Outsourcing Human Resources is on the rise, it’s a cost-effective and efficient solution for both big and small companies. Also known as HRO, it consists of sub-contracting an HR professional or team to assist with all or selective HR functions within a company.
As we’ve seen in past posts, current trends have seen a surge in the relevance of company culture, employee engagement, and candidate experience. Due to changes like this, the role of HR within an organization has become increasingly more crucial.
Why do companies choose to outsource HR functions? For many
different reasons! Small companies or startups may be interested in this
solution as a way to cut on costs, this way they can invest their capital on
other core activities. Complicated HR related problems can often arise in any
company – of any size – which require expertise in areas the in-house
department may not have sufficient knowledge in.
Not only is it cost effective because it saves on hiring a permanent position within the company, but because HR mistakes can be very costly, a badly handled situation and a lack of legal knowledge can lead to loss of employee loyalty or fines.
Organizations can completely or partially outsource HR
functions such as Background Screening, Performance Management, Payroll
Services or Temporary Staffing.
There are many ways a company or organization can choose to outsource, some of them being:
Contracting a freelancer. Depending on what HR function you require you have plenty of professionals with years of experience in freelancing.
Hiring HR services from a specialized company. Many companies are specialized in providing HR services. Here at The H Factor we are dedicated to providing full-service recruitment in an agile and effective manner.
Using SaaS Software. You may also consider automation, for tasks such as CV screening, employee records management, managing health and safety protocols, or tracking employees.
Outsourcing, however, like most things, has its pros and cons.
Some of the downsides of this solution are:
Giving up control. This disadvantage is related to small businesses, they are used to having control and management over most – if not all – of the functions in the company.
HR activities can become impersonal. Not having in-house HR staff means employees and candidates have to go through processes via new technologies or handle their issues over the phone or by email. As a result, they can lose the human touch in the process.
Less efficient internal communication. It can also be frustrating for employees to have to wait for a response about sensitive issues or urgent emails, instead of going straight to the responsible person in the workplace. Although this downside depends on how the service you decide to acquire functions.
On the other hand, it also has its benefits:
Fully trained and in-depth knowledge of the field. Hired professionals will be specialized in the service you require. If the person in charge of HR operations is not sufficiently trained or only dedicates part of their time to these functions, it could lead to complications.
Legal know-how. Companies specialized in this field will have a good understanding of HR compliance and regulations in the sector, therefore reducing the risk of legal problems arising.
Increase in efficiency. Hiring a company specialized in the activity you require means you can benefit from the latest technology and systems, speeding up processes. In small companies it can also save management time, they no longer have to solely manage employee-related issues or paperwork.
Cost reduction. As well as saving time outsourcing can save money too. Running an HR department can be costly, particularly for small or mid-sized businesses. When it comes to processes such as recruiting, outsourcing this HR function means saving on job boards, applicant tracking systems and recruiting technology.
Outsourcing is a great solution for companies of all sizes looking to satisfy their specific business needs in the most effective and time-saving way. In an ever-changing work environment that can be hard to keep up with hiring the best expertise available for the job means they are in turn provided with the best possible results without the hassle and cost of in-house hiring.