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The Increasing Value of the Human Resource OutsourcingOUTSOURCE October 24, 2013
Human resource outsourcing is one of the most important divisions of a company; the driving force towards operational growth belongs from there – the critical thinkers, the innovators, producers and executioners. In the case of a small business if it has plans to grow, it can do so by improving its production but anchored on acquiring additional manpower capable to do the job. However, whatever the size of the organization, there is the direct proportion of growing the labor force and growing the cost to run the business. To the striving company, even to the stable ones, the mandatory liabilities on maintaining manpower almost always affect the bottom line. It is no wonder that many organizations agree on the benefits of outsourcing their human resource.
The high cost of maintaining labor force
Part of the real-life challenges of human resource management is to make sure its workforce is working efficiently vis-à-vis the company’s projected revenue growth; too much or too little of it will have a negative effect on the financial objectives. If projected revenue is met then ratio of cost on labor force remains in balance; if not then the ratio blows out of proportion. On issues regarding major organizational cost-cutting, it is the human resource that takes the initial trimming – often without much choice.
Weighing on the benefits
The demand in human resource outsourcing for fulfilling nonessential jobs remains on the rise simply because it works for the best to most organizations. There is now more money left on the bottom line to serve as retained earnings that can be used for business expansions or better yet for additional incentive to the core manpower. Small businesses on the other hand are able to grow on a steady pace without incurring much liability.
But on a larger scale, the total benefits of human resource outsourcing are so much more than realized.
- Controlled manpower spending
- Increase in efficient work
- More surplus earnings to contribute to additional manpower benefits
- Reduced risk on non-compliance with mandatory manpower regulations
- More time to focus on core business strategies and operations
- Ability for small businesses to grow even with lack of in-house departmental experience
- Benefit from technological advancements
- Benefit from economies of scale
- Increase in stakeholder value
Following is a shortlist of just some of the non-strategic human resource functions that companies are commonly outsourcing:
- Some recruitment
- Retirement programs and planning
- Assistance for legal compliance
- Payroll processing and administration
- Manpower benefits administration
- Information technology
- Some training
- Employee counseling
There are justifiable reasons for employing outsourcing in an organization. However, in some cases there are negative impacts in an organization that cannot be avoided, for instance loss in managerial control, compromise in quality control or confidentiality issues. While these disadvantages do exist companies are encourage to create strategic plans to manage such risks. As the human resource outsourcing industry grows so will its system of providing quality labor; over time there will be less and less cons than pros.
Article Contributed by HR in Asia‘s Team.
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