Q&A: HR: In-house or Agency? with Amit Gadhvi

Every week, we schedule our weekly 1:1 with our readers. Want to be featured in an upcoming edition? Drop an email to [email protected] 

This week we’re in conversation with Amit Gadhvi, Manager- HR & Operations, at Aavenir. We talk about outsourcing HR functions.

The interview is edited for length and clarity. All views are personal and not linked to any organisation.

Q- Should the HR department handle inbound and outbound services internally, or is it feasible to outsource the entire HR function to an agency?

In the context of scaling up organizations, the question revolves around determining which HR functions can be outsourced and which ones should be kept in-house. Startups face challenges in recruiting due to the lack of an established brand. Recruitment and payroll are two areas that can be successfully outsourced, as they tend to be tedious and require specific expertise. By outsourcing these functions, HR professionals can focus on developing strategies, engagement, and fostering a diverse and inclusive culture.

However, certain aspects require an in-house HR presence. Building and nurturing the overall organizational culture is crucial, as HR serves as the brand ambassador, interacting with external recruiters and representing the company's values. Additionally, HR plays a vital role in bridging the gap between management and employees, effectively communicating management decisions, and upholding the organization's principles and values. Functions like employee onboarding, development and training, performance management, appraisals, and employee benefit programs are potential areas for outsourcing, with agencies specializing in performance management or providing employee benefits packages.

Ultimately, the decision to outsource or retain in-house HR functions depends on the organization's unique needs, strategic priorities, and resource allocation.

Q- What HR functions can be effectively outsourced? Do you foresee an agency model emerging for these functions, with agencies specializing in performance management or providing employee benefit packages?

There's a crucial aspect that often gets overlooked – employee engagement. Events play a key role in fostering employee engagement, and it's something that can be easily outsourced. Instead of wasting valuable time planning and executing these activities internally, organizations can host quarterly events for collaboration and other purposes, outsourcing the entire employee engagement function to an Event Management Agency. This allows HR to focus on more strategic initiatives.

Performance management is another area that can be outsourced, but it's a bit of a 50/50 situation. While HR plays a crucial role in aligning performance management with internal stakeholders and organizational goals, there are tools and systems available that assist in measuring performance. Many HR departments, including ours, utilize these resources to facilitate performance management.

Regarding employee benefit programs, exploring an agency model for providing comprehensive packages is certainly feasible. Employee benefits agencies specialize in tailoring packages to the specific needs of the organization and its employees.

Onboarding, being the initial step in the employee journey, is critical. It requires a proper and strong brand push. Having an in-house HR presence is beneficial as they can ensure a well-structured onboarding experience that aligns with the organization's culture and values.

Q- I have seen many onboarding agencies in the West but none in India, do you think it is an emerging trend?

Onboarding holds significant importance for many HR professionals. They want to personally ensure they are the first point of contact and make a positive impression on new hires. This personal touch is why the exploration of outsourcing onboarding is limited. However, with the right technology and a focus on the employee experience, there are two aspects to consider: the human element and the technological aspect. While HR professionals may prefer to retain control over the human part of the onboarding experience, finding suitable technology solutions can be challenging. The market lacks robust tech options for onboarding, making it difficult to fully outsource this function effectively.

I have seen a great asset management tool called Great HR in the past. It offered a smooth employee onboarding experience with a simple process. By providing a link to employees, they could easily fill in their details and generate an employee code automatically. This tool greatly benefited HR and facilitated the onboarding process, which is a crucial aspect for 90% of my colleagues and me. While onboarding can be outsourced, it requires a robust and user-friendly technology solution to ensure a seamless experience. Therefore, outsourcing with a strong tech solution that prioritizes user experience would be ideal.

Q- What is your opinion on the difference between MNCs and startups when it comes to offboarding processes, where MNCs have dedicated teams while startups often lack any formal process?

It's crucial that employees love their organization, regardless of how long they've been working there. The first 90 days and the final 60 days of an employee's notice period are particularly important, as this is when the transition takes place. Offboarding is often thought of as something that HR handles, but in reality, it's the department head who knows the most about a person's role and can best manage the process. Talent management is often talked about, but few take accountability for it. While HR may not be responsible for day-to-day performance, they should take responsibility for providing growth opportunities and ensuring that managers are upskilling their team members. This can be challenging, but it's essential for the success of the organization.

Q- Do you think AI will replace us and take over many functions currently done by agencies?

There are two different perspectives on AI. Some believe that it will eventually replace human jobs, while others see it as a tool that can be used to enhance human performance. In terms of AI in recruitment, there are concerns about bias and discrimination. If an AI model is trained on biased recruitment data, it could lead to discriminatory hiring practices. While AI could potentially automate some HR processes like employee communications and performance appraisals, HR is a field that requires a lot of human judgement and decision-making. It's essential to strike a balance between using AI for efficiency and maintaining human oversight to ensure fairness and prevent discrimination. It's still early days for AI in HR, and it will take time to see how it can be best utilized in the field.

Q- How do organizations choose which functions should be inbound and outbound at their stage? What functions can be inbound/outbound? Can we have a dedicated team or a person to it?

There are two things to consider when it comes to HR time management. Firstly, it's essential to ensure that the HR team's time is being used efficiently and effectively. Repetitive processes that can be outsourced to external partners should be considered to free up their time for more strategic initiatives. Secondly, it's important to align HR efforts with the business needs. If there is a pressing need for a specific skill set, it might be more efficient to outsource training or hire a consultant rather than hire a full-time employee. Overall, it's crucial to balance the HR team's workload and business needs to ensure optimal performance and outcomes.