations
did not
outsource any function of organizations partially outsource an HR function
(organization
co-manages function with vendor)
HRO Market
In next 5 years, global spending on HRO will double from $40 billion to $80
billion
From 2002 to 2004, 14% increase in large firms that would consider HRO
Consulting and Training
3.1.3 FACTORS HAMPERING HRO INDUSTRY
Cost factor & Confidentiality
The fear of losing jobs
Loss of sensitive information to public/competition
Ethics and quality of outsourcing vendors
Possibility of security breaches
Cost-benefit equation not clear
Lack of psychological acceptance
3.1.4 DOMINANT TRENDS IN MAIN HR OUTSOURCING INDUSTRY SEGMENTS:
39
Consultants
Administrative service providers
Technology enablers
Customizing imported software products remains an issue: supply oriented rather
than
demand based customization
3.1.5 HR OUTSOURCING COMPANY SERVICE TYPES
An HR outsourcing company can be divided basically into four categories as PEOs,
BPOs,
ASPs, or e-services based on the type of service it offers.
3.1.6 PEO (PROFESSIONAL EMPLOYER ORGANIZATIONS)
A PEO or A Professional Employer Organization is the one that takes full
responsibility of your
company's human resources management. Another outsourcing option that involves
handing
over the HR duties along with the employees is called a PEO
(professional employer
organization). In a PEO, the outsourcing firm becomes the legal employer, handling
payroll,
benefits, insurance and other employee relations; it leases the employees back to
the company.
Employees generally enjoy better benefits because of group rates, and the
scenario allows
business owners to concentrate solely on company goals rather than personnel
issues. Some
companies may also enjoy tax benefits and will save on worker's
compensation and
unemployment insurance because employees are the responsibility of the PEO.
3.1.7 BPO (BUSINESS PROCESS OUTSOURCING)
The new buzz word 'BPO' seems to be everywhere now a day! Ever wondered what is
BPO? Let
us explain: BPO has expanded sounds as Business Process Outsourcing and can be
aptly defined
as the act of utilizing the services of a third party by a company in order to
perform its back
office operations that might be payroll administration, customer help desks/ call
centres, telemarketing, accounting, billing; the list is endless.
To put it in simple words a BPO (business process outsourcing) is a process in
which a company
delegates some of its business processes mainly back office operations to a third
party by giving
the third party total control over that process. Business process outsourcing
otherwise known as
BPO is the process of leveraging technology vendors in various third worlds or
developing
40
nations for doing a job which was once the responsibility of the enterprise. Or
simply put, it is
the process of shifting an internal job process to an outside/external company
which might have
a completely different geographical location.
Generally the processes being outsourcing as part of BPO are backend jobs like
call/help
centres, call centre outsourcing services, medical transcription, billing, payroll
processing, data
entry and the like. Most of these jobs are outsourcing by first world nations like
USA and UK to
third world nations like India, Philippines, China, Malaysia and some
eastern European
countries. These nations have a good pool of English speaking youth who receive
accent and job
related training before they are inducted at a salary which is much lesser than
what their
counterparts in first world nations would demand. This allows first world
organizations to get
higher profits and provide better services by lowering the prices and by recruiting
more labour
than they could possibly do otherwise. In addition to benefiting the first world
nations, business
process outsourcing has also benefited third world nations by generating much
needed jobs.
A BPO or business process outsourcing company is different from a PEO in the sense
that it
provides various facilities including HR. A BPO can help improve the HR process,
provide HR
data warehousing and self-access.
3.2 THE BPO INDUSTRY
The BPO industry has flourished at a frantic pace in the last few years and
companies have
ended up with huge savings by being a part of the industry. By outsourcing their
back office
business processes to cheaper nations like China, India, Philippines, Mexico, South
Africa etc.
companies can cut costs, better concentrate on their core businesses and strengths,
ensure better
customer satisfaction and in a way get an edge over their competitors. A report
suggests that US
firms have saved nearly $8 billion through outsourcing to third world nations like
India.
3.2.1 SELECTING THE BPO COMPANIES
Selecting on the right BPO vendor is probably the next most important task other
than fixing up
on a BPO destination. Although there are lots of organizations and agencies
dedicated to helping
buyers in making the right decision, there are some precautions that the buyer has
to maintain.
3.2.2 SELECTING THE BPO VENDORS
The key factor before finalizing on a BPO vendor is to scrutinize and analyses his
strength and
expertise in terms of providing similar services to clients. One good way to find
this out would
be to follow up with the firm's existing clients regarding the services. The BPO
vendor must
41
have proper quality certifications and should be in possession of skilled manpower
or must be in
a position to offer training facilities. Apart from this the BPO Company should
have a strong
financial background and should be willing to share risk in the outsourcing
contract. It is always
good to know the kind of services that the vendor offers and his
relationship with other
outsourcing suppliers.
Most companies decide to outsource their business processes to multiple BPO
companies rather
than a single one. This by all means is a good practice as the vendors will compete
among
themselves to provide better service and the company will always be in a position
to change
vendors in case one doesn't live up to the mark.
3.2.3 BPO COMPANIES IN INDIA
As the BPO boom grows relatively unheard offshore outsourcing destinations like
Pune and
Kolkata in subcontinent India are rising to fame with the state governments
starting to spend
money in developing the infrastructures and formulating friendlier taxes and other
legal norms.
Most BPO companies in the Indian Subcontinent are quality certified from leading
quality firms
like ISO 9000, CMM etc. and have access to high tech technologies and
infrastructure.
Sure enough companies like IBM, Microsoft, Oracle, Cisco, Prudential, Hewlett
Packard, ATT
Wireless, Dell and many more consider India to be their first choice as an offshore
contact centre
outsourcing destination.
3.2.4 GETTING STARTED
If you are planning to take a plunge into the BPO wave, you got to formulate an
effective plan by
understanding your vision along with your long term goals. Deciding on
the right BPO
destination and more importantly the right BPO vendor can go a long way in ensuring
smooth
operations with good returns. As of now, India with its easily available English
speaking,
computer literate, low cost manpower, better infrastructure and quality certified
software and
BPO venders seems to be a great destination for outsourcing. So take your pick!
3.2.5 BPO INDIA - PRESENT AND FUTURE
The BPO boom has helped developing countries like India in a major way by creating
quality job
opportunities in turn benefiting the Indian economy. So what is it that makes BPO
India stand
out in the crowd?
3.2.6 THE INDIAN EDGE
42
India in the recent years has shown huge developments in the areas of
communication, power
and software developments. India exports software to 95 different countries and
stands second in
the world as far as software exports are concerned. In addition India has ISO 9000,
CMM quality
certified software firms that have a reputation of providing quality services.
India stands out of
the rest in terms of better IT and technological infrastructure, low cost, skilled
manpower that is
readily available, friendly taxation and other laws, a stable government, a fast
paced economy
and quality certified software firms.
3.2.7 HRO IN INDIA
IT city Bangalore seems to be a hot destination for BPOs swiftly
followed by similar
technologically advanced cities like Chennai, Hyderabad, Mumbai, Delhi, Kolkata and
Pune. All
these cities in India are technologically advanced and have a good infrastructure
with almost 278
quality certified BPO vendors.
3.2.8 HR BUSINESS PROCESS OUTSOURCING
HR business process outsourcing is picking up pace as more and more companies feel
that back
offer HR operations take up lots of their resources. As for IT, India seems to be a
major hub for
HR outsourcing too. Cities having a good infrastructure like Bangalore, Delhi,
Pune, Bombay
and Chennai are being seen as a major offshore outsourcing destinations as of now.
The Bombay
offshore outsourcing industry seems to be picking up really well at present as
compared to
Chennai and Bangalore, who seem to be calling the shots right now.
