Intense pressure from the competitors and the unstable market situations compelled the companies to switch its focus of attention from the day-to-day activities to the core functions. With the popularity of the business outsourcing showing an upward trend and its impact on the profitability, the companies were induced to outsource other secondary functions of the entity. The human resource outsourcing is a recent development which is rising at an immense speed with the Fortune 1000 companies deciding to outsource its HR functions.

The human resource functions that are outsourced varies from payroll, education and training, recruitment and dismissal functions like conducting exit interviews, etc. HR outsourcing services are brought under four categories. PEO or Professional Employer organisation is one wherein the PEO and the parent company go into a partnership with PEO taking up the human resource functions completely and the latter concentrating on the core business activities. BPO, on the other hand, helps the HR activities by giving access to the latest technologies. ASP or Application service Providers gives access to the HR software for easy functioning. Well known packages like those developed by People Soft etc helps in payroll management, etc. E-services are web based services provided to the clients.

India entered HR outsourcing in Nov, 2003, the first step being taken by a Chennai-based company named Secova. Low cost of operations in India with an abundant supply of educated and English-speaking human capital made her highly attractive. Geographical position of India is an added advantage which gives high flexibility of operations. With many outsourcing companies being situated in USA and other developed countries, the strategic location of India helps the employees to meet the demands of major outsourcing countries round the clock. With emphasis laid by the Government to upgrade the infrastructure of the country through its current Five-Year plan, many foreign companies have set up its operations in India. The intense competition amongst the telecom providers and internet service providers has drastically brought down the cost in telecommunication making a major cost centre less expensive.

Ranking seventh in area provides the advantage of spreading the area of operations to other states. For example, many business entities have spread their wings from the major metros to Tier II and Tier III cities where industries have great chances to flourish. The decreased cost of living in places other than metros leads to further reduction in the operating costs of the entities. The success stories of the BPO industry in India also played a key role for the movement of HR outsourcing business to India.

Leaders in HR outsourcing like Hewitt, Fidelity, Accenture, etc on recognising India’s potential have set up many business houses to cope with the demands of the industry. It is stated that a part of the largest HR BPO deal signed last year between Accenture and Unilever is being done in India along with other countries. Indian company Secova, which has clients domiciled in USA, recognised the need for having a front-end office at US for operating HR functions like filing of tax returns, printing cheques, etc.

It is said that a Boston based consulting group expects the BPO business in India to reach 30 million by 2020.With a huge amount of intellectual people who has the power to pace with the future demands and a supportive stable government to back up, India has a huge scope for the further attainment of HR outsourcing business.