Outsourcing of human resources, that is, assigning some of one’s personnel management activities to an external service provider, is an increasingly common strategic choice. Geniez Web is one of the Best HR Outsourcing Companies in Pakistan In fact, to date, two out of three Pakistan companies have chosen to outsource payroll management. Other HR functions are no different and are increasingly outsourced, such as recruiting or training employees. But outsourcing is not always the best solution for companies: should a function as important as personnel management be delegated (and can it be delegated)?
- Outsourcing: what are the benefits?
- Risks associated with outsourcing
- Should it outsource or not?
Table of Contents
Outsourcing HR: What Are the Benefits?
- Various administrative tasks are time-consuming for companies, whether it’s the preparation of payroll or the organization of training. These activities require a significant time investment without having high added value. Outsourcing these demanding tasks to a third-party service provider saves a lot of time,
- Not all French companies have the necessary in-house skills to issue an employment contract or payroll. Compliance with labor law or collective agreements cannot be achieved by itself, and outsourcing makes it possible to reduce the risk of error in this case.
- Outsourcing costs are contractual: therefore, they can be easily evaluated, freeing the company’s internal resources from tedious work.
Well-thought-out HR outsourcing optimizes the operation of a company, allowing the HR department to prioritize value-creating activities.
Risks Associated with Outsourcing
Despite these undeniable advantages, outsourcing of human resources is not a trivial process. Like any major change in a company’s organization, it has inherent risks.
- The proliferation of interlocutors and actors inevitably brings with it the risk of misunderstanding. Also, an intermediary does not work directly with the entire company, which does not provide a conducive framework for exchange and communication.
- Outsourcing leads to a gradual loss of technical knowledge for employees. As digital tools evolve rapidly, staying away from part of the HR activity therefore leads to increased reliance on external service providers.
- When a major decision is made, for example in the context of a change in HR strategy, a lot of exchange of ideas is required between the decision maker and the external service provider responsible for its implementation. This incompressible time limits companies’ responsiveness and slows their development.
While some areas of HR may not be completely outsourced, it is entirely possible to do some tasks collaboratively. For example, in the context of hiring, the final decision clearly rests with the company that wants to hire. However, pre-screening or bridging jobs can be outsourced, provided you’ve taken the time to state your requirements clearly.
Outsourcing or not outsourcing?
When choosing HR activities to outsource, it is common to verify the feasibility of the project by asking the 4 Cs questions:
- Does the HR activity in question require a high level of technical detail? Can we easily acquire the necessary skills to manage it? For example, generating payroll requires cross-knowledge in the legal and IT fields, particularly in specialized industries.
- Let’s take the payroll example again: 30% to 40% of the HR function is dedicated to payroll processing.
- These must be outsourced primarily as they do not support approximation or delay. This is, for example, in the preparation of employment contracts.
- In other words, how many different actors share the load of this service? As a matter of fact, a human resources area with a reduced environment will be more easily transferred to third parties.
Moving towards outsourcing some of your human resources allows you to focus on higher value-added tasks. Personalized support for employees, development of social dialogue, quality training offers. Many HR activities necessary for the health of companies.