HR Outsourcing Services(HRO)| Pros and Cons
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Sometimes a company decides to change its structure, in such a way, that it
no longer performs certain tasks which are not its core business. Instead, the
company hires or collaborates with other companies which can then perform these
functions(wiki)
When
the term outsourcing is used for Human Resources Services, it is called Outsourcing
of HR Services. Outsourcing human resources are gaining popularity with
companies that can’t afford or do not want to hire an extra person or a team
for particular functions such a payroll or benefits administration.
The
most commonly outsourced HR Services and HR Functions are:
- 401(k) administration
- Recruitment Function – known as RPO – Recruitment Process Outsourcing
- Pre-employment screening/verification
- Background Checking
- Flexible spending account administration
- Employee assistance programs
- Health care benefits and COBRA administration
- Temporary staffing
- Pension benefits administration
- Retirement benefits administration
- Relocation
- Payroll
- Employee engagement - Event planning
- Retirement planning
- Labour law/Statutory compliances
- Dispute Resolution /Arbitration
Besides having many other significant causes, there are a few
commonly determined motives behind outsourcing HR services in today’s era as
briefed below -
- Reduce the overall cost of production
- Development of services reaches a wider pool of experts.
- Access the knowledge unavailable through Internal/other channels
- Improve flexibility of business processes
- Decrease labour costs
- Freeing HR personnel’s from day today administrative hassles and letting then concentrate on the core.
HR
Outsourcing Services| Pros
HR
Staff can be more strategic
If routine tasks are outsourced, HR can focus
on tasks that have more impact on the organization’s bottom line
Compliance
Issues
Vendors that specialize in the legal aspects
of HR matters can provide the information required for the company to comply
with applicable law.
Efficiency
If the outsourcing firm specializes in a particular area, it should be able to do as much work as company staff, in less
time
HR
Outsourcing Services| Cons
Employer
Privacy
Some organizations don’t want outside vendors to
know significant aspects of their business.
Employee
Reaction
Current Employees may feel less connected to the organization
if personal issues such as benefits or salaries are outsourced
Employee
Relations
Companies that provide outsourcing may not handle
such issues as sensitively as on roll HR professionals. This could create
issues that require the organization to step in and handle a sticky situation.
Outsourcing
Checklist for Employers /Human Resources: While deciding for outsourcing HR services, an organization
should consider the following checklist:
- What do we spend on the tasks we may want to outsource?
- How would outsourcing affect our current workforce, especially if it involves removing positions?
- Who will coordinate with the outsourcing firm, and how will doing so affect that employee’s workload?
- What criteria should we use in choosing an outsourcing firm? For example, do we want to hire a firm that would keep outsourced functions in this country or one that could or would send the functions offshore
Consider the following Key (HR) Outsourcing Stats for more insights: (smallbizgenius.net)
- It is estimated that 300.000 positions are outsourced every year.
- In 2018, the global market for outsourcing was worth $85.6 billion.
- Government and Defense sectors are the two biggest users of outsourcing in the Americas.
- 59% of businesses use outsourcing to reduce their expenses.
- 65% of businesses that outsource application hosting say they would increase their outsourcing efforts in the future.
- 78% of
respondents in Deloitte’s survey say they feel positive about their outsourcing
relationship with other companies.
To conclude, I would like to suggest viewing 2019 Human Resource
Outsourcing (HRO) Trends Report by PrismHR which will be
instrumental while deciding for Outsourcing of your HR services.
I endeavoured to simplify the term HR Outsourcing Services for
Small Business owners including HR Persons who are struggling with HR
activities and are looking for possible resolutions could benefit from working
with HRO companies. A comprehensive list of HRO companies provided
by Business.com and Inc.com respectively
for your easy reference
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