Outsourcing Four Stages Process Make or Buy Decision Five competitive force driving organizations to outsource HR activities Rationales for outsourcing Positive and negative outcomes of outsourcing Conclusion

1. WELCOME TO OUR
PRESENTATION

2. HRM OUTSOURCING :
MAKE OR BUY DECISION

3. Contents of presentation
 Outsourcing
 Four Stages Process Make or Buy Decision
 Five competitive force driving organizations to outsource HR activities
 Rationales for outsourcing
 Positive and negative outcomes of outsourcing
 Conclusion

5. Four Stages Process Make or Buy Decision
Planning
Stage
Evaluation
Stage
Analyzing
Performance
Stage
Selecting
Stage

6. Planning Stage
Assess Risks
Senior Management & Employee Announcement
Appoint the Project Team
Choose Independent advisor
Choose the project leader

7. Evaluation Stage
 Evaluate Implication on Company’s Strategy
 Determine Core Competences
 Define Motive, Objective, Scope

8. Analyzing Performance Stage
Measure Current and Future Costs
Measure Current and Future Performance

9. Selecting Stage
 Define Organization Needs
 Engage the Market place
 Prepare and Deliver Request of Proposal (RFP)

10. Five competitive force driving organizations to
outsource HR activities
Downsizing
Rapid Growth or Decline
Globalization
Increased Competition
Restructuring

11. Rationales for outsourcing
Strategic Reasons for
outsourcing
Operational/ Tactical Reasons
for Outsourcing

12. Strategic rationales for outsourcing
 Innovations and economies of scale in HR technology used by outside vendors
 Gain access to world class capabilities
 Get access to resources that are not available internally
 Improve customer satisfaction
 Increase Flexibility
 Sharing Risk

13. Operational rationales for outsourcing
 Innovations and economies of scale in HR technology used by
outside vendors
 Time sensitive issues better handled by outsourcing
 Reduce control cost and operating cost
 Improve performance
 Outsourcing reduce liability and risk in legally sensitive HR activities
 Ability to manage functions that are out of control
 Efficient vendor management practices drive costs down more
than economies of scale
 Specialized vendors offer activities as their core business and
strategy focus

14.  Lower HR costs
 Higher Service Quality
 Redeployment of Internal HR Expertise
 Enhanced Credibility of HR Function
 Improve economy
 Risk and Uncertainty Absorption by HR Vendor
Positive outcomes of outsourcing

15. Negative outcomes of outsourcing
 Significant Cost Savings not always Experienced
 Vendor Switching Cost
 Long Term Vendor Contracts
 Disruption of Firms Culture
 Removal or Distancing of HR Function from Employees

16. Conclusion
 Determination whether to manage HR activities internally or
to buy them from an outside logistics provider involves both
qualitative and quantitative factors.
 Qualitative considerations include service quality and the
necessity for long-run business relationships with
subcontractors. Quantitative factors deal with cost.

17.  Thanks to All for being
patient ….