Human Resources Outsourcing

2483 Words Apr 13th, 2009 10 Pages
ABSTRACT

In this globalization era, Human Resource Outsourcing (HRO) has come to the surface of business life as a solution. When Multi-national companies decided to outsource its Human Resources Operations, they had only one major goal in mind and that is cutting costs. They have decided to outsource end-to-end human resource operations to third party and today it has become the greatest of exposures. This interesting solution is the main reason why this paper was being written. This paper will discuss about the real concept of outsourcing especially human resource outsourcing, advantages and disadvantages of outsourcing, and so forth. By discussing all that, it will be clear why human resource outsourcing is quite a trend among
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Technically speaking, outsourcing is not just the contract with a third party to perform a service for an organization, but it also involves transferring a significant amount of management control and decision-making to the external supplier. The process of outsourcing is very much formal like other business processes and it always includes a considerable degree of two-way information exchange, coordination, and trust. (Martin, 2006)

The concept of outsourcing became popular in the mid 1990s since then the trend of outsourcing has increased to a great level. The reason for this increase in the popularity of the concept of outsourcing was the rapid growth in the number of high-tech companies in the early 1990s that were often not vast or large enough to incorporate and run large customer service departments of their own.

There are four steps that generally covered by the process of outsourcing, which are:
1. Strategic thinking, developing the organization's philosophy about the role of outsourcing in its activities.
2. Evaluation and selection, to decide on the appropriate outsourcing projects and potential locations for the work to be done and service providers to do it.
3. Contract development, to work out the legal, pricing and service level agreement (SLA) terms
4. Outsourcing management or governance, to refine the ongoing working relationship between the client and outsourcing service providers. (Shiravastav, 2007) Generally, the
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