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INTRODUCTION

Outsourcing is a business strategy that moves some of an organizations functions,

processes, activities and decision responsibility from within an organization to outside

providers. It is the contracting out of a business process, which an organization may have

previously performed internally or has a new need for, to an independent organization from

which the process is purchased back as a service. This is done through negotiating contract

agreements with a vendor who takes on the responsibility for the production process, people

management, quality, customer service and key asset management of the function. The

process can greatly reduce fixed overhead costs of an organization. Though the practice of

purchasing a business functioninstead of providing it internallyis common feature of any

modern economy, the term outsourcing became popular in America near the turn of the 21st

century. An outsourcing deal may also involve transfer of the employees and assets involved

to the outsourcing business partner.

Two organizations may enter into a contractual agreement involving

an exchange ofservices and payments. Outsourcing is said to help firms to perform well in

their core competencies and mitigate shortage of skill or expertise in the areas where they

want to outsource.

Outsourcing can offer greater budget flexibility and control. Outsourcing lets

organizations pay for only the services they need, when they need them. It also reduces the

need to hire and train specialized staff, brings in fresh engineering expertise, and reduces

capital and operating expenses.

If an organization lacks the skills and the expertise to tackle human resources,

consider outsourcing HR services. Most organizations today outsource HR services to India,

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because they do not have the proficiency or the expertise to deal with HR services in-house.

Moreover, organizations choose to outsource HR services in order to save on time and effort.

HR outsourcing can be mainly classified into two categories. Transaction and administration

outsourcing services and consultancy outsourcing services. HR transaction outsourcing

services include monthly requirements such as, payroll processing. HR consultancy services

are some of the other services that can be outsourced to India. Though organizations

outsource transaction management and HR consultancy services to India, many organizations

still take care of strategic and policy functions within their organization.

Organizations who wish to outsource their HR services to India can outsource HR

services in different areas such as, administration of employee benefits, payroll processing,

administration of fixed assets, management of hardware, database etc. Organizations

outsourcing to India, mostly outsource their payroll services and training / survey

requirements

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REASONS FOR OUTSOURCING

1. AN IMPORTANT COST-CUTTING MEASURE: According to Lisa Rowan, IDC's

program director for HR and talent-management services research, one of the most common

reasons companies turn to HR outsourcing is to cut costs. "When there are staff cutbacks,"

explained Rowan, "organizations tend not to want to cut back their customer-facing frontline

people so they outsource some of the staff functionsfrequently, HR is part of that."

Handing over HR functions to a third-party provider, however, doesn't necessarily mean you

have to give in-house HR veterans the boot. Rather, Rowan said that many companies opt to

"rebadge" important HR personnel essentially, transferring an employee from the client

company to the service provider to reduce headcount without sacrificing talent altogether.

Another factor to consider when using outsourcing to cut costs is maintaining realistic

expectations. "In the past, when IDC has done primary research on the topic of outsourcing,

companies' expectations have been a little unrealistic," warned Rowan. "The smaller the

organization, the more unrealistic they've been." For this reason, Rowan recommended that

companies anticipate cost savings in the range of 20 to 30 percent.

2. MAKING YOUR CORE BUSINESS A PRIMARY FOCUS: Activities such as sifting

through emails and pushing paper may be a key part of an HR professional's job description,

but they can also take away from core competencies. No wonder many companies opt to

outsource in order to help HR staff shift focus from mundane tasks to mission-critical

strategies. "If you can remove a layer of the administrative work that you have to do, the

feeling is that HR people will be able to focus more on higher value activities," said Rowan.

But before you offload an HR department's paperwork onto an outsourcer, Rowan said it's

important to ensure that you have the right mix of in-house personnel to tackle important

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functions such as recruitment and retention. "Oftentimes the folks that are left behind don't

necessarily possess the skills needed to truly be talent experts," she said.

3. HASSLE-FREE COMPLIANCE: These days, HR departments have their hands full

developing programs and policies to ensure compliance with everything from the FLSA (Fair

Labour Standards Act) to sexual harassment laws. It's all the more reason to seek the

compliance expertise of an outsourcer. The more obvious advantage, according to Rowan, is

that "if you look at some of the bigger outsourcers, they have all of the compliance elements

in place because it's incumbent upon them to do so." But there's a less obvious benefit as

well, especially if your company mistakenly violates one of today's myriad HR regulations.

