Question

Discuss the advantages and disadvantages to outsourcing the Human Resource function. In your opinion which option do you think is best and why? Must be at least 500 words or more in an essay format.

Please use and Cite Source!

Answer 1

The business community as a whole is often confused when it comes to outsourcing HR. Some believe it has its own set of advantages and there are others who believe it’s a total waste of resource.

The advantages of Outsourcing HR could be categorized as follows:

-       Executives and Managers would have more time to focus on the business goals and objectives instead of looking into processes they are not familiar with, the entity to whom the task has been outsourced can look into it.

-       Legal problems would be reduced as the agency would look into all the legal issues binding the organization and the employees

-       Outside agencies are good at coming up with attractive benefit packages for potential candidates, making them even more competitive in the job market.

-       Accessible Information, all information pertaining to employees or prospective employees can be easily obtained through these outsourced entities.

The drawbacks or disadvantages of outsourcing HR could be as follows:

-       Adjustment issues of the entire company with an external HR operation which is a part and parcel of everyday interactions

-       Often external HR providers do away with healthcare benefits for the employees

-       Lack of ownership – these external HR agencies handle multiple clients at once, the dedication towards your firm would be limited and there would be operational delays.

-       Issue with the Non-disclosure, all sensitive information pertaining to the people, responsibilities and payroll goes to a third party entity. The risk factor goes up.

I believe the HR function should not be outsourced. The HR is involved with the core of an organization that is its people and manpower. Information pertaining to this key resource is preferred to be retained within the bounds of the company and not be revealed to an outside entity in the name of process improvement. This critical information can very easily be leaked and cause much of a stir in the daily operations. It is always advisable that when it comes to the softer, finer human aspects, the issue or matter is dealt by a team close to the core of the company and a part of the larger family of the HR department.

Instead of outsourcing the entire HR department, firms can also look at upgrading the skill set of these HR personnel to a standard offered by these third party entities at a nominal rate. All escalations and matters would be retained well within company bounds and decisions would be taken keeping in mind the longer term horizon of the firm.

Source – Benefits and Disadvantages of HR Outsourcing, Sarah Johnson in Microsourcing.