Is outsourcing human resource management a good idea?

We are planning to provide outsource human resource management service. Would love to hear feedbacks from business owners

Kristian

30 Jan, 2022


1 Answer


Wilson Twoon

Content Coordinator at Beamstart

Before we dive into the comparisons of outsourcing human resource management, what is HR outsourcing?

HR outsourcing can be defined as subcontracting, which process would include hiring a third-party service or firm to carry out duties and tasks on behalf of a department. 

The aim and needs for Human Resource outsourcing can be subjective for different companies; however, companies would typically delegate mundane tasks, less strategic duties, or task that requires constant monitoring and specialization. 

These are some examples of Human Resource outsourcing activities: 

  • Recruitment, training, and development such as outsourcing to headhunters
  • Payroll management with certain HR software 
  • Monitoring the organizational structure
  • Employee inductions
  • Tracking department objectives, targets, and strategies with a contract-based HR professional 

What is the Advantage of Human Resource outsourcing?

1. Reducing spending while maximizing Human Resource value 

To fund a human resource department would be difficult especially for founders as they would need to spend on: 

  • Hiring Human Resource professionals 
  • Spend on space for Human Resource department 
  • Spend on various equipment and software 
  • Spend on advertising on job portals 
  • Taking time to interview candidates 
  • Spend on insurance plans and healthcare benefits for employees 

All of these spendings can be nullified through Human Resource outsourcing.

According to an analysis from the Hackett Group, it stated that Human Resource organizations can spend 26% less while operating with 32% fewer staff while achieving high levels of effectiveness. 

Outsourcing areas such as talent acquisition, employee relations, and  compensation and benefits administration can allow Human Resource organizations to spend 29% less on outsourcing per employee than typical companies and 28% less on labor 


2. Allowing further growth in business 

Growing a business especially a startup would recover unsurmountable attention to various parts of the business-like management, finance, and human resource as well. With this divided attention, it would be hard for founders and small businesses to focus on growing their business and delivering value. 

Human Resource outsourcing can help relieve the burden of founders by delegating it to a specialist, allowing founders to focus and develop further on other parts of the business. 

According to Deloitte, Human Resource outsourcing has allowed 72% of companies to concentrate on other tasks. 

  

What is the disadvantage of Human Resouce outsourcing? 

1. Loss of control 

The Human Resource department is the people's department. By delegating it to a Human Resouce outsourcer, you could not control the outcome, thus inducing more worries where it should be reducing it. 


2. Cultural Change 

The company culture is what drives employees to work there. If this area is outsourced, you can lose some of the tones you're producing and change the dynamics.



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