A wise person once said, “Change is inevitable, growth is intentional.”
Successful businesses profit from embracing the idea of intentional growth. In Hong Kong, growth has come from many economic sectors including tourism, luxury goods, retail and banking. Visitor arrivals to Hong Kong in 2012 increased by 16% over 2011, according to the Hong Kong Tourism Board. Luxury retail continues to grow across the region, which is driven by increased internal and visitor demand. The statistics released by the Census and Statistics Department show that retail sales have experienced a 14% year-on-year growth over the past 12 months. Many global banks, private equity firms and hedge funds have expanded their operations into Hong Kong.
When confronting business growth, and the operational demands stemming from it, do we increase internal headcount to meet change or do we outsource? It is not just about the cost, but your long term ability to strategically focus on your core business mission. During a period of growth or change, using external experts can help leverage your existing capabilities to accomplish your aims and objectives. Outsourcing can help a company remain flexible and facilitate change. The company can still run its core functions whilst the outsourced vendor helps to absorb the change. Service quality to both clients and employees can be maintained and improved, even during periods of growth.
Outsourcing is also a solution during the company formation stage. According to the statistics released by the Companies Registry in July 2013, the number of newly incorporated companies in the first half of 2013 increased by 9% when compared to that in the second half of 2012. New companies face the daunting task of hiring, payroll, and arranging visas for their expatriate employees. We are often approached by new clients from overseas to assist with their payroll and visa requirements. They have little knowledge of how to comply with local requirements with regards to Mandatory Provident Fund (MPF), Inland Revenue Department (IRD) and Hong Kong Labour Law. Like many new businesses, there is a multitude of more urgent matters that HR professionals need to attend to. For clients with very high turnover figures, for example retail companies, the challenge of increasing levels of product demand coupled with the need to stay on top of starters and leavers and various pay issues, poses a large workload and often distracts companies from their core operations.
All the systems are set up by going onsite to the client’s location when needed, ensuring that when the business starts operations, all paperwork and information flows smoothly. Beyond cost reduction and time efficiency, we work closely with our clients to ensure strategic business alignment by learning their business model and making sure our services are tailored to facilitate their growth.
Human resources functions such as working visas, payroll and certain talent management duties are often outsourced to external vendors. Most companies just don’t have the resources to do it all and do it well. And if they do, what is the cost? And what other strategic work is being missed?
In their book 100 Things you need to Know: Best People Practices for Managers and HR, management experts, Eichinger, Lombardo and Ulrich are succinct in noting the best reasons for outsourcing HR administrative functions. Fundamentally, utilising an expert vendor to provide transactional work frees up the human resources team for the meaningful strategic and transformative work that is truly value-added.
As our client grows they continue to outsource, placing high value on the fact that they can focus on their core business, since we provide them with the equivalent of a full time finance, HR and even administration team where necessary, for a fraction of the cost. HR issues the client would face if handling internally such as sick leave, annual leave, resignations, cover for existing staff and other challenges are not something the client ever has to worry about.
In a market that is continuously changing the rules and regulations, an outsourced vendor can help you navigate the changes and let you focus on your core business mission with peace of mind.
By Bella Khan, General Manager - Business Services, Links International Hong Kong
Paul Arkwright
Publisher
