HR outsourcing


Published on

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.

Published in: Career, Business, Technology
1 Comment
No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

HR outsourcing

  1. 1. 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 4th Floor, Star Mac Dinh Chi Street, Chi Street, District 1, Ho Chi Minh City, Tel: (84-8) 291 188 - Fax: (84-8) 291 4088 - Email: Tel: (84-8) 6 291 4188 - Fax: (84-8) 6 291 4088 - Email: International Centre, UnitCentre, Unit 06, 5th floor, 17 Ngo Quyen Street, Hanoi, Vietnam International 06, 5th floor, 17 Ngo Quyen Street, Hanoi, Vietnam Tel: ( 84 4) 936 76184) Fax: ( 84 4) - Fax: ( 84- 4) 3 Tel: ( 84 - 3 936 7618 936 7619 E-mail: 7619 - E-mail:
  2. 2. CONTENT1. What is outsourcing?2. Why HR outsourcing?3. Advantages and Disadvantages of HR outsourcing.4. Challenges of HR outsourcing in VN5. Important notes for an successful HR outsourcing project6. How to choose a good HR outsourcing vendor ?7. Case study of HR outsourcing in VN8. Q&A
  3. 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. 4. WHAT IS OUTSOURCING? Benefit of tactical outsourcing:• Generate immediate cost savings• Eliminate the need for future investment• Relieve the burden of staffingTypical services: staffing outsourcing serviceb. 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. 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. 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. 7. Typical services: 3PL Source: Armstrong& Associates, Inc.
  8. 8. Trends in 3PL Source: Armstrong& Associates, Inc.
  10. 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. 11. ADVANTAGES VS DISADVANTAGESADVANTAGES2. Access to pool of talent, sustainable sources of skill3. Efficiency, focus on core business, core resources4. Cost saving, no investment for infrastructure, software…5. Cost restructure: move fixed cost to variable cost and make variable cost more predictable6. Risk management: transfer risk of non tax and legal compliance to outsourced vendor7. Back up plan
  12. 12. ADVANTAGES VS DISADVANTAGESDISADVANTAGES3. More expenses if not choosing a good outsourced vendor4. Sensitive information may leak to competitors5. Less control of the processes6. Weak connection with staff/end users7. Dependency on outsourced vendor
  13. 13. CHALLENGES OF HR OUTSOURCING IN VN1. HR outsourcing is new concept with Vietnamese Government and community2. HR outsourcing industry is still immature market3. Organization do not have too many options in selecting a professional HR outsourcing vendor to meet their needs4. Pool of skillful resources are limited5. Outsourcing costs are high compared with labour cost and very high compared with ones in developed countries6. IT Infra-structure, data integrity, data security should be invested in large scale7. Integrated solutions should be developed
  14. 14. IMPORTANT NOTES FOR SUCCESSFUL HROUTSOURCING PROJECTSource: The black book of Outsourcing: How to manage the changes, challenges,opportunities _ Douglas Brown & Scott Wilson
  15. 15. IMPORTANT NOTES FOR SUCCESSFUL HR OUTSOURCING PROJECT1. 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. 16. IMPORTANT NOTES FOR SUCCESSFUL HR OUTSOURCING PROJECT2. 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. 17. IMPORTANT NOTES FOR SUCCESSFUL HR OUTSOURCING PROJECT3. Management commitment and support :• Management commitment and support are essential as outsourcing project involves a great deal of changes, especially in cases of reorganization4. 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. 18. HOW TO CHOOSE A GOOD HRVENDOR 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. 19. HOW TO CHOOSE A GOOD HR VENDORIN VIETNAM Case study of ABC in choosing a vendor for payroll service 05/2009 to 11/2009
  20. 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 outsourceStrategy+ • 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, staffNegotiation 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. 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 accessImplement • 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. 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. 23. Q&A
  24. 24. For more details on HR Outsourcing services, please contact:Ms. Nguyen Thi Thanh HuongSenior Manager, Payroll & HR Outsourcing servicesTalentNet Corporation4th Floor, Star Building,33 Mac Dinh Chi StreetDistrict 1, HCMC, VietnamTel: (84 8) 6291 4188 ext: 202Email: