The document discusses HR outsourcing. It states that any non-core activity that a company lacks expertise in can be outsourced. Outsourcing involves giving a task to an independent contractor to determine the best way to complete it, establishing a potential long-term partnership. The document lists common HR functions that are candidates for outsourcing, like recruitment and training, as well as functions that are not good candidates, like strategic decision making. It also outlines the advantages of cost savings and flexibility but notes disadvantages can include loss of control and effects on employee morale.

1. Strategic Human Resource Management – KMB HR04
Topic: HR Outsourcing
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

2. HR OUTSOURCING
ACHLA TYAGI, ABES EC (032), AKTU,
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3. HR Outsourcing
• Any activity in which a company lacks internal
expertise and confidentiality, can be outsourced.
• Outsourcing is a strategic decision to give a task
or activity to an independent contractor who
determines how best to do the task or activity.
• The firm and the independent contractor become
partners and may establish a long-term
relationship.
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

4. Why Outsource HR
• Tightening labour markets and competitive
product markets – pressure to reduce head count
• Cut costs
• Add value
• Do more with less
– Upgrade, but not upsize
– Downsize, but not downgrade
• HR itself is becoming the target of belt tightening
• Shed routine administrative tasks and focus on
talent management.
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

5. Which Functions/Sub-systems to
Outsource
• Recruitment – preliminary screening and short listing
• Training – Training Needs Identification, content
development, delivery, logistics, third party evaluation
• Performance management - on line – automation
• Compensation – pay roll and compensation surveys
• Safety - inspections
• Welfare – transport, security, catering
• Labour contract – contract employees doing the job
which was earlier done by regular employees
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

6. Which function not to outsource
• Decision making in each of the sub functions
• Leading change and transforming the
organization
ACHLA TYAGI, ABES EC (032), AKTU,
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7. Advantages & Disadvantages of
Outsourcing
Advantages
• Cost reduction & savings
• Financial and operational
flexibility
• Need to focus on few things
• Access to quality, expertise
& better management skills
• Staffing flexibility
Disdvantages
• Need greater coordination
flow with agencies
• Reduces organizational
learning by depleting its skill
base
• Loss of control
• Adverse effects on morale
and motivation
• Job insecurity
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

8. Factors Hampering HRO
• Cost factor & Confidentiality
• The fear of losing jobs
• Loss of sensitive information to public/
competition
• Ethics and quality of outsourcing vendors
• Possibility of security breaches
• Cost-benefit equation not clear
• Lack of psychological acceptance
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW