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HR Outsourcing - Talking point
Shalini Shukla 03 Oct 2013
Outsourcing o !" unctions is a realit# or man# companies$ large an%
small$ to%a#. &he 'ene(ts a)ect owners$ *-suite e+ecuti,es$ !" managers an% emplo#ees$ an% can inclu%e cost sa,ings$
an% access to highl# skille% proessionals an% a%,ance% technolog#$ which can collecti,el# result in a sustaina'le
competiti,e a%,antage.
&he 'roa% a%option o !" outsourcing across -sia-.aci(c has also emerge% as a ke# (n%ing o regional research con%ucte%
'# &alent2$ a lea%ing !" an% 'usiness process outsourcing pro,i%er. &he &alent2 -sia-.aci(c /arket .ulse Stu%# oun% that
across -ustralia$ !ong 0ong$ *hina an% Singapore$ the ma1orit# o !" e+ecuti,es 230-9045 are now consi%ering !"
outsourcing as a solution to ke# challenges cite%$ inclu%ing search an% recruitment 26645 an% emplo#ee retention 27045.
*ommenting on these (n%ings$ 8ohn "awlinson$ *9O o the &alent2 :roup$ sai%: ;&his research reinorces that ongoing skills
shortages are hampering organisations across -sia rom (n%ing the people the# nee% to %ri,e top line 'usiness growth.
<hat=s interesting here is that !" e+ecuti,es are ocusing on %i)erent wa#s to a%%ress these challenges > namel# through
outsourcing$ an% in,estment in learning an% %e,elopment.
;&he act that the o,erwhelming ma1orit# o !" e+ecuti,es are outsourcing !" unctions 2or are consi%ering %oing so5
represents a massi,e shit in the in%ustr# > e,en compare% to (,e #ears ago. ?elson !all=s 8une !" Outsourcing @n%e+
'acks this up with the in%ustr# reporting a 104 increase in con(%ence in the !"O sector o,er the last Auarter. @t clearl#
shows that outsourcing is now 'eing consi%ere% as a strategic solution$ rather than a cost-cutting tactic in response to the
glo'al (nancial crisis$B "awlinson continue%.
-cross the region$ all markets are seeing strong utilisation o outsourcing as a solution to man# !" challenges$ with 974 in
*hina$ -ustralia an% Singapore seeing clear 'ene(ts o outsourcing. @n !ong 0ong$ 914 are seeing clear 'ene(ts o
outsourcing$ while regionall# 164 o !" managers are turning to outsourcing as a means o a%%ressing skill shortage
pro'lems.
@n%ee%$ interest in !" outsourcing has increase% signi(cantl# in -sia in recent #ears. ;"ecentl#$ our outsourcing %epartment
has 'een getting more enAuiries on outsourcing ser,ices rom man# companies$B sa#s *harles Ciaw$ Director$ &imes
Sotware. ;@t coul% 'e that companies (n% it tough to recruit new sta) an% retain e+isting sta).B

What to outsource?
-ccor%ing to the &alent2 -sia-.aci(c /arket .ulse Stu%#$ 714 o !" e+ecuti,es across -sia outsource all or part o their
search an% recruitment unction. &his 26045 is the unction most likel# to 'e consi%ere% or outsourcing$ ollowe% '#
emplo#ee learning an% %e,elopment 21745 an% pa#roll 21245. /ore than 604 o e+ecuti,es in Singapore are alrea%#
outsourcing their pa#roll unction.
Su1a# Ehat$ "egional Director > Eusiness De,elopment 2S9- F @n%ia5$ -on !ewitt$ sa#s that !" operations can essentiall# 'e
split into tactical an% critical ones$ with tactical transactions 'eing commonl# outsource%. ;<hat is outsource% an% what
aspects are retaine% %epen%s on the go,ernance an% control mechanisms in place.B
Gor e+ample$ perormance e,aluation con,ersations cannot 'e outsource%$ sa#s Ehat. ;&o 'e e)ecti,e$ the process nee%s a
%ialogue 'etween the manager an% the emplo#ee. !owe,er$ workHows or con%ucting the perormance re,iew process an%
%ata gathering$ can 'e perorme% ,ia a clou%-'ase% outsource% toolB. <ith recruitment outsourcing 2".O5 on the other
han%$ !" can allow their outsourcing partners to sie,e through resumes an% ena'le the !" unction to ocus on a select ew
resumes$ rom which the (nal can%i%ate can 'e chosen.
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<hile %i)erent !" unctions an% transactions within unctions can 'e outsource%$ some are en%-to-en% outsourcing while
others are part outsourcing. ;&his is 'ecause companies can le,erage on the !" e+pertise/technolog# the# alrea%# ha,e
an% partner with outsourcing ser,ice pro,i%ers to (ll gaps$B sa#s Ehat.
;!" Outsourcing is e,ol,ing$B he a%%s. ;<hile He+i'ilit# an% ,alue are ke# %ri,ers$ cost optimisation is still signi(cantI or
instance$ companies can %eci%e whether to engage in onshore$ o)shore or near shore outsourcing mo%els. Jltimatel#$ the
!" raternit# wants options.B

