The Emergence of HR Business Process Outsourcing

The Emergence of HR Business Process Outsourcing

An organization, when it is conceptualized and comes into existence, seeks to perform certain activities for which there is a need. A for-profit organization will deliver the products and services for which it has been formed, for a price that enables it to cover its costs and make a profit. A not-for-profit organization might not charge for the products and services it delivers, but will rely on donor funding for the same, which will enable it to reach the eventual beneficiaries.

While that is perhaps as they intend, organizations also inherit the responsibility for operating within the legal boundaries defined by the jurisdiction they operate in. They may have to carry out many tasks which are not directly beneficial to their work, but are necessary in order that the regulatory environment can be maintained by the government, and they can operate within it.

Besides, as they operate in a competitive environment, where resources might be limited and customers have choices, they need to respect that environment and operate so that they can eke efficiencies out of the system.

While we have seen rapid strides being made in automation and digitization of processes, we have also seen that people continue to be critical to the success of any organization. And people need to be managed. They need to be hired. They need to be evaluated. They need to be compensated. They need to be trained. They need to be appraised and provided feedback. They may need increments from time to time. They may need promotions. They need to be assigned roles and responsibilities. Regulatory requirements related to people management also need to be complied with, while handling the competitive requirements of managing people. Minimum wages have to be honored, as well as weekly work hours. Regulatory reports may need to be filed from time to time, as well as statutory deductions deposited into relevant accounts.

All in all, there is a fair amount of effort and expertise that goes into human resources management.

Having been recognized as one of the three best providers of data related services, BPO provider oWorkers has been supporting its clients from around the world for over 8 years.

 

The emergence of HR Business Process Outsourcing

An organization and its management are always engaged in trying to perform their functions in the best possible manner, with a view to maximizing the long-term potential.

With the advent of process outsourcing as an option, ever since BPOs, with the expansion of telecommunications networks and the internet, started expanding around the globe, many organizations are choosing it, if they are able to determine that that choice is in their best interest. There have been some concerns about making sensitive employee data available to an outsourced partner, but they have gradually been overcome with the introduction of advanced technologies and even self-service options that are now available. And, instead of the outsourced processes getting less attention, it seems they are getting more.

The arguments in favor of this approach are usually articulated as follows:

Focus on main business

A competitive world is not easy to survive and thrive in. There are companies dying all the time on account of their failure to compete. Equally, newer companies get founded with fresh ideas and desire to succeed.

In such an environment, having multiple balls in the air will always be more difficult to manage than fewer ones. By handing over some of the balls in the air to others, after determining that they can handle them, allows a company to focus on the few balls that mostly relate to the business activities that are core to the success of their business.

Pure play BPO providers are equipped to provide 24×7 support, if required by clients, leveraging available resources much more than what most companies are used to.

Specialists can do it better

The primary work of an organization typically hogs the limelight, and takes most of the attention. Many support services tend to be handled in a manner that keeps them ticking, without much effort at process or technology improvement.

The situation changes when the process gets outsourced to a specialist. Firstly, this being their source of revenue, is of prime importance. The partner needs to ensure that they are able to do it in the most efficient manner, not only to keep clients happy but also for their own cost efficiencies.

Additionally, the ability to aggregate volumes across multiple clients, often gives them the critical mass to invest in technology and process enhancements. Everyone benefits.

Our popularity with jobseekers ensures that oWorkers can even provide short-term resources at short notice, like a hundred extra within 48 hours. This ends up saving a huge amount of money for clients who would, otherwise, have to hire and retain resources for the entire year, just to handle a few days of unexpected peak volumes.

Cost saving

Companies often get locked in to certain types of costs, especially with regard to people. Compensation and reward related policies, by default, are applicable across various types of resources. Sometimes, this entails a cost higher than reasonable for a certain type of work.

Outsourcers, since they are adept at hiring and training transactional resources that typically come with less advanced educational background and lower experience, hire at lower costs. Companies can take the benefit of the partner’s ability to hire and train resources at a lower cost, for work that does not require a higher compensation.

oWorkers has earned accolades from clients for its unique pricing model. It offers a choice between dollars per unit of input, say manhours, and dollars per unit of output, to clients, with the final choice being that of the client. Clients routinely mention saving almost 80% of pre-outsourcing cost after engaging oWorkers for HRO work.

 

Where does HR business process outsourcing help?

Recruitment and RPO

Engaging in a competitive marketplace is a resource-hungry activity. Outsourcing enables it to be managed in an efficient manner.

Taking a simple example, if there are 100 companies and 5 colleges operating in a certain geographical area. All the companies need to hire fresh graduates every year, for which all of them will need to reach out to those colleges. At the same time, all interested candidates may need to be interviewed again and again for all the different companies.