3.2.9 ASP (APPLICATION SERVICE PROVIDER)
An ASP or application service provider company will host the HR service on the web
and rent it
to users. EG: PeopleSoft
3.2.10 E-SERVICES (ELECTRONIC SERVICES)
E services are those human resource service companies that are web based. Both BPO
and ASP's
can be referred as e-service companies. A company which has decided to outsource
its human
resources has to decide as to which type of vendor to go for and which offshore
destination to
choose for outsourcing its human resource functions. The major destination for
outsourcing
human resources is seen as India. India has many companies that offer HR services
and best of
all; most of these companies are quality certified. This makes outsourcing to them
a relatively
safer option. Apart from this India also have good communications infrastructure,
cheaper labour
and a stable government. In addition to India some other good sales force
outsourcing, research it
43
outsourcing and HR outsourcing services destinations are China and Philippines. In
addition the
Romania outsourcing industry is also on the bloom and is a good option for UK firms
who want
to play it safe outsourcing HR function.
3.3.1 INDUSTRY PROFILE OF SOFTWARE & IT INDUSTRY
3.3.2 IT SERVICES OUTSOURCING
The IT services outsourcing sector is the fastest growing sector in the outsourcing
market and
has been growing at a frantic pace with more and more companies planning to take
the plunge.
According to various estimates the IT services outsourcing market will reach US $
200 billion by
2004 and will grow even further. As for the IT service outsourcing destinations are
concerned,
India stands out way ahead of the rest. This is because India has many quality
certified software
firms, computer savvy workforce and relatively cheaper rates of operation. India
also exports
software to 19 different countries and has a great infrastructure in terms of
communication.
3.3.3 IT OUTSOURCING TO INDIA
When it comes to singling out the most popular destination for IT outsourcing, one
name very
well stands out of the rest India! In all its glory India in the past three years
has become the most
popular destination for IT outsourcing with more than 230 fortune 1000 companies
using its
outsourcing services. You can do IT outsourcing and work at home directory from
home. So
what is it that gives India its popularity? Let's look at some major factors.
In India, the software boom started somewhere in the late 1990s. Most of the Indian
software
companies at that moment offered only limited software services such as the banking
and the
engineering software. The business software boom started with the emergence of Y2K
problem,
when a large number of skilled personnel were required to fulfill the mammoth
databasecorrection demand in order to cope up with the advent of the new
millennium.
The profile of the Indian IT Services has been undergoing a change in the last few
years, partly
as it moves up the value chain and partly as a response to the market dynamics. Ten
years ago,
most US companies would not even consider outsourcing some of their IT projects to
outside
vendors. Now, ten years later, a vast majority of US companies use the professional
services of
Indian Software engineers in some manner, through large, medium or small
companies or
through individuals recruited directly.
44
The market competition is forcing organizations to cut down on costs of
products. The
professional IT services on the other hand are becoming increasingly expensive. The
offshore
software development model is today where onsite professional services were ten
years ago.
There is a high chance (almost a mathematical certainty), that in less than ten
years, the vast
majority of IT services (software development being just one of them) from
developed countries,
will be, one, outsourced and two, outsourced to an offshore vendor.
Despite the global economic slowdown, the Indian IT software and services
industry is
maintaining a steady pace of growth. Software development activity is not confined
to a few
cities in India. Software development centers, such as Bangalore, Hyderabad,
Mumbai, Pune,
Chennai, Calcutta, Delhi-Noida-Gurgaon, Vadodara, Bhubaneswar, Ahmedabad,
Goa,
Chandigarh, and Trivandrum are all developing quickly. All of these places have
state-of-the-art
software facilities and the presence of a large number of overseas vendors. Indias
most prized
resource is its readily available technical work force. India has the second
largest Englishspeaking scientific professionals in the world, second only to the
U.S. It is estimated that India
has over 4 million technical workers, over 1,832 educational institutions and
polytechnics, which
train more than 67,785 computer software professionals every year. The enormous
base of
skilled manpower is a major draw for global customers. India provides IT services
at one-tenth
the price. No wonder more and more companies are basing their operations in India.
The industry is in an expansion mode right now, with dozens of new offshore IT
services vendors
emerging everyday, the industry has a high probability of being subjected to the
80:20 rule in not
too distant a future. In perhaps another ten years, 80 percent of all
outsourced offshore
development work will be done by 20 percent of all vendors, a small number of high
qualities,
trusted vendors. Only a few selected countries and only the most professional
companies in those
countries will emerge as winners. India is the country of choice for
offshore software
development. It has the potential to become and remain the country of choice for
all software
developments and IT enabled services, second only to the USA. The third choice
could be far
distant.
India is among the three countries that have built supercomputers on their own. The
other two
are USA and Japan. India is among six countries that launch satellites and do so
even for
Germany and Belgium. India's INSAT is among the world's largest domestic
satellite
communication systems. India has the third largest telecommunications network among
the
emerging economies, and it is among the top ten networks of the world .To become a
global
leader in the IT industry and retain that position, India needs to constantly keep
moving up the
45
value chain, focusing on finished products and solutions, rather than purely on
skill sets and
resumes. It also needs to be able to package its services as products, rather than
offering them as
raw material. It needs to be able to recognize and build up on its strengths and
work on
weaknesses. Another extension of the IT industry is the ITES (Information
Technology Enabled
Services) which is a sector dependent on IT sector.
Information technology consulting (IT consulting or business and technology
services) is a field
that focuses on advising businesses on how best to use information technology to
meet their
business objectives. In addition to providing advice, IT consultancies often
implement, deploy,
and administer IT systems on businesses' behalf.
3.3.4 DELL OUTSOURCING - LATEST NEWS
Dell outsourced its computer support operations to India and had set up major call
center
operations in cities like Bangalore and Chennai. But the company has received many
complaints
in terms of bad customer service along with rude comments and bad accents.
This has lead the Dell outsourcing unit to rethink its strategies regarding utility
outsourcing call
center. According to a report in the local newspaper Austin-American Statesman,
Dell has
decided to move back its technical support jobs from India to US. But Dell
outsourcing in terms
of support for home users is still being outsourced to India in large numbers. Dell
outsourcing is
a live example of how things can go wrong in an outsourcing contract if things are
not planned
out properly. Though outsourcing can be beneficial to organizations there are many
myths
offshore outsourcing IT that needs to be cleared? Firstly outsourcing is in no way
the ultimate
answer. Many business white papers outsourcing IT have clearly stated that
outsourcing can only
be beneficial to those who do so analyzing the short as well as long
term goals of an
organization. Therefore first and foremost organizations should research
outsourcing what is it
and in which way will it be beneficial to them. IT outsourcing advantages are many,
but same is
the case with operations failing and organizations backing up.
3.3.5 IBM OUTSOURCING - LATEST DEVELOPMENTS
IBM outsourcing jobs to offshore destinations like India and China has met up with
large scale
opposition by its own employees. IBM in the recent times has outsourced nearly 1000
low end as
well as high end jobs to offshore destinations resulting in huge layoffs and has
plans to move
another 4000 jobs to India, China and other nations. Pools of IBM employees in the
USA have
formed a union to fight the IBM outsourcing of jobs.
46
The labour union represents a small portion of IBM employees who have plans to take
action
against the company in case of any more jobs outsourced. They have even decided not
to train
any replacement workers from third world countries. Through business process
outsourcing IBM
on the other hand has promised the generation of more and better paying jobs in US
as firms, it is already here. So just how are the big 3 IT services firms faring
on the attrition and hiring front? Consider the following attrition rates.
