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HR Outsourcing - Really Efficient ?

Published by MBA Skool Team in Human Resources Articles category Last Updated: April 17, 2011Read time:

Why does a company need to have a HR department ?

Mainly the functions of HR are organizational structuring, staffing, recruitment, selection, compensation and benefits etc.

Believe it or not, many organizations don’t take Human Resources planning or strategy as part of the main organization functions. The overall strategy of most of the organization do not include HR functions. So this has lead to budding of a new type of outsourcing called HR Outsourcing. In the corporate world, new companies are coming up who specialize in HR functions and provide support for them.


Human Resource Outsourcing

The basic services offered by HR outsourcing firms may include:

Overseeing organizational structure and staffing requirements

Recruiting, training, and development

Tracking department objectives, goals, and strategies

Employee and manager training

Benefits administration

Employee orientation programs

So what kind of companies go for HR outsourcing ? Mainly as per the trends and stats, SME’s are going for it. Typically companies in the staff size range of 25 and 1500 use HR outsourcing. So that such companies can focus on their core competencies and not worry about the HR functions.

The concept looks very good and highly efficient but problems come when they are actually implemented. Its agreed that small and medium companies can concentrate on their work and not worry about HR but what if the employee they just got through the outsourced HR firm is not able to perform well. One of the reasons might be that nether the new employee nor the HR firm understood what the company actually does.

Just consider a startup which has come up with some highly innovative technology in IT sector. They hire a form for their HR needs so that the founder members concentrate on their product.

How can we assume that the HR firm will be able to get the right people ? Is it possible ?

The answer is both yes and no. Yes if the actual company takes high interest in profiling the candidates while working with the HR firm.

No if they let the HR firm alone assuming they will get them the right guy.

So if for perfect results, the actual company needs to work with the HR firm then what was the point hiring them right ?

The thing is outsourcing works well when it gets proper support from the hiring firm. There is a wrong assumption in the corporate world that once the work is outsourced, it’s off their plate. This assumption is totally wrong. Outsourcing will just reduce your effort not nullify it. You still need to coordinate well. Same is the case with HR outsourcing. End of the day whatever guy they find for you is going to work with you, for your firm and profits. So you need to play proper role alongside the HR firm.

One solution can be rather than having a full HR department, have a small team which works closely with the HR firm to achieve your goals properly and honestly.

One more thing which is prevalent in the market these days is the rise of online job portals and consultants. They also form the part of HR outsourcing. Many times it has been observed that they actually spoil the brand of the actual hiring company due to poor first touch point. Imagine a potential candidate receives a mail for a suitable role in company of his choice from one such job portal. He picks up his phone and calls the number given in the email. The person who picks up doesn’t have much knowledge about the profile and the company as he is not from that field. The company is in risk of losing out on a potential employee. It not only causes loss of an employee but also causes a dent on the brand.

So is HR outsourcing not a good thing ?

No, It’s a wonderful thing if used intelligently. Just assuming that if outsourced, leaves you with no work on the HR front is totally wrong.

If you work closely with the HR firm not only you can get right motivated people on board but also save a lot of money.




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