The Official Blog of Benifys HR Solutions

When one starts thinking of outsourcing the HR function, whether partially or totally, there are a lot of questions that crop up in the mind. We’ve attempted to put together some of them and tried to present potential solutions so that these questions do not act as roadblocks in the journey towards greater efficiency and professionalism in the HR function.


Outsourcing is now a norm, people have realised that they should concentrate on their organisation’s core competencies and not share limited bandwidth in trying to run functions that can be run by someone else better, either because that someone else is better trained to carry out these functions, or because it does not make commercial sense to have an in-house function that would probably not have its hands full all the while.


Q. I have an Admin / HR team and they are doing okay. Why do I need to outsource?

A. True, the existing team might be working out fine, but there are no comparators to their performance, they operate on benchmarks that have been internally set, based on the limited knowledge of the HR function that most line managers possess. To enable dramatic growth for any organisation, and to have access to specialized expertise in each of the HR domains, a much larger team is required. This larger team could be a virtual team, working for your organisation on a need basis, rather than add to the salary bill that’s probably already a large part of your total expenses. Through outsourcing, you have access to quality HR services, thought leadership, and specialized support for different HR processes.


Q. How secure is my data? How will the Outsourcing partner ensure confidentiality at my site or their back-end operations?

A. Quality outsourcing organizations are committed to data security for all their client organisations. While most sign an NDA and related legal documents, they also ensure that your data resides on an IT platform that has restricted access. The data that needs to remain secure resides in exclusive servers with every possible care taken through technological barriers (firewalls, anti-hacking tools, etc.) to human interventions (strict control over number of people with rights to access your data). All physical data pertaining to your employees normally rests in your premises, they do not take it away to store it elsewhere. End of the day, you have to trust your data with someone, and in these times, the care that good outsourcing providers take of your data is probably better than what your internal team would be doing.


Q. If I outsource HR it will affect the morale of my employees. What message will this send to rest of the functions?

A. Outsourcing of a function is a common practice nowadays. This is done not with a view to shed workforce, but to equip the function with a competitive edge and improve its efficiency and effectiveness. When people see the difference that outsourcing has made to the organisation, they will realize the benefits of outsourcing themselves. At the same time, outsourcing decisions always have a strategy for the existing HR team, based on the company’s needs they can groomed into a consulting or business partner role. This is what is known as “Retained HR”. Some HR outsourcing firms go to the extent of taking on the existing HR teams onto their rolls, where they work under the shared services model, while providing continuity to the existing HR function.


Q. If I outsource, will I have the same control as compared to an in-house HR team?

A. You do not lose control over the HR function. Instead, you free your bandwidth from carrying out, or overseeing, HR related tasks, and you equip your HR function with expert knowledge and professionalism. While legally they may reside on some other organisation’s rolls, they still function as an in-house team, providing you with as much face-time and interaction as required. Every activity that the existing team was carrying out will be replicated by the outsourcing organization, only with greater cost-effectiveness and better quality.


Q. Will there be cultural issues between the outsourced services provider’s team and the outsourcing organisation’s employees/other functions?

A. HR outsourcing has evolved to a level where HRO firms are now committed to a seamless transition. They function as an internal department. Your employees and your management team will not even notice the cultural differences. If at all, they will be happier with the greater professionalism and expertise that the HRO firm brings.


Q. What can an HRO firm do differently to cut down my recruitment cost?

A. Two things – first, they will be able to manage your existing vendors better, because they have specific expertise in the recruitment space. This will help them negotiate better rates, and put in place a vendor management practice that you might otherwise not have access to. They also have a pool of recruitment partners, and will be able to obtain better terms for your recruitment requirements. Second, even if they utilise their own recruitment engine to service your needs and fill a position for you using their own resources, their charges will be highly competitive because they are now your partners.


Q. If my employee base increases by X % how will HRO firms deal with it and will there be any change in costing?

A. Work with the outsourcing partner to arrive at a per employee costing model rather than a lump sum. This benefits both parties. For you, your costs are linked to your capability to pay (if you’re growing, the probability is that you’re now able to allocate a larger portion to support services like HR – if you’re shrinking, you’d like your support services costs to some down as well). For the outsourcing services provider, he becomes a partner in your growth, always on the look-out to add value to your business so that both the organisations grow together. In such models, there is no redundancy built into the pricing mechanism, and you don’t end up paying extra for people who are not on your rolls.


Q. I want the core HR activities to be handled by my team; I can probably outsource just my recruitment function.

A. Then what you probably need is an RPO (recruitment process outsourcing) instead of an HRO. The strength of HRO firms is in demonstrating the value that HR can bring to an organisation through an end-to-end offering, and not in piecemeal services like recruitment.


Q. My organisations training needs are very specific. How will you design training programs for me?

A. Besides other verticals, most HRO firms nowadays have a dedicated Learning and Development team. Although they don’t usually cater to functional or technical training because we such training programs are best handled by subject matter experts, and not training experts. The basic behavioural tenets in employees in any industry vertical are similar to a large extent, and differ in degrees between industries. Even so, the expert trainers and content developers in an HRO will understand the particular need for your organisation and design customized training programs to address the training requirements of your organisation.


Q. How much do I gain from outsourcing HR in terms of money? Is it worth the effort?

Depending on the vendor the pricing is very competitive and sometimes even lower than what your organisation should be incurring as the total cost of running the HR department as an in-house function. This figure is derived from industry benchmarks. While this gives you an immediate reason to outsource, the true value add that you will experience will be in terms of the drastic improvement in quality and accuracy of the HR services from the very beginning of the engagement.