Why Do Firms Opt For Human Resource Outsourcing?

Human Resource outsourcing is increasingly being undertaken to address staffing and

skill related problems that are affecting small and medium businesses. Some organizations find it difficult to employ the right combination of full time employees with expertise- due to financial or time constraints. This leads to the hiring of human resources services only for strategic and managerial concerns. As hiring of inadequately skilled employees for the primary functions and processes such as human resource management can lead to high organizational costs and inefficiency, the current trend is to recruit professional third party human resources services to devote the appropriate level of expertise and man hours to the human resource processes and issues on hand.

A short synopsis on the reasons why Organizations opt for human resource outsourcing:

1.Some companies hire staff only for strategic positions such as high level management posts and programming and outsource the administrative functions such as HR, Accounting and technology support to third parties.

2.The human resources services are hired when the HR needs and requirements outgrow the capabilities of the in house HR staff. The sophisticated and updated support from expert professionals comes in very handy in such situations.

3.Some companies go in for human resource outsourcing when the in house HR Department experiences major turnover, and there is a lack of time, and other resources to create the appropriate internal HR Department as per the requirement.

4.In small and medium sized companies, the Controller/CFO/Director of Finance is also responsible for looking into the affairs of the HR department. When the volume of transactions increases the need for external expertise for human resources services arises as he cannot devote much time to HR affairs.

5.Due to financial constraints, it becomes difficult for cash crunched companies to afford a full fledged HR department with full time staff members dedicated to HR responsibilities. In such situations, it becomes imperative to hire professionals through human resource outsourcing to take care of payroll, recruitment, staff litigation and disputes, legal modalities and other processes.

6.The need to comply with the employment laws and regulations necessitates the presence of a HR Department. Failure of compliance may lead to heavy penalties even for small companies. Hiring of human resources services helps businesses comply with the legalities and regulations in a professional manner.

7.Sometimes the regulations vary in the different branches spread across the country due to differences in regional laws. The employment laws and regulations governing such companies can be really daunting. Human resource outsourcing helps in getting the right expertise relevant to these laws and saves a great deal of complications.

The HR Departments hiring human resources services no longer have to compromise with inefficient in house staff or forgo additional staff strength due to a financial shortfall. The human resource outsourcing arrangements help in getting the flexibility, staffing, expertise and skills required for day to day functions. The human resources services lead to better utilization of resources and helps save time and money.

by: Ruby Sahiwal

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