Title of the Project

(OUTSOURCING OF HR FUNCTIONS IN INDIA)

Submitted in partial fulfillment of the requirements

for (PGPM)

2009-11

SUBMITTED BY

Name: RAZI AHMED

PGPM
Roll No. 010101008
Batch: 2009 - 20011

UnitedWorld School of Business, Kolkata

 Student’s Declaration

I hereby declare that this report, submitted in partial fulfillment of the

requirement for the award for the PGPM to UnitedWorld School of Business is my
original work and not used anywhere for award of any degree or diploma.

Place : Kolkata

Date : 1/4/2011
------------------------------------
Signature

Name : RAZI AHMED

Class :PGPM – VI SEM

Roll No : 010101008
 Certificate

This is to certify that the dissertation submitted in partial fulfillment for the award of
PGPM of UnitedWorld School of Business is a result of the bonafide research work
carried out by Mr. RAZI AHMED Enrolment No. 010101008 under my supervision
and guidance. No part of this report has been submitted for award of any other
degree or diploma

Date 1/4/2011 Place: KOLKATA

Faculty guide : DEBI PARSAD

CHATERJEE

Signature : ______________

Core Faculty
UnitedWorld School of Business, Kolkata.
Introduction
The productive capacity of all business depends on three factors: the capital resource,
the physical resource and the human resource” -(Peter.F.Ducker)
This statement holds a lot of significance because of the fact that of all the three
resources, only the human resources possess the productive capacity for which the upper
limits are not defined. So in order to utilize the true worth of the employees to its fullest, one
need to outsource the non-core activities of the organization
Outsourcing is at the moment a worldwide phenomenon. Most small to medium sized
companies are using it on different process in order to cut costs and gain increases in profits.
outsourcing can be defined as the delegation of one or more business processes to an external
provider, who then owns, manages and administers the selected processes based on defined
and measurable performance metric.One domain that is not always properly understood is
outsourcing HR activities in order to cut costs. Human resources is sometimes seen as such
a crucial aspect of one’s business that it should be handled internally. We can say that a lot of
companies are missing out on a great way to cut costs and increase profits because of being
misinformed. Contrary to what you might believe, outsourcing HR activities is a great
solution for most small to medium sized companies out there.
Rapidly changing market dynamics and global competitive pressures have caused organizations to
spend more time focusing on their core business. Organizations are fast realizing that they can't be all
things to all people. So companies now, be it a software company, a service provider or a
manufacturing firm, decide what they are good at and outsource everything else, i.e., focus on their
core competency, and let someone else do the rest in a more efficient and cost-effective manner.
As a result, human resources outsourcing is becoming increasingly prevalent. The number of
companies outsourcing HR activities continues to rise, and the scope of outsourced HR activities
continues to expand. HR outsourcing can happen in HR functions, like payroll administration
(producing checks, handling taxes, dealing with sick-time and vacations), employee benefits (Health,
Medical, Life insurance, Cafeteria, etc), human resource management (hiring and firing, background
interviews, exit interviews and wage reviews), risk management, etc. Outsourcing has become a
common response to manage people and technology resources strategically, enhance services, and
manage costs more effectively.
 
Outsourcing noncore activities allows HR professionals to move away from routine administration to
a more strategic role. The organization can focus on higher value-added activities while the
outsourcing provider takes care of the day-to-day administration. Critical internal resources, such as
technology and talent, can be devoted to company's core business. Outsourcing reduces the need for
large capital expenditures in noncore functions. Thus, outsourcing becomes a strategy for reducing the
capital intensity of the business. This strategy has gained popularity as companies aim to become
more nimble and gain the speed and flexibility necessary to compete in today's business environment.
A growing number of executives understand the benefits it can bring in terms of not only cost savings,
but also heightened strategic focus. Many recognize outsourcing relationships as long-term
partnerships created to further the strategic goals of the organization.
But still in India, people are not very clear about what exactly is manpower outsourcing
all about, and issues like quality and trust needs to be addressed properly. Experts say the
basic reasons hampering the growth of HR outsourcing in India are confidentiality and cost
factors. Moreover, the fear of losing jobs, losing control over confidential data, ethics and
quality of outsourcing vendors, security breaches and overall confidence in the vendors deters
many organizations. The biggest problem - and this is why the HR outsourcing industry in
India is on the back foot - is the government and the industry's failure to tackle issues like
data security and data privacy. This is where Indian HR outsourcing companies face a major
handicap.

Experts believe that in present times HRO is undergoing a transition phase. It is

moving out from the realm of bigger companies to small and mid-sized organizations. There
has also been a transition in its user acceptance, where it is moving from a corporate domain
to PSUs’ and the Government sector

The purpose of this dissertation is to explore the trends in hr outsourcing. The dissertation is designed to gather data from
companies that have outsourced some or all function of HR and to report their experience and results. sources of data
provide insight into issues such as the:
 Scope and objectives of an HRO initiatives.
 Another major issue in HRO process is to decide which HR function need to be
offloaded and also which firm to outsource. This is one of the biggest challenges, because it
may adversely affect company’s performance if selected wrongly. Before going for
offloading any in-house HR related activity to external agency; one need to be sure about the
pros and cons of outsourcing it. Though there are several benefits of outsourcing HR related
activities there are some shortcomings too.
This dissertation work highlights the various issues and challenges of HRO including the
pros and cons of it and recommending what organizations need to take precautions while
going for HRO.