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In-House or Outsourced HR Team: Which One Is Better For Your Company?

October 11, 2018

Human resource (HR) department is the backbone of every organisation as it holds integral role such as in recruiting and managing the workforce. HR department will also measure how your business thrive in the future. Given its significance to support a business, even newly-built company such as startup with less than 10 employees needs to hire HR leader in their organisation. As the business flourishes, so does your HR department. However, if you are on a tight budget, you need to think twice about bringing new hires to the HR team. In this case, outsourcing some HR functions can be a good option.

See also: Automation Now: 5 TOP HR Software to Improve Productivity

Nonetheless, before you decide between those two options, you should know there are three factors that should be taken into account: the cost to minimise company budget, expertise for a flexible training, and flexibility to always find the best candidates for certain position worldwide. Given that different business has different needs to be completed and roles to be filled, here are some insights on how in-house and outsourcing human resources department can benefit your company.

In-house

Having in-house HR employees is very beneficial for your business as you can have control over HR primary tasks such as employee hiring, training and development, as well as retention. Here are the advantages and disadvantages of in-house HR team.

Advantages

  • You can have more control over your employees.
  • You can monitor your employee development and productivity during the training.
  • Face-to-face conversation can be done almost every day with your employees and this will improve engagement between employees. Team discussion is more effective because each team member is present and able to express their ideas.
  • Intellectual property such as design copyright might remain confidential as you can have your employee to sign a non-compete contract.

Disadvantages

  • This type of employment is not budget-efficient and you should pay full attention to train and hire the right candidates.
  • It is a tough task to find the right potential candidates.
  • Most employees might expect to have health insurance and 401(k) plan, whereas these are expensive if you cannot manage the company’s financial condition well.
  • Interviewing and negotiating with candidates can take time and if they depart, you need to start all over again.

Outsourcing

Outsourced HR team is when you rely on an outsourcing provider to manage your company’s personnel functions such as health benefits plans, retirement plans, training, hiring, and any legal expertise. Small companies opt to choose this option as it is more cost-efficient. Here are the advantages and disadvantages of this employment type.

Advantages

  • As you hire another company to do human resources tasks, you can have more time focusing on growing your core business.
  • It takes less time, so professionals can get the jobs done faster.
  • Your business gets more specialised expertise.
  • You can find talents from around the world.

Disadvantages

  • As you hire a company to do the job for you, help is available only as needed (unless you have an ongoing contract in place).
  • When you outsource, there might be lack understanding between the two parties as they do not directly involve in your business.
  • Working across continents can mean that business hours might decrease.
  • Communications cannot be done quite often and this might result to lack understanding.

Read also: People around the World Fears Massive Job Losses from Automation: Pew Research Center

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