Human Resource Outsourcing- Need Of The Hour?

In todays business environment, which has become highly competitive and much more global, reducing the cost of services provided by the businesses and achieving core competency in niche areas, human resource outsourcing has become need of the hour. As is evident by the name itself, human resource outsourcing is outsourcing some or all the functions of the human resource management to a third party vendor in order to save the cost of administration and reduce the burden of human resource management on the top and middle level management of the company.

A Strategic Business Decision

The various types of functions which can be outsourced in the form of human resource outsourcing includes overseeing organizational structure and staffing requirement, the hiring of various personnel, the training needs of the personnel and their development, tracking department goals, objectives and strategies, benefits administration and employee orientation programs. Until quite recently, outsourcing really meant that areas in which the company doesnt have core competency should be given to a third party vendor who can do it more professionally and save costs too. But when it comes to human resource outsourcing, it is not the case where companies cant manage a HR department on their own, in fact they dont want to manage a HR department on their own, and so more and more companies are now in-part or totally outsourcing their human resource department to third party vendors. This strategic decision makes the companies more focused on their core competencies and they become more goal oriented where top management has all the time to focus on furthering business development rather than on human resource management. Thus, human resource outsourcing is a strategic decision to make.

Advantages of Human Resource Outsourcing

The advantages of human resource outsourcing are many, including the fact that companies can get rid of an allied function such as human resource management and thus focus on their core business values and targets, thus streamlining the whole company. Another advantage of human resource outsourcing is greatly reducing operational cost by taking out most of the functions of HR, and thus the savings acquired thus can be used to fuel expansion in other revenue generating. One more advantage of human resource outsourcing is that it reduces the burden on the employees-especially the middle and top management, and thus without having to worry about HR functions, the middle and top management of the company can focus on innovation and strategic growth of the company. Lastly, by human resource outsourcing, the company can enjoy the best of the HR services through the third party vendor, thereby getting premium services at lower prices.

On the Flip Side

However,experts have pointed out that there may be some disadvantages of human resource outsourcing as well. The main disadvantage being- the loss of control over employee management and employee relationship building. Also, there are some issues of confidentiality and outsourcing of HR services means losing personal touch with the employees and their daily needs or problem areas. These areas, when outsourced, cannot be totally entrusted on third party vendors. Most importantly, the quality delivered in human resource outsourcing is also an area of concern.

However,human resource outsourcing has become the latest mantra of the global outsourcing industry and is playing an important role in shaping up the companies of tomorrow, thereby aiding in the process of global economic integration.