In general there are different types of specific strategic and the operational level reasons for the purpose of using the HR outsourcing process by the organizations. The increased demand within the production, the productivity as well as the growth and development initiated the organizations to observe their own HR process in their organization which have lead to the process of the strategic outsourcing and separated the general services and the strategic outsourcing services.
According to (Greer, Youngblood and Gray) the HR outsourcing decisions are considered as the important aspects which are playing the vital role within the process of reducing the costs for the purpose of the HR services.
According to (Roberts) the HR functions are facing the tough and heavy competition in order to exhibit the values related to the efficiency and the success. Most of the aspects related to the HR functions are been carried out through the different types of the outer service providers.
According to (Turnbull, 2002, p. 10) the HR outsourcing is the process which will give more benefits to the organization and by using this process many organizations can save more amount of funds which they are investing on their HR’s. Generally the outsourcing is the process of motivating and supporting the HR professionals in the organization related to the clients in order to play the strategic role within the process of design as well as the implementation of the programs which are related to the workforce.
According to (Ulrich’s) The HR is should play four different types of roles such as strategic partner, the administrative expert, the employee champion as well as the change agent.
According to Greer et al the HR outsourcing plays a vital partner role within the HR department and the HR is the person who will add high value to the organization and will play one of the significant roles within the success of the organization. Most of the organizations are even using the HR outsourcing process in order to avoid the politics within the organization as well as to improve and develop the effectiveness of the organization.
According to (Sisson & Storey) the actual purpose of the HR outsourcing is working efficiently and some of the difficult reasons for the purpose of the outsourcing the HR is providing the special and expert services, the cost reduction as well as allowing the HR professionals to work in a strategic way to achieve the goals and objectives of the organization. It is even specified that the HR outsourcing process is not only performed to cost reduction process but it will work as the significant strategic tool.
According to (Oates) the outsourcing is the special type of the decision which is the strategic decision and it is considered especially at the senior level management.
According to the survey report by IDC-www.idc.com the HR BPO-business process outsourcing is considered as one of the fast developed sector which belongs to the HR services. Generally is the HR is been outsourced in a correct way then it will lead to the development within the quality of the services, it will even save money as well as the time. If the HR outsourcing services are poor then there will be poor quality if services. It is already been proved that the adequate and suitable services are been offered by the HR outsources but they will not offer the outstanding services.
According to (Patrick Wright, Cornell University professor), the quality of the service is one of the important aspect within the HR outsourcing process. It is even been specified that even though the HR outsourcing will offer better quality of services but it is not sure that the costs of outsourcing is less costly. Most of the organizations and the companies outsource their HR’s in order to get more number of the services with low costs.
In the year 2004 the survey conducted by SHRM’s regarding the process of HR outsourcing among 169 individuals 56% of them told that most of the organizations are outsourcing their HR’s for the purpose of saving the money as well as for reducing the operating prices. In this survey nearly 70% of the organizations have specified their views and feedback that they have faced the negative practices while outsourcing their HR’s and projects and even they are not even satisfied with the costs as well as the difficulties within the process of outsourcing. And finally they came to a conclusion that there is a necessity of the support from the senior management in order to manage the HR outsourcing process. The reasons for this process is that the lack of the simplicity within the costs of the project which belongs to the outsourcing process.
And nearly 57% of the companies have revealed their views that they have spent more amount within the process of contracts by the project dealers or else the outsource supplier. Some of the other companies even specified that they have even spent the secret amount for the purpose of managing as well as controlling the projects related to the project outsourcing. One of the significant issue within the process of outsourcing the HR is the process of selecting the appropriate HR activities which are to be used for the purpose of outsourcing. While making the decisions related to this process the organizations should take the different types of the activities into consideration in order to develop or improve the performance of the organization.
It is the necessary requirement to give the difference between core and noncore activities to do. It has been suggested by the Finn (1999) that the primary distinction between the Human resource core and the noncore activities can be made. It has been considered one step further by the Ulrich (1998) that the core activities are those transformational works which creates the specific values for the employees, customers, and investors.
