Net result: right from the head of HR with strategic corporate responsibilities to the lowliest staffer number-crunching the monthly payroll, the entire HR department is contracted to an outside HR consultancy.Under an outsourcing arrangement, a company's HR manpower no longer shows up on the wage bill of the corporate. Instead, the entire department's salaries (including statutory requirements like provident fund) go on the rolls of an outside HR consultant--who in turn, charges the corporate a time-based fee for HR services rendered. Usually, the outsourced employee will be present, physically, in the client's office, for pre-determined hours in a week, as per theneed.

Leading the wave are: multinationals, start-up operations, project-based organisations, software companies and financial services companies. Says Noble & Hewitt (N&H) country head Ravi Virmani: "Contracting out the entire service of HR is becoming more and more popular as the cost of hiring increases, the internal customer becomes important, and the role of specialised services and retention becomes an issue."

He should know: at present, Virmani plays the role of vice-president, human resources for one of his six integrated HR clients. These include: a large US car manufacturer who set up shop in India a year ago; a US-based testing company with a manpower strength of 100; an American NBFC which has about 80 employees spread across four branches; and an American FMCG, which has been operating in the country for three years and now has 600 employees.

A bullish Noble & Hewitt is now investing $4 million in India over the next three years, solely on technology needed to provide outsourcing todomestic corporates. Recently, it set up a 24-hour voice-mail system on a dedicated phoneline for one of its clients. Says Virmani: "We're thus like an extension of the company."

Why are companies outsourcing? Primarily, outsourcing allows HR to become a variable cost resource. Besides, there is much more flexibility in terms of terminating the contract of an outsourcing consultant than in firing full-time employees.

Often, it's not cheaper than setting up an in-house HR department. For an outsourcing consultancy charges the going salary for every person attached to the organisation, plus a service fee. But outsourcing does offer more value for money.

For, despite the higher per-hour cost, the company is billed only for the number of hours the consultant's team worked on that company's assignments--which works out cheaper than full-time employees who are underutilised. Also, a company gets access to a top-notch HR professional, who would otherwise be unaffordable on a full-time basis, or would not evenconsider working for a small/new company. Says Chandresh Dhebar, managing director, Carrier Catalyst Pvt--who runs the full HR department of a Noida-based company 20 km away from his Patparganj home-office at Delhi: "Typically, I would be hired full-time for a salary of Rs 18-20 lakh per annum. For an outsourcing client my services come for less than half."Adds Virmani: "If a client uses 10 people for a job, we use less than half." Pertinently, despite servicing more than a dozen clients in the last two years, Noble & Hewitt's entire outsourcing team consists of less than 20 people. Consider the other outsourcing imperatives:

n At Chennai-based Grundig Electronics India Ltd, the entire HRD needs of 100 employees are serviced by Ma Foi Management Consultants since April 1997--including recruitment, payroll and statutory compliances, mission and vision workshops, an appraisal system, training and development, and even employee counselling.

Says Grundig vice-president SV Rajagopalan: "It's more economicaland under one roof we get expertise on all facets of HR." Adds Ma Foi managing director Pandia Rajan: "Large established companies get head-count conscious as revenues are linked to the head-count. So they outsource whatever they can."

n At Mumbai-based Cussons India Pvt Ltd, the HR system is driven by internal line managers. But the company is using outsourced resources to assist in policy setting and advising on process management in a highly proactive fashion. Says Cussons managing director John Thornber: "Like non-executive directors on the board, it brings in objectivity."

Adds Geet Mala Jalota, who was an outsourced manager from August 1996 to August 1997 at Cusson's from Mumbai-based Mantra's and is at present, general manager, Impact Management and Personnel Services: "With outsourcing you can apportion the cost of HR according to the rate of returns of the project. If you hire hire a full-time junior person, you can't just fire him after a year because you need a senior person."

n Delhi-basedSilver Oaks Laboratories, an Oriflame vendor, uses Debhar's Carrier Catalyst for all its HR needs from personnel policies, payroll and job-specification, to selection procedures.

Says Silver Oaks business head PS Bhaumik: "We are a small organisation of just 64 which needs to build a culture right from the start. But a full-time person would would find his role very small." Adds Debhar: "Since an outside consultant has a reasonable stature, the top management takes you seriously. So, the qualitative performance also improves."

The down-sources? While the outsourcing agency is meant to be perceived by employees as an extension of their own organisation, dissatisfaction can arise eventually, over a lack of a full-time, in-house human resource manager.

Noble & Hewitt, therefore, recommends bringing in a full-time HR person any time after the staff strength crosses 50--who can then liaison with the outsourcing agency. Either way, for companies leery of absorbing 20 per cent increases in the wage bill perannum, outsourcing is not just a fad, it's a fundamental.