The Human Resources department is the epicentre of myriad activities in any set-up. Payroll, benefits, hiring, firing, legal complexities – these are some of the vital aspects dealt with by the HR. While this department itself does not produce any product, it contributes immensely towards employee well-being and legal security.
Traditionally an in-house department, there has been an increasing trend in the recent past towards its outsourcing. Small and medium firms are opting to outsource either all or parts of their requirements, for a variety of reason. The core reasons for outsourcing HR are:
1. Saves money
Outsourcing HR works out to be significantly more cost effective than hiring new employees to fill in the void. Hiring new employees to simply carry out an added task would lead to large costs in the long-run. Outsourcing allows you to limit this added cost. Further, larger your company grows, greater is your saving from outsourcing HR.
2. Hiring Experts
Another perk of outsourcing comes from the consequent ability to hire experts to meet your requirements. These are world renowned individuals whom we can’t afford bring on-board permanently. Outsourcing allows us to avail of their services and benefit from their expertise.
3. Focus on Core Competencies
HR consumes a lot a time and it is not even the primary focus of your company. Outsourcing it lets you focus on your core competencies without compromising on the HR services. You can consequently, channel all your time and energy where you intend to, in the first place.
4. Enhanced legal compliance:
Legalities around a firm are complex and comprehensive. The need to protect the employees and firms is thus, immense. Outsourcing compliance ensures strict following of the legal system, preventing any glitch or run in with the law.
5. Access to innovation
HR firms will keep themselves thoroughly updated with the latest software – whether it to do with cloud, social media, analytics. Hiring their services allows to avail of the latest improvements and advancements in this sphere.
Like with everything else, outsourcing HR is not the perfect solution to all HR problems. It may be good for few companies and may not for some others. While making this decision, it is important to weigh all the pros and cons.
One of the most important risks involved is the fact that a very integral part of your organisation is now being handled by someone else. There will always exist the likelihood of a value conflict between your organisation and those you outsource HR to.
Once you have decided that outsourcing is the best option for your organisation, your next step is to find the perfect individual/firm to hire. While considering this, it is important to realise that HR is an expensive service to seek. The prices would vary and one must ensure against compromising the quality of service for a lower cost.
Everything being said, the rising trend towards outsourcing is evident. In 2012, the global HR outsourcing market was estimated at US $ 110 billion. It is now expected to grow to US $ 200 billion by 2017. As a trend that is fast rising, HR outsourcing will have a tremendous impact on the global organisation structure.