3.3.7 INFOSYS
Attrition at Infosys rose from 10.9% the last quarter to 11.6%. However, a March
Wall Street
Journal article quoted a CLSA Asia-Pacific report as saying that there are
unconfirmed rumors
that 4,000-4,200 employees have resigned at Infosys for the month of February alone
well
beyond the 1,200 employees who should be resigning each month (as of December 31,
Infosys
had about 109,882 employees). Nevertheless, it was also noted that Infosys had the
largest bench
strength in the industry at almost 20,000 free resources.
3.3.8 TATA CONSULTANCY SERVICES (TCS)
Attrition at TCS has been stable at around 11.5% although company officials
expect this rate to
rise. However, the Wall Street Journal noted in February that TCS will go on a
hiring spree and
hire up to 30,000 new employees after the next fiscal year begins on April 1. This
is on top of the
11,500 planned hires for the first quarter of 2010. It was also noted that 70% of
new hires for the
new fiscal year will be fresh graduates and more than 2,000 employees will be
recruited from
outside India.
3.3.9 WIPRO
Wipro had an attrition rate of about 13.4% up from an average of 8.9% over the
past three
quarters. Hence, the Hindu Business Line noted that they were planning a salary
hike for
February along with promotions to help prevent attrition from rising further while
recruitment
47
initiatives would happen on a demand basis and include a mix of campus hires and
science
graduates along with experienced talent. Meanwhile, the Hindu Business Line quoted
Girish
Paranjpe, the Joint-CEO of Wipros IT Services group, as saying that the companys
bench
strength was around 7,500 to 8,000 on an employee base of about 103,000 while the
industry
bench strength standard is usually twice that.
However, another Hindu Business Line article noted that the brunt of any rise in
attrition rates
will likely be borne by mid-size software outsourcers who could see attrition rates
reach the 15%
level. Moreover and since the big players have mostly not been hiring for some
time, employees
with midsize firms are more likely to consider jumping to larger companies if they
are offered
the right opportunity.
Meanwhile, utilization rates (that is, the number of employees billed per hundred
verses those
who are on the bench) are also increasing at the big 3 IT services firms. According
to the Hindu
Business Line, utilization rates rose from 67.3% to 68.8% at Infosys, 73.6% to
77.2% at Tata
Consultancy Services (TCS) and 70.8% to 73.2% at Wipro.
Nevertheless, as utilization and attrition rates rise, its time for companies to
once again think
about long-term strategies for retaining employees. As Raman Roy, the chairman and
managing
director of BPO firm Quattro, noted in the Financial Express, meddling with salary
and benefits
is a short-term strategy (he chooses to focus on in-house training to create an
efficient group of
high achievers) while attrition is merely a symptom and not a disease. In other
words, its the
symptom of an increasingly healthier job market and economy for outsourcing.
CHAPTER-4
48
Data Analysis
And
Interpretation
CHAPTER-4
DATA ANALYSIS & INTERPRETATION
DATA COLLECTION INSTRUMENT
Based on the data collected through a well-structured questionnaire, the
opinion of the
respondents is analysed. The questionnaire method of data collection is quite
popular, so the
49
questions related to the objectives of the study were asked from the
respondents. The
questionnaire was formulated on the basis of ideas related to the
subject after a detailed
discussion with the guide.
ANALYSIS OF DATA & ITS INTERPRETATION
RESPONDENT PROFILE and ORGANIZATION DETAILS
Table 4.1 Department and Designation Profile of the respondents
Sr. No Designation
No. of
Respondents
Percentage
1 Executive 15 15%
2 Manager 26 26%
3 Practioner 34 34%
4 Assistant Manager 25 25%
5 TOTAL 100 100%
50
Graph 4.1 Department and Designation Profile of the respondents
Analysis:
It is evident from table and graph no.4.1 that out of 100 respondents, 15 were HR
Executives,26
were HR Managers While 34 were working as HR Practioner and other 25% respondents
were
working on the post of Assistant Managers.
Interpretation:
Thus it is clear that respondents from various categories took active participation
to answer the
questionnaire but the maximum no. of participants belonged to the HR Practioner
Group who
was the youngest among all which is a point of significance as the majority of
youngsters were
interested in answering the questionnaire. As far as the department is
concerned, all the
respondents were from the HR Department of different organizations.
51
Table 4.2 Years of Work Experienceof the respondents
Sr. No
Years Of Work
Experience
No. of
Respondents
Percentage
1 3 5 years 45 45%
2 6 10 years 22 22%
3 11 15 years 18 18%
4 16 and above years 15 15%
5 TOTAL 100 100%
Graph 4.2 Years of Work Experience of the respondents
Analysis:
From table and graph no.4.2, it is evident that the maximum no. of respondents were
having 3-5
years of work experience (45%) and minimum no. of respondents (15%) were having
work
experience of 16 years and above. (22%) respondents were having work-experience of
6 to 10
years and the rest (18) % of respondents were having a work experience of 11 - 15
years.
Interpretation:
Thus it is clear that the respondents belong to almost all the managerial levels
but young
managers took a keen interest in responding the questionnaire.
NAME OF ORGANIZATION / COMPANY
52
The present study titled THE IMPACT OF HR OUTSOURCING ON VARIOUS HR
FUNCTIONS WITH REFERENCE TO IT INDUSTRY was planned for purely academic
research purpose and the data collected for this study is being analysed and
interpreted. For this
purpose, a questionnaire was evolved on the basis of which different information
was collected
from various organizations and companies.
The companies which participated in this research project are as follows:
1. IBM India Pvt. Ltd
2. DELL India Pvt. Ltd
3. NOKIA India
4. NOKIA SIEMENS NETWORKS
5. NVIDIA India Pvt. Ltd
6. MICROSOFT India Pvt. Ltd
7. WIPRO India Pvt. Ltd
8. ADVANCED MICRO DEVICES India
9. HEWLETT-PACKARD India Pvt. Ltd
10. INFOSYS India Pvt. Ltd
From the above list, it is evident that most of the MNCs now-a-days practice HRO
for various
HR functions and concentrate more on the core competencies.
Table 4.3 Approximate HR strength in the organization
53
Sr.
No
Approximate No. Of
Employees
Percentage of
employees
1 100 to 500 5%
2 501 to 1000 9%
3 1001 to 5000 12%
4 5001 to 10000 14%
5 10001 and Above 60%
6 TOTAL 100%
Graph 4.3 Approximate HR strength in the organization
Analysis:
From the table and graph no.4.3 it is evident that 60% of the organizations have
more than 10000
employees whereas 14% organizations have an employee range of 5001 to 10000. The 3
rd
common ranges of employees are in between 1001 to 5000(12%). The next 2 categories
fall
within the range of 501 to 1000(9%) and 100 to 500(5%) respectively.
Interpretation:
Thus it is clear that most of the respondents belong to large organizations but
small and medium
sized enterprises (SMEs) also have a significant representation.
54
Table 4.4 Response of the organizations towards HR outsourcing
Sr. No. Response Regarding HR Outsourcing Percentage
1 Yes 74%
2 No 26%
3 TOTAL 100%
Graph 4.4 Response of the organizations towards HR outsourcing
Analysis:
From the table and graph no.4.4 it is evident that 76% organizations practices HRO
on a
regular basis while the rest 26% do not outsource HR functions.
Interpretation:
Thus it is clear that majority of HR managers feel that HR functions should be
outsourced for
various important reasons; e.g. to reduce cost, to focus and improve the core
competencies of the
business, still there is a significant no. of HR managers who dont agree with HR
outsourcing
because it weakens the in-house HR department.
55
Table 4.5 Approximate no. of people outsourced by various organizations
Sr. No.
