HR Outsourcing

Human Resources is a mission-critical function from small sized to big sized businesses. Human resources departments provide a wide variety of services to a company; from hiring to firing, benefit packages, stock options, disputes, etc. These different aspects of expertise are expensive to staff. The key question is, do companies have enough time and money to spend on Human Resources? For companies who answer “No” they must seriously look at human resource outsourcing services as an option.

Broadly, Human resources outsourcing is classified into administration outsourcing and HR Consultancy. Administration outsourcing is outsourcing of all the non-core activities of a company in which the company does not wish to spend a lot of time. HR consultancy is a step higher in the value chain with knowledge consulting being provided in core processes of Human Resources like hiring, interviewing, background checks, etc. When a company wants to take advantage of Human Resource outsourcing , it needs to clearly know which functions can it staffed internally. Remember, if you plan to do Human Resource outsourcing with a HR outsourcing company, you would expect them to have the background and expertise in the HR vertical of the country from where the work is outsourced.

There are many companies who offer HR outsourcing services as their major line of business. The most common HR processes outsourced from the US are receivables management, call center outsourcing, benefit administration outsourcing and database management. These three functions have found a good customer base in the US who believe that they can get good quality results at low cost if outsourced. Transactional outsourcing, which is more of a day to day function for Human Resources departments in the US is treated as a non-core function across the industry. With availability of skill sets across the seas who could do this work, transaction based outsourcing is gaining rapid acceptance.

Everything is not as rosy as it looks with some challenges crippling the growth of the HR outsourcing industry. Companies who outsource their HR work lose control of the confidentiality of mission-critical data. Security breaches and quality of vendors are troubling issues as well. The fact that Human Resources departments are for the employees, one definitely feels that an in-house Human Resources department in the company is necessary. After all, you would require a person who has sound knowledge of the company’s operating policies and fundamentals to design incentive programs, employee motivation programs for their employees, or intervene in disputes.

All this means that you can do Human Resources outsourcing for your company, provided you know what can be outsourced and what not.