Question

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Why do organizations outsource HRM functions?

Answer 1

Outsourcing:- It can be defined as an activity where the organization contracts or hires any other outside organization outside to perform some certain activities or producing some products which are conventionally were performed within the organization by the manpower of the organization. It is mainly done as a cost-cutting measure.

With the help of outsourcing, the organization can focus on their core activities by contracting other firms to perform the secondary activities which are not so vital for the existence of the organization. In fact, outsourcing helps in attaining the comparative advantage as the firm can improve its efficiency, cost-effectiveness and customer focus by mainly dealing with the core activities.

The human resource department of an organization is mainly responsible to take care of a number of manpower related functions which include employee payroll and tax filing as well as an employee benefit and health administration, legal compliance, maintain files and records, and oversee training and development. Similar to any other processes of any organization, these processes are also quite comprehensive and complex. Thus a number of organizations are now focusing on outsourcing their HR operations to enjoy the below-mentioned benefits:-

• By outsourcing HR operations, the companies can focus on saving the cost incurred in managing these activities.
• HR outsourcing helps the organization to focus on the main activities which are quite important to acquire a competitive advantage.
• If we look at the present business environment, government and regulatory authorizes are becoming very stringent when it comes to HR policy compliances. In order to ensure the adherence to these compliances, outsourcing is the most effective method of ensuring the compliances of different government regulations and policies.
• There can be chances that the HR department lack experience of handling the HR functions, thus the firms can opt for outsourcing these activities.
• Outsourcing the HR functions also improves efficiency, accuracy, and effectiveness of HR functions
• HR outsourcing also results in greater performance of HR manpower as they can focus on their core activates

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