What are Outsourcing and its HR implications?
Outsourcing and its HR implications is a business strategy that consists of hiring an external firm for additional help tasks that help save money. A company hires another company to help them with some of their tasks for quality assurance and cost-saving. Outsourcing is not just for the manufacturing industry but has expanded to many different industries because of how much it is needed. Outsourcing is an effective cost-saving way; hence, a business can efficiently work its existing resources without loss. This is because there is a division of labor between the company involved.
Looking into further detail of the benefits HR can bring are:
Outsourcing & its HR implications Cost
As mentioned above, HR outsourcing can help with cost-cutting. Outsourcing can help with
tasks such as recruitment, payroll management, or even hiring and training employees. This can help in not having to pay taxes, insurance, or overhead costs since the hired organization handles them.
Outsourcing & its HR implications Efficiency
By handling other important tasks for a company, Outsourcing helps a company save time and energy to focus on other important tasks. Especially with hiring and training employees involves a lot of time and money to invest which can be hard for a business that might be relatively new and not have the resources to do so much at one time. Therefore, manpower outsourcing companies can help you figure out recruitment and training.
Access to a larger talent pool
If a start-up is looking for employees, they may not have the knowledge or know-how as to where to look. They may not have access to a more broad base of employees who are more specialized and efficient to work with. However, an experienced Manpower outsourcing company will know exactly how to recruit and have access to a larger talent pool. Since Outsourcing firms have recruitment tools and HR networks that can assist in finding the highest quality candidates.
Whereas, there are the drawbacks:
There are drawbacks to such practices since employees may leave or see an increase in turnover of employees being laid off. It starts making the employees fear their jobs since another company is getting hire to do some of the tasks, as it is consider more cost-effective. This can result in a reduction in employee loyalty as the business may be force to focus on other aspects.
Quality assurance is not always assure in HR outsourcing as it can vary from business to business. It can also create issues if the businesses don’t see eye to eye and have communication issues. It can affect work entirely and can result in a low-quality service or product being produce. This can happen because some third-party companies may hire low-wage workers who may not be as skilled. Companies may want to save costs by Outsourcing but should do so at their own cost of quality assurance.
We forget that by hiring another company, a business has to give up some control of the business. This can create issues since the business hiring an Outsourcing company isn’t able to overlook any of the tasks being done. It also creates this communication gap; the HR company may not know how that business works or hasn’t been able to figure it out. This is why it is very important for an outsourcing company to understand your business and how you do things.