The decision of outsourcing the HR Department of a company is a tough call. HR managers every where are confused on whether to outsource the job or keep it in-house. However, there is an increasing trend globally, that favours outsourcing the HR functions. Increasing influence of technology enables the HR managers to locate talent anywhere in the world, and the added benefit of cost saving due to outsourcing to developing nations makes these managers favour HR outsourcing.
As a result, HR outsourcing service is experiencing a rise in demand from small and large corporations alike. The HR service providers manage the HR activities of the companies, like recruitment and training, and payroll management. In some cases, the service provider is entrusted with the whole HR function of the company. Outsourcing helps small and medium scale companies to reduce labour costs and thereby increase productivity and profitability.
Reasons for outsourcing HR
- The main reason quoted by companies is saving costs. The organisations find it profitable to outsource to a supplier, when the fees quoted by them are less when compared to the costs involved in maintaining the HR Department in-house.
- Outsourcing allows the companies to concentrate on other strategic departments, leaving the HR management in the hands of a trusted provider.
- Majority of the companies outsource the HR functions in order to increase compliance. The ever changing labour laws and regulations, make it difficult to the companies to be compliant and up- to-date with these ever changing regulations. Outsourcing HR to a dedicated HR supplier makes it easy and safe for the companies, as these suppliers have good knowledge about these laws and regulations.
- Outsourcing helps the companies to increase the accuracy of HR management. The experts handling the job will focus on the handling the functions effectively as they are accountable for all their activities. This leaves the companies with more time to concentrate on other strategic functions.
- Some companies outsource their HR due to a lack of competent in-house team. Since the supplier will have expertise in handling HR activities, it will benefit the organization to have better results.
- The ever evolving and improving technology makes it a better decision to outsource the HR function for small and medium organizations. This will save the costs involved in technology updates regularly.
The companies should search for a reputable HR outsourcing service to handle their HR functions. The quality and experience of the supplier plays an important role in determining the efficiency and productivity of the work force and also the reputation of your organization.