Outsourcing HR Doesn’t Always Increase Efficiency

Outsourcing is the process when a company hires a team of individuals to manage a specific company operation. Before taking a decision, the size of the business and the financial capability should be kept in mind. Some more factors play an important role when outsourcing your HR function. The human resource department of a business usually handles tedious to normal tasks. The human resource is one of the most important departments of a company.

It is responsible for handling several daily complexities of the organization, such as training, employee recruitment, employee benefits, company growth and legal compliance. Although outsourcing human resources function offers a cost-efficient alternative to employing an onsite department, outsourcing HR function is not always beneficial for increasing efficiency. The real purpose behind outsourcing HR functions is to save money and make business operations smooth and efficient.

However, this doesn’t always work out as planned. Although outsourcing might be a great idea for some companies, some don’t want to lose their personal touch by handing over the recruitment part to others.  It seems as if outsourcing HR is a smart business solution but its outcomes also rely on the size of the organization and the complexity of HR needs. Here are some of the reasons why outsourcing HR doesn’t always increase efficiency:

Mediocre Performance

Several companies outsource to control their cost. This reduction in cost may also result in poor performance from the outsourced provider. Since the human resources department is accountable for the everyday operations of a company, any flaw in performance can result in negative outcomes.

Not Easily Accessible

According to Rebekah from CSB GROUP, when a decision is made to outsource some of an organization’s HR functions, this can sometimes create a feeling of distance between the company and employees. If the HR department is not easily available, the employees may feel frustrated and face delays in communication. There is also speculation about outsourcing other departments once a company outsources its HR. This can create a sense of paranoia and mistrust among employees.

Recruitment Issues

In several cases, outsourced employees do not have a clear understanding of the company culture that an on-site employee has. When the HR department recruits people, this lack of understanding may also affect new employees during the recruitment process. Moreover, if the outsourced provider fails to recruit suitable employees for a company, both parties will find it difficult to work together. This has a negative impact on the success and future of a business.

Information Leaks

Outsourcing HR can also lead to leakage of sensitive company data. Many a time, for an outsourced company to offer sufficient service, some part of sensitive information about the company’s structure or other important product information is necessary for the vendor to perform unimpeded. There is always a possibility of leaking confidential data, whether deliberate or not when outsourcing HR functions.

Loss of Authority

Once a company decides to outsource its HR functions, some executives hand over considerable control of their sensitive data and policies. This means you can be too dependent on the outsourced provider. Dependency and loss of control create several risks for the present and future authority of a company.

Is Outsourcing A Good Idea?

Small businesses may benefit from an outside provider to manage their HR functions. However, big corporations that are highly resourceful can easily afford to maintain their HR functions with the help of an in-house team. Outsourcing routine tasks can be a better practice and sophisticated operations should be left for the in-house teams to look into.

Final Thoughts

Since the HR department is responsible for handling secure and confidential information, such as contact details and salaries, if you fail to hire a trust-worthy and reputable outsourcing service provider, you will be at risk of losing confidential and private information. A highly efficient HR department is capable of offering the best employees to a company. However, contracts can be a disadvantage when the relationship between both parties has a dispute due to ineffective communication.

Mismatched expectations can cause the contact to end prematurely, resulting in loss of valuable time and money. Outsourced HR service providers may have different performance preferences and methods to assess the aptitude of an employee. This is why it is important to make all necessary evaluations before outsourcing your HR functions.