The Effects of Outsourcing HR to India

One very important trend in the recent times has been the growth of human resource outsourcing. HR outsourcing to India includes administrative tasks such as payroll, benefits, education/training, recruiting personnel, administration etc. to realize economies of scale and achieve standardization of services.

Rapidly changing market dynamics and global competitive pressures have caused organizations to spend more time focusing on their core business. Organizations are fast realizing that they can't be all things to all people. So companies now, be it software companies, service providers or manufacturing firms, decide what they are good at and are outsourcing everything else, i.e., focus on their core competency, and let someone else do the rest in a more efficient and cost-effective manner.

As a result, human resources outsourcing is becoming increasingly prevalent. The number of companies outsourcing HR activities to India continues to rise, and the scope of outsourced HR activities continues to expand. HR outsourcing can happen in HR functions, like payroll administration (producing checks, handling taxes, dealing with sick-time and vacations), employee benefits (Health, Medical, Life insurance, Cafeteria, etc), human resource management (hiring and firing, background interviews, exit interviews and wage reviews), risk management, etc. Outsourcing has become a common response to manage people and technology resources strategically, enhance services, and manage costs more effectively.

Outsourcing non-core activities allows HR professionals to move away from routine administration to a more strategic role. The organization can focus on higher value-added activities while the outsourcing provider takes care of the day-to-day administration. Critical internal resources, such as technology and talent, can be devoted to company's core business. Outsourcing reduces the need for large capital expenditures in noncore functions.

Thus, outsourcing becomes a strategy for reducing the capital intensity of the business. This strategy has gained popularity as companies aim to become more nimble and gain the speed and flexibility necessary to compete in today's business environment. A growing number of executives understand the benefits it can bring in terms of not only cost savings, but also heightened strategic focus. Many recognize outsourcing relationships as long-term partnerships created to further the strategic goals of the organization.

The HR outsourcing business opportunity is large and India is likely to garner a larger and larger piece of this pie in the future. India, with its intrinsic advantages such as low cost, ready pool of English speaking manpower and geographic positioning, is emerging as a viable destination for HR outsourcing companies to set up their businesses.

But still here people are not very clear about what exactly is manpower outsourcing all about, and issues like quality and trust needs to be addressed properly. Experts say the basic reasons hampering the growth of HR outsourcing in India are confidentiality and cost factors. Moreover, the fear of losing jobs, losing control over confidential data, ethics and quality of outsourcing vendors, security breaches and overall confidence in the vendors deters many organizations. The biggest problem - and this is why the HR outsourcing industry in India is on the back foot - is the government and the industry's failure to tackle issues like data security and data privacy. This is where Indian HR outsourcing companies face a major handicap. The Indian government is still grappling with drafting a data protection law designed to quell growing privacy concerns from their offshore clients.

Right now, India is barely skimming the surface of the HR outsourcing market potential. Indian life Hewitt (ILH), FIDELITY, EXULT and MAFOI are some of the prominent HR outsourcing services providers in India and the clients include giants of manufacturing, software and service industries like GE Capital, Ford Motors, Hyundai Motors, Satyam Group, Infosys, Enron, Haldia Petrochemicals and HSBC, to name a few, but many more needs to be added to that list.

Large organizations mostly are outsourcing their HR services to India in order to concentrate on their core processes. Such large organizations can increase the profitability of their business by outsourcing. Large organizations also stand to gain from better HR services for their employees. Small and mid-size organizations also outsource if they do not have enough of HR staff to manage their HR functions. Mid-size and small organizations can also benefit from cost-effective services when they outsource to India. Outsource HR services to India to enhance your productivity and return on investments and also to achieve the economies of scale.

When you outsource HR services to India, you can see an improvement in your HR support functions. Outsourcing HR services can help you bring out more effective and efficient processes within your organization. Payroll functions can be completed on time accurately and your outsourcing partner can come up with ingenious ways of improving HR functions in your organization.
Outsourcing HR services to India can help you achieve your targets. Your business can become more productive with the help of effective business and HR strategies. You can also on save time, effort and manpower. You can concentrate more on your business and can be relieved from taking care of your HR work in-house. With strategic HR strategies, training programs and development programs, you can retain your employees.

Outsourcing HR Services to India can help your organization gain a competitive edge!

Till that time, HR outsourcing in India remains to be a gold mine waiting to be unearthed...

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