Outsourcing has become a major global trend in the last decade as businesses of all sizes look for opportunities to reduce costs and improve operational performance by using cost effective labor and resources in whatever part of the World they are located. The expanding reach of the Internet and growth of online collaboration tools mean that outsourcing is easier and more effective than ever before.

1. www.talentnet.vn
CHALLENGES OF HR OUTSOURCING
IN VIETNAM
Presented by: Huong Nguyen
Date: 18th March, 2011
4th Floor, Star Building, 33Building, 33 Mac Dinh District 1, Ho Chi Minh City, Vietnam Vietnam
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2. CONTENT
1. What is outsourcing?
2. Why HR outsourcing?
3. Advantages and Disadvantages of
HR outsourcing.
4. Challenges of HR outsourcing in
VN
5. Important notes for an successful
HR outsourcing project
6. How to choose a good HR
outsourcing vendor ?
7. Case study of HR outsourcing in
VN
8. Q&A

3. WHAT IS OUTSOURCING?
1. Definition:
Out: external, source: resource.
Outsourcing means contracting out of a
business function - commonly one
previously performed in-house - to an
external provider.
2. There are 3 levels of outsourcing:
a. Tactical outsourcing
• Lack of talent, resource
• Reduce headcount (restructuring)

4. WHAT IS OUTSOURCING?
 Benefit of tactical outsourcing:
• Generate immediate cost savings
• Eliminate the need for future investment
• Relieve the burden of staffing
Typical services: staffing outsourcing service
b. Strategic outsourcing
• Outsource all of the functions, responsibility of one area
• Relationship between the organization and outsourcing
vendor is switch from buyer & supplier to business partner.

5. WHAT IS OUTSOURCING?
 Benefits of strategic outsourcing:
• Reduce in-house administration
• Focus on strategic issues
• Benefit from external expertise and well-tested processes
Typical services: IT outsourcing, payroll outsourcing, legal
outsourcing, hiring, training & development…outsourcing.
c. Tranformational outsourcing
• Innovation that outside specialists bring to the business
• Centered on creating value vs on cutting costs
• Powerful tool/forces for change, partner in the battle for market
and mind share.

6. WHAT IS OUTSOURCING?
 Benefits of transformational outsourcing:
• Gain confidence and experience from strategic partner
• Build on best practice
• Move further, faster
Typical services: Longer term collaborative partnership,
growth and productivity strategies..

7. Typical services: 3PL
Source: Armstrong& Associates, Inc.

8. Trends in 3PL
Source: Armstrong& Associates, Inc.

9. WHY HR OUTSOURCING ?

10. WHY HR OUTSOURCING ?
* 85 % of the time on Administration and Management with no
Added Value
* 15% of the time on HR strategies, communication, planning.
According to Hewitt’s HR outsourcing Trend and Insights
2009 survey, top reasons for outsourcing HR services:
5. Opportunity for cost savings 78%
6. Access to outside expertise 78%
7. Improve service quality 74%
8. Realign resources/focus
on strategic HR properties 72%
5. Relief from regulatory/
administrative burden 70%

11. ADVANTAGES VS DISADVANTAGES
ADVANTAGES
2. Access to pool of talent, sustainable sources of
skill
3. Efficiency, focus on core business, core resources
4. Cost saving, no investment for infrastructure,
software…
5. Cost restructure: move fixed cost to variable cost
and make variable cost more predictable
6. Risk management: transfer risk of non tax and
legal compliance to outsourced vendor
7. Back up plan

12. ADVANTAGES VS DISADVANTAGES
DISADVANTAGES
3. More expenses if not choosing
a good outsourced vendor
4. Sensitive information may leak
to competitors
5. Less control of the processes
6. Weak connection with staff/end
users
7. Dependency on outsourced
vendor

13. CHALLENGES OF HR OUTSOURCING IN VN
1. HR outsourcing is new concept with Vietnamese
Government and community
2. HR outsourcing industry is still immature market
3. Organization do not have too many options in selecting a
professional HR outsourcing vendor to meet their needs
4. Pool of skillful resources are limited
5. Outsourcing costs are high compared with labour cost and
very high compared with ones in developed countries
6. IT Infra-structure, data integrity, data security should be
invested in large scale
7. Integrated solutions should be developed

