Outsourcing Topic 10

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    New EmploymentPractices

    Dr. Tanusree Chakraborty

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    Outsourcing

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    What is Outsourcing?

    Outsourcing - the strategic use of outside resources to

    perform activities traditionally handled

    by internal staff and resourcesDave Griffiths

    Why Outsource? Provide services that are scalable,

    secure, and efficient, while improvingoverall service and reducing costs

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    Why do Companies Outsource?

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    Reasons for Outsourcing

    Traditional role - reaction to problem

    Reduction and control of costs

    Avoid large capital investment costs Insufficient resources available

    Modern role business strategy

    Allows company to focus on their corecompetencies

    Keeping up with cutting-edge technology

    Creating value for the organization and itscustomers

    Building partnerships

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    What Can be Outsourced?

    system integration

    data network

    mainframe data center voice network, internet/intranet

    maintenance/repair

    applications development

    e-commerce end-user support system

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    How to Implement Outsourcing

    Program initiation Opinions and ideas shared to form draft

    contract

    Program implementation Transferring staff Service Level Agreement (SLA) Establish communications between

    partners Actual transfer of the service Establish management procedures

    Contract agreement

    Contract fulfillment

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    HR Outsourcing Services

    Online HR software solutions

    Employee self service

    Screening and assessing of employees

    Providing employee performance reviews

    Providing benefit administration for employees

    Preparing health and safety programs for employees

    Maintaining files of personnel

    Developing and managing HR forms

    Unemployment claims management services Preparing and updating employee handbooks,

    workplace policies and procedures

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    Problems With Outsourcing

    Loss of Control

    Increased cash outflow

    Confidentiality and security

    Selection of supplier

    Too dependent on serviceprovider

    Loss of staff or moralproblems

    Time consuming Provider may not understand

    business environment

    Provider slow to react tochanges in strategy

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    Problems With Outsourcing

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    Contingent Workforce

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    Contingent Workforce

    A contingent workforce is a provisional group ofworkers who work for an organization on a non-permanent basis, also known as freelancers,independent professionals, temporary contractworkers, independent contractors or consultants

    Contingent Workforce Management (CWM) is thestrategic approach to managing an organization'scontingent workforce in a way that it reduces thecompany's cost in the management of contingent

    employees and mitigates the company's risk inemploying them.[

    http://en.wikipedia.org/wiki/Independent_contractorhttp://en.wikipedia.org/wiki/Independent_contractorhttp://en.wikipedia.org/wiki/Managementhttp://en.wikipedia.org/wiki/Managementhttp://en.wikipedia.org/wiki/Contingent_workforcehttp://en.wikipedia.org/wiki/Contingent_workforcehttp://en.wikipedia.org/wiki/Managementhttp://en.wikipedia.org/wiki/Independent_contractor
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    Advantages and Disadvantages of usingContingent Workers

    Flexibility in type andamount of laborresources

    Save costs in benefits

    and tax Immediate access to

    expertise not presentinternally

    Savings in long-term

    compensation costs

    Loyalty toemployer orcompany

    Disturbsorganizations coremorale and culture

    Training costs

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    Contingent Workforce Outsourcing(CWO)

    Contingent Workforce Outsourcing (CWO)denotes a provider who facilitates clients'ability to aggregate and track spending, billing,and performance of more than one type of

    non-W-2 worker.

    This includes traditional temps andindependent contractors and consultants.

    http://en.wikipedia.org/wiki/Form_W-2http://en.wikipedia.org/wiki/Form_W-2http://en.wikipedia.org/wiki/Form_W-2http://en.wikipedia.org/wiki/Form_W-2
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    A World In Flux

    Technological Development Manufacturing

    Transportation

    Communication Mobility Of production

    Of labour

    Centralised / Disaggregated production

    Access to multiple, diverse HR Pools

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    A World In Flux issues and implications

    Economic and Social Trends / Shifts

    Sector and Industry shrinkage or expansion

    Tourism, Energy, Agriculture

    Pandemics

    HIV/AIDS

    Socio-Political developments

    CSME, PetroCaribe, FTAA Shifts in career expectations, relationships

    and options

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    A World In Flux issues and implications

    The psychological contract The death of womb to tomb and cradle to

    grave

    Relationships of convenience? Personal responsibility for benefits

    Flexibility and loyalty To self?

    To organisations?

    To principles and professional standards?

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    A World In Flux issues and implications

    Pervasiveness and Speed of Change

    Competition

    Response times

    The need to be nimble and agile

    Rapid access to specific skills for limitedtime periods

    Minimising long-term structural andfinancial commitments

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    Responding to flux !!