Approximate No. Of People Outsourced By Different
Organizations
Percentage
1 100 to 500 14%
2 501 to 1000 16%
3 1001 to 5000 40%
4 5001 and Above 30%
5 TOTAL 100%
Graph 4.5 Approximate no. of people outsourced by various organizations
Analysis:
From the table and graph no4.5 it is evident that the maximum no. of people
outsourced by
different organizations fall between the range of 1001 to 5000, i.e. 40%. The next
common
range of human resource outsourced by different organizations is 5001 and above
(30%).
However some organizations outsource smaller no. of people which come under the
range of
501 to 1001. The minimum no. of people outsourced by various organizations range
from
100 to 500 (14%).
Interpretation:
Thus is clear that major MNCs are now practicing heavy HR outsourcing and are
focusing
more on their core businesses. Most of the organizations are outsourcing a
significant no. of
56
manpower which is up to 5000 (40%) and more than 5000 (30%). Thus it is clear that
70%
organizations are outsourcing their HR requirements. Even many small and medium
size
enterprises (SMEs) are also outsourcing a considerable amount of human resource
which
comes under the range of 100 to 1000 (30%).
Table 4.6 Major HR functions outsourced by various organizations
57
58
Sr. No.
HR Functions
Outsourced
Essentially
Outsourced
%
Frequently
Outsourced %
Sometimes
Outsourced
%
Rarely
Outsourced
%
Never
Outsource
d%
TOTAL
1
Payroll
processing
65% 25% 10% 0% 0% 100%
2
Training and
Development
57% 23% 20% 0% 0% 100%
3 Recruitment 67% 20% 13% 0% 0% 100%
4
Manpower
planning
50% 30% 15% 5% 0% 100%
5
Employment Law
and Regulatory
Compliance
51% 20% 19% 10% 0% 100%
6 Tax Management 62% 17% 18% 3% 0% 100%
7
Performance
Management
51% 26% 19% 4% 0% 100%
8
Conducting
Employee Survey
45% 33% 15% 7% 0% 100%
9
Maintenance of
Personal Records
52% 24% 18% 6% 0% 100%
10
Outsourcing
Entire HR
Functions
15% 15% 20% 20% 30% 100%
59
Analysis:
From the table and graph no.4.6 it is evident that most of the organizations
outsource various HR
functions on a regular basis. The most important HR functions outsourced by them
are Payroll
processing, Training and Development, Recruitment, Manpower planning,
Employment Law and
Regulatory Compliance, Tax Management, Performance Management, Conducting Employee
Survey,
Maintenance of Personal Records, etc. The maximum percentage of
Essentially Outsourced HR
Functions was Recruitment (67%), Payroll Processing (65%) and Tax
Management (62%). The
minimum incidence of essentially outsourced HR functions was outsourcing entire HR
functions (15%)
and conducting employee survey (45%). However the other HR functions
which were essentially
outsourced are Maintenance of Personal Records (52%), Performance Management (51%),
Employment
Law and Regulatory Compliance (51%) and Manpower Planning (50%) respectively. As
far as the
percentage of Frequently Outsourced HR Functions is considered, the maximum
incidence was of
conducting employee survey (33%), Manpower planning (30%), Performance
Management (26%),
Payroll processing (25%), Maintenance of Personal Records (24%) and training and
Development (23%)
respectively. However the minimum percentages of HR functions outsourced in this
category were of
outsourcing entire HR functions (15%), Tax Management (17%), Recruitment (20%) and
Employment
Law and Regulatory Compliance (20%) respectively.
As far as the percentage of Sometimes Outsourced HR functionsis concerned, the
maximum no. of
incidences were of training and development, Outsourcing Entire HR functions (20%
each), followed by
performance management and Employment Law and Regulatory Compliance (19% each)
along with Tax
Management and Maintenance of Personal Records (18% each) followed by Manpower
Planning and
Conducting Employee Survey (15% each) respectively. However the minimum
percentage of HR
Functions outsourced in this category were of Payroll Processing (10%) and
Recruitment (13%). As far as
the percentage of Rarely Outsourced HR functionsis concerned, the maximum no. of
incidences were
of outsourcing entire HR functions (20%), Employment Law and Regulatory Compliance
(10%) followed
by conducting employee survey (7%) and Maintenance of Personal Records (6%)
respectively. However
the minimum percentage of HR Functions outsourced in this category were of Tax
Management (3%),
Performance Management (4%) and Manpower Planning (5%) respectively. As far as the
percentage of
Never Outsourced HR functions is concerned, the maximum no. of incidence was of
Outsourcing Entire
HR functions (30%) and the rest of the outsourced HR functions were nil (0%).
Interpretation:
Thus it is clear that the most commonly outsourced HR functions by most of the
organizations &
companies are Recruitment (67%), Payroll Processing (65%) and Tax Management (62%).
The
next most common category of outsourced HR functions is Training & Development
(57%),
60
Maintenance of Personal Records (52%) and Performance Management (51%), Employment
Law & Regulatory Compliance (51each%). Thus it is clear that most of the HR
functions are
outsourced regularly. Thus it is evident that HR Outsourcing is an evolving
industry and HRO
functions as a strategic tool aimed primarily to assist organisations on their core
businesses.
Table 4.7 Important reasons for outsourcing HR functions by various organizations
61
Sr.
No.
Important reasons for
outsourcing HR functions
Most
Important
Reason
Much
Important
Reason
Important
Reason
Less
Important
Reason
Least
Important
Reason
TOTAL
1 To Save Cost 77 13 10 0 0 100%
2 To Save Time 75 17 8 0 0 100%
3
To Increase The Capacity
of The Organization
57 31 19 3 0 100%
4 To Gain Tax Benefit 60 14 26 0 0 100%
5
To Improve Levels Of
Quality & Performance
45 35 15 5 0 100%
6 To Improve Efficiency 38 42 18 2 0 100%
7 To Increase Productivity 64 14 11 9 2 100%
8
To Improve Quality of
Service
54 27 13 6 0 100%
9 To Achieve Better ROI 58 19 11 12 0 100%
10
To Gain Expertise
Support
56 24 12 8 0 100%
62
Analysis:
From the table and graph no.4.7 it is evident that various organizations are
outsourcing different
HR functions on a regular basis on account of different reasons out of
which the most
important reasonsare to "save cost"or to reduce costs (77%), to save time(75%),
to gain
tax benefit (60%), to increase the capacity of organization (57%), to achieve
better ROI (Return
On Investment) (58%), to increase productivity (64%), to gain expert
support (56%), to
improve quality of service (54%), to improve level of quality & performance (45%)
and to
improve efficiency (38%). Thus it is clear that the most important causes of HRO
are:
To save cost (77%)
To save time (75%)
To increase productivity (64%)
The least important cause is to increase efficiency (38%). However among much
important
reasons of HRO, to improve efficiency is on the top (42%) followed by to improve
level of
quality & performance (35%), to improve Quality of service (27%), to increase the
capacity of
organization (31%) and to gain expertise support (24%) respectively whereas the
least important
cause in this group is to save cost (13%), followed by tax benefit &
increase in
productivity(14%each) followed by to save time (17%) and to achieve better ROI
(19%). In the
important reasons category, the maximum incident is of to gain tax
benefit (26%) and
minimum is of to save time (8%). In less important reasons group, the maximum
incident corelates to achieve better ROI (12%) and the minimum incidence
co-relates to improve
efficiency (2%). However in least important category, only one factor is
identified which corelates with improved productivity. Thus it is clear that
increase productivity is a consistent
reason for HRO in all the categories.
