Indian companies are also not lagging
behind in outsourcing their HR activities. LG Soft India
has outsourced its PF management, Escosoft has
outsourced payroll processing, execution of training
programmes and survey conduction. Depending on their
need, outsourcing can be transactional or HR Consulting.
In India transactional outsourcing is more prevalent
3.
In the value chain, it falls at the lower-end compared
to HR consultancy, although it happens to be an
essential function. According to Harish Chopra, whose
firm Harish Chopra & Associates has garnered a large
chunk of financial sector HRO over the years: “An
investment bank would prefer to recruit investment
bankers rather than HR specialists. And given their
minimum salaries and establishment costs, HR
administration would cost them twice as much 4.” |
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The HR outsourcing fever has not only spread to large companies but many small and medium sized companies are also welcoming this trend. Salary and Benefits Processing, Benefits Administration, and Compensation Benchmarking & Design are the most frequently outsourced HR activities in India. According to a study conducted by the Institute of Management Accountants (IMA) in mid 1990s, mid-sized companies spent more on the routine transactional work in finance and accounting services than large companies and maintain 79 percent more headcount 5.
This kind of cost is felt even more in the routing HR work. According to the survey more that 87 percent of the funds mid-sized companies’ budget for finance and HR go towards routine processing transactions, rather than policy making strategies and analysis that could move their business forward. This is clearly counterproductive for organizations set on high productive model.
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[3] Transactional outsourcing is more of day-to-day or month-to-month
requirements, and constitutes services like payroll and benefits.
[4] Www.hewittassociates.com
[5] C. J Sarma, HR outsourcing: Strategic thinking in troubled times, IT
People.com
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