Some organizations are opposed to the idea of outsourcing HR as they are unsure of its effectiveness or whether it can actually solve problems. However, despite the obvious dilemma before deciding to outsource at least some HR tasks, HR outsourcing (HRO) can, in fact, make in-house HR teams much more agile and allow them to focus more on the strategic potential of the function.
Here are a few of the benefits of HRO:
- Cost reduction. Instead of having to pay full-time employees to carry out menial tasks, paying the hourly or project charge of an external service provider is much more cost-effective.
- Focus on strategy. When administrative tasks are assigned to an outside partner, HR officers will have more time to spend on more strategic aspects of the business such as recruitment and talent management.
- Enhanced service provision. There are HR services firms in the market which can provide expert services in aspects of HR you did not even know the company needed. Thus, you will have more resources at your disposal to help your organization grow.
- Less workload for a usually small department. HR departments are usually quite lean compared to the functions they have to execute. This means that while workload increases –especially in thriving companies- the team will have much-needed help.
The advantages of HRO notwithstanding, companies should, by no means, outsource the entire HR function. Rather, maximum impact is brought about when time-consuming tasks are delegated externally. Some examples are employee relocation support, issuing employee handbooks and policies, recruiting temporary staff and benefits packages and payroll.
Of course, one needs to consider any possible losses resulting from outsourcing HR tasks. These may include:
- Resistance to change. Employees who were previously used to an easily accessible HR may complain about the change.
- Reduced focus on company services. Hiring an outside agency means that you cannot expect the same level of services as an in-house team would provide because external firms have other clients they share their resources and attention with.
- External agencies may not deliver. Since you cannot control the workflow in an outside firm, you cannot know whether they will deliver up-to-standard results.
- HRO vendor strategy may change. The agency you outsourced tasks to may shift its strategic mission in a way that does not benefit your company. To remedy this, always opt for shorter-term contracts.