14. IMPORTANT NOTES FOR SUCCESSFUL HR
OUTSOURCING PROJECT
Source: The black book of Outsourcing: How to manage the changes, challenges,
opportunities _ Douglas Brown & Scott Wilson

15. IMPORTANT NOTES FOR SUCCESSFUL HR
OUTSOURCING PROJECT
1. Service Level Agreement (SLA): clear, detail and there are
some valuable points need to focus:
 Timeline to deliver the services: an fixed schedule should be
discussed and agreed in advance between the organization and
vendor
 What kind of reports/output to be delivered: a check list of reports,
outputs should be discussed and followed on
monthly/quartery/yearly basic
 Responsibilities of organization and vendor: this should be
mentioned as detailed as possible as many unclear services
will be extra charged to your organization
 Decisions to be made by organization, vendor: this is very
important in HR outsourcing as it much link with your staff ‘
feeling and your HR cost

16. IMPORTANT NOTES FOR SUCCESSFUL HR
OUTSOURCING PROJECT
2. Planning transition
 Keep end users informed about the goals and progress of
the arrangement
 Get end users involved: input in outsourcing plans, how the
changes affect them..
 Buy-in end users and sign-off on outsourced activities
 Educate end users about new method of the process
 Take care with high sensitivity if it involves transition of
employee from organization to HR outsourcing vendor.

17. IMPORTANT NOTES FOR SUCCESSFUL HR
OUTSOURCING PROJECT
3. Management commitment and support :
• Management commitment and support are essential as
outsourcing project involves a great deal of changes,
especially in cases of reorganization
4. Performance monitoring and support:
• Performance should be review frequently to make sure the
service can meet the organization’s expectation.
• Mutual support, understanding and solving problems with a
we’re- in-this-together attitude.

18. HOW TO CHOOSE A GOOD HR
VENDOR IN VIETNAM
Hewitt’s HR Outsourcing Trends and Insights 2009
Survey gives top factors to consider in choosing
outsourcing provider:
• Service quality
• Track record
• Strong HR Process expertise
• Brand trust
• Strength in customising solutions
Very few organizations select their HR providers
based on lowest cost

19. HOW TO CHOOSE A GOOD HR VENDOR
IN VIETNAM
Case study of ABC
in choosing a
vendor for payroll
service
05/2009 to 11/2009

20. Case Study
• Internal discuss about strategic outsourcing of payroll as the number of employee increase double or tripple in 2 year time
• Finallize the scope of work need to outsource
Strategy+
• Timeliness: May 2009
Scope
•Invite 3 HR vendors to come to present their services and discuss with them the scope of service need to outsource
• Get 3 quotations from 3 HR vendors
• Check reference in the network, or current clients using payroll services on technical expertise, customer services, staff
Negotiation turnover, deadline… (by email, telephone)
and finalise
• Visit vendor’s office (HR team+IT) to access server room, filing system, software, and interview the IT manager and the
consultant to deliver the services ( some organization the Sales manager is very excellent, while the staff to deliver the
services is not qualified)
• Finalise the vendor based on quality, cost ..
• Finalise the contract and sign- off
•Timelineness: Jun to July 2009

21. Case Study
• Inform staff about the payroll outsourcing arrangement: explain the reasons why outsourcing payroll and get their inputs and
expectation
• Arrange a meeting between vendor and all staff: to introduce the vendor, and introduce some new method as e-payslip
access
Implement
• Inform the vendor all the information related to services as ABC’ payment policy, staff expectation, management
ation expectation, culture…
• Handover employee data to new vendor for setting up in Aug 2009
• Run paralell in two payroll circles: Sep and Oct 2009
• Go live on Nov. 2009
• Monthly check list of documents exchanged between the parties and the output reports are followed up
• Review the services quality by each quaterly and then 6 month
Post-
• Renew the contract after one year and a half.
Implemen
tation

22. Summary
 In other countries, companies have embraced
HR outsourcing enthusiastically
 How can we help companies in Vietnam learn
from their experience and share in the
benefits?

23. Q&A

24. For more details on HR Outsourcing services, please contact:
Ms. Nguyen Thi Thanh Huong
Senior Manager, Payroll & HR Outsourcing services
TalentNet Corporation
4th Floor, Star Building,
33 Mac Dinh Chi Street
District 1, HCMC, Vietnam
Tel: (84 8) 6291 4188 ext: 202
Email: nguyen.t.thanh.huong@talentnet.vn