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    The Contingent WorkforceResponse

    Hidden Workforce of temporary workers, independentcontractors, consultants, leased executives, project-based resources

    Temporary worker arrangements driven by:

    Seasonal / Periodic fluctuations or demands

    Filling of temporary vacancies

    Specific tasks of limited duration

    Flexibility needs (worker and organisational)

    Perceived cost savings

    Reduction in obligations

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    Managing A Contingent Workforce

    Clarity on Company Purpose and Policy

    Appropriate use of contingent workforce

    Optimal Mix of Contingent to Permanent

    Variability / Equity in treatment

    Social Responsibility

    Regional, National and Sector Development

    Gender and Minority Issues

    Education Inputs

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    Managing A Contingent Workforce

    Legal Issues / Litigation / Liability

    Workers Rights and Representation

    Compensation and Benefits

    Company Culture, Values and Brand

    Organisational Integrity and Reputation

    Attracting quality Human Resources

    Standards, Quality and Consistency

    Cost vs Benefit

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    Managing A Contingent Workforce

    Ownership of the Process

    HR or shared

    Organisational Politics

    Costs Loyalty and Commitment

    Turnover

    Training

    Intellectual Property and Security

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    On The Ground Issues!!

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    Managing A Contingent Workforce Operational HR Issues (1)

    Sourcing

    Who is responsible? Procurement? HR? Agency?

    Does this vary according to the category?

    Access to and Cost of labour resources

    Placement

    Organisational conversations / collaboration

    Orientation and Integration

    HR Dept. vs Managerial and Staff Roles

    Teamwork

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    Managing A Contingent Workforce Operational HR Issues (2)

    Multiple-category contingent workforce

    Issues of (perceived) Equity or Inequity

    Impact on workforce

    Management Techniques

    Standards, Performance Evaluation and Appraisal

    Contractual or Developmental?

    Retaining knowledge capital of contingent workforce

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    Employee Leasing

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    Employee Leasing

    Arrangement in which a firm (called subscribingfirm) transfers its employees to another firm (calledleasing firm) which specializes inhuman resourcemanagement, payrollaccounting, and riskadministration. The subscribing firm leases its

    employees backas employees of the leasing firmand usually pays more for their services than theirsalaries at the time of transfer. This way the payrolland associatedexpenses and taxes ofthe leasedemployees become the leasing firm'sliabilities.

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/www.businessdictionary.com/definition/arrangement.html
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    Employee Leasing

    Employee leasing is a business agreement inwhich a company has a professionalemployment organization (PEO) put itsemployees on the PEOs payroll and leases theemployees back to the company.

    The act of outsourcing the human resourcesand payroll tasks from one company toanother.

    This is done on the current and permanentemployees of a company.

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    Why Use Employee Leasing?

    ZERO liability of having employees No insurance hikes when accident occur No more need to worry about government issues (tax,

    most paperwork, etc.) Stable medical benefits (if you choose) Save time, make money Sometimes employees feel as if they dont belong to

    YOUR company Client is highly dependent on the PEO for their

    employees

    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2BWork%26gl%3DIN&usg=AFQjCNHpquMoC-Rv-SqniUhD54WtQ9CXZQhttp://www.google.com/url?ct=abg&q=https://www.google.com/adsense/support/bin/request.py%3Fcontact%3Dabg_afc%26url%3Dhttp://www.businessdictionary.com/definition/employee-leasing.html%26hl%3Den%26client%3Dca-pub-2929677839778239%26adU%3DMyAdrenalin.com%26adT%3DAutomate%2Byour%2BHR%2BWork%26gl%3DIN&usg=AFQjCNHpquMoC-Rv-SqniUhD54WtQ9CXZQhttp://www.google.com/url?ct=abg&q=https://www.google.com/adsense/support/bin/request.py%3Fcontact%3Dabg_afc%26url%3Dhttp://www.businessdictionary.com/definition/employee-leasing.html%26hl%3Den%26client%3Dca-pub-2929677839778239%26adU%3DMyAdrenalin.com%26adT%3DAutomate%2Byour%2BHR%2BWork%26gl%3DIN&usg=AFQjCNHpquMoC-Rv-SqniUhD54WtQ9CXZQhttp://www.google.com/url?ct=abg&q=https://www.google.com/adsense/support/bin/request.py%3Fcontact%3Dabg_afc%26url%3Dhttp://www.businessdictionary.com/definition/employee-leasing.html%26hl%3Den%26client%3Dca-pub-2929677839778239%26adU%3DMyAdrenalin.com%26adT%3DAutomate%2Byour%2BHR%2BWork%26gl%3DIN&usg=AFQjCNHpquMoC-Rv-SqniUhD54WtQ9CXZQ
  • 8/3/2019 Outsourcing Topic 10

    31/31

    Thank You

    http://www.google.com/url?ct=abg&q=https://www.google.com/adsense/support/bin/request.py%3Fcontact%3Dabg_afc%26url%3Dhttp://www.businessdictionary.com/definition/employee-leasing.html%26hl%3Den%26client%3Dca-pub-2929677839778239%26adU%3DMyAdrenalin.com%26adT%3DAutomate%2Byour%2BHR%2BWork%26gl%3DIN&usg=AFQjCNHpquMoC-Rv-SqniUhD54WtQ9CXZQ