The outsourcing of non-core business functions such as HR, to the right outsourcing service providers, can help companies to stay competitive by reducing their overheads, improving efficiencies and achieving their financial goals.
In the current economic climate, facility owners are under considerable pressure to lower their operating costs and concentrate on their core competencies. Companies are realizing that by outsourcing non-core functions, they not only gain cost advantages but also benefit from reduced enterprise overheads and improved business efficiencies.
Over the past few years many more organisations are finding that outsourcing the routine of HR frees up staff to get more involved with the business and its strategy. According to a new survey of more than 600 decision-makers in European companies, outsourcing is now favoured as a business tool by large organisations. The Ernst & Young "European Outsourcing Survey 2008" highlights that 70% of respondents already outsource at least one function of their business, with 20% set to increase their level of outsourcing in the next two years. Companies increasingly view it as a means to gain a competitive edge in a tough economic climate.
Typical examples of specialist outsourcing are finance and law - traditionally in the form of accountants and solicitors - where highly trained and qualified professionals ‘lease’ their specialist expertise and experience to an organisation.
Organisations should not outsource simply to get rid of a mess however. An outsourced mess is still a mess and will not function any more effectively because it is being handled by a third party. If HR is not running effectively, its activities cannot be successfully outsourced until the problems have been identified and dealt with.
Here are my top 5 reasons to outsource your HR function:
Cost - the outsourced cost is typically cheaper. To properly appreciate this, the true internal costs of HR should be assessed. Consider not just salaries, benefits and employer's NIC for internal staff, but also the cost of space, of providing facilities and support functions such as payroll and IT - not to mention loss of opportunity costs when customer work is neglected.
Access to a higher level of expertise - one of the common reasons for outsourcing is to have access to higher levels of experience, knowledge or expertise than the in-house team can provide.
Speed of response - if a function is outsourced, the service provided should be quicker to respond because it is not dependent on one person who may be otherwise occupied or on holiday or sick. It is more likely that there will be back-up so that if one person is not available, another may be.
Impartiality – HR issues are often ‘thorny’ and sometimes an external third party is much better placed to handle potentially controversial situations in a sensitive manner, whilst still asserting commercial objectives.
Focus upon delivery of your own products and services - costly internal expertise often gets dissipated into more routine administrative work such as HR. Clearly this can be both an inefficient use of resources and can also be unsatisfactory for the individual. Using an outsourcing provider enables staff to spend all of their time on financially and professionally rewarding work, benefitting the individual, your business and your customers.
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