Feature

The evolution of managed HR services

Sudipta Dev on how organisations can outsource their recruitment problems to ‘extended HR arms’

This is the era of “managed services”—when a company seeks to focus on its core competencies and leaves other functions to the expertise of “partner” organisations. These services could range from procurement and administration of talent to managed IT services to security management and many others. Managed HR services is a proven way for optimising workforce efficiency and reducing staffing costs. Still an emerging trend in India, it ranges from payroll processing to recruitment to help desk functions and other operations, with Managed Service Providers (MSPs) becoming an extension of the internal HR team.

Significance of managed services

The ever-increasing challenges of recruitment has led to the necessity of managed HR services. Sadhana Somasekhar, Director & Chief Marketing Officer, Focus Infotech, states, “Outsourcing or harnessing extended HR services through service providers external to core HR, help address some of the base-line challenges with regard to new recruitment, talent search, scheduling of interviews, coordination with the panelists and the prospective employees, follow-up, background checks, feedback, etc, etc.” She adds that the HR team size to total head count ratio is something that no amount of mathematics can justify. The HR department being effectively a ‘cost centre’ for the organisation, the only route to meeting objectives is by partnering with able ‘extended HR arms’ external to the core HR.

Ajay Mallapurkar, Centre Head-Mumbai, Mafoi Manag-ement Consultants, points out, “A significant amount of operational HR (like payroll, joining formalities, statutory management, etc), is transaction heavy and it makes sense for organisations to outsource these activities.”

"A significant amount of operational HR (like payroll, joining formalities) is transaction heavy and it makes sense to outsource these activities" - Ajay Mallapurkar Centre Head-Mumbai Mafoi Management Consultants

"Outsourcing could help address some of the base-line challenges with regard to new recruitment, talent search, scheduling of interviews, etc" - Sadhana Somasekhar Director & Chief Marketing Officer Focus Infotech

"Typically, a user base of 1,000 PCs and 20 servers can save as high as Rs 20 lakh per annum for an organisation in 24x7 environment support" - C V Prakash Head-Human Capital Team Computers

There is of course a long list of benefits for an organisation. The partnership could be with one or more MSPs. C V Prakash, Head-Human Capital, Team Computers, lists how managed services help HR teams in organisations deal efficiently with the following:

• High attrition rate
  
• Replacement hiring and induction costs
• Training cost
• Continuity/availability of services (no leave replacement available otherwise)
• Competency of running core business (should not get sucked into IT management)
• High profit ratio in balance sheet (profit per employee); healthy financial status
• More control with MSP vendors than self-owned employees; more accountability at less cost
• Challenges faced by employees in skill upgradation so as to meet the on-going technological changes
• Expensive team overheads.
  Managed services is a viable, cost-effective and dependable option.

Range of services offered

Most managed service providers offer common services like payroll processing and recruitment services. Mafoi Management Consultants has also been offering statutory management and human resources management systems. Focus Infotech has productised its services into:

• TechSearch: Placement service and executive search in the IT domain for technical as well as functional profiles. TechSearch addresses both ends of the recruitment spectrum—the customer and the candidate. For the former in the capacity of an extended HR arm and for the latter as their career managers.
• TechSource: IT professional and consulting services on fixed-term contracts, with the right to hire. These consultants form an integral part of Focus’s employee base and are exposed to best-in-class opportunities.

The managed services offered by Team Computers is vastly varied—managed IT services, managed printing services, security management services, server management and SmartDESK (facility management services). In the HR space, the company provides staff augmentation services. The consultants are selected, inducted, supervised and appraised by the client, while Team Computers carries the headcount on its rolls and payroll process, and meets all other statutory requirements of PF, ESI and taxation, wherever necessary.

Optimising workforce efficiency

Productivity level in an organisation goes up as additional teams are created without actually adding to the internal headcount and associated overheads. Somasekhar informs that the services offered are basically of two different types, helping address the long-term and short-term resource requirements. “Short-term resource requirements or consulting is altogether a separate business, the processes and formalities being something that most organisations would not want to get into themselves but would look to partner with companies whose core competency is consulting services.”

Prakash focuses on the factors that enhance efficiency:

• Encouraging peer member skill competition
• Inducing more productivity as processes take over the people-dependent systems
• Making workforce efficiency structured, measured, evaluated and performed.

Impact on workforce cost

The reduction in staffing and administration costs for organisations is substantial, and is the key reason why organisations are interested in entering into an agreement with MSPs. C V Prakash informs that the cost-to- company for any person directly employed, would be minimum 2.5 times to 3 times of the salary, while a MSP offers anywhere in the range of 1.8 to 2.5 times. “Typically, a user base of 1,000 PCs and 20 servers can save as high as Rs 20 lakh per annum for an organisation in 24x7 environment support,” he adds.

“Organisations which outsource do not have to invest in building expertise in the non-core functions. There is also the advantage of economies of scale for service providers which can be passed on to client organisations,” reminds Mallapurkar.

Number of providers

A pertinent question is: what works best—multiple structures or a single-window provider? “That depends on the nature of job/process outsourced, the quantum of work as well as the geographical spread. For example, payroll could be given to one vendor, large scale hiring could be divided among various service providers and joining formalities could be outsourced to different vendors depending on their location,” answers Mallapurkar.

Somasekhar adds that a single-window provider is preferred by project teams as it gives them the flexibility to make quicker decisions, while the HR department would normally prefer separating the services. “However, from the service provider’s point of view, the business of placement services is as different from consulting services, as hardware is from software. While the common factor may remain the domain of operation, the process and capability matrix of the service provider for these two services make them essentially different services. For instance, one of the basic ingredients, albeit not so evident, in the consulting services is financial girth and health. This business deals with human capital as the ‘product’. And with such a product, ensuring financial security becomes a key factor in customer satisfaction and curtailing attrition. Consulting services call for availability of various internal teams and processes, akin to those available with the customer. There has to a ‘customer support’ or external HR team, a personnel department to manage the payroll, a strong finance team and finally an experienced and effective management team.”

She reminds that the financial strength may however not be a key ingredient in placement services, “Place-ments can be handled even by a one-man team, provided the customer is available. Placement can market itself on just the ‘brand’ equity that good PR can create.”

Future of managed services

The future of managed services as a staffing alternative is very bright. While organisational staffing is not being replaced it is the evolution as a value-added service that has brought into focus the emergence of managed HR services. “We have the various phases of this evolution coexisting and the customer may define or chose which phase is required and when. Staffing is normally a term associated with providing suitable resources and managing them on the customer projects. The value-add begins when some or several of the normal HR processes are handled by the service provider, be it pre-screening (both technical and personnel related), scheduling the interviews, ensuring smooth deployment, working with the customer project team to forecast and plan on the resource requirements, co-marketing the customer organisation in HR initiatives, etc,” clarifies Somasekhar.

The fact that MSPs take the complete responsibility of producing the right candidate makes the staff requisition process hassle-free for permanent as well as contingency staffing.

sudipta@expresscomputeronline.com