Interpretation:
Thus it is clear that:
A) The most important reasons for HRO are: (B) the other important reasons for HRO
are:
To save cost -77% *To achieve better ROI -58%
To save time -75% *To increase capacity of organization-57%
To increase productivity-64% *To gain expertise support-56%
63
To gain tax benefit-60% *To improve the quality of service-54%
Table 4.8 Important factors for choosing a third party supplier for HR outsourcing
Analysis:
From the table and graph no.4.8, it is evident that the most important factors for
choosing a
vendor or third party supplier for HROare service quality (75%), existing
relationship (66%)
64
Sr.
No
Important Factors For Choosing
A Third Party Supplier For HR
Outsourcing
Most
Important
Factors
Much
Important
Factors
Important
Factors
Less
Important
Factors
TOTAL
1 Lowest Cost 65 25 14 6 100%
2 Service Quality 75 19 5 1 100%
3 Existing Relationship 66 24 17 3 100%
4 Strong HR Process Expertise 65 19 15 11 100%
5 Strength In Customized Solution 32 27 33 8 100%
& strong HR process expertise (65%). The next common causes in this category are
lowest cost
(65%) and strength in customized solutions (32%).
In the category of much important factorsfor choosing a vendor to provide HRO
services, the
reasons which have been identified are customized solutions (27%), lowest
cost (25%) &
existing relationship (24%). However the service quality & strong HR process
expertise are also
expressed as important reasons.
In important factor group strength in customized solutions is on the top (33%) &
service
quality is at the bottom level (5%). The other factors in this category are
existing relationship
(17%), strong HR Process Expertise (15%) & lowest cost (14%).
As far as theless important & least important reasons are concerned, the maximum
incidences
are of strong HR process expertise (11%) and strength in customized solutions (8%)
followed by
lowest cost (6%) & service quality (1%). In least important group, no factor was
identified.
Interpretation:
Thus it is clear that in the opinion of most of the HR managers, the most important
reasons to
select a vendor or third party supplier are:
Service Quality (75%)
Existing Relationship (66%)
Lowest Cost (65%)
Strong HR Process Expertise (65%)
However strength in customized solutions (32%) is also seen as an important factor
to select the
vendor for different services which are being outsourced by the various
organizations. In this
context, it is very relevant to explain that the factor of lowest cost is not so
significant as the
quality of service & existing relationship between the two parties. So it is
conclude that though
the lowest cost is an important factor in choosing the vendor or third
party supplier for
Outsourcing different HR Functions but the quality of service & existing
relationship with the
vendor are of great significance.
65
Table 4.9 Opinions on different aspects of HR outsourcing in relation to various HR
functions.
Graph 4.9 Opinions on different aspects of HR outsourcing in relation to various HR
functions
Analysis:
From the table and graph no.4.9, it is evident that 80% of the HR Managers have
completely
agreed with the fact that HR Outsourcing is an answer to avoid high labor cost &
expensive
66
Sr.
No
Different aspects of HR outsourcing Opinion
Completely
agree
Mostly
agree
Agree
Partially
agree
Disagree TOTAL
1.
Is HR outsourcing is the answer to avoiding
high labour cost & expensive technology?
80 16 4 0 0 100%
2.
Is HR outsourcing is a viable choice for small
to mid-sized businesses to limit staffing
burdens while maintaining high quality HR
functions?
60 23 10 7 0 100%
3.
Is HR outsourcing can provide services &
highly trained professionals that businesses
need often with significant cost savings over
hiring full time HR staff?
45 27 23 5 0 100%
technology. 16% HR Managers Mostly agreedwith the above fact; however 4% did agree
that
the above fact is true in relation with HR Outsourcing.
As far as the statement Is HR outsourcing is a viable choice for small to mid-
sized businesses to
limit staffing burdens while maintaining high quality HR functions? is concerned,
60% of the HR
Managers completely agreed, 23% mostly agreed, 10% just agreed & 7% partially
agreed but none of
them was against the above fact.
As far as the statement Is HR outsourcing can provide services & highly trained
professionals that
businesses need often with significant cost savings over hiring full time HR staff?
is concerned, 45%
of the HR Managers completely agreed, 27% mostly agreed, 23% just agreed & 5%
partially agreed but
none of them was against the above fact.
Interpretation:
Thus it is clear that all the three facts about HR outsourcing are very relevant &
are of great
significance because 80%, 60% and 45% HR managers support the above opinions
related to HR
Outsourcing. Thus it is evident that:
HR Outsourcing is the answer to avoid high labour cost
HR outsourcing is a viable choice for small to mid-sized businesses
HR outsourcing can provide better services & highly trained professionals
at
comparatively lower cost
Table 4.10 Type of the legal service agreement standard included in HR Outsourcing
Contract
Sr. No. Legal Service Agreement Standard Included In HRO
Contract
Percentage
1 Employee Satisfaction 30%
2 Issue Resolution 36%
3 Delivery of Data 22%
4 System Availability 12%
5 TOTAL 100%
67
Graph 4.10 Type of the legal service agreement standard included in HR Outsourcing
Contract
Analysis:
From the table and graph no.4.10, it is evident that issue resolution (36%), had
been the most
important legal service agreement standard of HRO contract, while system
availability (12%),
was least important reason for this fact. However employee satisfaction (30%) &
delivery of data
(32%) had also been the important factors of this issue of HR outsourcing.
Interpretation:
Thus it is clear that issue resolution (36%) must be kept in mind and should be
essentially
fulfilled in the matter of legal service agreement standard of HR outsourcing, but
rest of the
factors, i.e., Employee Satisfaction (30%), Delivery of Data (22%) and System
Availability
(12%) cant be ignored in this respect.
68
Table 4.11 HR Functions Which Are Not Outsourced Or Being Outsourced
Either
Partially or Completely.
Sr.
No
Major HR Functions
Not
Outsourced
%
Partially
Outsourced
%
Completely
Outsourced
%
TOTAL
1 Payroll processing 10% 22% 68% 100%
2 Training & Development 8% 19% 73% 100%
3 Recruitment 11% 12% 77% 100%
4 Manpower planning 20% 45% 35% 100%
5
Employment Law & Regulatory
Compliance
30% 55% 15% 100%
6 Tax Management 25% 39% 36% 100%
7 Performance Management 17% 52% 31% 100%
8 Conducting Employee Survey 51% 34% 15% 100%
9
Maintenance of Personal
Records
20% 45% 35% 100%
69
70
Analysis:
From the table and graph no. 4.11, it is evident that the major HR
functions which are
completely outsourced by different organizations are recruitment (77%),
training &
development (73%), payroll processing (68%).Tax management (36%), Maintenance
of
Personnel Records (35%), Manpower Planning (35%) and Performance Management (31%).
The
other HR Functions which are completely outsourced are Employment Law &
Regulatory
Compliance as well as Conducting Employee Survey (15% each).
The HR Functions which are Partially Outsourced are Employment Law &
Regulatory
Compliance (55%), Performance Management (52%), Maintenance of Personal Records
(45%),
and Manpower Planning (45%). The other partially outsourced HR Functions are
Conducting
Employee Survey (34%), training & development (19%) and Recruitment (12%).
There are some organizations which do not outsource some of their HR
Functions like
Conducting Employee Survey (51%), Employment Law & Regulatory Compliance (30%), Tax
Management (25%), Manpower Planning and Maintenance of Personal Records (20% each).
However minimum incidences of HR Functions which are not outsourced by
certain
organization are Payroll Processing (10%), Training & Development (8%) and
Recruitment
(11%).
Interpretation:
Thus it is clear that the Recruitment is the most important HR function which is
completely
outsourced by 77% of organizations, partially outsourced by 12% and not outsourced
by 11% of
organizations. Training & Development is the next most important HR
Function which is
completely outsourced by 73% of organizations while 19% of organizations
outsourced it
partially but 8% organizations handle it in-house. Payroll processing is another
important HR
Function which is completely outsourced by 68% organizations, partially outsourced
by 22% and
not outsourced by 10% of organizations.