The noncore activities can be considered as the transactional work which is regular and typical and is the one which could be easily copied and imitated. The training and development along with the management facilities are the most important areas that are to be outsourced and the industrial relations skills are the least likely areas which are found by the Shaw and Fairhurst and they have supported the findings of the Hall and Torrington. In order to sustain the earlier findings more proofs have been provided by the large scale survey (Vernon, Philips, Brewster & Ommeren).
In the European countries the survey has been carried out on the 3964 organizations every company having more than 200 employees in the year 1999. On the four different areas of the human resource outsourcing it has pay the attention. They are the training and development, recruitment and selection, pay and benefits, and workplace outplacement or reduction. In the survey nearly 97% of the organizations have used the external providers in the human resource in order cover at least one of the main service areas which has been examined during the survey. The most usual bought in service are the training and development activities which has been observed in the results. In at least the three of the areas that are identified by the survey have observed that one third of the organizations have used the external providers.
During this process the companies that are surveyed nearly 50% of them have remained constant in the usage of the external providers while the 40% of them gave the report of the increase in their use. For the purpose of the pay and benefits nearly 32% of the U.K. organizations are making the use of the external providers especially. The type of the human resource activities that the organizations are supplying from the external providers gives some of the useful insights of this. Due to the quantitative nature and the scale of the studies only the partial and the superficial picture has been provided by it. How the organizations are taking the decisions on why the particular human resource activities are to be outsourced is remaining not clear along with whether they truly constitute the noncore activities of the firm.
It has been found by the Hewitt Associates by the survey conducted by them that about the 94% of 129 companies have polled the outsource at one human resource activity and the respondents have expected to expand the outsourcing over its customary limits of payroll and health and welfare benefits. Global mobility, headhunting, and the recruiting are the new areas that are expected to be included. The human resource technology support, performance management, and the staff learning and development are the other areas that the employers are liking to considered and this have been noted by the Bryan Doyle, the president of the Hewitt’s Human resource outsourcing Business.
The effectiveness of these outsourcing activities is also unclear of how and whether they can be evaluated. In order to make the consistent human resource functions the in house and the outsource human resource activities by the client firms and the outsourcing provider. To analyze the recent ways in the human resource outsourcing is one of the ways to understand these relationships.
To discharge the in-house human resource team for the more strategic role number of the firms has been outsourcing the usual administrative human resource activities. Beyond this the outsource of the entire package is selected by the minority of the others along with the design of the human resource systems which are most probably have the primary effect on the organizational culture and performance (Klass, McClendon & Gainey). A number of questions have been appeared by the raise of this way.
As an example what are the human resource activities that should be outsourced? The role of the in-house human resource is affected by the human resource outsourcing and also the rest of the workforce, how? What are the drawbacks for the human resource function? From the last decade on wards the human resource outsourcing has been increased significantly and this has been the proof from the professional and the practitioner publications (Woodall, Gourlay & Short). How the decisions of the outsourcing are made, how the decisions are implemented, and how the effectiveness of the outsourcing is calculated are the ones that have been investigated by the some of the few academic researchers mainly. For the importance and the role of the human resource function and for different groups in the work force the researchers have also made the investigations.
This shortage of the research is in sharp due to the difference in the growing prescriptive literature on the financial and the strategic reasons how the organizations should outsource (Rubery, Earnshaw, Marchington, Cooke & Vincent) and how to go about it (e.g. Cook, 1999; Rippin). On the effect of the outsourcing of the employees there is shortage of the research to make the perfect statements as noted by the Purcell (1996, p. 22). The things that are clearly missing in the research is the insiders viewpoint – the employee voice on the contact of the outsourcing on the employment relations (Kessler, Coyle-Shapiro, & Purcell, 1999, p. 6).
At present the companies understand there a limitation of their early efforts in the short term is an effort to renegotiate the outsourcing contract. What should be fixed in the merchant relationship is the thing that is present to them in the clearer view. In the western European companies to outsource the contract renegotiation there is a way according to the research of the Gartner. For the more elastic outsourcing relationships there are the pressures from the clients who are forcing the vendors.
Within the 12 months only 15% of all the contracts have been renegotiated. The investigation 2007 that is available from the Bureau of National Affairs (BNA), U.S.A. and also the study on the human resource department Benchmarks have reported that about 72% of the investigated employees are supplying at least one of the human resource activity.