Human Resources Outsourcing The Next Wave of Off shoring
The Yankee Group, a US research and consulting firm, estimates HR Outsourcing Services (HRO) worldwide market will grow to $80-billion by 2008, at a compounded annual growth of 12%, with non-core transactional duties, such as, payroll and benefits administration, being increasingly outsourced (particularly in the US), rather than conducted in-house
Kelly HRfirst, the staffing alternatives business unit of employment services firm Kelly Services, reckons about 85% of all US businesses outsource at least, a portion of their HR functions
In its report, Kelly HRfirst points out cost savings and efficiency gains reaped through HRO services have paved the way for businesses to increase their use of recruitment process outsourcing (RPO), a 'rapidly emerging and high-demand sub-set of HRO'
Elixir Web Solutions, a recruitment consultancy estimates, the RPO sub-set comprising of the entire recruitment cycle, from needs assessment to sourcing, screening, and interviewing candidates, including hiring will account for $30-billion of the HRO market by 2008
At this point, the question India should ask of itself is: "How much of this business has come the sub-continental way, and how much of it can India expect to win in the years ahead, given the scale on which off-shoring is taking place?"
Gautam Sinha, CEO of the Bangalore-based IT recruiting firm TVA Infotech, points out that within the Indian market, the total annual spending on recruitment is Rs 700 - 800 crore, so this then, can theoretically be considered the potential size of the RPO business (and RPO is only a sub-set of HRO) that can be generated from locally-based companies Fake Watch.
Then, there is off-shoring Of the $36 billion in revenues that Indian companies earned from IT-enabled services in 2004, only 2% or some $70-million were from HRO services
But, the potential is indicated by several factors Large global players, such as Fidelity, Exult and Hewitt have set up operations in India (including others, such as Hyderabad-based Kenexa India, Bangalore-based TVA Infotech, and Chennai-based Secova eServices) And, a Nasscom-McKinsey report projects the revenue of Indian firms from HRO will increase to $35-billion by 2008, while Gartner believes India can expect to win 10-15% of the American HRO services market; and finally, only 6% of USA's HR spending is off-shored, but changes are in the offing and that figure is almost certain to rise
Raghuvir Sakuru, Managing Director of the US-owned Kenexa India, a provider of outsourced HR services, says 20-30% of non-customer interface functions segment of the HRO pie can be off-shored, and India can hope to win a substantial share of this Kenexa India, he says, accounts for 10-15% of the RPO business done by its US parent company
Sinha notes that HR outsourcing has certainly begun in India, with payroll and benefits administration that has been outsourced for some time, as has training Except for modest chunks, recruitment has not yet been outsourced on any significant scale, the risk involved (arising from the need for confidentiality) prevents companies from doing more recruitment outsourcing
HR aspects, the most amenable to outsourcing according to Sinha, are payroll and benefits administration; help lines and the answering of queries relating to HR policies; recruitment by large hirers; training; and performance appraisal He believes the core HR processes, such as, career development, for example "will and should be retained in-house"
Further, Sinha says, some large software companies hiring tens of thousands each year, still debate on, whether recruiting is a strategic function or it can be outsourced While, Sakuru adds: "Three or four years back, companies never realised the need for automated processes Now they do, since they are recruiting in the thousands And, there are also companies that offer automated solutions" Five years from now, he says, 'it will be a completely different landscape'
However, Sinha lists two problems associated with HR outsourcing, which act as obstacles to the trend gathering momentum: "First, outsourcing is associated with layoffs, which Indian society is not yet ready for, because of the stigma associated with being laid off RGB flexible led strips. Second, people who are in the system should be comfortable with the idea of not having direct control over the HR process This is not yet happening in India, because individuals tend to measure their professional prowess by the number of people who report to them"
Of all overseas markets, according to the Kelly report, India holds the greatest promise, because it is experiencing rapid growth in the job market across many industries It needs R&D talent in the automotive industry, middle and senior-level managers, engineers, MBAs, workers in niche industries (such as bio-tech and IT product development), and English-speaking employees for retail and call centre jobs Indeed, the employment boom just may create a talent shortage, if the government and educational institutions do not do something about the crunch
However, in reality, Indian firms, says Kelly, generally feel it is more economical to manage HR functions internally There is, also distrust caused by sub-standard deliverables by vendors in the past Finally, there is also concern about maintaining the confidentiality of data and corporate security
To date, HRO and RPO are growing faster in the United States than in any other global market This, says Kelly Services, is explained by changes in labour supply and demand that today's HR departments are ill-equipped to keep up with Workers have reduced company loyalty, greater expectations from their jobs, and want to manage their own careers Significantly, these very changes are rapidly taking place in India too
Can India handle HRO and RPO on top of BPO, ITeS, KPO, ESO and a whole slew of other process outsourcing services? Of course, it can! If, the Indian government and educational institutions take adequate steps, then what was termed as India's disadvantage ie its population explosion, that same disadvantage, will turn into its advantage with requisite training and education The Indian masses need to be trained and educated, as the process outsourcing sector promise employment for all Without losing its hold as an agriculture-based society, India is set to become an all rounder, a multi-tasker Along with green revolutions, the sub-continent has started to lead the revolt to eradicate illiteracy, and once that is removed, it will automatically put an end to poverty
India should not miss out on this golden opportunity to regain the glory that was India Let all Indians pledge that they will make this century India's century The Wheel of Fortune has come full circle Pushed to the bottom of the heap by a rapacious, avaricious West, India has climbed and clawed its way (in a wholesome, ethical manner, unlike the West) nearly to the top A few more years, and it will be an established leader of the world, once again, an economic power to reckon with cl boots.