The next important HR functions which are completely outsourced by 36%, 35%, 31%
and 15%
of organizations are Tax Management, Maintenance of Personnel records,
Performance
Management, Conducting Employee Survey and Employment Law & Regulatory Compliance
respectively. The other important HR Functions which are partially outsourced by
55%, 52%,
45%, 39% and 34% of the organizations are Employment Law & Regulatory Compliance,
Performance Management, Manpower planning , Maintenance of Personnel
Records, Tax
Management and Conducting Employee Survey.
71
The HR Functions which are not outsourced by 51%, 30%, 25%, 20% and
17% of the
organizations are Conducting Employee Survey, Employment Law & Regulatory
Compliance
Tax Management, Manpower planning, Maintenance of Personnel records and Performance
Management respectively.
Table 4.12 Opinion about the impact of HR Outsourcing on various HR attributes.
Sr. No HR Attributes Excellent Very
Good
Good Average Poor TOTAL
1 Business performance 60 20 13 7 0 100%
2 Employee & Organization Coordination
53 19 24 4 0 100%
3 Employee Job-Fit 49 23 15 13 0 100%
4 Employee Performance 58 16 22 4 0 100%
5 Employee Development 65 15 9 11 0 100%
6 Employee Moral & Motivation 45 24 13 18 0 100%
7 Employee Satisfaction 52 19 16 13 0 100%
8 Effectiveness of training 67 18 12 3 0 100%
Graph 4.12 Opinions about the impact of HR Outsourcing on various HR
Analysis:
72
It is evident from the table and graph no.4.12 that HR Outsourcing has an
Excellent positive
impact on various HR attributes and Functions such as Effectiveness of
training (67%),
Employee Development (65%), Business Performance (60%), Employee Performance (58%),
Employee & Organization Co-Ordination (53%), Employee Job fit (49%) and Employee
Moral
& Motivation (45%).
As far as the Very Good Positive Impactof HR outsourcing on different HR
Functions &
Attributes is concerned it was found to be 24%, 23%, 20%. 19%, 18%, 16 % & 15% for
Employee Moral & Motivation, Employee Job fit, , Employee Satisfaction, Employee
&
Organization Co-Ordination, Employee Performance and Employee Development
respectively.
As far as the Good Positive Impact of HR outsourcing on different HR
Functions &
Attributes is concerned it was found to be 24%, 22%, 16%, 15%, 13%, 12% & 9% for
Employee
& Organization Co-Ordination, Employee Performance, Employee Satisfaction, Employee
Job
fit, Employee Moral & Motivation, Effectiveness of Training and Employee
Development
respectively.
As far as the Average Positive Impact of HR outsourcing on different HR Functions
&
Attributes is concerned it was found to be 18%, 13%, 11%, 7%, 4% & 3% for Employee
Moral
& Motivation, Employee Job fit & Employee Satisfaction, Employee Development,
Business
Performance, Employee Performance, Employee & Organization Co-Ordination and
Effectiveness of Training respectively.
Interpretation:
Thus it is clear that HR Outsourcing has an Excellent Positive Impact on
Effectiveness of
Training (67%), Employee Development (65%) and Business Performance (60%).
HR
Outsourcing has a Very good Positive Impact on Employee Moral &
Motivation (24%),
Employee Job fit (23%), Employee Satisfaction (19%), Employee Performance
(16%) and
Employee & Organization Co-Ordination (19%).
Thus it clear that HR Outsourcing is a boon for enhancing various organizational
capacities and
for overall improvement of different HR functions of different organizations
according to their
various needs & requirements.
73
Table 4.13 Opinion about Outsourcing Options with Reference To
organizational HR
Sr. No. Response Regarding HR Outsourcing Percentage
1 Yes 76%
2 No 15%
3 Cant Say 9%
4 TOTAL 100%
Graph 4.13 Opinion about Outsourcing Options with Reference To organizational HR
74
Analysis
It is evident from the Table and Graph no. 4.13 that most of the HR Managers (76%)
are of the
opinion that HR Outsourcing can boost the performance of IT industries; however 15%
were of
the opinion that it may impact negatively. However 9% HR Managers were indifferent.
Interpretation:
Thus it is clear majority of HR Managers (76%) are of the opinion that to improve
the condition
of the IT industries, HR Outsourcing is essential, but while doing so proper care &
precaution
should be applied so as to ensure the proper implementation of
organizational policies &
practices.
Table 4.14 Opinion of HR Managers on whether HR Outsourcing may help to reduce the
Rate of Attrition in IT Organizations?
Sr.
No.
Opinion of HR Managers on "whether HR Outsourcing may
help to reduce the Rate of Attrition in IT Organizations?"
Percentage
1 Yes 86%
2 No 08%
3 Cant Say 06%
4 TOTAL 100%
Graph 4.14 Opinion of HR Managers on whether HR Outsourcing may help to reduce the
Rate of Attrition in IT Organizations?
75
Analysis
It is evident from the above Table and Graph that HR Outsourcing is very effective
in controlling
the rate of attrition in the IT sector. 86% HR managers supported the above view;
however 8%
were against it, while 6% were having an indifferent opinion.
Interpretation:
Thus it is clear that HR Outsourcing can effectively control the Problem
Attritionin IT Sector.
Attritionis the biggest nightmare for HR Managers in IT services and outsourcing
companies.
Thus it is clear that both HR outsourcing & IT Industries may be benefitted by
mutual cooperation & co-ordination because they are inter-dependent and
inter-related as 86% HR
Managers agreed with the above fact.
Table 4.15 Opinion of HR Managers on how well have your HR outsourced functions
fulfilled their objectives?
76
Sr.
No.
Opinion of HR Managers on How well have your HR
outsourced functions fulfilled their objectives
Percentage
1 Excellent 78%
2 Very Good 11%
3 Good 7%
4 Average 4%
5 Deteriorated 0%
6 TOTAL 100%
Table 4.15 Opinion of HR Managers on how well have your HR outsourced functions
fulfilled their objectives?
Analysis
77
From the table and graph no. 4.15 it is clear that outsourced HR Functions were
excellentin
fulfilling the different objectives and needs of the organizations for which they
were undertaken.
78% of HR Managers agreed with this fact. However 11%, 7and 4% were of the opinion
that the
outsourced HR functions were very good, good & average in fulfilling the given
objectives.
Interpretation
Thus it is clear that the concept of HR Outsourcing has proved to be a boon in
completing the
different tasks, objectives and needs for which they have been assigned. 78% HR
Managers have
rated its efficiency as Excellent, 11% have rated it as Very Good, 7% have rated it
to be good
and the rest 4% have rated it as Average in performance. In no case Deterioration
was observed.
Thus it has been proved that HR outsourcing can provide services & highly trained
professionals
that businesses need often with significant cost savings over hiring full time
employees.
78
CHAPTER-5
SUMMARY
OF
FINDINGS
CHAPTER-5
79
SUMMARY OF FINDINGS
The present study titled THE IMPACT OF HR OUTSOURCING ON VARIOUS HR
FUNCTIONS WITH REFERENCE TO IT INDUSTRYis an attempt to understand the pros
and cons of HR Outsourcing on various HR functions. Based on the data collected an
in-depth
analysis has been made and the results are interpreted. The following findings are
given based on
the analysis of the data obtained through survey.
5.1 To study the different aspects of HR outsourcing
To study the different aspects of HR Outsourcing, the questions 1 to 3 & 7 to 8;
from the
questionnaire have been used to collect the required data and information on the
basis of
which the following facts have been observed about the different aspects of HR
Outsourcing.
