Advantage on Outsourcing Human Resources to India



When considering Human Resources outsourcing to India, an organisation needs to ask at the outset why it needs to change the way the Human Resources function operates at present. In other words, what aspects of the existing Human Resources provision are not satisfactory or would benefit from improvements? By probing these responses HR can then focus on the scale and type of changes that maybe required and these will help decide whether HR outsourcing might be an appropriate response.


There are a number of potential benefits and challenges in outsource to India.


When organisations put forward a business case for Human Resources outsourcing there are a number of potential benefits that many cite. In practice, these benefits are not necessarily mutually exclusive and a number of them could be achieved through some alternative solution rather than via outsourcing. Commonly mentioned benefits include:

  • Reduced cost.
  • Increased efficiency.
  • Access to improved Human Resources IT systems without capital outlay
  • Improved people management information (including human capital metrics).
  • Access to Human Resources expertise not available internally
  • Increased flexibility and speed of response to Human Resources problems.
  • Part of an overall strategy (for example the organisation is outsourcing a number of its support functions, of which Human Resources is just one part).
  • Reduced risk as it is possible to scale up and down more efficiently.
  • Human Resources can operate more strategically.
  • From a practical point of view, there are also a number of potential pitfalls that it is useful to bear in mind when considering outsourcing. Some of the main ones are:

    • Don’t outsource what you don’t understand. The outsource provider will only have to subsequently solve the problem (at a cost) and the provider’s solution might not be most suitable from your organization’s perspective.
  • Outsourcing does not absolve the organisation of good people management practices nor of overall responsibility for the provision of HR services.
  • Increasingly, outsourcing arrangements are often long term (five to ten year contracts are not unusual). An understanding of the organization’s current and future business strategy and potential changing business (and hence risk) profile by the outsourcing provider is important before entering into any contractual arrangement. This helps to avoid being tied into unfavorable contractual arrangements.
  • Loss of local knowledge and processes which instead reside with the outsource provider.
  • Standardization of processes in line with outsources provider not organizational preferences.
  • Fragmentation of the service provided means that day to day operations are split from strategy and policy direction.
  • The need to constantly review the success of the outsourcing arrangement against specified metrics. The need for outsourcing services may change as the business environment changes, and there are instances of services being brought back in-house.

  • In addition, an outsourcing to India arrangement will often also include significant changes to Human Resources processes, in a few cases, including Human Resources self-service systems and or a formalized Human Resources call centre provision for staff and managers. It is therefore important to make sure that sufficient Human Resources leadership and expertise remains internally to manage these changes as well as providing on-going leadership and strategic direction. Being clear about who is accountable for solving problems during the transition is another important consideration is it the outsource provider or the outsourcing organisationfor when you outsource to India.

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