"What you gain with a third party," chuckled Rowan, "is somebody's throat to choke."

4. ACCESS TO CUTTING-EDGE BEST PRACTICES: For many HR departments, it's

easy to get into a rut, issuing the same forms and abiding by the same policies year after year.

The problem with this is times change, which could render your HR staff's best practices and

processes out of date.

5.EMPLOYEE SATISFACTION: Whether it's the anonymity they grant employees or the

access to survey tools they offer clients, outsourcers often boost employee satisfaction levels

by helping companies improve management practices, lift morale and raise retention rates.

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ADVANTAGES OF OUTSOURCING

An organization's human resources department is responsible for a variety of

functions. Human resource departments oversee employee payroll and tax filing as well as

employee benefit and health administration. Human resources also manage legal compliance,

maintain files and records, and oversee training and development. For many businesses, the

various functions of the HR department are too comprehensive and complex to maintain in-

house. Businesses that outsource HR functions receive several advantages that support the

company's bottom line.

RISK MANAGEMENT

Human resources outsourcing firms help businesses minimize risk. Employment and

labor laws change regularly, and it can be difficult for employers to remain up-to-date on

regulations that affect the workplace. Outsourcing firms employ HR professionals whose

purpose is to stay abreast on a variety of federal and state employment laws. HR staff helps

businesses comply with these laws to avoid costly lawsuits brought on by employees. HR

firms also maintain and audit company policies and practices to ensure the organization and

its employee's best interests remain protected.

COST SAVINGS

Outsourcing helps reduce the cost of maintaining nonrevenue-generating back-office

expenses. A fully functional human resources department requires additional office space and

highly trained and experienced HR staff. Many small businesses find it more cost-effective to

outsource HR functions rather than expand to a larger location to meet the space needs of

another department. Furthermore, outsourcing costs are variable and can be reduced when

business needs warrant.

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EFFICIENCY

Maintaining an efficient and productive workplace is critical. Outsourcing HR

functions create greater efficiency within human resources systems. Advanced human

resources technology utilized by outsourcing providers help streamline important HR

functions, such as payroll, benefit administration and compliance management. Outsourcing

helps employers and managers spend less time doing paperwork and more time dedicated to

improving the efficiency and effectiveness of the workforce.

EMPLOYEE DEVELOPMENT

Outsourcing HR functions help businesses manage employee performance and

development. Providers implement performance management plans to ensure employees

comply with company policies and procedures and successfully meet business goals.

Outsourcing firms periodically monitor employee performance and report findings to

management. This reduces the workload of managers by minimizing the amount of

administrative responsibilities they must focus on.

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BENEFITS OF OUTSOURCING HUMAN RESOURCES TO

DEVELOPING COUNTRIES

A lot of companies today are using outsourcing of human resources. This is done in

order to gain different benefits of outsourcing human resources. In most cases we are talking

about cutting costs, increasing flexibility, gaining time and making more money. We are not

going to talk about how outsourcing can generate you money. In order to learn we

recommend that you take a look at other pages from this web site. Now we want to talk about

the possibility of obtaining even more benefits of outsourcing human resources if we opt

for HR outsourcing providers located in developing countries.

Now what we have to understand when thinking about benefits of outsourcing human

resources to developing countries is the fact that there are both advantages and disadvantages

of doing this. We must not only think about benefits. The benefits are quite obvious. If we are

using providers from developing countries we will surely pay less than opting for providers

from developed countries. This is because such companies do not need to pay their staff as

much as the alternatives. In this case the fees they ask can be lower and still gain a lot of

profit. This is the one main benefit that companies look at when outsourcing human resources

to developing countries. Unfortunately the problem is that sometimes a lot of people fail to

see what is really important: experience.

We have to understand that there are circumstances in which the benefits of

outsourcing human resources to developing countries also include experience. On the other

hand, there are a lot more companies that can not properly handle all of the tasks you need.

For instance, some of them might not be able to offer you the right medical insurance plan as

they do not have connections to local authorities. Whenever you outsource to developing

countries you really have to make sure that the particular provider will choose can deliver on

quality through its experience. An alternative would be to only outsource those functions that

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the company can perform well while choosing local providers for those activities that can not

be performed properly by the provider located in developing countries. This will save you

money and increase productivity at the same time for sure. Everything boils down to building

a good HR outsourcing strategy that includes everything you want to outsource and you

personal needs on this matter. There are a lot of benefits of outsourcing human resources and

you should consider them properly as you could gain a lot of advantages from them.

