Humans are a company’s most valuable asset for achieving maximum productivity. That is why in almost every company, there is a specialized department – Human Resources Department (HRD) – to manage the human resources optimally.
While in-house HR personnel staffing may have been the norm, companies worldwide are now deliberately seeking to manage their human resources and workforce by outsourcing HR functions for an efficacious Human Capital Management (HCM) and extensive HR Consulting.
What Is Human Resources Outsourcing (HRO)?
HR Outsourcing is a third-party recruitment model whereby a company sub-contracts some or all of its HR operations to Human Resources specialists, experts, and professionals to handle. It is primarily going outside the company’s confines to hire third-party HR experts who may be individual service providers or an outsourcing firm.
HR functions to be outsourced generally depend on the type of company and its culture. Such functions are typically trivial and of noncore importance.
Some of such functions may include administrative and operational tasks like;
- Temporary Staffing
- Drug Screening and Background Checks
- Recruiting and Training
- Updating employee handbooks and policy manuals
- Employee Awards and Recognition
- Workforce and Benefits Administration
- Ways a Company may Benefit from Human Resources Outsourcing
While there may be a few pitfalls with HR Outsourcing, the pros outweigh the cons. Below are some ways a company may benefit from HR Outsourcing.
A study has revealed that the primary reason for outsourcing is to save costs. Most small businesses and startups do not have the financial capacity to maintain an in-house HR staff system. Another research showed that the average HR Manager earns more than $75,000 annually.
Outsourcing HR functions reduces the cost of staffing an in-house HR department and allows for the influx of funds to core company operations. Outsourcing avails the company access to expert services from personnel well-groomed and trained in HR functions.
Some employees may not be well-grounded in technical HR roles, so it takes only an expert to navigate such water, thereby leading to more efficiency in the HR department. It also exposes a company to high-tech HR IT services that upgrade the company’s efficiency in the long run.
Keeping track of employment and industry laws and policies of concern to an organization can be burdensome. Outsourcing experts ensure that this area of administration is attended to by keeping themselves abreast of such laws and ensuring organizational-wide compliance to avoid lawsuits and fines that may be a consequence of noncompliance.
People and Organization Management
The core function of an HR department is to manage employee-related activities and operations. A company will be availed objective expert-advisory services on people management and overall management consulting functions to maximize growth and increase business value.
With the HR day-to-day tasks out of the way and entrusted in professional outsources, a company can effectively focus on more strategic tasks and critical business functions essential to the advancement of the company’s goal. Statistics show that 24% of small businesses outsource to improve their organization’s competence, and 57% of businesses outsource to focus on revenue-generating functions.
Outsourcing HR the Right Way
Human Resources Outsourcing is a crucial business move that comes with risks. It is therefore recommended that in order to have a smooth outsourcing arrangement, a service agreement be drawn up to define the requisite terms and standards for the agreement and penalties for noncompliance from both parties. It would be best if you opted for a credible HR outsourcing company with an impressive track record like Valentine Industries. Our services are easily accessible, and we are available 24/7. Get in touch.