The article discusses the evolution of business process outsourcing in general, and human resources outsourcing in specific. It further categorizes the hr activities as important and not important, based on which the organization can make an outsourcing decision. The paper also lists the major reasons for outsourcing HR.
Organizations, particularly manufacturing ones, have always developed contracts with outside companies to provide goods and services. Outsourcing is just one such form of subcontracting, used to describe the practice whereby work previously performed in-house is "contracted out". The relentless search for competitive edge, strategic advantage and efficiency improvement has put increasing pressure on the part of the organization to concentrate on their core activities, and outsource all the peripheral activities. This leads to lean business structures, and ultimately leads to improvement in bottom line and good corporate performance. Also, the phenomenon of outsourcing is not restricted to private sector but has also been accepted by the public sector and the government agencies. This shift of focus on core activity on the part of organizations has resulted in the traditionally in-house HR function to be outsourced. And if one is to go by the McKinsey report, the market for HR outsourcing is pegged at $78 bn by the end of this year, which is huge by any count.
Outsourcing, particularly in the Indian context, is nothing new, and dates back to the age of Ramayana. Muni Vishwamitra, in Ramayana, while performing Aswamedha Yagya, asked king Dasarath of Ayodhya to help him carry out his Yagya in a peaceful manner. For this, he requested the king to send Lord Rama and his brothers, that is, outsourced "security" to Lord Rama. So it has been around in different forms earlier, but the importance of it has not been felt as much as it is felt in today's age of cut-throat competition. Outsourcing has reached a stage whereby it is being used to bring down cost and outperform competitors by creating cost advantage. More recently, outsourcing has spilled business domain and taken a political connotation because of its immense capacity to generate employment. The purpose of this paper is not to address the political angle of outsourcing, but the HR angle. We begin by having a tryst with history as to how outsourcing in general has progressed in the business, and where it stands in today's world. |