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OUTSOURCING HR SERVICES TO INDIA

WHY OUTSOURCE HR SERVICES TO INDIA?

When you outsource HR services to India, you can save on time and effort and

concentrate on your core business. You will also be able to increase your flexibility to met

needs such as, changing and new business conditions and increasing orders for products,

services and technologies. By outsourcing a non-core process like HR services, you can

concentrate more on increasing customer satisfaction and on increasing the value of your

products / services.

Outsource HR services to India and benefit from the skills, expertise, latest

technology and professional services that India offers in the field of HR. When you outsource

HR services to India, you will find your operating performance, risk management and control

improving. By outsourcing HR services, you can also gain access to professional services.

Your outsourcing provider will be able to provide you with proficient HR services that can

bring about a change in your organization. Outsourcing HR services can also help you benefit

financially. One good reason for outsourcing HR services to India is that you can save on

costs and at the same time get access to high-quality services.

ORGANIZATIONS THAT OUTSOURCE HR SERVICES TO INDIA

Large organizations mostly outsource their HR services to India in order to

concentrate on their core processes. Such large organizations can increase the profitability of

their business by outsourcing. Large organizations also stand to gain from better HR services

for their employees. Small and mid-size organizations also outsource if they do not have

enough of HR staff to manage their HR functions. Mid-size and small organizations can also

benefit from cost-effective services when they outsource to India. Outsource HR services to

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India to enhance your productivity and return on investments and also to achieve the

economies of scale.

ADVANTAGES OF OUTSOURCING HR SERVICES TO INDIA

When you outsource HR services to India, you can see an improvement in your HR

support functions. Outsourcing HR services can help you bring out more effective and

efficient processes within your organization. Payroll functions can be completed on time

accurately and your outsourcing partner can come up with ingenious ways of improving HR

functions in your organization.

Outsourcing HR services to India can help you achieve your targets. Your business

can become more productive with the help of effective business and HR strategies. You can

also on save time, effort and manpower. You can concentrate more on your business and can

be relieved from taking care of your HR work in-house. With strategic HR strategies, training

programs and development programs, you can retain your employees.

Outsourcing HR Services to India can help your organization gain a competitive edge!

PROBLEMS OF OUTSOURCING HR SERVICES TO INDIA

There are a lot of call centers in India and many Indians are educated to speak in an

American accent to talk with their clients in the United States. The call center itself belongs

to IT companies in the United States but it is placed in India and Indian workers there are

educated to have an American accent and playing a role of customer service as company

members. This is because it is cheaper to employ Indians than employ Americans. Indian

employees are well educated and they usually have IT and programming skills but they have

struggled with getting job though they graduated from good school. So this sounds very nice

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because this creates a job in developing country. But this causes a lot of problems. You can

find problems both in India and the United States.

First, problems in India are about their identity and career. Customers call the

company and expect that they are going to talk with an American worker. So first thing to do

for their job is learning American accent, speed of talking and expressions. Also they need to

learn American culture to pretend to be American workers. They check local weather and

news in the States on the internet and talk with customers there as if they were also there.

They are forced to keep themselves surrounded by American culture and to make themselves

think they are not Indians but Americans. So they kill their own identities to get money. This

is not good but they need to do that because otherwise they cant get money. IT companies

take advantage of it because they know India have a lot of young people who have

knowledge of IT are having hard time to find a job and they can hire them for very cheap. If

they work for 7 hours a day, they need to be Americans for one-thirds of a day. It might make

them confused.

Second, these Indian workers are doing the same thing every day. Its just pretending

and talking and it doesnt require any professional skills. This keeps them from a professional

and good job even though they graduated from good schools. And you must not forget that

there are problems in the United States, too. Because they started outsourcing, a lot of

Americans have lost their jobs and opportunity to get a job in their country. The last two

problems about career in both countries bring inequality to our society. Japan also has this

problem. We dont have enough job spots for Japanese today but Japanese companies build

their factory outside of Japan because it is cheaper. Some people say we are creating job in

developing countries but we must not forget this also creates inequality.

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HISTORY OF OUTSOURCING IN AMERICA

Many perceive offshore outsourcing as a scheming and malevolent business strategy

that has deprived most American workers of jobs that should be theirs. However, a closer

look at the history of outsourcing takes readers back in time, to reflect on the factors that gave

rise to what it is today.

