A Study of Human Resource Outsourcing in Indian IT Companies

PsycEXTRA Dataset, 2000

is director of Human Capital at Accenture, a global management consulting, technology services, and outsourcing company. Kevin wishes to acknowledge his I-O colleagues Tasha Eurich, Martin Lanik, and Tommie Mobbs. Without their involvement and interest in this topic, I probably would not have written this paper. Thank you! Our "profession," broadly defined as industrial-organizational (I-O) psychology and human resources (HR) management, is evolving in ways of which we never dreamed. Driven by technology advancements, globalization, cost pressures, and changing workforce demographics , we are experiencing an unprecedented shift in how HR professionals deliver human capital services and in who employs them. That shift, which is the highest impact HR industry trend in 20 years, is HR outsourcing (HRO). As HRO becomes more predominant in large organizations, I-O psychologists, with our unique competencies and perspectives, can play a meaningful role and strategically impact this major workforce trend.

The emergence of globalization has made outsourcing to become one of the widely embraced business strategies for delivering outstanding services to consumers in the manufacturing sector. However, in spite of the increasing trend in outsourcing arrangements, there are inadequate literature underpinnings on how outsourcing human resource activities affect performance of manufacturing firms. The main objective of this study was to investigate the effects of outsourcing human resource activities on performance of manufacturing firms in Kenya. Methodology: The study adopted case study research design. The study targeted employees in the rank of senior staff and middle staff in Capwell Industries Limited. A target population of 480 employees from which a sample of 145 respondents was taken was used. Purposive and stratified sampling technique was used in selecting the respondents. Significance: The study covered the effect of outsourcing human resource functions on performance of manufacturing firms at Capwell Industries Ltd in Kenya. The study focused on human resource functions which are; recruitment, training, payroll and Human Resource Management Information Systems and how outsourcing of these activities affect the performance at CIL. Findings: Findings of the study indicated that the practice of outsourcing employee recruitment services was found to result to a negative slope on firm performance. Respondents felt that outsourcing employee training was positively associated with employee competence, hence improving firm performance. The study also established that outsourcing employee payroll was viewed by respondents with skeptism and that it had significant negative effect on firm performance. Findings have shown that outsourcing HRMIS was negatively but insignificantly associated with firm performance. From the study findings, the researcher recommends the manufacturing firms to consider assigning recruitment functions to insider management or involve them fully in case of outsourcing..

Abstract: The present paper focuses on different types of HR functions outsourcing and the factors which need to be considered before public sector go for outsourcing of HR Functions. A review of available literature was done in order to understand the risk and benefits of outsourcing HR Functions that need to focus on their core business activities and still establish and maintain good HR policies and to explore the factors that affect the HR outsourcing decision with special emphasis on a proper cost benefit analysis of HR functions outsourcing. The findings of the paper implicitly point out that the decision of HR outsourcing is contingent upon factors like availability of adequate resources, flexibility, affordability and acceptability. The paper also suggests a systematic process & certain pre-requisite to successfully execute HR Functions outsourcing. Keywords: Human Resource Functions, Outsourcing, Public sector, availability of adequate resources, flexibility, affordability and acceptability.

The growing concept of recruitment outsourcing has its impact on every aspect of business. Cost reduction with profitability, growth and business expansions was high on company's agenda. Many companies started doing cost cutting during economic downturn and tough market competition and thinking to outsource some of its core functions, Greer,Youngblood, and Gray (1999). In order to address the demand of lowering the recruitment cost, human resource planned to outsource it in order to manage this HR services with effective HR planning and development within an organization. Downsizing and strict competition also meant that the HR is also under continuous pressure to demonstrate incurred cost, both efficiently and effectively (Roberts, 2001). HR professionals' stated that an effective and efficient culture of recruitment, selection and positioning of talent has a major impact on survival, growth and development of an organization; Ofori&Aryeetey, 2011. Ongori 2010, recruitment and selection practices are the key factors to ensure the success and growth of an organization. However the typical reasons to outsource recruitment, apart from cost reduction were to seek specialize HR services and expertise and concentration of internal HR specialists on more of strategic role in talent management in the business. In this regard, the following paper is undertaken to examine the impact of recruitment process outsourcing on the human resource planning and development as a whole.