Many people today hear in the news about jobs being "outsourced" to places like China and other countries. The reason behind this type of outsourcing is generally centered around economics. For many businesses, outsourcing jobs to another country where employees work for smaller wages is more profitable. While many factors are involved, the two most commonly argued are jobs vs. cost.
As long as outsourcing can be handled well, efficiency and profitability will follow.
– Annie Dodson, ApplyDirect.com.au
Outsourcing applies to more than just sending work to factories in other countries, though. Many businesses and companies today have changed the way their Human Resources departments are run through use of outsourcing. The principle is basically the same. Firms that specialize in certain aspects of a Human Resources department are given that area to work with. From managing payrolls to hiring, to performance reviews or extended sick leave, a Human Resources "vendor" saves a company time, money, and eliminates mountains of paperwork. Yet for those who implement outsourcing, one huge concern is managing change with outsourced HR. As long as outsourcing can be handled well, efficiency and profitability will follow.
Cost reductions to a company are one major benefit of outsourcing HR. These reductions occur in terms of number of employees hired and their salaries, to space. Areas once allocated to a Human Resources department within a business can now be used for other things, or a smaller, less expensive building may be used for the company's operations. Many of today's outsourced HR work is done virtually, eliminating the need for huge office space. So where does this leave employees whose job functions are all but gone through use of outsourcing? Communication and employee involvement throughout the restructuring process is vital to managing change with outsourced HR. Employees may offer some valuable input on the changes if the lines of communication are kept open. Support services need to be in place for those who will ultimately lose their jobs due to outsourcing in HR.
It's also important to ensure that areas such as employee training don't suffer when HR is outsourced. While the core business remains, career development and training may suffer. Online job recruitment is another sticky area. Companies end up complaining about not being able to find "good employees" because many of the good ones were lost to outsourcing. Unless one uses a HR vendor with expertise at hiring experts in the field, employee quality will suffer. It's been said that by keeping some good, competent, HR employees, a company that outsources has an advantage. There is an "in-house" person one can speak with if a call center can't answer a question. A few individuals with expertise are on hand to help other employees. When outsourcing HR functions, by keeping a few expert HR employees on hand, one can still save money while retaining quality.
Sometimes, rather than outsourcing all HR functions, a certain service level may be agreed on for outsourcing.
– Annie Dodson, ApplyDirect.com.au
Having HR professionals on hand during the changes can save a lot of time and money in the long run, too. Outsourcing is not just letting a vendor handle all aspects of the HR department. It needs to be a partnership, a service trusted by the company's employees and the company itself. The vendor will have access to sensitive information. Poor vendor practices can ultimately alienate a company's employees. Sometimes, rather than outsourcing all HR functions, a certain service level may be agreed on for outsourcing. This could include the "repetitive" type jobs such as payroll, benefits, background checks, etc. Ultimately, it's up to the company to decide how much outsourcing of HR will be done. By keeping open the lines of communication with all employees, and getting their input and involvement, the process can go much more smoothly.
Annie Dodson is a HR manager and blogger with experience in Outsourcing and Online Recruitment. Currently, she is contributing to the marketing department at Apply Direct.