OUTSOURCING

Outsourcing1Companies that see outsourcing as a short-term cost cutting opportunity are almost always disappointed with the results. But companies that approach outsourcing as one element of overall business strategies are applying some specific best practices to reach their goals more quickly and with fewer roadblocks.

Eighty four percent of the buyers of outsourcing services in diamond cluster’s “2004 Global IT outsourcing Report” said they are concerned about backlash of jobs lost to offshore outsources. But those same companies have probably underestimated the ripple effect of their outsourcing decision.

Why outsourcing   ?

An obvious benefit of outsourcing is the significant cost savings and improvement to the bottom line. Depending upon the work process outsourced, some organizations save up to 60 % in content development and maintenance of e-learning technologies, such as Learning Management Systems (LMSs), Content Management Systems (CMSs) and authoring platform.

Also outsourcing is often used to overcome resource shortage. It is the classic “more for less’ story heard every where in organization today.

Specialised Knowledge : In recent months, some training organization have seen a shift towards centralized functions. Centralization has put the onus on training management to ensure that training is not only the best of breed but is also standardized and consistent in quality. Therefore training executives are now working closely with the specialist vendors— the outsourcing partners to control and maintain quality and consistency of training material, be it e-learning content or classroom courseware. In addition to improving training effectiveness, education organization are also under tremendous pressure to reduce time-to-train or time-to-market.

Outsourcing in our organization is done as a strategic initiative. The organization needs to be prepared to outsource as the vendor is prepared to manage the outsourced operation.

Size does Matter : Outsourcing can lead to tremendous cost saving. However, organization must remember that cost saving actually build up over time. The potential for cost saving in the early part of the outsourcing initiative is offset by one-time relationship establishment costs, initial time lags in development and possibility of rework until the relationship between the organization and vender matures.

Maturity makes it easy : organization with a clear definition of finished deliverables (the output), well-aligned resource responsibilities (the process) and requirement acquisition (the input) have been shown to outsource more effectively than those without reliable and consistent work plan that includes elements of all three-the output, the input and the process. The organizations can measure the reliability and consistency of their input and output by using the Outsourcing Maturity Matrix.

In the first wave of e-learning, many organizations bought and invested heavily in e-learning and training infrastructure. Millions of dollars were invested in the delivery systems, such as LMS, LCMS and CMS, and in the authoring tools. Just as the infrastructure was being deployed and the users could be trained, the economy turned sour. The organizations faced with slashed training budgets were left in a peculiar situation-they had the vehicle to deliver training, but not enough fuel since they were left without enough budget to develop significant content. Still other organizations were slower to adopt e-learning, and when the inevitable budget cutting came, they were left without the infrastructure or the content.

ROAD MAP FOR SUCCESSFUL OUTSOURCING

With increasing pressure on training budgets, senior management emphasis on improved ROI of training infrastructure, outsourcing proves to be the answer for many organizations. In addition to careful selection of the outsourcing partner, internal training organizations need to discipline the work plan – the input, the output and the processes, prior to outsourcing. Even then, this transition from internal development to outsourced development is fraught with road hazards. Call them teething pains.

Client organizations can take several steps to minimize, if not completely eliminate, the road hazards on the path to outsourcing. For first-time offshore outsourcing clients, reorientation of the internal training organization and selective and/or dual shore development models are two ways to mitigate the risks. 

Reorient, You Must

Success of outsourcing initiatives largely depends upon successful requirements management and standardization of output. This helps minimize conflict between the expectation and realization of benefit.

Here, the internal training organization plays an important part in supporting the outsourcing operations by effectively managing client and vendor processes. In the absence of outsourcing partners, the role of the internal training organization has been one of the supplier to the businesses it supports. To ensure a successful outsourcing relationship, training organizations need to play two roles interchangeably—one of a supplier to the business users, and another of a customer to the outsourcing partner.

As outsourcing of human resource functions grows; so does the outsourcing industry’s need for talented HR and benefits experts who can improve how it delivers services to clients. “If even half the projections for growth in HR outsourcing are correct, the industry is going to need a lot of professionals at all levels of HR experience to help with that expansion,” says Glenn Davidson, chairman of the HR Outsourcing Association and Accenture HR Services’ chief of market strategy and corporate development. 

Entrepreneurial Culture

Part of the appeal for working with an HR outsourcing company is the change in culture, Davidson says. “You go from being a cost center to being part of the core business. A whole world of opportunities opens up for you.”

“At most companies, the top HR position is senior vice president of human resources, and there are very few positions out there,” he continues. “In our industry, HR people have an opportunity to expand their career sphere into marketing, strategy and even be chief executives at companies because good HR service is our business.”

Rob Ball, chief people officer at Exult, says that certifications and continuing education are things HR outsourcing companies look for on resumes when hiring. Also important is “a big-picture sense of how human resources can help large enterprises.”

To help HR professionals groom themselves for jobs in the industry, Davidson’s organization is developing a certificate program in HR. “We are working on a road-show class that we can take companies who are interested in HR outsourcing, so their employees can learn more about the trends,” Davidson says. “Pay for HR professionals can be higher at HR outsourcing firms than in house HR/benefits work, but salaries vary from company to company.”

Davidson says “Rewards can be greater in the HR outsourcing industry for benefit professionals. It depends on their ability to produce results,” he says. “People who have great ideas on how to make HR services a better value proposition for large employers and who can dramatically improve employee productivity and save money will be either famous, rich or both.”

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