Advantages And Disadvantages Of Human Resource Outsourcing

Human resource tasks such as payrolls, benefits administration, business processes, recruitment and talent management often require adept skill and understanding to perform. Do you lack experts and time in your company to get the job done? If you do, then you need to outsource human resource tasks to an outside company. This means that you need to hire a company to do some of the job your company has to do in order for profit to grow. HR outsourcing (also known as HRO) is the process of sub-contracting human resources functions to an external supplier.

Core HR functions are now outsourced to other companies in order to save on business expenses. Human resource outsourcing is a global trend and is now becoming a booming business in many countries, such as Nigeria, China, Philippines, India and other developing countries. They offer cheap and quality services for companies who are outsourcing human resources.

Pros

It is a fact that some of the jobs that you need to do require professionals. However, if you hire a professional in your company, it will usually be too expensive and will take a lot of time. If you outsource it to outsourcing companies and freelancers, you will be saving a lot of money in terms of salaries.

Since outsourcing saves a lot of money, your company will be able to cut costs in human resource jobs. There are a lot of professionals who are competent and are qualified to do your human resources jobs. They will be able to provide you with quality services at a very competitive price.

Your company will also be able to save a lot of money on building your own in-house human resource department. This is because the outsourcing companies already have the technology and you don’t have to invest a lot of money by developing your own in-house human resources department. The outsourcing company will be the one to provide the technology for you. They will only charge you with the services they do.

Another great thing about outsourcing your human resources jobs is that it will allow your company to focus on other more important factors. It will effectively let you manage your company’s priorities more efficiently.

Cons
However, with all the advantages that human resource outsourcing can provide you, there will always be some disadvantages.

Outsourcing is like ceding an entire department in your organization (and a very important one at that) to an external body. To a very large extent, you have limited managerial control over the functions of that department. The outsourcing company controls the running of the HR department and may operate it in such a way more in tune with maximizing profit from the services they provide to you rather than in line with your organization's mission and vision.

Since you will be letting other companies handle your human resources jobs, you will be providing sensitive information to them. There is a threat to security and confidentiality. Vital information may slip out and may ultimately cost your company.

Another disadvantage is that when you outsource your human resource department, you will be directing your clients to the outsourcing company. This means that you will be losing direct communication with your clients and it might weaken your relationship with your clients and potential clients. Because of this, you have to make sure that the quality of the outsourcing company’s services remains at par with your standards.

Conclusion

So, if you need outsourcing as a growth engine or a way to access human resource technology without spending a lot of money on technology or reduce administrative overheads in order for your company to focus on more important issues, you should consider all these.  Keeping them in mind will ensure quality in the services of the outsourcing company. Also, always remember that strategic roles of your company should always be kept in-house.