Step change in adoption of HR outsourcing throughout APAC
The broad adoption of HR Outsourcing across Asia Pacific has emerged as the main finding of regional research conducted by Talent2, who specialise in HR BPO organisation and end-to-end talent management solutions. The Talent2 APAC Market Pulse Study, was commissioned to help understand the current state of the HR industry across Asia Pacific. The online survey covered 576 senior HR and C-suite executives from Hong Kong, China, Singapore and Australia who shared their views on their current business practices and the challenges fain the HR industry.
Skills shortages means more outsourcing
The Study found that across Hong Kong, Australia, China and Singapore the majority of HR executives: Hong Kong, 80%; China, 90%; Australia, 87% and Singapore, 90% are now considering HR Outsourcing as a solution to key challenges cited. Major challenges include: Search and Recruitment (64%) and Employee Retention (50%).
Commenting on these findings, Caleb Baker, Managing Director, Recruitment Managed Services - Asia-Pacific, said, “It is important to understand the HR industry across the region and the people related changes impacting organisations. This research reinforces that ongoing skills shortages are hampering organisations across Asia from finding the people they need to drive top line business growth. What’s interesting here is that HR executives are focusing on different ways to address these challenges—namely through outsourcing, and investment in learning and development.” He added, “The fact that the overwhelming majority of HR executives are outsourcing HR functions—or are considering doing so—represents a massive shift in the industry, even compared to five years ago. It clearly shows that outsourcing is now being considered as a strategic solution, rather than a cost-cutting tactic in response to the GFC."
Consistent with APAC findings, Hong Kong is seeing strong utilisation of outsourcing as a solution to many HR challenges, with 80% outsourcing one or more HR functions and 91% seeing clear benefits of outsourcing.
Training remains a priority for many HR executives, with 49% looking to increase investment in learning and development over the next 12 months. Only 3% expect to cut investment in learning and development.
Search and Recruitment was identified as the most challenging HR function by Hong Kong respondents,69%, followed by Employee Retention, 56%, and Employee Engagement, 26%. When asked about the main challenges facing their organisation this year, these areas appeared in the same order of priority.
In addition, some interesting contrasts emerged in the Study between Hong Kong and the region. Whilst 73% of APAC HR executives report having experienced problems in recruiting due to skill shortages, this was most acute in Hong Kong with 78% experiencing this. Interestingly, more Hong Kong companies, almost a third, make do by having staffs work longer hours, compared to the APAC average of 28%.
Gina McLellan, Managing Director, Recruitment & Contracting—Asia said, “The Study clearly validates that search and recruitment as well as employee retention continue to be the top issues plaguing organisations in Hong Kong and China. However, the underlying causes and employee motivators are different between Hong Kong and China, and organisations need to adopt different strategies to address them. On a positive note, the survey shows that organisations are interested to find new ways of running HR and their business.”
HR headaches
» In the case of search and recruitment, 67% of HR executives outsource all or part of this function. Employee learning and development, 41%, is also likely to involve an element of outsourcing.
» Specialised knowledge of the outsourcing company, 59%, is the most commonly cited benefit of outsourcing. Another key benefit of outsourcing was that it enables businesses to free up resources and play to their strengths by focusing on their core competencies, 41%.
» Outsourcing also offers stability to many businesses as it assists in dealing with the challenge of employee recruitment and retention, with 40% indicating that it is good for areas in which it is difficult to recruit and keep staff.
» Some drawbacks are associated with outsourcing, with the main one being that external providers lack detailed knowledge about the business, 62%. A lack of consistency from outsourcing companies, 51%, and cost, 50%, are also considered drawbacks by some HR Managers.
» As many as 56% of HR Managers would consider starting to outsource or increasing their commitment to outsource some HR functions in the next 12 months. Search and recruitment, 38%, is the function most likely to be considered for outsourcing, followed by employee learning and development, 13%, and payroll, 10%.
» For many, 21%, outsourcing has either been an improvement on the old systems or exceeded expectations. A further 59% acknowledge that it has been inconsistent in service delivery, sometimes good but sometimes not so good.
» As many as 78% of HR Managers report having experienced problems in recruiting due to skill shortages.
» Those that have experienced skill shortage problems have adopted a range of strategies to alleviate the problem. The most popular are to upgrade the skills of existing staff, 64%, or hire new staff from overseas, 44%.
» Hiring contract or temporary staff to help alleviate high workloads has been adopted by 37%, while as many as 31% will make do by having existing staff work longer hours.
» The majority of businesses either already have a completely online HR process model, 25%, or are planning to increase the online component of their HR processes, 44%. However, many continue to stick to more traditional HR processes, with 21% indicating that they have no plan to move online.
» Many HR executives, 83%, are exploring new ways of doing business, the most popular being performance management, 63%. Other ways of doing business that are being explored are mentoring, 43%, training and mobile learning, 43%, and ‘on boarding’ and induction, 41%.
Paul Arkwright
Publisher