The history of outsourcing by its concept alone is said to date as far back as the 1800s

in America's history. Accordingly, the manufacture of clipper ship sails was done in

Scotland, since sails had to be fashioned according to exact specifications. The sail's

effectiveness was essential for long voyages. In citing this particular piece of trivia, it denotes

that even long ago outsourcing was a concept resorted to, out of a demand for expertise.

In order to appreciate the information about the surrounding circumstances that make up the

history of outsourcing, the facts will be presented according to significant timelines.

1970

Around the 1970s, the concept of outsourcing was revived. This era saw the

beginnings of computer technologies, in development of which presented a likely tool for

outsourcing the processing of company payrolls. During that time, this did not require

offshore expertise since there were several companies who could provide such services in

states or cities where advancements in computerization were taking place..

On the other side of the globe, however, the communist Chinese government opened the

country's doors to global trade. The Chinese people are known for their shrewd business

sense; hence they immediately saw how their country could benefit from harnessing the

rising concept of job outsourcing. Millions of Chinese citizens found work, as thousands of

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factories mushroomed through different Chinese regions. In fact, this country earned for itself

the monikerthe worlds number one factory.

1980

As technology kept on advancing, the 1970s through the 1980s saw several

manufacturing companies sending off their raw materials to other countries, not because of

expertise but mainly because of economic benefits. Since direct labor costs represented a

large portion of manufacturing overhead, harnessing the labor force of third world developing

countries presented a better option.

Soon enough, before the 1980s ended, the trend in outsourcing transcended from

payroll, to HR functions, to manufacturing, and eventually to Information Technology (IT).

Eastman Kodak was the first company to pay heed to an IT outsourcing firms advisement.

Still, IT outsourcing in its early stage was said to have presented more headaches.

1990s to 2000

Advancing technologies saw the creation of self-service dashboards, which eliminated

the occurrence of errors and discrepancies. As the 20th century neared to a close, the Y2K

scare about the collapse of major computer systems gave rise to the need for technologies that

could update computer systems in just a flash. In fact, the Y2K scare was considered as

phenomenal in its effect, because it also brought the advent of the Internet.

Hence, the beginnings of the 21st century saw the boom in technological developments which

brought the history of outsourcing to greater heights. Unfortunately, not enough American

students were into the technological education scene at a time that technology was booming.

In fact, the highest jobs in demand were for IT specialists, but only a few American

candidates were considered as highly qualified. Candidates had to meet technological

advancements that were becoming more and more complicated.

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Education as the Top Driving Factor that Led to Outsourcing

2001

Only 5% of American students graduated with engineering degrees while 46% percentwere Chinese.

60% of those who graduated with PhD degrees in Electrical Engineering were of foreignorigins.

2002

An estimated 590,000 foreign students were enrolled in US colleges and universities and20% of these numbers were Indian and Chinese students. The proportion of their

American counterpart was placed only at 5%.

The number of high school seniors for 2002 who took the ACT college entrance examwho intended to pursue degrees in engineering dwindled from 9% posted in 1992, to 6%

during this year.

2003

The proportion of high school students who pursued engineering degrees dropped to only2%. This was said to be due to the increasing number of American students who could

not meet the math and science prerequisites, based on the standards of global demand for

high technology.

Education seemed to be the foremost driving factor that led American firms to rely on thetechnological talents and skills of foreign service providers. To date, however, the lack

oftechnological skills and talents in the American sector has abated, as awareness about

the demand for high technological concepts became evident.

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OTHER DRIVING FACTORS THAT CONTRIBUTED TO THE HISTORY OF

OUTSOURCING IN AMERICA

BROADBAND

The year 2003 was declared as the beginnings of the Broadband Age as

sophistication in telecommunications continued. This allowed the business sector to explore

the possibilities for outsourcing other types of jobs.

INTERNET

High speed Internet was being highly utilized in almost every part of the globe. The

Internet made it possible for outsourcing parties to share documents in real time, which

eliminated some of the risks associated with outsourcing jobs. The Asia-Pacific region is said

to be the leading DSL user.

DATA STORAGE

The development of data storage not only drove the costs of paper usage but likewise

enhanced the possibilities of outsourcing more jobs with less of the known risks. The history

of outsourcing saw the development of floppy disks, magnetic tapes, punch cards, disks, CDs,

flash drives, and cloud computing storage. In fact, this development in high-tech data storage

has driven down the costs of manpower via outsourcing even further.

