There are many reasons for HR outsourcing services being hired by organizations today. Reading this article will help you understand how an organization can gain from outsourcing their HR functions.
What is HR Outsourcing?
In today’s world of globalization, a new concept of Human resource outsourcing is coined. HR outsourcing is the process of sub-contracting human resources functions to an external supplier. Reviews of business processes have led many organisations to decide that it makes business sense to sub-contract some or all non-core activities to specialist providers, so as to reduce the complexities of handling day to day human resource issues in more accurate ways and, on the other hand, it also helps the organisation to focus on its core business.
Advantages of outsourcing your HR
An effective human resources adviser is essential to any company, although sometimes it may be difficult to manage the HR processes in-house, and companies may find it more beneficial using an HR company outside of the business.
As there are so many different branches in HR, some companies may find it a lot easier to reach out to specialist companies, rather than employing somebody in-house.
Using an external provider can have many advantages, such as:
- Skills and knowledge – hiring someone from a specialist company will ensure they have been fully trained in that one specific field and will have excellent knowledge. Someone in-house may not know something as in depth as a specialist.
- Increased focus on core business activities – With rapid growth in business, comes increased back-office operations. The increase in back-office operations demands additional human and financial resources, which may side-track your attention from the core business activities. HR functions are a part of such back-office operations. Outsourcing HR functions can help you redirect human as well as financial resources to your core business activities.
- Increased legislative compliance – specialist companies, such as payroll or pensions, will have more of an understanding of the legislation that surrounds that subject, ensuring legal compliance.
- Reduced costs – hiring an HR adviser can often result in a high cost, in comparison to hiring specialist companies. The cost of poor people management can be substantial and, if a company fails to comply with the law, they could be faced with a hefty claim at an employment tribunal and a large bill for the legal costs. As previously mentioned, a specialist will have more of an understanding of the law in their field, and will know it inside out, which would mean the chance of a tribunal for a situation is less likely.
- Saving management time – the expenditure of management time alone in dealing with, for example, a troublesome employee, is wholly disproportionate in most cases.