Dear Bigbhanu,
HR outsourcing can work as a boon or a bane, depending on the necessity of organizations to do so. Strategically, it must make sense to outsource or to keep processes in-house.
Typically, I have seen that outsourcing is done for one or more of the following reasons:
1. Cost-benefit advantage - lower cost of outsourcing compared to in-house processes
2. Confidentiality of processes - avoiding in-house leaks
3. External expertise compared to existing in-house expertise
4. Time advantage - timely process completion commitments and easier time-to-market processes/products/services.
5. Internal focus on innovative/creative/strategic work and elimination of mundane, time-consuming in-house processes
6. Greater objectivity and credibility gain amongst employees
7. Confidence of top management in external professionalism and proven expertise
8. Strategic intent of reducing high, permanent salary/pay loads
9. Client preference, especially from overseas clients
10. Branding/credibility enhancement by associating with globally renowned outsourcing companies
11. Maintaining a flat and flexible organizational headcount and reporting structure
If done appropriately based on organizational needs, outsourcing may work wonderfully. However, the competence and diligence of the outsourced party are paramount.
Strategically, it must be clear what and how much to outsource and for how long. The monitoring mechanisms for outsourced processes must be in place and meticulously working to ensure compliance, accuracy, timeliness, and satisfactory execution.
In some organizations, I have kept processes in-house, and in some, I have outsourced. Both approaches have worked wonderfully!
Rahul Kumar