Knowing when to outsource your HR

April 3, 20144:55 pm705 views

Knowing when to outsource your HR

A lot of businesses nowadays dislike the idea of investing precious time on activities that do not generate revenue. Examples of these are employee benefits, payroll, and compensation as well as HR management. However, even though these are not income generating business functions they still remain to be important aspects of every business. These tasks are extremely necessary for a successful business operation. Because they are considered non-core for which the tasks involved is time consuming, companies are looking for ways to optimize their resources in terms of manpower and infrastructure.

The practice of outsourcing has become the next best thing to having an in-house department for all HR functions. Outsourcing HR functions, whether in part or whole, post many advantages that this model of business operations has gained steady ground over the years. Even the big name global companies have, in one time or another, used third party services for their business. By doing so, companies would have more focus and leverage on their core business and avoid the hectic, time-consuming management that HR brings.

Outsourcing HR has many benefits: a broader access to knowledge and different skills, savings when it comes to costs, and better HR management. The most common functions that companies outsource to HR services vendors are the functions that do not generate any revenue, for instance pensions, legal and payroll to name three.

When is the right time to outsource your company’s HR functions? Here are three wise points to consider.

1) Costs of an outsourced service

Find out how much it cost for your company to maintain your HR department or at least parts of it. The answer to this matter will validate the advantage of outsourcing some HR functions. But establish first and foremost the costs of the outsourced service, and how it will be billed. More or less, the costs differ depending on the level of outsourcing. There are some services that offer specific rates (day-to-day, monthly) per project, and some even offer extra hourly rates for “emergency” situations.

2) How big your organization is

Does your company really need to outsource? Surveys show that small businesses with 70 or less employees most likely do not have specific teams for HR. Usually, any ranking employee with qualifying HR skills and experience is assigned to look over human resource. If the company has over 70 employees, it is much easier for them to determine if acquiring an in-house HR team is more efficient than outsourcing. However, if they do require outsourcing, the HR service may differ than that of the business with fewer employees.

3) What type of HR services will your organization need

Business operations, including its human resource, vary from company to company. This goes without saying that no two companies have the same outsourced HR requirements. It is therefore important to communicate with the preferred HR services vendor the objectives of the business and the true nature of HR work required for outsourcing.