SECURITY FEATURES

Whereas before, security seemed to pose considerable threats to businesses in getting

involved with virtual business transactions, the enhancement of Internet security feature

allowed almost all global businesses to participate virtually, to the point of eliminating

physical stores and offices. Employers are in fact hiring telecommuters to do office work.

These are only some of the driving factors which contributed to the history of outsourcing

and what it is now todaythe Business Process Outsourcing industry. To date, people in the

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following top five countries in the lead would also be interested to know how this particular

phenomenon came about, as it brought improvement to the lives of many in their respective

regions:

IndiaEngineering and Technical ChinaManufacturing and Technical MexicoManufacturing United StatesAnalysis and Creativity Philippines- Administrative

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HOW OUTSOURCING AFFECTS THE US ECONOMY

There has been and continues to be a lot of debate over outsourcing and while

supporters say that it is good for the US economy, detractors argue otherwise.

Proponents insist that outsourcing will save money for companies, will open up

opportunities and will lead to more Americans holding jobs at a higher level. They feel this

practice offers substantial gains to the US economy with cheaper imports and stronger

exports.

Opponents who are against outsourcing argue that hiring people from foreign

countries effects the US economy in a negative way and strips hundreds to thousands of

Americans of jobs, especially the skilled and semi-skilled workers. They argue that the loss

of competitive advantage to other countries is permanent and the American worker and

economy lose forever.

All the points seem valid in their place.It has to be agreed that outsourcing does lead

to loss of jobs in the US, especially those that have minimal qualifications. On the other

hand, the loss of jobs is not only limited to people with minimal skills, but also jobs of skilled

labor that are being outsourced to other countries.

Americans who are in poverty and willing to do minimally skilled jobs find it harder

to find jobs, and poverty does nothing for the US economy, other than reduce consumer

spending and tax revenues.

There is also data that provides evidence that jobs are lost and lost forever, especially

for those who belong to the low end of the food chain. A suitable example would be the

manufacturing job losses examined by the University of California-Santa Cruz. In their study,

they found that in a period of 20 years, in the labor intensive industries such as leather,

textiles, footwear and clothing, about one-third displaced workers could not find

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reemployment within a three-year period, and even those people who did, about half of them

experienced a substantial cutting in their wages by at least 15 percent.

Outsourcing in these areas does not leave enough jobs for the Americans. A jobless

person cannot purchase homes and cannot spend money. When people do not buy, people

that produce things do not make money too.

Another harmful effect of outsourcing is loss of income by local, state and federal

governments. There are lesser payroll tax receipts and lesser contributions to Social Security

and Medicare. Then there are the outgoing payments for unemployment benefits. Sales and

other tax revenue suffers too.

Outsourcing is nothing new. In the early 19th century, Britain imported cotton from

the United States, then spun the cotton and weaved the fabric in England and then exported

the finished textiles abroad, mostly to India, then its colony. UK kept about 80 percent of the

monetary gains from these exports, adding to its national wealth. After some time, the mill

owners came up with what a so-called smart idea that they could grow the cotton in India

and shift the textile machines there too, which will enable them to save money on wages and

shipping expenses. This felt like a great idea, but then the monetary gains being repatriated to

England was only 15 to 20 percent of the total value of the textiles in the form of profit.

Now 80 percent of the created monetary gains remained in India, which was a great

loss to the British economy that resulted in unemployment as well as social unrest.

United States also faces similar problems. By outsourcing, not only skilled labor is

lost but monetary gains too. What must be understood is that service jobs do not pay as much

as manufacturing jobs do nor do they create national wealth. On the other hand, they absorb

wealth. Manufacturing jobs have by far the greatest impact on national economy, in terms of

losing skills and the time taken to retrain such a force. Another thing is the loss of industrial

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infrastructure with the closing down of U.S. factories and then exporting of capital abroad.

This money is then not available for U.S. economic expansion.

Service jobs on the other hand do not need so much training and very little capital

investment. U.S. companies derive savings in wages and more importantly in health benefit

payments by outsourcing these jobs. Of course there is no doubt there is loss of national

wealth by sending money abroad to pay their wages and salaries.

An argument pro outsourcing can say that short-term job losses brought on by

outsourcing are mitigated in the long run by gains to American workers from consumption

growth and free trade in low-wage countries.