Why outsource?
<ith outsourcing$ companies are a'le to impro,e their !" unctions$ as ser,ice pro,i%ers t#picall# specialise in rele,ant
(el%s 2see &a'le 15.
;-mongst the man# 'ene(ts o !" outsourcing$ some inclu%e impro,e% eKcienc# an% e)ecti,eness$ access to worl%-class
capa'ilities that ma# not 'e a,aila'le internall#$ an% re%ucing 'usiness operating costs$B sa#s Ciaw.
-ccor%ing to the &alent2 -sia-.aci(c /arket .ulse Stu%#$ a ke# 'ene(t o outsourcing is that it ena'les 'usinesses to ree up
resources an% pla# to their strengths$ '# ocusing on their core competencies 27345.
Outsourcing also o)ers sta'ilit# to man# 'usinesses$ with 624 (n%ing it to 'e a 'ene(t in relation to coping with peaks an%
troughs in 'usiness acti,it#.
!owe,er$ there are some %raw'acks also associate% with outsourcing$ the main risk 'eing that e+ternal pro,i%ers oten lack
%etaile% knowle%ge a'out the 'usiness 26745. *ost 26345 an% a lack o consistenc# rom outsourcing companies 26745 are
also consi%ere% %raw'acks '# some !" e+ecuti,es.
@nterestingl#$ the sur,e# oun% that in *hina$ securit# an% con(%entialit# issues were cite% as an o'stacle or consi%ering
outsourcing 26645.
;@n Singapore$ @ think it has 'ecome a tren% or companies to outsource their non-core acti,ities an% !" unctions 'ecause
it is har% to allocate a suita'le can%i%ate to %o the 1o' 2in ,iew o the /anpower /inistr# cutting Auotas to hire oreign
talent an% %iKcult# to recruit locals an% permanent resi%ents5$B sa#s Ciaw. ;/anagement woul% preer to allocate current
manpower to impro,e compan# ocus to 'ring in more 'usiness an% re,enues.B
;Outsourcing is here to sta# an% grow$B he conclu%es.


Which shore works best?

Depending on the proximity to your business location, you can outsource work to an
offshore, near-shore or onshore locale.
Offshore refers to a foreign location that is far away in distance and, more
importantly, far apart in time from your primary place of business.
Near-shore also refers to a foreign locale, but one that is much closer to you.
Onshore is a locale in the same country as yours.
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Of the two considerations, distance and time, the latter is the most critical. All other
factors being eual, it is much more effecti!e to work with a near-shore partner that is in the
same time "one as yours than it is to do it with an offshore !endor that is three or four time
"ones away.
#ource$ Nearsoft

Table 1
Benefits of HR Outsourcing

%educing business operating costs to impro!e in company focus
&mpro!ing efficiency and effecti!eness
'nhancing the corporate image of the company
(a!ing a more flexible and adaptable organisational structure
)ain access to world-class capabilities
*ree internal resources for other purposes
Accessing to resources that are not a!ailable internally
#a!e tangible and intangible administrati!e cost
#a!e the cost to buy the +ayroll,(uman %esource,e--odules
#a!e time and cost to upgrade hardware and payroll software due to changes of
go!ernment rules and regulations.
Disaster %eco!ery
#ource$ .harles /iaw, Director, 0imes #oftware


HR meets IT
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According to a sur!ey conducted by %epublic +olytechnic 1%+2 and the #ingapore (%
&nstitute 1#(%&2, larger companies are more likely to use (% &nformation #ystems 1(%&#2.
(owe!er, less than 345 of companies, regardless of si"e, currently use (%&# for strategic
(% operations.
0his lea!es (% operations such as learning and de!elopment, performance management,
and career de!elopment largely within manual systems, despite the sur!ey showing that
impro!ed strategic (% management was in demand from (% practitioners.
0he main moti!ation behind implementing a new (%&# was to cut down on paper work and
time spent managing operational (% functions, thereby allowing greater focus on strategic
(% tasks.
675 of respondents to the study felt that (%&# systems were too costly to implement, and
385 did not know about go!ernment subsidies aimed at reducing these costs.
0he sur!ey also re!ealed that (% practitioners using a fully integrated (%&# had the highest
satisfaction rate amongst their peers.
9(% information systems support organisations: dri!e to increase their efficiency and
producti!ity through better human capital and de!elopmental management for their
employees,; said 'rman 0an, +resident, #(%&.
90hrough the effecti!e use of such technology, (% managers can focus more of their
attention on people relations and strategic matters, helping their organisations achie!e
greater efficiencies and raise producti!ity,; he adds.