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DISSERTATION REPORT ON A STUDY ON HUMAN RESOURCE OUTSOURCING IN IT INDUSTRY

SUBMITTED BY: CHHAYA SINGH MBA-IB 4TH SEM

TOPICS TO BE COVERED:
INTRODUCTION INDUSTRY PROFILE OBJECTIVE LITERATURE REVIEW RESEARCH METHODOLOGY ANALYSIS LIMITATIONS and FINDINGS

INTRODUCTION
This research is aimed at analyzing the current state of the HR outsourcing market in

India and the trends that are prevalent in the same. Today, in this era of globalization there is high degree of competition in all areas. One very important trend in the recent times has been the growth of human resource outsourcing.
Organizations are fast realizing that they can't be all things to all people. So

companies now, be it a software company, a service provider or a manufacturing firm, decide what they are good at and outsource everything else, i.e., focus on their core competency, and let someone else do the rest in a more efficient and costeffective manner.
Cook (1999) defines Human Resource Outsourcing as "having a third-party

service provider or vendor furnishes, on an ongoing basis, the administration of an HRM activity that would normally be performed in-house".

PRESENT SCENARIO IN INDIA: With more and more companies looking

to rationalise employees on their payroll, manpower outsourcing is slowly becoming the new buzz in India too. The trend seems to have hit not just big multinational companies but the public sector and government undertakings as well, though on a very low key yet in the latter.

Estimates show that the latent size of HR outsourcing in India is about $2 billion with a current market of $27 million and it is growing at a rate of about 50 per cent.

POINTS TO BE NOTED:
HRO market is still in transition Vast difference exists between the state of HRO market in India and the global

scenario
Public Sector hasnt yet taken to outsourcing Cost/benefits and confidentiality are most important considerations in HRO HRO is expected to gain momentum in the coming years

BENEFITS AND PITFALLS OF HRO:

BENEFITS Reduced cost Increased efficiency Access to improved HR IT systems

PITFALLS Dont outsource what you dont understand. Loss of local knowledge and processes Standardisation of processes in line with outsource provider not organisational preferences.

Increased flexibility and speed of response and Reduced risk

INDUSTRY PROFILE
Information Technology is one of the most important industries in the Indian economy.

The IT industry of India has registered huge growth in recent years. India's IT industry grew from 150 million US Dollars in 1990-1991 to a whopping 50 billion UD Dollars in 2006-2007. In the last ten years the Information Technology industry in India has grown at an average annual rate of 30%.
India is now one of the biggest IT capitals in the modern world.The economic effect of

the technologically inclined services sector in Indiaaccounting for 40% of the country's GDP and 30% of export earnings as of 2006, while employing only 25% of its workforce.
The Indian information technology (IT) industry has played a key role in putting India on

the global map and is now envisioned to become a US$ 225 billion industry by 2020.
Some of the major companies in the IT industry of India are -

Tata Consultancy Services (TCS)


Infosys Wipro IBM

HP
HCL Cognizant Technology Solutions (CTS) amd many more.

OBJECTIVE
The objective of this research is to find out a picture of current trends in

outsourcing in HR services prevalent in Indian firms.


To find the functions of HR generally outsourced by the companies. The various effects of HR Outsourcing on employees, consultants and

Organization.

LITERATURE REVIEW

Nasscom Manpower Resource Survey: Nasscom conducted a survey in the year 2009, on the IT work force status in the country. These were the issues under study.

To ascertain the present quarter of IT work force in the country. To make future projections about supplying IT-manpower resources needed to

meet the industry demand.


To frame a strategy for the same. Russ Banham, Forecast 2012:December 2011:

Says while 2011 was marked by increasing economic, social and political volatility geopolitically, HRO Todays panel of experts believes that HR outsourcing is maturing while remaining flexible enough to adapt to a changing marketplace. . We expect 2012 to bring even greater emphasis on business outcomes, as companies explore HR BPO as a way to meet business needs and improve business performance.

CORPORATE RESEARCH FORUM REPORT, ACCENTURE:

The HRO market is set to grow to $3 trillion over the next five years, and just over a third of HRO potential has been currently delivered," reported Dr. Anthony Hesketh, CRF Project Researcher.
HR outsourcing (HRO) has been a sore point for people in HR. The subject carries a reputation akin to being the last turkey-in-the-strategy-shop. For many HR directors, HRO is often something done to self - rather than a strategic business decision taken by us.

RESEARCH METHODOLOGY

Sample Size:
The questionnaires were distributed to 5 Human Resource Executives and Employees some returned it by answering all the questions, some gave it half filled and some did not respond to the questionnaire. So at the end I got the full support and response of 5. Some of the Companies included in the survey were: Sopra Group Fiserv Accenture IBM Ericsson

Primary Sources Primary sources are the ones through which a fresh data is collected and for the first time, and thus happens to be original in character. Structured Questionnaire The instrument taken for the study is comprised of 15 questions, close ended, 5 points scale has been used for the anaysis.

Secondary Sources:

The theoretical base of this study has been built by using secondary sources of data like books, magazines and various internet sites

ANALYSIS
According to the survey 68% of the organization outsource there HR activities

and 32% do not outsource The Companies replied on the achieved purpose for organization: As supported by 60% of the respondants that HR services has achieved its purpose and changed the whole process.40% of the respondants disagree with the fact that HR services has achieved its purpose. Current trends of HRO in Industry: 54% of the respondants believes that use of HRO has increased changed organisations current and future business strategy and 15 % believes it has remained same. 88% of the respondants feels that HRO has bought a change in the career of HR Professionals in recent years. HR Functions That Are Outsourced: Of the total activities that are being outsourced Organisations mostly preferred for payroll and compensation 36% followed by Recruitment and Selection 30%,then Training and Development 14% and so on.

Benefits through HRO:

Most of the respondents agreed that it improves the service quality (14 %) whereas

others stated that it is used to gain access to outside expertise (4 %). It also benefit as Cost saving (32%) and there is a increase on the focus of the core Business (24%)
Effect of HRO on the Employees: Nearly 40 % of officials rated it as High whereas 15 % of people rated it as Average.

Out of which very low and low was rated at 14 % and 26% each.
There was a High Impact (42 %) on employees level of attrition, whereas (22%) of

employees stated that it has a low impact

LIMITATIONS
The HR Outsourcing Activities may differ from sector to sector and

from organization to organization. Sample size was not too large. People try to manipulate answers in positive way. The sample which we took does not represent the whole population as the numbers of respondents were very less We used convenience sampling technique owing to limited resources which is not ideal for this kind of research

FINDINGS
Most of the respondants believe that use of HRO has increased in past few

years. Most of the officials stated that the main reason for not outsourcing their HR activity is because of insecurity among the Employees. There are many more critical and sensitive information which organisations think must not be leaked in any form by their organisation and hence because of this they are not interested in outsourcing their HR activity. HR Outsourcing improves the service quality of an organisation and can deliver more efficiently to its employees, whereas other organisations are seeking for outside expertise. Most of the IT companies tries to Outsource all its HR Services through one vendor only The most important metric to measure the level of effectiveness is Cost saved due to outsourcing, the main reason why the companies outsource their HR Services then is the Service level improvement followed by increase in employee satisfaction