Most of the respondents belong to large organizations but small & medium
enterprises
(SMEs) also have a significant representation and the majority of HR Managers feel
that HR
Functions should be outsourced.
Most of the organizations are outsourcing a significant no. of manpower which is
up to 5000
and even more than 5000. Small and medium size enterprises (SMEs) are also
outsourcing a
considerable amount of HR, which comes under the range of 100 to 1000.
HR Outsourcing is an answer to avoid high labour cost & expensive technology.
HR outsourcing is a viable choice for small to mid-sized businesses to limit
staffing burdens
while maintaining high quality HR functions.
HR outsourcing can provide services & highly trained professionals that
businesses need
often with significant cost savings over hiring full time HR staff.
As far as the legal service agreement standard included in HR Outsourcing
contract is
concerned, the Issue resolution, had been the most important legal
service agreement
standard of HRO contract. However employee satisfaction & delivery of data had also
been
the important factors of this issue of HR outsourcing.
5.2 To study the important reasons for HR Outsourcing
80
To know the important reasons for HR Outsourcing, the question no.5 from the
questionnaire
has been used to collect the required data and information on the basis
of which the
following facts have been observed about the important reasons for HR Outsourcing
in the
order of rating, merit and significance.
A) The most important reasons for HRO are: (B) the other important reasons for HRO
are:
To save cost *To achieve better ROI
To save time *To increase capacity of organization
To increase productivity *To gain expertise support
To gain tax benefit *To improve the quality of service
To improve levels of performance *To improve efficiency
5.3 To study the important factors responsible towards choosing a third party
supplier for
HR Outsourcing.
For this purpose question no.6 has been used from the questionnaire to collect the
required data
and information on the basis of which the following facts have been observed in
relation to the
important reasons for choosing a third party supplier for HR Outsourcing in the
order of rating,
merit and significance.
Service Quality
Existing Relationship
Lowest Cost
Strong HR Process Expertise
Strength In Customized Solution
In this reference, a relevant factor was noted that though the lowest cost was
considered as an
important factor in choosing the vendor or third party supplier for outsourcing
different HR
Functions but most of the managers gave top priority to the quality of service and
their existing
relationship with the vendor.
81
5.4 To study the major HR functions being outsourced in the Indian industry either
completely or partially
For this purpose questions 4 & 9 from the questionnaire have been used to collect
the required
data and information on the basis of which the following facts have been observed
in relation to
the major HR functions being outsourced in the Indian industry either completely or
partially in
the order of rating, merit and significance.
The most commonly outsourced HR functions by most of the organizations &
companies were
Recruitment, Payroll Processing and Tax Management. The next most common category
of
outsourced HR functions was Training & Development, Maintenance of Personal
Records,
Performance Management and Employment Law & Regulatory Compliance.
The major HR functions which are completely outsourced by different
organizations are
recruitment, training & development, payroll processing &Tax management
The HR Functions which are Partially Outsourced are Employment Law &
Regulatory
Compliance, Performance Management, Maintenance of Personal Records, and Manpower
Planning and Conducting Employee Survey.
5.5 To study the impact of HR outsourcing on various HR functions & on the
effectiveness
of the HR department.
For this purpose question 10 from the questionnaire have been used to collect the
required data
and information on the basis of which the following facts have been observed in
relation to the
impact of HR outsourcing on the various HR functions & on the
effectiveness of the HR
department in the order of rating, merit and significance.
HR Outsourcing is a boon for enhancing various organizational capacities and for
overall
improvement of different HR functions of different organizations according to their
various
needs & requirements
HR Outsourcing has an Excellent Positive Impact on:
Effectiveness of Training
Employee Development
Business Performance
82
HR Outsourcing has a Very good Positive Impact on:
Employee Moral & Motivation
Employee Job fit
Employee Satisfaction
Employee Performance
Employee & Organization Co-Ordination
5.6 To study the co-relation between HR Outsourcing & IT industry
For this purpose questions 11 and 12 from the questionnaire have been used to
collect the
required data and information on the basis of which the following facts have been
observed with
reference to the co-relation between HR Outsourcing & IT industry.
Majority of HR Managers are of the opinion that to improve the condition of the
IT
industries, HR Outsourcing is essential.
Majority of HR Managers agreed with the fact that both HR outsourcing & IT
Industries
may be benefitted by mutual co-operation & co-ordination because they are
interdependent and inter-related.
that HR Outsourcing is very effective in controlling the rate of attrition in the
IT sector
5.7 To study the effectiveness of HR function that is being outsourced.
For this purpose question 13 from the questionnaire has been used to collect the
required data and
information on the basis of which the following facts have been observed with
reference to the
effectiveness of HR function that is being outsourced in the order of
rating, merit and
significance.
HR Outsourcing has proved to be a boon in completing the different tasks,
objectives and
needs for which they have been assigned. 78% HR Managers have rated its efficiency
as
Excellent, 11% have rated it as Very Good, 7% have rated it to be good and the rest
4%
have rated it as Average in performance. In no case Deterioration was observed.
83
CHAPTER-6
SUGGESTION
SAND
CONCLUSION
S
84
SUGGESTIONS
On the basis of the present study, the following recommendations are suggested for
a successful
HR outsourcing:
? The outlook of the Indian industry is gradually shifting from anti to
pro towards HR
outsourcing, but there is still a long way to go as far as trusting an outside
organization
(vendor). The companies need to build a relation of trust and understanding with
total
communication as the base. This would help to serve the interest of both the
parties better
and to a greater extent.
? In terms of effectiveness, it is important for the company to be engaged
continuously with
the vendors in order to succeed. Unless one engages with the vendor upfront to
explain the
requirements and expectations in detail, it is difficult to get efficient results
from outsourced
operations. Accountability is the key success factor.
? Fortnightly or monthly meetings should be held with the vendors in order to
understand the
level of progress as well as to assess the needs of the vendors. Understanding the
business
from the vendors point of view is essential for the success of any outsourcing
contract.
? Compensation of the employees is a major factor which should be kept in mind
before
outsourcing. The amount of compensation has a significant impact on the
effectiveness of the
HR functions. For example as the avg. Monthly salary increases the effectiveness
of the
outsourced recruitment with respect to the level of psychological contract
proportionately
increases. So in such cases companies paying higher compensation can outsource
their
recruitment function to a vendor for greater effectiveness.
? The outsourcer should exercise great care while engaging a vendor. This task will
largely
determine the success of the partnership. The task may be entrusted to a consulting
company
or be done in-house. In the latter, the outsourcer can form a team to select the
vendor
85
? Based on the analysis it is important to device a proper reporting relationship
with the vendor
for an on-going and transparent communication process to make HR outsourcing
more
effective. For this purpose, first shortlist probable candidates and brief them
clearly about the
job expectations. These expectations have to be realistic and achievable. This will
in turn
help the service provider to assess whether it can measure up to those
expectations.
? Provide enough information to the prospective service provider with regard to the
scope of
the relationship, the time- frame, and the price that is being offered in return
for the services.
Vague issues should be clarified and prospective vendors should be asked
to provide
references of clients whom they have served so as to get in touch with them and
seek their
opinion about their services & performance.
? For effective HR Outsourcing, the client company should keep in the mind the
technical
know- how and expertise available with the vendor. Experience is also a factor that
should be
considered. Pricing or the cost factor largely determines the success of
outsourcing.
However, a low cost factor alone should not be the criterion for selection because
the quality
of service has a great impact on the success of client.
? The HR vendor performs specialized operations to keep up its market
competitiveness; so the
employees of the vendor may need training to spruce up their skill. It will be in
the client
company's interest to ensure and provide training to the outsourced employees.
