There are many advantages of outsourcing hr functions and any company should be aware of them. With advanced technology in place more and more organizations will specialize in providing services, which were typically in the core of the business activities. If you wish to improve your HR abilities, look at the possibility of outsourcing some of your HR functions.
What is outsourcing? – table of content:
- What is outsourcing?
- Types of HR outsourcing
- Reasons for HR outsourcing
- What functions of HR may be outsourced?
- Advantages of outsourcing HR functions
The specifics of hybrid remote work and remote work
Outsourcing is the strategy used by the companies to obtain work, which was done previously by the internal employees, from external sources. In case of skills, which are not critical for everyday running of the company it is cheaper to receive some services from the outside. Typically Human Resources processes were seen as an integral part of company’s culture and not willingly outsourced. Still, Human Resources functions are not strategically critical and they are not highly confidential hence they can be outsourced easily and effectively.
Types of HR outsourcing
Types of HR outsourcing
- Application Service Provider
- Business Process Outsourcing
- Total HR Outsourcing
Application Service Provider Many companies provide hardware and software applications, which are devised to support human resource activities in an organizations and businesses. The software is installed and customized by the provider, who usually arrange further support.
Business Process Outsourcing (BPO)All important processes of the company may be outsourced and delivered by external services provider. Multinational Corporations (MNC) are particularly interested in outsourcing of their operations regardless if those are: front office (customer service), back office (generic business), or middle office (operational procedures) processes. BPO is particularly useful for companies, which operate in many countries and employ a great number of individuals. In BPO the client has contact with the HR services through support centers, which may be located anywhere in the world.
Total HR Outsourcing This type of outsourcing may be riskier than other types since all the HR functions are performed by the external service provider and there is no HR department in the company. It is possible, that the company employs some senior HR professionals, but it may not be necessary.
Reasons for HR outsourcing
The first reason for standardization of HR services is extremely high turnover of manpower. IT is difficult for HR departments to create, own unique organizational set of practices, when employees are changing their jobs frequently. HR services become more and more standardized to match the criteria set by competitors, while HR departments try to follow the trends on the market.
To attract new skilled employees, as well as to retain the existing ones, the HR has to be up to date with all organizational practices of the day. For some industries this may be even more true than for the others, especially when we think of highly skilled individuals of technical, scientific, or managerial qualifications.
Another reason for HR standardization is the overall level of knowledge presented by the average employee. Currently, employees are aware of psychological findings related to human behavior as well as the consequences of those findings for the work field. Common knowledge cannot be ignored, employees read book and newspapers, and form their expectations based on those sources. Again HR departments have to follow the trend and provide all the benefits, employers have read about.
What functions of HR may be outsourced?
There are many advantages of outsourcing HR functions, but the most important one is that one can outsource all the functions of HR instead of keeping some of them in house and outsourcing just some. It has no huge sense to keep any of the HR operations, when starting the outsourcing process. With HR functions outside the company one can focus his attention on growing business, saving money and main, current business goals. What is sure, some of the HR functions may be outsourced easily and those are:
- payroll services – payroll service is responsible for wages, taxes and detailed calculations of salaries
- compliance with labour law – the service of labour law is responsible for implementing all legal regulations related to such issues as: discrimination, harassment, and other
- claims and compensations – here the service is concerned with compensation claims in case of injury or sickness of employees
- benefits and insurances – HR services are responsible for planning and processing of employees benefits, which require much work with documentation as well as caring for renewals and termination of expired benefits
- recruitment, screening, background checks – the main task of the HR teams is the recruitment, where the service has to handle all tasks related to: advertising, screening, interviewing, hiring, and skills testing
Advantages of outsourcing HR functions
There are many advantages of outsourcing HR functions, and some of them are as follows:
- cost savings and time savings – all the HR functions are time consuming and costly, any type of outsourcing may bring your companies necessary savings in time as well as limit your spendings on: salaries, training, employment acquisition, and payroll
- improvement of HR quality – companies, who deal only with certain functions and processes typically have more advanced technology related to their activities, similarly HR processes can be automated and streamlined for better effectiveness and efficiency
- better risk management – all companies have to follow national regulations, and it is sometimes easier for external service providers to keep up with the changes, small companies don’t have to take up all the risk related to compliance any more
- better employee benefits – some benefits obtained by professional employer organizations, while there have more employees in their databases can be cheaper and of better value than those offered to small companies directly
- better performance monitoring – this task can be easily delegated and reported from the outside
- greater focus on your business – you may concentrate on your goals instead of spending much time on planning HR functions, fully-functioning HR departments cause strain on company’s resources
There are many advantages of outsourcing hr functions and any company should be aware of them. With advanced technology in place more and more organizations will specialize in providing services, which were typically in the core of the business activities. HR services are of great importance of each company, but there is room for improvement of those functions, which is the best way to switch the main focus from internal activities into main, strategic goals of the company.
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