Why Consider HR Outsourcing?

 

Introduction

Human resource outsourcing refers to a process in which organization transfers responsibilities and risks for HR functions to the external provider, which performs these tasks on behalf of the organization. Since HR functions are complex and time-consuming businesses prefer for outsourcing either whole HR functions or part of the HR responsibilities (Bell, 2021).

 

Most companies outsource human resources functions by collaborating with a professional employer organization. Although outsourcing HR might not be right for all businesses, there are some significant advantages to doing so, especially when it comes to saving time and money (Hamlin, 2019).

 

Importance of HR Outsourcing

Human resource outsourcing is an important strategic HR initiative. It helps organization to focus on internal resources towards doing what they do best and simultaneously helps to control the bottom lines. HR outsourcing helps an organization to gain cost and time efficiencies, provides cutting edge over their human resource strategies and improves services to their employees (Biswas, 2021).

 

Organizations can earn below benefits by HR outsourcing.


§  Reduced cost

§  Increased efficiency

§  Access to improved HR IT systems

§  Improved management information

§  Access to HR expertise not available internally

§  Increased flexibility and speed of response

§  Reduced risk

 

Which HR functions can be outsourced?

Following are the key HR functions that can be outsourced.


§  Payroll and compensation management

§  Benefit management

§  Talent management

§  Performance management

§  Recruitment and selection

§  Policy compliance management

 

In global context, Unilever has outsourced its some of HR functions to well renowned outsourcing company Accenture. Under the HR portion of the contract, Accenture provides recruitment, payroll administration, reward administration, performance management, workforce reporting and core HR administration in 100 countries around the world where Unilever operates. The agreement has been designed to transform Unilever's HR operations and functions through greater efficiency, effectiveness and to achieve increasingly higher levels of performance (Anon., 2013).

 

In Sri Lankan context, Sri Lanka Telecom has outsourced its payroll and compensation system to a professional employer organization. In addition to that, SLT has formed a separate subsidiary to fulfill staff requirements of Mother Company and its other subsidiary companies. Further, part of medical benefits are also being compensated through “Agrahara” insurance scheme.

 

Conclusion

Human resources department of a company is responsible for a variety of functions. Most of the functions are too comprehensive and complex to maintain in-house. Businesses that outsource HR functions receive several advantages that support the company's bottom line.

 

Reference

Anon., 2013. Business Standard. [Online]
Available at: https://www.business-standard.com/article/companies/unilever-outsources-hr-services-to-accenture-106060801011_1.html
[Accessed 27 April 2021].

Bell, A., 2021. SNACKNATION. [Online]
Available at: https://snacknation.com/blog/hr-outsourcing/
[Accessed 27 April 2021].

Biswas, R., 2021. YOURARTICLELIBRARY. [Online]
Available at: https://www.yourarticlelibrary.com/human-resource-management-2/hr-outsourcing/99683
[Accessed 27 April 2021].

Hamlin, K., 2019. Chron. [Online]
Available at: https://smallbusiness.chron.com/advantages-outsourcing-hr-functions-21169.html
[Accessed 27 April 2021].

 

Comments

  1. Ruwan HerathApril 29, 2021 at 7:05 PM

    HR functions that are most commonly outsourced;
    High-volume recruiting.
    Temporary staffing.
    Background checks and drug screening.
    Relocation.
    Payroll.
    Benefits administration.
    Coaching.
    Creating/updating employee handbooks and policy manuals.

    ReplyDelete
    Replies
    1. Nuwan BuddhikaMay 1, 2021 at 9:20 AM

      Thank you Ruwan for your additions to HR functions that can be outsourced.

      Delete
  2. Udari WeerasingheMay 1, 2021 at 11:57 PM

    For several reasons, including cost savings and the freeing of human resource professionals to focus on more strategic efforts, HR functions are among the services organizations are most likely to choose to outsource. Author has describe HR outsourcing in a well organised manner.

    ReplyDelete
  3. AbeethaMay 2, 2021 at 1:24 AM

    The outcome of the outsource will depend on the organization's culture ,requirement & etc

    ReplyDelete
  4. SynchronyHRFebruary 3, 2022 at 3:59 AM

    Thanks for sharing this blog! If you are looking HR Consulting Services in the USA! Get in touch with Outsourcing HR.

    ReplyDelete
  5. SynchronyHRMarch 10, 2022 at 3:59 AM

    Thanks for sharing this blog! If you are looking HR Outsourcing Services in the USA! Get in touch with Self Storage Business HR Support.

    ReplyDelete

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