HR Outsourcing is Getting More Popular among Organisations Looking to Streamline Their Business

Many companies are subcontracting their HR to other providers more specialized in the trade. HR outsourcing has many advantages and disadvantages and the decision to delegate HR is ultimately a decision that should be made while having as much information as possible. is a new way of sub-contracting human resources functionalities to an external supplier. Many organisations have come to the same conclusion that it makes a lot of business sense to delegate some or all non-essential activities to other more capable providers. This frees up resource for the organization to focus on more important operations. HR is a wise choice for outsourcing as it reduces cost on non-core components of the organisation. It increases efficiency because their highly specialized in the trade making work more productive and faster. HR also allows access to an improved IT system more capable of handling different tasks. And sub-contracting non-core activities to HR also reduces the risk for the organisation.

There are a lot of ways in which HR outsourcing can be done. For most, they follow a business process HR outsourcing where a subcontractor handles HR activities like payroll, recruitment, or maybe even the whole human resource department. A shared service HR outsourcing can also be done wherein only the administrative elements are delegated to external suppliers. Last is application service HR outsourcing. This is where subcontractors manage the technological infrastructure to support HR activities. While these all sound appealing from the perspective of the organization trying to streamline and cut cost, outsourcing HR does have some drawbacks. The main organisation loses a fair bit of control on their HR functionalities. It can also impact, however significant, the employer-employee dynamic. And it requires a lot of legal or regulatory requirements.

Possible pitfalls of HR outsourcing also include outsourcing certain functionalities not fully understood by those in charge. Because of this, problems are passed on to subcontractors which they will have to fix at a cost. HR outsourcing contract has also been increasingly long-term arrangements. This means a greater understanding of the organisation’s current and future strategies is an important factor to determine before going into a contractual agreement to outsource HR. These are only a few pitfalls that organisations need to be aware of when it comes to HR outsourcing. In the end, it’s the organisations prerogative to weigh the advantages and disadvantages of subcontracting their HR activities.

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