HR Outsourcing - The Emerging Trends
 |
Authors
Authors: Sanjib Dutta
Senior Faculty Member
ICMR (IBS Center for Management Research).
Links
Tools
Why the Outsourcing Rush? Contd...
HR outsourcing at Ma Foi Management Consultants
|
Chennai based Ma Foi is a perfect example of a company that has profited by effectively tapping the HR outsourcing market. The firm which initially began just by providing outsourcing services in recruitment is moving into other areas like compensation management, psychometric evaluation, training exit interviews, and outsourcing of personnel including sales staff and manual labor. The firm is a public limited company with revenues of $10.2 million for the financial year ending 2003. Such is the potential of the HR outsourcing market that if handled with expertise and integrity can be a highly profitable market. The company has identified that its potential markets range from pharma to FMCG. Its major clients include Coca Cola India, Thomson Electronics, Madura Garments, Alstom group and a major Healthcare recruiter in the UK. The firm recently launched three products, MRMS (Ma Foi Resume Management Systems), HRMS (Ma Foi Human Resource Management Systems, and DAREM (Daily Activity Reporting and Expense Management). According to Rajiv Krishnan, the director and CEO of the Ma Foi, these products will considerably reduce the time that corporates spend on regular transactional work. For example, the MRMS offers tracking, complete word-by-word search facility, automated e-mail notification, user-friendly interface, total security and consolidated reports. A major software company can get one lakh resumes and this can be a useful tool for tracking these resumes. |
The Indian Scenario
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
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.
3] In an interview to Deccan Herald, "Changing facet of HR in outsourcing," December 25, 2002.
4] www.hewittassociates.com
5] C. J Sarma, HR outsourcing: Strategic thinking in troubled times, IT People.com