Reasons For Outsourcing The Human Resource Function
If you work in any sort of good company, you would surely have heard about human resource outsourcing services. In fact, for any company that chooses to present itself as a credible entity, a human resource policy is absolutely essential. But there is a widely held belief among companies that the costs involved in establishing, sustaining and maintaining a human resources division is far too much to justify investment. This is certainly true in some cases. I some of the really large companies, the number of professionals in the human resources department could be upwards of five percent of the total employees. And if you consider manufacturing majors with upwards of twenty thousand staff, the number could be truly staggering.
In most conventional organizations, human resource outsourcing services is an alien term. Human resource is something that is done in-house and not necessarily outsourced. But increasingly, human resource outsourcing is becoming a tangible reality of the modern day enterprise. And there are several reasons why this is necessarily a good thing.
Outsourcing Human Resources Functions: How, Why, When, and When Not to Contract for HR Services
Which is why the concept of human resource outsourcing came in to the picture in the first place? Human resource outsourcing, as the name suggests is the outsourcing of activities related to human resources. To explain this further, let us take an example. Let us say an Information Technology company decides that it is spending far too much in maintaining a human resource department, which is not even close to their core competency. In order to gain some efficiency, it decided to go in for human resource outsourcing.
For one thing, several companies, especially in the large scale enterprise sphere have determined that in order for them to focus better on their core activities, their non-core activities need to be outsourced. This can be better illustrated through the means of a live example. For instance, statisticians would club all people working in manufacturing industries as those in well, manufacturing. But this conveniently ensures that all accountants, marketing people, sales people and allied professionals like human resource professionals get clubbed under the manufacturing umbrella. This, as you can see, is not necessarily the best way to go about it as this gives industry professionals the wrong picture.
This human resource outsourcing service is provided by a specialized human resources company. They not only have the skilled professionals to handle the work, but it is their core competency. As such, to attract the best professionals in the business and the economies of scale of their operation allow them to pass on cost savings to their clients. The Information Technology company will surely foot a hefty bill at the end of the month for the human resource outsourcing services they get. But this cost will pale into insignificance when compared to the cost of actually doing the job themselves and in house at that.
But human resource outsourcing makes amends to this trend. When let us say manufacturing companies outsource their human resource functions to specialist human resource firms, they are said to be indulging in what has come to be known as human resource outsourcing. What this does for the manufacturing company is that it gives it more time and resources to focus on its core area of expertise, in this case manufacturing, while a non core activity like recruitment or payroll is managed by the company that undertakes the human resource outsourcing.
There are several advantages to human resource outsourcing. Firstly, by eliminating something that is not a core competency to a specialist, the client company can concentrate on doing a better job. Secondly, where do you think a qualified and experienced human resources manager would join? A company where Human resources is not the main field of work or a human resource outsourcing company where he will be working on what he is trained to do? Finally, human resource outsourcing frees up capital, money and infrastructure that is otherwise invested in a non core competency area and enables a company to go to market with their core offerings in a much more efficient and speedy manner.
Some time ago, this kind of human resource outsourcing was restricted to information technology companies. But nowadays, even so called conventional companies are undertaking human resource outsourcing activities. First and foremost, it makes a whole lot of business sense from the cost perspective. Secondly, it enables them to focus on core activities, without compromising their non core activities. And even from the perspective of the outsourcing company, given the fact that they have a host of consistent and reliable clients, they too can spend time, effort and money on making themselves professional or experts in their chosen fields.
While at one point of time, it was only the divisions like accounting and finance which were outsourced (and that too more from a sense of fear that people within would find out the pecuniary details of the company) today, even recruitment has gone the outsourcing way. The day is not far when other activities which are considered critical yet non core might also go this way. Don’t say that you weren’t warned!
What Are The Advantages Of Human Resource Outsourcing Services
Reasons For Outsourcing The Human Resource Function
