The Indian outsourcing juggernaut rolls on. The latest concept emerging from the outsourcing scene is related to human resources (HR) outsourcing. Hitherto organisations have been reluctant to outsource HR. The Zensar-PeopleSoft alliance aims to change all that by helping Indian organisations outsource some or all of their HR functions or business processes to a third-party alliance. The concept here is one of ‘HR shared services,’ which happens to be a $78 billion market globally. As part of this initiative, Zensar has already established its first shared services centre in Pune.
Says Ganesh Natarajan, deputy chairman & managing director, Zensar
Technologies, “Companies can significantly revamp their HR processes and avail of a suite of applications ranging from personnel and payroll records to e-learning and knowledge management. These will be available on a pay-per-use basis.” The rising use of shared service centres for processing HR transactions can have a considerable impact on companies that can’t afford to purchase authorised PeopleSoft licences.
Thiru Vengadam, country manager, PeopleSoft, explains, “Organisations that are stuck with a low-end solution can now drive global best practices into their HR processes without having to buy licences. This could be a boon for Indian Tier-II companies that are facing budgetary constraints and other limitations that prevent them from adopting a complete PeopleSoft HR suite.”
GANESH NATARAJAN says that companies can avail of a suite of applications ranging from personnel and payroll records to e-learning and knowledge management on a pay-per-use basis
Recruitment to retirement
Zensar is even offering a hosted PeopleSoft HCM solution to organisations in addition to managing or building a customised portal supporting an organisation’s HR needs. Says Aamod Wagh, chief operating officer, Zensar BPO, “We aim to provide the HR head with a corporate portal to take care of all back-office planning and address the entire range of HR functions—from recruitment to retirement.”
This is the first time PeopleSoft is entering into an alliance of this nature in India. Avers Vengadam, “With this partnership we will widen our footprint in enterprises that do not fall into our traditional areas. This opens up new vistas for PeopleSoft.” At present, about 70 percent of the Fortune 500 have implemented PeopleSoft solutions (predominantly in the United States.) The company has now set its hopes on the Indian market, which, combined with the market in Asia-Pacific, is expected to grow to $3 billion by 2008.
Consolidating HR processes
The idea behind deploying HR shared services is to realise economies of scale and achieve standardisation of services by consolidating HR processes at a single location. Maximising the return on human capital (which many companies regard as an investment) is the most critical factor in an organisation’s success.
The most obvious benefit for an organisation would be in terms of cost-savings, which could be to the extent of 15-40 percent. Some other benefits of this approach include enhanced service quality and greater access to data making it easier to measure performance and undertake workforce analysis. These cost savings come with their own set of challenges that include a willingness on the part of companies to accept outsourced HR as an integral part of their business processes. There is also a need for different skill-sets. These factors need to be considered and it is important to have a well-planned change management strategy in place. With Indian software firms now looking to obtain the ‘global’ tag, HR shared services may end up being deployed by this sector.
According to a McKinsey report, the global HR outsourcing market is valued at $78 billion.
India’s huge workforce makes the country one of the largest potential markets in the world for HR outsourcing.
PeopleSoft recently tied up with L&T Infotech to target the construction and manufacturing sectors.