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The Pros and Cons of Outsourcing HR Functions

Posted On: 21/12/2016

There is no over-estimating the importance of a great HR team. They are there to deal with the lifeblood of every business – its employees.

While some companies still prefer to keep their HR in-house, increasing numbers are outsourcing their HR functions and it’s estimated that almost 50 per cent of large organisations now outsource at least some of their HR requirements. Outsourcing spend among UK companies has also trebled during the past two years, with smaller businesses now being some of the largest beneficiaries. While outsourcing HR can bring huge benefits to business, it admittedly isn’t for every organisation. So, what are the pros and cons of this approach?

Pros

Freedom: HR is time consuming. As human beings we are complex, with individual needs and issues, and dealing with an entire workforce on a day-to-day basis needs dedication and application. Often, these tasks can drain energy and resources from a company’s core product and may even hinder growth and profitability.

By outsourcing HR functions, companies can concentrate on what they are best at, safe in the knowledge that whether it’s a completely outsourced service or an add-on to their own internal department, the providers bring the experience and expertise to ensure the business is kept running smoothly.

Cost efficiencies: In start-ups or companies which are growing rapidly, internal HR can be a costly resource. Highly-trained and knowledgeable HR staff are worth their weight in gold but smaller companies or start-ups simply may not be able to afford them at the outset.

Outsourcing can help reduce costs in terms of permanent staff and office space requirements, and can be tailored to expand or contract as your needs determine. Within established HR departments, outsourcing routine and mundane tasks is a great way of freeing up your own HR staff to enable them to concentrate on their jobs.

Training & development: A busy HR department can often be overstretched and leave its members short of time for vital staff training. Outsourced HR functions enable clear and relevant bespoke training to be given by professionals who have access to the most current legislation, thinking and methodologies, helping your team stay up to date.

Cons

Finding the right fit: Problems can occur if the outsourcing firm doesn’t take the time to understand your company and its unique culture. Some providers are more hands off than hands on and this may leave you isolated when you need it most. It’s vital that the HR outsourcing company you partner with takes the time to listen to your current needs and future expectations, and to fully understand your business.

Length of contract: It can be frustrating to be tied into a lengthy contract when your needs have outgrown it. Ensure that the company you choose allows you flexibility in the level of support you require both now and in the future.

Outsourcing the HR functions of your organisation needs careful consideration, a full understanding of the levels of involvement of the company you’re considering and the rewards it will bring. The potential benefits of outsourcing, however, will bring a valuable return on investment and far exceed expectations in terms of managing your prize assets – your staff.

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