HR BPO is a recent entrant into the outsourcing industry. The success of various business functions on outsourcing persuaded the companies to transfer the HR functions from its principal area of business. This led to the development of the concept of HR BPO. HR BPO transitioned the job of the HR personnel from the mundane job of appointment to retirement to strategic planning.
There are different types of BPO organisations for HR functions. Professional Employer Organisation or the PEO undertakes all the activities related to the human resources by entering into a partnership with the parent company leaving the entire resources of the latter for the core processes. HR BPO, on the other hand, helps the companies to have access to the latest technology or make use of the existing technology to enhance the quality of the human resource function. HR data warehousing is an example of the service provided by the HR BPO. Data warehousing has been defined as “a technique for properly assembling and managing data from various sources for the purpose of answering business questions and making decisions that were not previously possible”. Application Service Providers rent their services to the various companies. E-services are web based services provided to the clients. The employee beneficiary activities like the cafeteria, insurance, health services, managerial task of handling taxes, dealing with the sick leaves and vacations, dispute management, etc are outsourced to others depending on the needs of the companies.
The motivating factor behind the outsourcing of human resources function varies between the companies. The impact the outsourcing of other functions had on the cost of the products developed and services rendered, and the overall profitability was one of the major causes behind the transfer of HR function to a BPO. With the competition becoming severe, it became difficult for the companies to maintain its market share. The pressure from the customers to deliver excellence in the quality and the shareholders to maximise the wealth, drove the management to outsource its secondary functions to the experts. The transfer of the human resource function helped the companies to avail the service of experts providing ample time and resources to the management to concentrate on the core areas of its business. The reduction in the staff for HR function is an added advantage. However the head count varies with the type of outsourcing program the company has opted for. While a few BPOs accept all the functions related to HR, some concentrate and undertake specific functions.
However, the success of the HR BPO requires the skills of the experts to be successful. The company to which the work is outsourced must be well versed in the business processes, the working culture, attitudes, etc of the employees and the company to make it a successful project. With the spread of the area of operations around the globe, having excellent domain knowledge relevant to various countries is by no means an easy task.
HR BPO is however a promising solution for a company if the services of a competent partner is availed.