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What is Human Resource Outsourcing ?
The area of Human Resources has evolved itself from just being a part of an organization to becoming a whole business by itself. There are firms in the world working on specific HR areas like payroll, employee benefit, survey research, HR software products etc. Other than these there are companies in the field of HR BPO called by different names as Human Resources Outsourcing (HRO) or Recruitment Process Outsourcing (RPO) or Employee Process Outsourcing (EPO) firms. Other than these mentioned above there are staffing companies into temporary/ permanent staffing. End of the day competition is intense and the market to fight for is large enough to accommodate more players – both globally and in India. Basically India has seen HR functions only restricted to Recruitment consultants. Gartner Research says in 2004 itself HRO or HR BPO is said to garner 39% of all BPO revenues worldwide with turnover of $ 51 billion.

Today India may have an abundance of manpower talent pool, but the biggest challenge facing companies would be to hiring and employing the right/best talent. In most organizations recruitment or HR functions per se is either assigned to the various employees, who are part of the HR department or assigned to a dedicated group involved with strategizing the future manpower requirements depending on the various dynamics of the market, the brand value the organization commands and various other miscellaneous factors.
HRO today is such a critical function involving activities such as sourcing, assessment tests/ interviews, new hire training, orientation and administrative practices. An effective HR outsourcing initiative would involve a heady mix of hands on recruitment coupled with robust products, processes, procedures and mechanisms.
The benefits of having a HRO would give greater emphasis for the organization to concentrate on its core competencies, cutting the cost/time of hiring, would definitely have a bearing on the quality of the delivery of the end produce, would lead to better utilization of the existent manpower, give a greater purpose to the hiring process and of course the delivery would be done to the expectation and demand of the client. The key query, I believe in the outsourcing industry is whether the firms are willing enough to outsource their key processes and Human Resources.
Why Human Resource is considered such a key process? Because it is just difficult to retain employees, as attrition rates have crossed double digit figures across industries. Everyone in India knows the very future of BPO industry is at stake due to this attrition menace, which could on an average be ( and I would safely take a guess of attrition) in high 40 percentages. The aftereffects of such a phenomena are drastic as many multinationals also take attrition as a very important component in their decision making process for an investment in India.
The 3R’s of HRO - To find the right candidate for the right job at the right time. This is the core competency of an HR outsourcer.