14 May 2013
HR Outsourcing
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Human Resources Outsourcing – Is it a Risk or Opportunity?

Human Resources outsourcing or HR outsourcing seems to be a growing trend these days. Everyone is either thinking of engaging in HR outsourcing services or has already hired a company for their human resources management activities. All kinds of businesses, especially small to medium businesses (SMBs), have realized how tedious it is to manage payroll, HR benefits, compensation and other HR activities. Also these activities do not generate revenue and consume almost a quarter of your time. This is why, more and more organizations are leaning towards human resources outsourcing. However, no matter how many benefits HR outsourcing services offer, there are some risks too. Let us find out if HR outsourcing is a risk or an opportunity.

Pros of HR outsourcing

HR outsourcing services cover many services critical to the employer as well as employees such as payroll, benefits, insurance, medical, etc. HR outsourcing can be a boon to companies dealing with a varied workforce like contractors, consultants, remote workers, temporary staff, or full time employees over multiple countries. With an HR outsourcing team supporting back-end activities of the HR department of such companies, the productivity and efficiency can be increased multifold.

HR Outsourcing

In SMBs, when the pressure to provide better services or products is immense, focusing entirely on the cost centers like HR can prove to be a bad decision. HR outsourcing allows you to focus on the more important tasks of your business i.e. on your profit centers. Outsourcing your non-core business functions frees up your time to focus more on your core-functions, which is said to be the most important benefit enjoyed by SMBs who are already outsourcing their HR management activities.

Cons of HR outsourcing

HR outsourcing may prove to be a risk if you don’t select your outsourcing partner wisely or read the fine print closely. It may also prove to be a wrong decision if your company is too big or too small and you can’t derive proper benefits out of it. The two chief risk factors of HR outsourcing are control and cost. While engaging with a service provider for your HR outsourcing services, you need to convey your needs to the provider before hand. There are many different levels of engagement that can be worked out according to your business needs. If you already have an in-house HR team that needs some back-end support due to the erratic work cycles, talk to your provider to help you along those lines. You do not need to pay for the HR outsourcing team throughout the year if you need them to help out only few months during year-end.

Another, important risk factor is control. When you give private employee data to an outsider, many security threats arise. Human resources outsourcing requires you to give all kinds of information about your employees, including their medical details and personal details. If you don’t hire a trustworthy company, you may as well put yourself at risk. Not all human resources outsourcing companies are the same; therefore it is important to read the terms carefully before signing the deal. Maybe talking to one of their clients can help you decide better.

Remember, HR outsourcing might seem like a big leap, but it could be advantageous to your company in many ways. The extra support your HR team gets can improve their efficiencies to new heights. As the HR is considered the backbone of any organization, this could improve the overall communication and productivity of your organization.

Focus on your core competencies; let us help you with your HR services to improve your company’s overall efficiency. Call us on 1-877-RISHABH (1-877-747-4224) or fill in your contact details here.

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