OUTSOURCING CERTAIN human resources functions, such as recruitment, payroll and even training and development, gives a company room to focus on key aspects of its core business. Hong Kong employers are catching on to the advantages this offers as they see the cost savings and greater efficiencies resulting from allowing third-party specialists to manage such tasks. However, China-based companies have been slow to follow this international trend, and that begs the question of why. 'The reasons are psychological,' said Holly Hu Qian, operations manager for managed services in China at recruitment firm Talent2. 'Many large businesses love the idea of outsourcing but have reservations because the concept is so new to them. Also, some people who work in HR are probably concerned it might reduce their influence, or they just fear for their own jobs.' Ms Hu said the mainland government had put certain regulations in place to control outsourcing. Licences were required to accept such work and, for the present, these were issued only to local companies. 'To overcome this difficulty, a non-mainland company would first have to set up a joint venture,' she said. Odilia Poon Kam-yee, who is Talent2's operations director for managed services in Asia, said many HR departments in the mainland had still to learn about the potential benefits of outsourcing. The first challenge for service providers, therefore, was to raise awareness. 'To succeed, we first need to educate senior management by explaining the outsourcing concept to them and how it works,' Ms Poon said. 'Our methodology,' Ms Hu added, 'is to assign professional on-site consultants who work in the client's office together with their HR team, so they can communicate directly.' Ms Hu said it worked best when there was a high level of trust and transparency and a real sense of partnership. But many businesses in China still thought more in terms of suppliers and transactions than of partners. Meanwhile, Talent2 recently achieved its first outsourcing project in the mainland with an assignment from leading IT company Unisys. 'One of our first tasks was to conduct a road show to tell everyone what we would be doing,' Ms Poon said. 'In China it takes a lot more effort for on-site consultants to become part of the existing HR team.' She said that employees of a mainland firm were generally reluctant to share in-house information with external parties. This made initial presentations a critical factor in achieving co-operation and achieving the intended objectives. 'It's all about winning hearts and minds if a team is going to pull together effectively,' Ms Poon said. Although much remains to be done, Ms Hu was optimistic about the prospects for long-term success. Firstly, there was the strength of the Chinese economy, as well as the growing demand for skilled labour. 'The candidate pool is certainly big but, compared with other developed economies, the level of professional skills and competencies is not as high,' she said. 'A large amount of screening and selection work is required even to compile a shortlist of candidates for a key position.' Secondly, traditional recruitment methods were no longer meeting the needs of many large mainland firms. They recognise that the process is not just about hiring, but also about induction and retention. 'Hiring should not be too subjective,' Ms Hu said. 'Our on-site consultants have therefore set up systems and objective benchmarks.' This usually involved discussions with a client's HR department and directors about the type of people they were looking for. 'We ask the company to introduce us to their most effective staff members,' she said. 'We then give those individuals a series of behavioural and aptitude tests, the results of which help to define the type of people the company is looking for. That forms a benchmark for recruiting new staff.' Ms Hu was confident that more Chinese companies would turn to HR outsourcing, especially now that the Chinese government had started to show an interest in the practice. 'For example, the Beijing Olympic Games committee is considering this as the best way to train some of the staff it will be taking on,' she said. Talent2 may not be competing in any Olympic events in 2008, but the firm hopes to win its own gold, based on the kind of hard work and perseverance seen in any successful athlete, by firmly establishing its HR outsourcing model in China in the years ahead.