There is no country like India, and there never will be Unique, colourful, exotic, wonderfully diverse, it is a country that is all spirit and soul You can love it or hate, but you can't ignore it In the face, India, go show them, girl!
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SBA s 8 a Program Can Help Some Companies Compete
Q: A friend told me that as a woman of Native American descent I might be eligible for a special SBA program that will help me start a small business He said I could compete for government contracts through this program Can you tell me what SBA program he's referring to?
-- Clara P
A: Your friend is probably referring to the Small Business Administration's (SBA) 8(a) Business Development (BD) Program The 8(a) Program (named after the section of the Small Business Act from which it comes) is an SBA program created to help small disadvantaged businesses better compete in the US marketplace and within the arena of government procurement The SBA provides business development, technical assistance and other services to the small businesses that are accepted into the 8(a) program
The 8(a) program is reserved for what the SBA calls "socially disadvantaged individuals" Socially disadvantaged individuals are defined as those who have been subjected to racial or ethnic prejudice or cultural bias because of their membership in a disadvantaged group
The SBA has designated the following groups as socially disadvantaged:
路 Black Americans 路 Hispanic Americans 路 Native Americans (Native American Indians, Eskimos, Aleuts, and Native Hawaiians) 路 Certain Asian Pacific Americans 路 Other individuals who can prove that they meet the SBA's criteria to be considered socially disadvantaged
One point where your friend is incorrect is that the 8(a) program is for new companies The 8(a) program is primarily for companies that have been in business for a minimum of two years, though that rule may be waived if your company is able to meet some pretty strict management, financial, and performance criteria
Obtaining 8(a) status is no guarantee that a company will be successful in obtaining government or other contracts, but it certainly doesn't hurt The Small Business Act mandates that all small businesses have the opportunity to provide goods and services to the US government To help ensure that mandate, the SBA negotiates annual procurement preference goals with every Federal agency and reviews each agency's results to make sure the goals were met
The statutory goals are: 23 percent of all prime contracts go to small businesses; 5 percent of prime and subcontracts for small disadvantaged businesses; 5 percent of prime and subcontracts for women-owned small businesses; 3 percent of prime contracts for HUBZone small businesses; and 3 percent of prime and subcontracts for service-disabled veteran-owned small businesses
A HUBZone (Historically Underutilized Business Zone) is a designated area within urban and rural communities that has been given preferential contract award consideration in an effort to stimulate economic development A company may qualify for HUBZone status if it is owned or controlled by one or more US citizens, has at least 35 percent of employees who live within the designated zone, and has a principal office located there HUBZones are a whole 'nother topic that we can discuss at another time Suffice it to say that a company that obtains both 8(a) and HUBZone status may be entitled to double dip in the government procurement trough, that's why you often find a number of 8(a) companies specifically moving into HUBZone areas to take advantage of the perks both programs offer cl boots.
The US government purchases billions of dollars in goods and services every year, everything from staples to those wonderfully expensive toilet seats Obtaining 8(a) status allows small businesses to compete for a portion of that business
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As expected, the 8(a) program has its fans and its detractors It's fans are those companies that obtain 8(a) status and thereby get preferential treatment when competing for government procurement contracts
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You can learn more at the SBA's website (sbagov) or by calling your local SBA office
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