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 Outsourcing
of non-core activities is becoming a norm, as organisations realise
that it is better to focus on their core strengths and leave support
functions to outside experts. With most IT companies, irrespective
of their size, now outsourcing their HR requirements, these functions
could vary from mundane operational tasks like pay-slip preparation
to recruitment to planning an effective corporate HR strategy. And
it is not just cost efficiency and convenience factors that determine
the business but the value added services which these HR consultancy
firms bring to their clients, creating a partnership in the truest
of sense.
While
the traditional HR operations like payroll processing etc have always
been given to outside agencies, the services offered by most of
these consultants can be broadly categorised into three sections
— strategy, management and operational. Strategy is for determining
the HR culture of the organisation, the process and system that
needs to be implemented. The management functions include operations
like performance appraisal, training, counselling, compensation
and benefits etc. Operational services, which have primarily always
been outsourced, include payroll processing, statutory compliance
et al. “Operational activities have traditionally been outsourced
to reduce headcount and ensure confidentiality. The recruitment
functions are given outside because the companies do not want to
get into the nitty-gritty of it. As far as strategy is concerned
most companies are not able to recruit experts because of the large
salaries and find it convenient to hire them as consultants,”
says Varda Pendse of Cerebrus Consultants.
Interestingly,
the trend of HR outsourcing was probably initiated in the 90s primarily
to investigate and monitor IT professionals who went on assignments
abroad for a company and then switched jobs. As these companies
themselves could not monitor where their employees had disappeared,
agencies were hired to trace them out. “These were initially
low-end jobs that initially got outsourced, now management and strategy
are the significant functions. As the market dynamics are very complex,
internal resources might not be able to provide the value addition,”
adds Pendse, pointing out that it is essential for an HR consultancy
firm to be a business partner for its client in every sense and
help it move forward.
More
than the cost factor it is the different perspective that a consultant
is able to provide which proves to be the winning point because
he/she is an outsider and is not involved in the organisation’s
politics. Then of course is the fact that the consultants are able
to bring multiskilling to the table, which probably a HR professional
hired by the company might not be able to provide. Significantly,
the outsourcing needs seem to vary from company to company depending
on the size. Small (less than 100 employees) and medium (100-300
staff members) mostly engage consultants for management and strategy.
“We find that operational aspect definitely gets outsourced
when it is a 300+ company, or if they are following an aggressive
growth strategy and do not want to add on HR staff but want fast
recruitment. The big companies mostly carry out the management functions
themselves but do engage consultants for formulating the HR strategy
of the company,” says Pendse, adding that as consultants they
work in close alliance with the company and align their business
objectives with the HR initiatives.
Poonam
Kumar, managing director and chairperson of Mega Ace Consultancy
(India) Limited, feels that training and research is an integral
part of any business activity including HR functions. It is also
important to note that a consultant is able to provide continuity,
which the staff probably cannot because there is constant attrition
in the HR department itself. “Motivation is another key aspect
which only a steady staff is able to provide. It is difficult to
quantify human resources, know how much you are able to inspire.
Training is not a static activity and the end result is motivation.
All this is not as simple - it is not just about administering salary,
maintaining records, get appraisals systems on time,” says
she, adding however that it is also essential to have a full time
support HR driver particularly in big companies for coordination
and linking activities. Human resources, she reminds, is a sensitive
issue and there will always be need for internal specialists, however,
it is a tough task finding very good high quality manager and hence
the need to outsource expertise from consultants.
In
an industry which is marked by constant changes, mergers and acquisitions
gives rise to crucial HR issues and experts believe that the reason
why most M&As fail is because the human aspect is not taken
into consideration, the only emphasis is on valuation, size and
economics, “Most problems arise from lack of communication,
and when cultures of two companies with different set of employees
meet, there is a lot of insecurity and uncertainty, and this can
be sorted out by handling the human part,” says Kumar, acknowledging
that in India people do not understand the value of communication
which needs to in fact percolate from the top management. Varda
Pendse concedes that their roles become all the more sensitive whenever
there is a merger, because apart from the not-so-easy task of aligning
the HR systems (regarding performance management, recruitment etc),
they also try to help create a vision for the organisation, clarity
in terms of roles, new organisational structure and new values.
C
Mamutty of Zams HR Consultants (an affiliate of Brainiasconline.com
and Rosenblatt.com, Canada and associate of BK White Associates,
Australia), feels that outsourcing is always easy when working with
knowledge workers, they understand the significance and are concerned
with the results. In an industry where HR outsourcing is almost
becoming a norm rather than an exception, it is probably this attitude
which will solve all the problems related to human resources.
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