Globalization has fueled the growth of multinational companies that have spread across the world in search of customers or resources. Very often, these companies have a skewed distribution of employees. While a large portion remains in the home country and a few secondary countries, the remaining employees are dispersed thinly across many countries. These “long-tail” countries, with employee population as low as double or single digits per country, pose a unique set of challenges to companies, especially in the Human Resources (HR) function. The extremely low number of employees in the long-tail countries translates to lack of economies of scale for the delivery of HR services. The weak financial case often results in a cavalier attitude towards HR in these long-tail countries that, in turn, leads to regulatory, payroll, technology, and people challenges.

This paper describes the conventional ways in which companies have tried to solve the problem of long-tail HR – the in-house model and the traditional outsourced model – and their pitfalls. It then goes on to describe an emerging winning model that can potentially deliver high-quality HR services in long-tail countries without driving up the cost unreasonably. Further, it describes a few practices that buyers should adopt to get the best out of the winning model. The paper finishes by discussing a case study in which a service provider employs the winning model to successfully serve a global enterprise.

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Human Resources Outsourcing