Depending on the business model of a company, it can choose different modalities of human talent management. HR outsourcing is a fairly common methodology that represents benefits and challenges for organizations.
Depending on the needs of the company, another external company, that is to say, a third actor with regard to internal processes will be in charge of the different tasks that concern personnel administration. It can be just about, for example, the accounting aspect or it can cover all HR needs.
What is HR outsourcing for?
As with other departments in companies, outsourcing human resources is nothing new. In fact, outsourcing or outsourcing of tasks began to be used by large companies 30 years ago during the 1990s.
The technological advances in terms of information and communication that were developed at that time allowed the possibility of thinking about the management of tasks outside the workspace specifically dedicated for this purpose.
With the advent of the Internet and nowadays, thanks to big data, artificial intelligence and cloud-based software and other trends in hr, human resources outsourcing is a more common practice every day.
Generally speaking, outsourcing allows an external provider to carry out one or more human resource functions and/or activities. When an organization decides to outsource to a third party for workforce management, it results in a third party making decisions and delivering the established results associated with that particular activity.
There are many factors that an organization must consider before outsourcing. Depending on the type of business, the industry, the values, the culture of the company and the management of expenses, outsourcing of human resources will be a good option, or not.
What services does HR outsourcing include?
Human relationships, that is, the way in which the different members of an organization interact with each other, with their environment and the manner in which they work, are an essential part of any company.
The ties, the work well-being, the work climate, the motivation and the productivity, will depend to a great extent on what happens between teams, colleagues, subordinates and supervisors.
For this reason, the human resources department is usually responsible for almost all facets of employee management and, therefore, they bear the enormous responsibility of not only choosing but preserving and nurturing the best human capital so that organizations can achieve their business objectives in a sustainable way.
These are some of the HR functions, which are more common to delegate to outsourcing services:
Recruitment of personnel
It is one of the key tasks that can define successor can be a real inconvenience in companies. Recruiting new employees for vacant positions (either traditionally, headhunting or inbound recruiting ) includes everything from posting a job advertisement to planning onboarding. An outsourcing service will take care of this as well as screen and schedule interviews.
Payroll management services
Payroll payment implies paying adequate salaries to all employees, knowing the salary bands and contemplating flexible compensation while complying with all contractual obligations and with what is required by labour laws (such as signing and transferring time control). Outsourcing this aspect in a company can mean significant savings in key resources such as time.
Evaluate the “state of health” of the company, know-how employees feel, if they comply with safety and hygiene standards or if, simply, the employment contracts are in order. These are just a few of the tasks that focus on an HR audit. Doing it internally undoubtedly saves time and money, but it does not guarantee the same level of rigour and objectivity that an external service can provide.
Types of hr outsourcing
As well as the reasons why a company can decide whether to opt (or not) for an external service that carries out the functions of the human resources department partially or totally, there are also different types of outsourcing companies by which it can be chosen.
- ASP (Application Service Provider): Application Service Provider. A large number of companies specialize in providing hardware and software to support large organizations. They install, customize, and provide support for running these applications. The main disadvantage of ASP is the costs associated with the application software.
- SaaS (Software as a Service): Software as a service. Based on cloud computing or “the cloud”, these types of platforms do not require large investments since they provide maximum adaptability on any operating system, computer and mobile device. They usually have trial versions, demos and freemium modalities that allow you to enjoy for a limited time or with limited functions, a free edition prior to making the purchase. An example of this is Factorial’s software that allows comprehensive or 360 management of all aspects of human management.
- Comprehensive outsourcing: In this type of outsourcing, the entire hr function is handled by a dedicated service provider. There is no specific human resources department in the organization since it is precisely the service provider who performs a series of non-strategic functions and contacts with employees. We will only find within the company, one or two people with Senior roles in charge of strategic planning and who will coordinate the tasks with the external provider.
Advantages of HR outsourcing
The most important thing we must know when we have in mind to delegate the human management of the organization to a third party is everything that said a decision may imply at internal levels.
Some of the main advantages or benefits for HR outsourcing is implemented are:
- Capital savings: Yes, you will pay to outsource your HR tasks, but your annual HR outsourcing bill won’t come close to the average salary of internal HR employees. If the annual cost of outsourcing your HR . is much less than hiring an HR employee, imagine how expensive it would be to hire an entire team, and that’s before you add in the employee payroll taxes and benefits administration costs.
- Suitable for large companies: If the company needs a management benefits package for a large group of people (such as workforces of more than 50, 100 or 200 employees), this will imply greater bargaining power. Outsourcing companies and platforms often have special rates and plans for organizations with a large staff.
- Time-saving: It is an intangible asset that is “listed on the stock market” and essential for any company and area of life. If you can’t afford a dedicated in-house HR staff, someone else who might be in the business of creating value or sales will have to handle all of the HR tasks, presumably manually. By outsourcing these types of processes, employees who previously handled those responsibilities will have more time for their core tasks. As a result, your company’s productivity and efficiency are likely to see a noticeable boost.
The outsourcing of human resources is nothing new, it has been with us for decades and everything indicates that increasingly, processes will be automated helping companies to maximize their resources.