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Human Resource

Outsourcing
HR outsourcing is the contracting out of parts
or the whole of the functions of HR to external
providers, rather than performing all the HR
functions in-house (Adler, 2003; Patry et al., 1999).
HR outsourcing ranges from simply transferring
noncore activities such as payroll and benefits
administration to external providers, to the
outsourcing of recruitment, training and even HR
strategic planning (Patry et al., 1999; Klaas et al.,
1999).
HR OUTSOURCING BASICS
Is the company comfortable letting
someone else handle its HR functions?

Do the company have dedicated HR


representatives or adequate resources
to manage its HR needs?

Can the business afford an HR


outsourcing firm?
PROCESS
Examine all functions being considered for outsourcing

Create a business case for outsourcing

Seek a vendor that will work very closely with your company

Make sure your contract with the vendor includes penalty


clauses and incentives to increase accountability

Consider at the outset how you will measure vendor performance

Learn about security protections the vendor provides


1)Planning Initiatives
2) Exploring Strategic Implications
3) Analysing Costs and Performance
4) Selecting Providers
5) Negotiating Terms
6) Transitioning Resources
7) Managing Relationships
CHOOSING AN HR FIRM
setting realistic goals and seeking a vendor that fits the
culture.
the range of outsourcing services it offers
the expertise it has in the industry
its general HR experience
its understanding of the priorities
its available resources
the flexibility of its contracts
WHEN TO OUTSOURCE AND WHEN NOT

It frees the internal HR staff to focus on strategic activities that add more values
than transactional, administrative tasks
It enables decentralized structures that support higher rates of innovation and
flexibility
It alleviates the bureaucratic burden of centralized HR administration
It enables the HR department to play its part in overall corporate downsizing
efforts
It facilitates access to new ideas and approaches outside the organization.
HR OUTSOURCING REASONS
AND BENEFITS

Organizationally-driven Reasons
Improvement-driven Reasons
Financially-driven Reasons
Revenue-driven Reasons
Cost-driven Reasons
Employee-driven Reasons
ADVANTAGES OF
HUMAN RESOURCE OUTSORCING
Enhances time management
Provides better quality products / services
Reduces fixed costs
Better investments through technological
advancement
Support managers to focus in their communicating
and integrating Human Resource policy
Suppliers having dealt with different organizations
always have new experience and approaches
DISADVANTAGES of HR Outsourcing
Reduce corporate robustness by changing support functions
Require considerable care in coordinating information flow with
the agency
Reduce the organizations learning capability by depleting its skill
base
Impair the Organizations ability to integrate processes
Compromise the organizations control over the functions that are
outsourced
Damage morale and motivation as jobs appear to be lost, and
Increase employees' insecurity, whether staff remain in the
Organization or are hired by the Agency
PROBLEMS WITH HR OUTSOURCING
One of the most serious is maintaining the
continuity of skill supply and the retention of
in-house knowledge and expertise.

The loss of quality

Switching the HR services from in-house to an


external provider inevitably causes disruption
to the continuity of the services, often for a
prolonged period of time and with unpredicted
problems.
Dos for HR Outsourcing
Have a clear vision of what outsourcing should achieve,
understand the scope of the services to be outsourced,
outsource the performance of a function, not the
responsibility for it.

Donts for HR Outsourcing


Dont outsource strategic, customer, or financial
management, dont let the goal of cost savings
dominate everything else, and dont think that
outsourcing is the answer to every problem.

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