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Human Resources Challenges For Outsourcing to India

India has the potential to capture more than 50 per cent of the world’s outsourcing market.  This market would generate export revenues of approximately $60 billion and is expected to grow 25 percent a year till 2010.

However, rapid growth among outsourcing vendors has created tension on the labor market. This has implications for the wages of staff. Also, key personnel are usually in demand for new, high-profile projects, or even at risk of being recruited by other offshore vendors. Common turnover levels are in the 15%-20% range. Many of the 3.6 million graduates churned out every year by Indian universities are considered mediocre. Some people in the IT industry have said that only one in 10 graduates is worth taking on.

This proves that if outsourcing companies want to keep the current pace of growth in the industry they will have to tackle a few major issues, predominantly in the area of human resources.

In 2005-2006 two studies were held in Mumbai (n=155) and Chennai (n=165) to assess the human resources challenges that a company faces with outsourcing. With questionnaires for both employees and their managers, we gained information on a few basic human resources questions, to name but a few:

• What selection methods identify the best employees?
• Which employees are satisfied with their job?
• Who is most likely to leave the company?
• Which management styles make India employees more productive?

We compared the answers in the outsourcings centre with other data we have gathered in the Netherlands, Brazil, Romania and the United States (total n=850).

The audience will get a better insight in human resources challenges that multinationals face while outsourcing a part of their business to India. Best practices and solutions will be discussed.

Kilian is an organizational psychologist, with a specialization in International Human Resources from Utrecht University, the Netherlands. In 1999 he joined ABN AMRO Bank, a world leading financial institution with more than 100,000 employees in 63 countries. Kilian is currently Head of Human Resources for seven European countries that focus on high wealth individuals. He arrived at this position following several roles Human Resources including; Head of Recruitment in the Netherlands and Head of HR in Monaco. Besides his work he does research in cooperation with the Utrecht University and the University of Amsterdam on ‘ pre-drivers of top-performance in a multinational environment’.