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What is Human Resources Outsourcing (HRO)?

  HRO, which started as a mainly cost-cutting exercise, has undergone a metamorphosis to be become a strategic business decision.
In HRO, companies can outsource functions such as:
1. Recruitment - job postings, applicant screening, assessments, interviews, offer management, and transition management.
2. Payroll transactions - compensation and benefits
3. Performance management - training needs and time management.
4. Compliance training - adherence to local, legal guidelines
5. Employee self-service applications - comprehensive Human Resource Integrated Suite (HRIS), which is a web application used by all employees for purposes such as daily time management, leave applications, project allotment status and much more.
6. Process transformation - restructuring existing, under-performing HR processes.
 

Why Outsource HR Processes?

  Many companies decide to outsource only some of their HR functions, while some opt for end-to-end HR outsourcing. This decision needs to be made in the context of an outsourcing strategy.

Some reasons a company chooses to opt for HRO could be :


1. Cost-efficiency Example:
Vodafone UK outsourced recruitment processes to Alexander Mann Solutions in 2005, and achieved savings of more than USD 8 million.
2. Concentration on core-competency, accessing domain expertise of provider
Example: Danka, US, a leading reseller of imaging equipment, opted for end-to-end HRO arrangement with Gevity, US, in order to concentrate on their core-competency, leading to cost-savings and HR process effeciency.
3. Process transformation and solution to specific problems
Carrefour, a global 'hypermarket' chain, asked Hewitt to develop recruitment procedures for their stores in China, improving efficiency and leading to better quality candidates.
4. Flexibility and scalability
Example: Alexander Mann enabled the creation of a flexible workforce for Vodafone UK, which could scale up quickly in response to project needs.
5. Access to comprehensive employee self-service applications
Example: Fifth Third Bank, a global financial services company entrusted Convergys with providing "a standardised HR-technology platform" which was scalable.
6. Optimisation of employee performance
Example: Harley-Davidson, an American motor-bike company, enlisted the services of Accenture in 2006, to "improve its workforce as competitive, market and demographic factors changed over time", according to Accenture.
   
 
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