Certain professional roles like retail, personal care, catering cannot be outsourced

because of inherent personal interactions between the consumer and the deliverer. Because

the service sector encompasses about 70 to 80 percent of the U.S. economy, outsourcing can

impact only a sliver of U.S. employment.

According to research data, more than 400,000 U.S. jobs had moved abroad and the

total is estimated to hit 3.3 million by 2015. Thats just above 200,000 jobs lost every year to

global outsourcing, a trivial problem in the context of the normal churn of the U.S. economy,

where about 7 million jobs were gained and lost in each of the previous four quarters.

Many government agencies outsource a part of their work in order to save millions of

dollars, which helps US economy and helps federal spending. The theory here is that paying

people less for work means that these companies have the ability to produce things cheaper

and will be able to transfer these savings to their consumers back in the U.S. Cheaper rates

means more consumers buying the products. One example is that of the early 90s, when the

price of personal computers dipped because the U.S. chip manufacturers outsourced this

offshore and thus reduced chip prices anywhere between 10 to 30 percent.

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DISADVANTAGES OF OUTSOURCING

The human resources department is the heart of any company. Human resources

handles many of the day-to-day complexities of the company, such as employee recruitment

and training, company growth, employee benefits, legal compliance and payroll. While

outsourcing human resources functions provides a cost-efficient alternative to staffing an

onsite department, there are some disadvantages.

POOR PERFORMANCE

Many companies outsource to limit costs; however, decreased costs often result in

decreased quality of performance by the outsourced provider. The human resources

department is responsible for the day-to-day operation of the company and any poor

performance from the outsourced provider causes an overall negative impact on the company

as a whole.

DISTANCE

Outsourcing human resources functions to an offsite location often leads to a sense of

distance between the employees and the company. When the human resources department is

not instantly accessible, employees experience delays in communication, leading the

employees to feel frustrated and unimportant to the company. This often results in reduced

morale among employees. The fact that the company is willing to outsource a department

may lead to speculation about the possibility of the outsourcing of other departments.

RECRUITMENT PROBLEMS

In some cases, outsourced employees lack the understanding of the company culture

that a regular employee has. As the human resource department recruits employees, this lack

of understanding may transfer to new employees during the recruitment process. The

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outsourced provider may also recruit employees who do not fit with the overall culture of the

company. The success of a business heavily relies on the performance of its employees, if the

employees are not the right fit; the success of the company suffers.

INFORMATION LEAKS

Outsourcing human resources functions may lead to the release of sensitive company

information. Often, for an outsourced company to provide adequate service, some sensitive

information about the companys organizational structure, product information or other inner

workings is necessary for the vendor to perform unhindered. Whether deliberate or not, when

providing an outside company with sensitive information, there is always a possibility for an

information leak.

DEPENDENCY AND LOSS OF CONTROL

After outsourcing to a provider, executives may give up too much control over the

companys human resource functions or the company may become too dependent on the

outsourced provider. Dependency and loss of control create the risk of the business not being

able to operate successfully if outsourcing is no longer an option for the company or if the

provider changes the terms of the contract.

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RECENT TRENDS IN HR OUTSOURCING

According to a recent report from Global Industry Analysts, Inc., the growth of

companies outsourcing Human Resources functions continues. Companies feel the need to

find more and more ways to slash costs as much as possible in the midst of the current

economic atmosphere. Whereas a company might have simply outsourced its payroll

administration a few years ago, more and more companies seem to be looking for ways to

maximize their dollars by outsourcing HR functions like recruitment, payroll, and benefits.

Although companies are now electing to outsource some or even all of their HR

functions to outside vendors, customization of outsourcing agreements remains a central

component of this system.

A 2011 studyby PriceWaterhouseCoopers and ADP indicates that companies that

outsource HR functions realize substantial cost savings. For example, the average company

that outsources such functions as payroll, workforce administration, time/attendance, and

benefits administration will pay approximately 18% more annually on these services than

those who use outside providers. The study also found that using a single outsourced provider

can decrease costs versus using multiple vendors or an in-house common vendoras much

as an average of 32%.

