Is HR Really Cost-Effective in the Age of Outsourcing? Let's Discuss Your Views

Hi All,

Recently, I had an interview where I was asked to justify "Is HR cost-effective?" With Human Resource Outsourcing (HRO) gaining popularity, we need strong points to support this argument.

Please share your thoughts on this.

Thanks,
Abhiman

Of course, yes.

HR is cost-effective. I am working for India's biggest retail company.

We do follow cost-cutting measures if required, as we have recently amended our policies and shared new guidelines for employees.

1. Traveling has been reduced by conducting meetings through video conferencing.

2. Cab booking has been reduced by instructing employees to commute at their expense initially and can reimburse from the company (saves extra cost that we used to pay to the vendor).

3. Strictly based on eligibility criteria, benefits would be given.

4. We have even put controls on outgoing couriers by instructing employees not to send any baseless documents (scan documents and send them to the desired person).

5. Not to print documents if not required and suggested to use duplex printing mode.

So, there are many more measures that we have taken to be cost-effective. I believe if taken seriously, these measures can help in so many ways. In our company, we proudly say that "HR IS COST-EFFECTIVE."

Thanks,
Shweta Jaitly

Dear Abhiman,
Yes, HR is cost effective because HR person has responsibility to reduce cost in terms of recruitment via Video Conferencing, through telephonic interviews, negotiating salary with selected candidates. And as Shweta said in terms of cab booking, reducing traveling & so on. You remember “Maximum utilization of resources which is done by Human Resource Department”.

Hi Abhiman,

Is "HR cost-effective"? I think it depends on the individual. There are people who will sit in the office without doing any work and give lots of responsibility to their assistants, resulting in low-quality work. This can negatively affect the culture of the HR department because employees may feel that the HR manager is not doing any work. So, in my opinion, HR being cost-effective depends on the individual. If HR is smart, then it is cost-effective. There are many ways in which HR can minimize costs, such as in recruitment, outings, etc. But this is only possible when HR is smart.

Regards,
Ramya.R

Thank you for your response, but the objective of this question was related to the importance of HR in the company. For example, the tasks mentioned can also be handled by admin. I believe we should focus on core HR. Can anyone discuss the importance of HR, please?

Abhiman,

HR-Admin is the only one. Admin is just a part of HR. HR defines/designs the structure & policies for an organization, and Administration executes and decides the methodology for the same. In other words, Admin & HR are just two sides of the same coin. So, HR's importance is very much there.

Regards,
Shweta

Hi Abhiman,

There are two dimensions to your question. If you are talking about the HR outsourcing (HRO) process, then yes, definitely, it can be a cost-effective option. In some companies abroad, the management (support/staff) is paid higher than the employees. If they are outsourced to India, the companies can actually benefit a lot through billing at decent rates.

If you are discussing the importance of HR in contributing to operational efficiency in terms of costs, then the answer would depend on how strong we are in implementing good practices to yield the maximum from resources and infrastructure while considering the human dimension.

If you would like to discuss further, you can call me at 09985227000.

Hi,

In today's economic scenario, everyone is looking for cost-cutting. Following ideas can be tried:

1) For company-owned cars, carpooling is useful.
2) Late sitting beyond 7 p.m. is justified. Even if extra lights or fans are required, they should be switched off.
3) Travel expenses should be optimized. The tour circuit should be rational and cover more meetings in one visit in an area, rather than revisiting.
4) Set a fixed mobile bill limit.
5) Implement a freeze on new printers, copiers, etc., unless approved by senior managers or senior authority.

Regards,
Vikas

Hi All,

Could we justify stating that HR and Admin are different segments of the organization? If yes, how? And if no, how?

Raj

Run HR on a profit center basis rather than a cost center. Also, there are hundreds of ways to eliminate waste which are not the sole domain of HR. Any person could spearhead such an initiative, for example, the seven deadly wastes. It could even focus on "must-haves" rather than "good-to-haves" when preparing job descriptions.

Let's think of Cost Center and Profit Center. HR is primarily a cost center. We stretch our thoughts to extend the logic to peek into the administrative domain to justify our role in expenditure control exercises in order to justify our input in reducing HR costs. HR Function and Administrative Function are two different functions. They have a reciprocal and corollary relation as an effect of cost-cutting measures. But HR is not about cost-cutting. Similar to the logic of the business as a whole, it should not be seen as a cost-cutting business but rather as full-time business initiatives.

What is Business? It's money multiplying activities. What is cost-cutting? It's reducing wastage. We have to separate HR from this. HR practices must create value by increasing the intellectual capital within the firm. HR professionals must add value, not reduce costs.

This cost-cutting measure and argument are okay for a typical Baniya Company whose sole survival depends on wastages.

Regards,
Sawant