Why You Should Outsource Your Human Resources

Though a lot of companies choose to handle their human resource (HR) needs themselves, a growing number are outsourcing things. In this blog, we have taken a look at the pros and cons of outsourcing your human resources as a business.

What is Outsourced Human Resource?

Outsourced human resources refers to the process of hiring an external organisation or individual to handle a wide range of HR functions, responsibilities and processes, on behalf of the company. Instead of managing everything in-house, the company hands things over to a third party provider, and everything is handled by them.

There are a variety of HR processes that can be outsourced such as payroll administration, recruitment and hiring, employee onboarding, compliance, policies and procedures, employee relations and performance management. The specific HR functions and responsibilities outsourced by a company can vary based on its needs and requirements. However, it’s important to carefully select an experienced and reputable HR service provider, and to establish clear communication and expectations, as this will help to ensure a successful outsourcing arrangement.

What are the Benefits of Outsourcing Human Resources?

It’s Cost Effective – Outsourcing HR activities can be cost effective for businesses. By engaging a third-party HR provider, you can avoid the costs associated with hiring and training staff, providing office space and equipment, and managing employee benefits. Outsourcing allows you to pay for HR services as and when you need them, reducing fixed costs.

Easy to Scale – It’s a lot easier to scale outsourced HR and adapt your human resources to constantly changing business needs. As a business grows, an external human resources provider can quickly adjust the services offered to the level of support required. This flexibility is particularly valuable for businesses experiencing seasonal fluctuations or rapid expansion, such as startups that are expected to grow a lot in a short amount of time.

Range of Services – Outsourcing HR provides access to a wide range of services and solutions, including recruitment and onboarding, payroll administration, training and development, and performance management. This comprehensive approach ensures that all human resource needs are addressed by a single provider, simplifying HR management for your business.

More Expertise – HR outsourcing gives you access to a team of professionals with expertise in various areas of human resources. These experts are experienced in HR and they understand compliance regulations, employment laws and industry standards. Outsourcing enables you to tap into this specialised knowledge and experience, ensuring that your HR needs are handled efficiently and correctly.

Better Use of Time and Resources – By outsourcing HR tasks, you can free up valuable time and resources, allowing you and your employees to concentrate on other aspects of running a business. This can lead to improved productivity, efficiency and effectiveness in achieving your business goals and getting things done.

Streamlined Service – Outsourced HR can streamline human resources processes through the use of advanced technologies and systems. These tools can automate administrative tasks, streamline recruitment processes and enhance employee data management, but they are not available to businesses who are handling HR in-house. By using technology, an outsourced HR provider can improve the efficiency and effectiveness of your business’ operations.

What are the Cons of Outsourcing Human Resources?

Less Control – Outsourcing HR functions means you have to let go of some of the control you have over those activities, and hand them to a third party provider. This loss of control can sometimes lead to concerns about the quality and timeliness of HR services, and it can be hard to fully leave things to someone else. This is why it’s so important to choose a reputable and reliable HR outsourcing provider, to reduce this risk.

Limited Flexibility – While HR outsourcing offers scalability in terms of resource allocation, it may come at the cost of how inflexible the service is. External providers tend to offer standardised HR solutions, and these may not perfectly align with your business’ needs and processes. Customisation options may be limited, and certain HR practices or policies may need to be adapted to work for your organisation.

Security and Confidentiality Risks – HR involves dealing with sensitive employee data, such as personal information, salary details and performance records. Outsourcing human resources introduces the risk of data breaches and breaches of confidentiality if proper security measures are not in place. You should ensure that the outsourcing provider has good data protection protocols and complies with relevant privacy regulations.

Less of a Personal Service – HR is closely intertwined with a business’ culture, values, and unique needs. Outsourcing this could lead to a potential disconnect between the external provider and your business’ culture, resulting in less of a personal service. HR decisions and strategies may not align with your specific requirements, which can impact employee morale and engagement. It’s important to work closely with your outsourced human resource team to ensure that everyone is on the same page.

The Types of Outsourced Human Resource

On-site Outsourced Human Resources – On-site outsourced human resources refers to the arrangement where an external human resources provider or consultant is physically present at your business’ premises to handle everything to do with HR.

Remote Outsourced Human Resources – Remote outsourced human resources refers to the practice of outsourcing HR functions to an external provider or consultant who operates remotely. Unlike on-site HR, they do not typically have a physical presence at your business premises.

At Profici, we provide a wide range of business support services, and this includes human resource support. You can rely on our team of experts to handle your HR needs, regardless of how simple or complex they are. To find out more, get in touch with our talented team today.