Pic: IMAGESBAZAAR

HR outsourcing has emerged as a much more efficient solution to several of today's HR grievances.

The worst mistake a company can make is to underrate its HR function. Very often - and more so in smaller companies - someone has to double up as a human resource manager while handling other ‘mainstream' responsibilities, right? In slightly better situations, a single HR manager has to handle the overall employee paperwork pertaining to hiring, firing, payroll, policy-making and execution. Consequently, it leads to a chaotic situation where neither the manager nor the employees are comfortable with the way human capital is managed or sought to be managed. Chandra Ganjoo, GM, HR at Trivitron Healthcare Pvt Ltd opines, "With every passing year, the trend of HR outsourcing appears to be constantly in vogue. Today, there are companies that are using HR outsourcing for the purpose of ‘managing the transition'. A few years ago, a research showed that in 2008, the HR outsourcing market would have a value of around $42 billion. Now in 2011, that value is much higher, somewhere around $67 billion and expectations have been exceeded."

Then, there are others who believe that HR outsourcing has a long way to go in India and has hardly reached the tip of the iceberg. "The HR outsourcing industry is at a nascent stage in India.  With the advent of companies propagating the concept of HR outsourcing, progressive organisations have started outsourcing operational HR activities. However, a majority of the entrepreneurs still look at HR as a backoffice or an administrative function and consider it a ‘cost centre'," says Ashish Arora, founder and MD, HR Anexi.

What is the cost-benefit analysis for a typical company outsourcing its HR function? Do the numbers look good? "Through HR outsourcing, a company can reduce the amount they pay for every single employee they have, in terms of HR processes costs. According to statistics, there is a possibility of reaching cost cuts of upto and even more than 50 per cent. It depends a lot on the HR outsourcing provider they choose. As per a survey in 2009, 93 per cent of respondents indicated a decrease in HR headcount since implementing outsourcing. While the headcount is just one of many metrics used to assess outsourcing effectiveness, it can be an useful leading indicator of near-term savings and the promise of future manpower efficiencies," adds Ganjoo.

Going by experience, Arora notices that HR outsourcing can help organisations reduce costs by 30-40 per cent and also result in direct and indirect savings. "HR outsourcing enables better management of HR and reduces costs in several ways. It frees up the resources by reducing the investments in assets, accelerates deployment of HR leading to better ROI (return on investment), leads to optimum use of  technology investments and provides a one-stop-solution by eliminating the need for dealing with several vendors/partners further," he feels.

Thus, the practice of outsourcing will not only prove beneficial to the company as a whole, but also enhance the performance of its most important asset - its people.

- Unnati Narang