With a slowdown of the world economy, many companies have started paring headcounts in their HR departments and outsource their HR functions to countries like China and India where the labor cost is comparatively low.
James Huang heads an BPO and HR outsourcing firm that has offices across China. Business is booming for freebooters like James as more and more solid, conservative old economy firms start receiving HR outsourcing contracts. The spry services outfits were doing this anyway.As a result, most companies. “It’s turning into a flood of contracts. Most are now being outsourced,” says James.
HR outsourcing is not a very new phenomenon; but what is surprising is the speed with which companies have bought into the idea itself. HR outsourcing covers all functions relating to recruitment, assessment of new candidates, sourcing candidates, background checks of candidates, and talent branding, which is a lot like media planning and deals with where to advertise for candidates and through which channels.
According to BPOVIA, a global consulting, outsourcing and investment services firm, human resource outsourcing (HRO) has come a long way since mere payroll administration or recruitment channel. It has moved up the value chain from tactical HR processes to managing business critical HR.
There are basically three broad classes of companies that are looking at HR outsourcing. First, there are large companies such as TCS and Infosys which have an employee base of close to 1 lakh each. These companies are looking to outsource HR to save costs. The second group comprises mid-size service as well as manufacturing companies with 2,000 to 5,000 people such as Microsoft China and Cisco. For such companies, it is a combination of a need to get the best talent and cost that is leading to the outsourcing of HR activities.Then there are the small companies who have ambition but simply do not have the strength or the expertise to hire big time. So they outsource their functions to BPO companies.
Apart from these functions, payroll and benefit management and performance management, strategic functions and training also form part of HR outsourcing Many of their clients are small firms with big ambitions, which do not have the capability to attract big talent. They also outsource their functions to firms like BPOVIA, who is professional on this.
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