If some of the companies were to outsource this function to an HRO partner, not only will they make it easy for themselves, even for the candidates it might become easier as the HRO partner may need to evaluate them only once for openings with the different employers.

Even if consolidation was not an outcome, the HR business process outsourcing company would probably benefit from the activity being outsourced to a professional, instead of managers being asked to take time out from their work in order to support the hiring process.

A more extreme version of outsourcing hiring is RPO or Recruitment Process Outsourcing where the entire process, including decision-making, can be handed over to a partner.

oWorkers is uniquely positioned for recruiting resources that deliver on client HRO projects. Being a preferred employer, we get more applications than we can hire. It keeps our hiring quality high and cost low, that eventually gets shared with clients through the pricing mechanism.

Payroll administration

Compensating employees for the work they do for you is an employer’s most basic and important responsibility.

It might also be the most onerous, considering it has to be done on time and accurately. We don’t expect employees to not know the amount of salary they are to receive, do we? They may not notice if they are paid extra, assuming the company has finally rewarded some unknown good work, but pay a cent less and they will be up in arms.

If that is not enough, there are regulations governing taxation, deductions, retiral benefits, minimum wages, etc. that obviously need to be complied with. Moreover, rules, as we know, can change. What is a company to do? Should they focus on the moving parts of their business or of the many support functions that need to be managed?

A specialist HR business process outsourcing outfit is much better placed to track the regulatory environment and ensure their clients are in compliance. It is their business, not a support function.

oWorkers pays social and local taxes for its employees in its three global delivery locations. Our employees, both past and present, rate as 4.65 or above on platforms like Glassdoor.

Compensation and benefits

Establishing the compensation and reward policies is a critical task for an HR team in any company. While compensation might refer to the cash component that an employee will receive, benefits, also referred to as indirect pay, would cover a much larger variety, such as health benefits, leave entitlement, pension plan, free lunches, and so on and so forth.

It requires an understanding of the business as well as knowledge of the work environment to be able to determine the right policies. Nobody wants it to be either too high or too low. It has to be just right. HRO partners who specialize in this area of HR, are a great boon, especially for the smaller companies, who find it difficult to establish benchmarks as well as obtain market information.

Through its multi-cultural and multi-ethnic team, oWorkers is able to deliver services in over 20 languages.

Performance Management

When a company employs people, managing them, evaluating them, giving feedback, rotating them to different roles, promoting them to assume higher responsibilities, are all par for the course. All these actions need to be backed up by a policy that sets expectations among people in terms of what may be possible, and a process through which they happen.

While the responsibility of managing staff cannot be taken away from their manager, neither the process of evaluating them, the administration around these processes, which is detailed and needs to be followed meticulously, lest charges of nepotism and favoritism surface, is increasingly being taken over by providers of HR business process outsourcing solutions.

Unlike some competitors, oWorkers prefers to employ its staff, and not use them as freelancers or contractors. This places greater responsibility on us, of performance and career management, evaluation, feedback and growth. However, it provides us with flexibility in deployment and has created a supervisory level with the growth and development of frontline resources.

Learning and Development

Training of new hires, especially entry level resources, and development of existing staff members are ongoing activities in most companies.

New hires need to be trained to ensure they understand the company’s processes and systems and are able to hit the ground running. Existing employees need refreshers from time to time as well as enhancement of skills to keep pace with the changing world.

When a company engages a provider to provide end-to-end training services, it is referred to as training outsourcing, a specific form of HRO.

Not only does it enhance training bandwidth for the company, it also gives it substantial flexibility by accessing the larger training pool of the partner. They may also be able to access training capabilities that, otherwise, may not have been available to them.

Our leadership team, which comes with over 20 years of hands-on industry experience, ensures that each individual working on a client project is suitably trained.

 

Challenges with HR business process outsourcing

Confidentiality of information

Staff data is confidential. Not only are staff a competitive advantage for a company, the data also includes a significant amount of personal information of individuals. The data being compromised at the hands of partners with weak processes remains a possibility.

Employee resistance

HR is seen as a sounding board for employee grievances and issues. Employees may feel uncomfortable about having to voice their issues to an outsider, though some believe it might actually be beneficial as staff members might have lesser hesitation.

This factor bears watching as HR would not wish to lose an important source of information about how employees are feeling.

Cross-trading

A partner is likely to be a specialist in the area, providing HR business process outsourcing services to other clients too. Some providers could be tempted by the possibility of leveraging resources of one company for another, and vice versa.

 

Final word

As a GDPR compliant provider, who is also ISO (27001 :2013 & 9001:2015) certified, oWorkers seeks to set clients’ concerns at rest regarding misuse of data.

Our deep partnerships with technology companies also enables our clients, through us, to use the best technologies for their projects. Of course, it helps that 85% of our clients are technology companies, including several unicorn marketplaces. It keeps us technologically ahead of the curve.

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