The document discusses HR outsourcing. It defines outsourcing as contracting an independent contractor to perform tasks or activities that a company lacks internal expertise or confidentiality to handle. Companies outsource HR functions to reduce costs, add value, and focus on talent management. Common HR functions that are outsourced include recruitment, training, performance management, compensation, and safety. While outsourcing provides cost savings and expertise, it can also reduce organizational learning and control. Factors that can hamper HR outsourcing include cost, confidentiality concerns, job security fears, and vendor quality issues.

1. HR Outsourcing
Dr. G C Mohanta, BE(Mech), MSc(Engg), MBA, PhD(Mgt)
Professor
Al-Qurmoshi Institute of Business Management,
Hyderabad - 500005

2. 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.

3. 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

4. Which Functions/Sub-systems
to Outsource
Recruitment – preliminary screening and short listing
Training – Trg. 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
Which function not to outsource
Decision making in each of the sub functions
Leading change and transforming the organization

5. 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
Disadvantages
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

6. 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

7. 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