HR Outsourcing

Outsourcing Human Resources has gained popularity with companies that can’t afford or don’t want to hire an extra person or a team for particular functions such as payroll or benefits administration. HR Outsourcing has been growing on a process-by-process basis for years. The result is that HR executives are increasingly being put in the role of vendor manager. Although cost is the most often talked about reason for outsourcing, surveys tell us that other considerations are also important. The most common reasons why organizations outsource are employee service and accessibility to the latest technology. When the service contract is written, cost is always at the top of the list. But other themes are saving time in terms of service delivery and quality improvement as judged by errors in the process. Overall, organizations realise that better employee service is a natural result of HR outsourcing.

Reasons for HR Outsourcing

In order to meet the demand for HR services that comes from the new business realities facing most organizations today, HR professionals need to be attuned to business realities and deliver value beyond their traditional administrative activities. The HR function needs to find new ways to deliver basic HR services. HR professionals like us play key roles as business and strategic partners to HR departments of companies. HR professionals today are playing new roles due to freed up time and have realised that outsourcing HR work is a potentially effective way to get administrative work done in the best manner possible.

Advantages of HR Outsourcing

We feel that a focus on cost and speed metrics is understandable. However, this focus can sub-optimize the effort if it does not look at the issue from a more strategic standpoint. The larger issue behind any significant HR improvement effort such as HR Outsourcing should be to accelerate the capacity of the organization to compete on the basis of human and organizational capability. The productivity level of the workforce has much more impact on profitability than does reducing the cost of an HR administrative process. Efforts to do administrative work more efficiently should focus not just on process improvement but also on making positive changes in employee behavior, such as freeing up their time to do their jobs or making the organization a more attractive place to work.