Outsourcing Human Resources to India

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Outsourcing is a term that is being used more frequently as increasing numbers of organisations are exploring this as a potential delivery option for some of their activities. It 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.

Within the context of Human Resource outsourcing, the specific processes that are included within any outsourcing arrangement will vary from organisation to organisation. Some organisations may outsource virtually all of their HR processes where others select specific components such as payroll or resourcing.

Our recent survey human resources outsourcing to India and the HR function identified that 29% of respondents are outsourcing some of the HR function. The most commonly outsourced activities reported are legal activities (69%), payroll (66%) and pensions (64%). 

So far, very few organisations have outsourced their entire HR function. In large organisations it is most common to have outsourced the operational elements of delivering HR activities whilst retaining control over HR strategy and decision-making. There are a number of well-publicized examples of large, mainly global organisations that have outsourced large parts of their HR operational activities, often in contracts for between five and ten years, for example BT, Boots The Chemist, Procter & Gamble and Unilever. Interestingly, small organisations often do the reverse, effectively outsourcing their strategy (to HR consultants and other professional advisers) and keeping the delivery of HR processes internal.

HR outsource to India is not the only solution that organisations might consider if they want to change the way their HR function operates. There are other options to consider either as an alternative, or as partner, to outsourcing.

This refers to the creation of an internal ‘hub’ for the delivery of HR services. Two distinctive features of HR shared service centers are:

To date, there appear to be more organisations setting up internal shared service centers rather than using an outsourcing approach. For more information, see our fact sheet on HR shared service centers.

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