In 2009,Hewitt Associates found in their own studythat a vendors depth of

knowledge mattered to many companies when it came to outsource strategy. Rather than

looking for a vendor with broad HR offerings, 82% of study respondents said they preferred a

partner with in-depth domain expertise. At the same time, 54% of respondents also said

that they would rather have one partner to manage multiple functions, rather than multiple

partners to handle distinct functions each.

http://www.prnewswire.com/news-releases/adp-total-cost-of-ownership-of-payroll-and-hr-functions-can-be-significantly-reduced-114999069.htmlhttp://www.prnewswire.com/news-releases/adp-total-cost-of-ownership-of-payroll-and-hr-functions-can-be-significantly-reduced-114999069.htmlhttp://www.hewittassociates.com/_MetaBasicCMAssetCache_/Assets/Articles/2009/Hewitt_HR_Outsourcing_Study_2009_Results.pdfhttp://www.hewittassociates.com/_MetaBasicCMAssetCache_/Assets/Articles/2009/Hewitt_HR_Outsourcing_Study_2009_Results.pdfhttp://www.hewittassociates.com/_MetaBasicCMAssetCache_/Assets/Articles/2009/Hewitt_HR_Outsourcing_Study_2009_Results.pdfhttp://www.hewittassociates.com/_MetaBasicCMAssetCache_/Assets/Articles/2009/Hewitt_HR_Outsourcing_Study_2009_Results.pdfhttp://www.prnewswire.com/news-releases/adp-total-cost-of-ownership-of-payroll-and-hr-functions-can-be-significantly-reduced-114999069.html

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Payroll outsourcing continues to be one of the most important areas of HR

outsourcing. Analysts are predicting that by 2015 the total HR outsourcing market will attain

$162 billionprimarily as a result of payroll, itself. While the PWC/ADP study suggests that

a single outsource vendor is the best solution for most companies, the Hewitt study indicates

that many companies may still think in terms of single functions, preferring as the SF

Chronicle article points out flexibility above all. Companies continue to encounter higher

costs for performing HR work in-house. The PWC/ADP study suggests that the problem may

lie in companies emphasizing technological transformation, rather than fundamentally

shifting their processes to meet new business needs and approaches.

Outsourcing HR functions, then, offers businesses one important way to re-imagine

how they execute essential business processes. What remains to be seen is whether HR

outsourcing providers will begin to improve flexibility options in order to try to attract more

clientele. If competition increases with continued demand for outsourced services, such a

scenario could potentially occur.

While 2011 was marked by increasing economic, social and political volatility

geopolitically,HRO Todays panel of experts believes that HR outsourcing is maturing while

remaining flexible enough to adapt to a changing marketplace.

Many of the experts consulted see this is as the golden age of HR outsourcing, and Jill

Goldstein, lead forAccenture's HR Business Process Outsourcing offering, is one: "HRO

started off as a cost reduction move for some companies. It has expanded well beyond that to

become a driving force for creating business value. We expect 2012 to bring even greater

emphasis on business outcomes, as companies explore HR BPO as a way to meet business

needs and improve business performance."

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During 2011 there was a spate of acquisitions and key acquisitions to enable providers

to offer multi-country offerings to globalizing clients. Other trends included the increasing

use of analytics to generate business insights that improved performance, as well as greater

client interest in options enabled by cloud computing, such as software as a service.

When it comes to analytics, Goldstein says the focus is increasingly on discovering

insights that inform the way the business is managed. Clients will continue to demand more

from analyticsits no longer just about metrics and dashboards, she explains. Companies

increasingly understand the value and importance of having an outsourcing partner that can

provide true insights to enable improved decision making. They realize there are more

meaningful operational insights that can be gained from analytics than a set of metrics.

HR OUTSOURCING TRENDS FOR 2012

HR outsourcing is getting more cost effective, broader and more powerful. Whatever the size

of your business, having an outsourcing strategy is increasingly crucial to the long-term

stability of your organization. This article outlines HR outsourcing trends for 2012, based on

an analysis published in theInternational Journal of Innovation, Management and

Technology.

HIGH GROWTH

From 2004-2007, the market for HR outsourcing services grew at 25-30% each year. It grew

in single-digits each year of the recession, and is projected to grow at an annual compounded

rate of about 16% for the next five years. Business Process Outsourcing worldwide is

predicted to generate $133.7 billion, an 8% increase, according to Gartner, Inc.

http://www.ijimt.org/papers/118-M514.pdfhttp://www.ijimt.org/papers/118-M514.pdfhttp://www.ijimt.org/papers/118-M514.pdfhttp://www.gartner.com/http://www.gartner.com/http://www.ijimt.org/papers/118-M514.pdfhttp://www.ijimt.org/papers/118-M514.pdf

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THE BREADTH OF HRO SERVICES IS EXPANDING

A survey by Hewitt Associates found that, of the 129 companies polled, 94% outsource at

least one HR-related process, and they expect to expand it further. Areas of interest include

telecommuting, globalization, and staff learning/development.

