Handling employee data can be a challenge even for big companies with more resources. In this case, the HR department is responsible to ensure the security and validity of employee data while making use of the best of them to leverage the organisation’s workforce management. This practice, however, could be daunting as HR personnel are required to go through a difficult and complex process. Thankfully, there comes an outsourcing process that at least can minimise the hefty work of HR tasks.

A brief review of outsourcing

Human resource outsourcing (HRO) often refers to a sustainable and competitive method to manage costs and allow a company to focus on strategic initiatives rather than managing transactional activities in HR operations. Outsourcing will enable HR professionals to be more strategic people managers while achieving offload multiple processes and technologies such as benefits and payroll.

See also: The Disadvantages of Payroll Outsourcing

HRO has been gaining traction in Asia and the Pacific nations. According to an MPHRO record, there was a rapid growth in HRO during 2015 and is continuously growing today. This growing traction happens due to business outsourcing process that benefits a company’s bottom line. Many businesses said that outsourcing helps decrease their business costs, improve concentration on key functions, achieve better results in noncore functions, expand business global presence, enable flexibility, as well as improve speed and efficiency in HR job.

The challenge in human resource outsourcing

When you pick a rose, you should also deal with its throne. Just like outsourcing, with its plenty of advantages, HRO also has some drawbacks. One of the biggest disadvantages of outsourcing is that exposing too much of company decision and plan can harm your business bottom line. Outsourcing is good and helpful, but what would happen when the employees you outsource are changing jobs? Or what if they stole your company’s recent prototype and leak them to your competitor? In this case, making sure that you keep an eye on your outsourcing process is vital.

However, the outsourcing process is already an exhausting task. So, keeping informed and making sure that employees are “trustworthy” is a cross to bear duty. It might greater your failure of outsourcing. Stephanie Overby research that the rate of outsourcing success is small and the failure can be anywhere around 40 to 70 percent. Besides, outsourcing pursues a quick fix cost-cutting manoeuvre rather than an investment. Therefore, it is more likely that this quick and competitive advantage will disappoint the result.

There are two practical solutions, nevertheless, that can help you maximise the exhausting outsourcing process and harness its profit.

1. Indicating the outsourcing risk

To avoid failure, you should understand the risk and challenge in HRO.

a. Risk of losing control and track

Each industry has its own managerial practices and policies. But during the outsourcing process, you might lose track of your managerial oversights, resulting in bobble goals. You might no longer head to the same goals anymore. Then, it might jeopardise a project even before you have a chance to fix it.

b. Risk of low quality

Outsourcing takes time and commitment. At the same time, it can bring concerns for business owners who want to outsource because when their project is not handled professionally, they should sacrifice quality as a result.

c. Risk of hidden costs

Outsourcing saves money but if you don’t pay attention to detail, you might suffer from its hidden cost. Commonly, the hidden costs in outsourcing are hardware and software upgrades, on-site troubleshooting, and changes for after-hours services which is not visible in a contract.

d. Risk of legality

Confidential information and intellectual property (IP) should be exposed to the third party when doing outsourcing. Thus, there might be a possibility that the third party will steal, leak, or mismanage your IP and information secrets.

2. Be smart with outsourcing technology and vendor collaboration

Outsourcing software and technology is increasing in its accessibility – but their hidden deficiency is also real and needs to be mitigated by HRO personnel. Besides, choosing the right outsourcing software will help evade those risks above. Hence, do select quality outsourced vendor by calculating the following information.

• Check its quality of service and availability by ensuring that vendor’s metrics meet your expectations and company’s goals;
• Read their review of security and services to avoid biased explanation from the vendor;
• Ask for a testimonial from vendor’s current clients; and
• Be mindful with their customer support. Find vendor whose customer support meets your needs

Helpful tips

Note: Rating from 1 – 10 with 1 is extremely bad and 10 is excellent

By calculating the options using variables like the above example, your task of choosing which vendors to collaborate with will be easier. The calculation also helps you reassure that the vendor can fulfil your overall expectations. 

Read also: Human Resource Outsourcing Trends for the Future