GROUP 2

OUTSOURC
Outsourcing isING
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.
Examples of outsourced activities: IT,
HR, Legal services, Manufacturing, R

DEFINITION OF HR
OUTSOURCING
Human resources outsourcing is
when a company gets an outside
party to perform some or all of their
HR functions.

In the SHRM study, 33 percent of HR

professionals
who
participated
believe their company will increase
their use of outsourcing within the
next five years.

OUTSOURCING ADVANTAGES
Better quality.
Reduction in administrative costs.
Preserving a strong culture or
employee morale.

OUTSOURCING DISADVANTAG
Loss of control
Loss of the opportunity
knowledge and information

to

gain

WHAT TO
OUTSOURCE IN
HR?
Three things that
managers do
(Henry Mintzbergs Nature of
Managers Job)
Interaction (outsource)
Information gathering/processing
(outsource)
Decision-making and problem
solving (do not outsource)

OUTSOURCING
MAY NOT BE
APPROPRIATE
The task is a core activity critical
strategy or technology.
WHEN

to

Task is highly interdependent with

core activity due to technology or
work design.
Task requires great deal of firm
specific human capital or access to
proprietary information.
Tasks where the employees work in

THE DECISION TO
OUTSOURCE
TRANSACTION
COST
Determine
the
best
type
relationship.
ANALYSIS

of

The properties of the transaction

determine the governance structure:
High
asset
uncertainty.

specificity

Medium asset specificity.

Low asset specificity.

and

OOSING HR OUTSOURCING SER

Core HR Outsourcing Services

Payroll Administration
Benefits Administration
Workforce Administration
Leave Administration
Talent Administration HR Outsourcing Services

Relocation and Handling Assignments

Performance Management and Training
Recruiting Administration
Compensation Administration

PROCESS OF HR OUTSOURCING

STRATEGIC
OUTSOURCING
Beyond cost control.
Specialization and expertise.
Focus on quality,
service delivery.

technology

and

Outsourcing to best of class, best of

industry.
Problems with technology.

WHICH FUNCTIONS TO
OUTSOURCE
Recruitment
Training
Performance management
Compensation
Safety
welfare
Labour contract

TYPICAL
PROBLEMS
Integration with over all strategy.
Fragmented and piecemeal approach.
Absence of formal outsourcing process.
Limited cost analysis.
Work flow, supply chain and logistics
management critical to outsourcing process.

RISKS OF HR
OUTSOURCING
a)
b)
c)
d)
e)
f)
g)
h)

Trust
Confidentiality
Dependency
Spillover risks
Relative proficiency
Strategic capability
Commitment
Flexibility

CONCLUSION
Provides
innovations.

specific

knowledge

and

HR outsourcing has become a core part

of several organizations.
Source of business for many service
providers.