PEOS ARE SCALING

Professional Employer Organizations (PEOs) have grown in average size as benefits of scale

and horizontal integration have made size a competitive advantage.

AUTOMATION OF HRO

As PEOs scale and information technology expands, PEOs are building web applications and

software to support real-time, 24/7 information. Automation increases the convenience and

lowers the costs of HRO services.

INTEGRATION OF BUSINESS PROCESS OUTSOURCING

As the number of HR services offered is expanding, PEOs are also offering additional

services not normally associated with human resources. Accounting, finance and HR are

converging within the PEO service offering, lowering costs and freeing up clients to focus yet

more on their core value.

LOWERING COSTS

Integration, automation, and greater scale of PEOs converge to make HR outsourcing

services more affordable for both small and large businesses.

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HUMAN RESOURCES OUTSOURCING (HRO) IS DISPLACING INTERNAL IT

AND ERPS

PEOs maintain their own IT infrastructure to handle payroll, record keeping and expenses, so

businesses dont have to. As information management migrates to the cloud and third-party

managed IT systems, naturally some HR functions follow suit.

MORE TYPES OF BUSINESSES ARE MIGRATING TO HR OUTSOURCING

HRO is moving into the non-profit and government sectors. At the same time that smaller

businesses are able to take advantage of HRO, larger organizations are also realizing the

advantages of HRO in addition to their in-house services.

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CONCLUSION

HR outsourcing is getting more cost effective, broader and more powerful. Whatever

the size of your business, having an outsourcing strategy is increasingly crucial to the long-

term stability of your organization.

While HR management is a basic and important responsibility for any company, it's

also true that many businesses dont possess the necessary staff, budget or desire to deal with

everyday HR tasks. Such companies usually decide to outsource some or all of their chores to

a service provider that will handle the work in exchange for payment. There are at least as

many reasons to outsource HR responsibilities as there are HR-outsourcing providers. Among

the leading motivations is the desire to save money, focus on core business tasks, improve

regulatory compliance, gain new insight, speed operations and provide new services.

U.S. investors, shareholders and American consumers derive the benefits of

outsourcing, although sometimes at the expense of American wage earners.

Another supportive argument is that outsourcing jobs to other less developed countries helps

those countries economically and helps increase trade for US products. It also gives those

countries the ability to pay back their debts to the U.S.

Experts believe that the greatest saving potential comes from outsourcing simple

assembly work or services. Since there is not much capital involved, except for training

people in other countries and payments for displaced U.S. workers, there is no other major

investment.

Outsourcing is a difficult issue to tackle and everyone, the supporters and detractors

agree on one thing that outsourcing cannot be eliminated completely. Some people feel

http://www.hrworld.com/management/http://www.hrworld.com/features/smb-need-hr-professional-061808/http://www.hrworld.com/hr-outsourcing/http://www.hrworld.com/whitepaper/top-10-service-bureau-selling-points/http://www.hrworld.com/buyers-guides/outsourcing-buyers-guide/http://www.hrworld.com/buyers-guides/outsourcing-buyers-guide/http://www.hrworld.com/whitepaper/top-10-service-bureau-selling-points/http://www.hrworld.com/hr-outsourcing/http://www.hrworld.com/features/smb-need-hr-professional-061808/http://www.hrworld.com/management/

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companies that outsource should be taxed for outsourcing and those that do not should be

rewarded.

Every business should at least examine the possibility of using an HR-outsourcing

service. A careful cost-benefit analysis can help a company decide which operations, if any,

should be outsourced.

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REFERENCES

FROM THE WEBSITE

www.dirjournal.com outsourcingWikipedia www.investopedia.com www.streetdirectory.com www.hrworld.com www.accenture.com vandoverviewpoints.com www.nextep.com

http://www.dirjournal.com/http://www.investopedia.com/http://www.streetdirectory.com/http://www.hrworld.com/http://www.accenture.com/http://www.nextep.com/http://www.nextep.com/http://www.accenture.com/http://www.hrworld.com/http://www.streetdirectory.com/http://www.investopedia.com/http://www.dirjournal.com/