Legal issues,
labor laws and taxation policies all have a major role in determining
the success of
outsourcing so the terms and condition of the relationship should be mutually
agreed and
written down in order to avoid confusion or vagueness.
? It would be better for the client to entrust a small project to the service
provider initially. This
will reduce the extent of risk and give a fair idea of how well the service
provider is going to
perform.
? Cultural differences are likely especially when it comes to offshore
outsourcing. The
relationship between the outsourcer and the service provider is best served when
these
differences are identified, understood and respected. Programs to bridge the gap
should be
held where both sides can come closer.
86
CONCLUSION
This research helps to gain an insight to the contemporary developments in the
field of HR
outsourcing in the Indian industry. It helps to clarify many myths about HR
outsourcing and also
brings up interesting facts about the same. Most of the respondents belong to large
organizations
but small and medium sized enterprises (SMEs) also have a significant
representation. Most of
the organizations are outsourcing a significant no. of manpower which is up to 5000
and even
more than 5000. Small and medium size enterprises (SMEs) are also outsourcing a
considerable
amount of HR, which comes under the range of 100 to 1000.
The most important reasons for HR outsourcing are to "save cost" or to reduce
costs, to save
time, to gain tax benefit, to increase the capacity of organization, to achieve
better ROI (Return
On Investment), to increase productivity, to gain expert support, to improve
quality of service, to
improve level of quality & performance and to improve efficiency. The important
reasons for
choosing a third party supplier for HR Outsourcing in the order of rating, merit
and significance
are Service Quality, Existing Relationship, Lowest Cost, Strong HR Process
Expertise and
Strength in Customized Solution.HR Outsourcing is essential to improve the
condition of the IT
industries. HR outsourcing & IT Industries both are benefitted by mutual co-
operation & coordination because they are inter-dependent and inter-related. It is
very effective in controlling
the rate of attrition in the IT sector.
HR Outsourcing is a very effective tool for enhancing various organizational
capacities and for
overall improvement of different HR functions of different organizations according
to their
various needs and requirements and also in completing the different tasks,
objectives and goals
for which they have been assigned. It has an Excellent Positive Impact on
Effectiveness of
Training, Employee Development and Business Performance and it also has a very good
positive
impact on Employee Moral & Motivation, Employee Job fit, Employee Satisfaction,
Employee
Performance and Employee & Organization Co-Ordination.
87
The present study has been conducted on a smaller sample size due to time
constraint and the
respondents were from specific areas and did not cover whole of India and the
primary data is
based on the responses to the questions which can be influenced by personal bias
and subjective
perception of the individuals and the present study is limited only to IT Industry.
SUGGESTIONS FOR FURTHER RESEARCH

Although a lot of work has been done in similar areas before, this research is an
effort to look at
the things from a fresh and a different angle. Thus this research work can be used
as a source of
secondary data by other researchers as it contains significant amount of analysis
in areas which
have not been explored much till now. It can also be used as a tool for comparative
analysis of
the past and present HR outsourcing scenario and to understand the changes that
have taken
place. It is also suggested that further research studies should be conducted on
this topic, on a
larger scale with a bigger sample size, including more industrial sectors
which outsource
different HR Functions like ITES, Logistics, Healthcare, financial Services and
Manufacturing
Sector in India.
88
BIBLIOGRAPH
Y
89
BIBLIOGRAPHY
Books:
Armstrong, M A Handbook of HR management practices, 8
project, so please answer the following questions by your experienced &
learned responses. The Data collected through this questionnaire will be
kept completely
confidential.)
Designation- DepartmentNo. of years of experienceName of organization/company-1)
What is the total manpower strength in your organization?
*Please mention the approximate No.-2) Has your organization outsourced manpower?
Yes
No
3) Please specify the approximate no. of people outsourced by your organization?
100-500
501-1000
1001-5000
5001 & Above
Others, please specify-92
4) What are the major HR functions outsourced in your organization?
(Please tick in the given boxes & also rate the outsourced HR functions from 1 to
5)
5-essentially outsourced, 4-frequently outsourced, 3-sometimes outsourced, 2-
rarely
outsourced,
1-never outsourced
Payroll processing 1 2 3 4 5
Training & Development 1 2 3 4 5
Recruitment 1 2 3 4 5
Manpower planning 1 2 3 4 5
Employment Law & Regulatory Compliance1 2 3 4 5
Tax Management 1 2 3 4 5
Performance Management 1 2 3 4 5
Conducting Employee Survey 1 2 3 4 5
Maintenance of Personal Records 1 2 3 4 5
Outsourcing Entire HR Functions 1 2 3 4 5
5) Please rate the following reasons for outsourcing HR functions by your
organization from
1 to 5?
5-most important, 4-much important, 3- important, 2-less important, 1- least
important
To save cost 1 2 3 4 5
To save time 1 2 3 4 5
To increase the capacity of the organization 1 2 3 4 5
To gain tax benefit 1 2 3 4 5
To improve levels of quality & performance 1 2 3 4 5
93
To improve efficiency 1 2 3 4 5
To increase productivity 1 2 3 4 5
To improve quality of service 1 2 3 4 5
To achieve better ROI 1 2 3 4 5
To gain expertise support 1 2 3 4 5
6) When choosing a third party supplier for HR outsourcing; what factors are most
important to you?
Please rate them in order of their importance from 1 to 5.
5-most important, 4-much important, 3- important, 2-less important, 1- least
important
Lowest Cost 1 2 3 4 5
Service Quality 1 2 3 4 5
Existing Relationship 1 2 3 4 5
Strong HR Process Expertise 1 2 3 4 5
Strength in Customized Solutions 1 2 3 4 5
Other factor if any please specify- 1 2 3 4 5
7) What is your opinion about different aspects of HR outsourcing in relation to
various HR
functions?
Please rate them from 1 to 5.
94
5-Completely agree 4- Mostly agree 3- Agree 2-Partially agree 1- Disagree
8) What is the legal service agreement standard included in your HR outsourcing
contract?
Employee Satisfaction
Issue Resolution
Delivery of Data
System Availability
9) Please specify the different HR functions which are being completely outsourced
or
partially outsourced or not outsourced in your organization:
Completely Partially Not Outsourced Payroll processing
Completely Partially Not Outsourced Training & Development
Completely Partially Not Outsourced Recruitment
Completely Partially Not Outsourced Manpower planning
Completely Partially Not Outsourced Emp. Law & Compliance
Completely Partially Not Outsourced Tax Management
Completely Partially Not Outsourced Performance Management
Completely Partially Not Outsourced Conducting Emp. Survey
Completely Partially Not Outsourced Maintenance of P-Records
10) What is your opinion about the Impactof HR outsourcing on various HR
Attributes?
95
Aspects Opinion With Rating 5 1
a) Is HR outsourcing is the answer to avoiding high labour
cost & expensive technology?
1 2 3 4 5
b) Is HR outsourcing is a viable choice for small to mid-sized
businesses to limit staffing burdens while maintaining high
quality HR functions?
1 2 3 4 5
c) Is HR outsourcing can provide services & highly trained
professionals that businesses need often with significant
cost savings over hiring full time HR staff?
1 2 3 4 5
(Please rate them from 1 to 5)
5-Excellent 4- Very Good 3- Good 2-Average 1- Poor
HR Attributes Impact with rating 5 to 1
Excellent Very Good Good Average Poor
Business performance 5 4 3 2 1
Employee & Organization Co-ordination 5 4 3 2 1
Employee Job-Fit 5 4 3 2 1
Employee Performance 5 4 3 2 1reference to

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1.2.6 Shared services

SUGGESTIONS FOR FURTHER RESEARCH

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