Challenges of Outsourcing HR in 2021 Outsourcing HR Functions: Pros and Cons

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Jun 07
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Each business has its unique ways of establishing a path toward success. In the past few years, we have witnessed that more and more of them choose outsourcing to move forward and thrive. What’s more, the predictions suggest that collaborations with BPO companies will become even more popular. And surely, HR is one of the most frequently outsourced fields. This practice has countless perks. However, there are a few important challenges of outsourcing HR you must be aware of. 

Before you embrace this widespread practice and get in touch with a team that will handle your administration, recruitment needs, or other related functions, get familiar with everything it can entail. What are HR outsourcing advantages and disadvantages? Here’s everything you must know. 

Can You Outsource HR?

Despite some challenges of outsourcing HR that might pop up when you choose this business practice, you should unquestionably explore it. Yes, several functions from this line of work can be outsourced.

First of all, there is recruitment. If you aim to grow and scale your business successfully, you will most likely need to bring new people on board. Although hiring qualified staff is a fundamental way to succeed and position your firm highly on the market’s ladder, it can be costly, time-consuming, and, to say it plainly – tricky. That is why outsourcing HR functions such as high-volume recruiting is almost always the best-laid plan. 

However, there are more related roles you can outsource. Even though talent acquisition is by far the most frequently outsourced field, there are other areas you can get a helping hand with. 

What HR Services Can Be Outsourced?

There are various scenarios when outsourcing HR services works like a charm. The most frequently outsourced functions from this domain involve:

  • Recruitments and temporary staffing,
  • Screenings, interviews, checking references, backgrounds, and more, 
  • Relocation processes, 
  • Payroll, administration, and packages of employee benefits,
  • Onboarding and coaching,
  • Creating or updating employee manuals.

These are the services companies often choose to outsource. When it comes to developing more complex strategies and managing the employee’s life cycle within a firm, most decide to keep it on-site. 

To determine your precise needs, you should set up clear goals and establish a pattern toward them. Know what HR’s role is in your team and be completely aware of whether outsourcing will work well for you. In addition, it is best to have an in-house specialist (or an entire team) that will collaborate with the expert BPO provider you have welcomed to your business’s future. 

What Are the Benefits of Outsourcing HR?

There are many benefits of outsourcing, and businesses worldwide are familiar with them. And when it comes to hiring, recruitment, and other related niches, there are a few significant advantages to take into account. 

When asking yourself the question – Is HR outsourcing good or bad? keep these crucial perks in mind:

  • Dedicating assignments in this domain to a skilled third-party team can free a lot of your time and help you speed up the processes,
  • An unbiased and skillful crew can bring you a fresh set of policies, trends, good practices, and innovative points of view,
  • Outsourcing some parts of HR can boost your business in many ways, starting from reviewing the applications, screening candidates, handling the processes and their experience, sending feedback, setting up an onboarding process, and developing a custom-made employee handbook,
  • All internal procedures will be streamlined and employee satisfaction will rise to another level,
  • Delegating administration to a BPO company or a group of experienced people will additionally save you time and let you focus on other business matters and perspectives.

Lastly, when you find a reputable BPO company, you will cut most of your costs and enhance productivity within your in-house team. 

When Should You Outsource HR?

If you’re wondering when is the right moment to start enjoying the benefits of BPO, don’t worry too much. The simple truth is that you will undoubtedly see it coming. So, if you’re not sure if now’s the time to outsource HR, look carefully for these signs:

  • You spend way too much time and energy on the tasks that can easily be fulfilled by an external team,
  • You’re (more and more) frequently facing liabilities in hiring or managing employees,
  • Your costs are skyrocketing, and you must diminish the expenses related to an empty seat or a lengthy hiring process,
  • The lines of accountability are blurred in your organization,
  • Your team is having a hard time adjusting to changes imminent to its growth. 

Since all of these situations will surely give you headaches, it’ll be impossible to miss them out. 

What Are the Disadvantages of Outsourcing?

Outsourcing is an increasingly popular practice due to its numerous advantages. Still, there are a few risks and challenges related to it. Before you pick a suitable partner, you should get familiar with potential issues, struggles, and drawbacks. Here are the main cons of outsourcing:

  • The reduced ability to monitor performance continuously,
  • Slips related to quality communication between the teams,
  • The difficulties to adjust schedules and deadlines between the in-house and outsourced staff,
  • Security risks and breaches that involve customer data,
  • Hidden costs and unexpected fees,
  • A lack of focus on the tasks you have assigned to the third-party squad. 

However, nearly all of these downsides and problems can be easily overcome. Firstly, to secure yourself a thriving collaboration, you must make sure to choose the right outsourcing company. Once you do, your journey will be pretty smooth, and you will start to see positive outcomes in no time. 

Challenges of Outsourcing HR

When speaking of outsourcing HR pros and cons, there are quite a few important points to take into consideration. Several claims speak in favor of choosing this business practice. However, some solid pieces of evidence can just as easily testify against it. So, what are the main reasons not to outsource HR? Here’s a brief guide on negative aspects you must know of:

  • A possible shortage of continuous (and quality) communication with staff and between the in-house and outsourced teams; This can be a major disadvantage since basically, all HR roles have a sole aim – to ensure the wellbeing of all employees, candidates, and their relations. 
  • A chance to misunderstand the on-site team, their needs, goals, and pain points; When an HR representative is off-site, they can easily misjudge certain situations, necessities, and struggles.
  • An off-site team can slip some benefits and awards from their minds. It is way harder to keep track of all the accomplishments, appraisals, and employee loyalty and engagement. 
  • Certain impediments or problems that need fixing could be on hold due to the physical distance between the teams. The whole route toward a solution can be longer and more complex.
  • Security can also represent a problem. Some technical weaknesses advert many employers from outsourcing. This field is no different. Many HR tools and web-hosted software have vulnerabilities, which can cause a long-term issue. 

These are some of the well-known struggles all businesses that pair up with external HR managers might face. Still, most of them can be resolved by striving to enhance communication and using some of the best tech tools and platforms designed for those who work from home. Lastly, if both sides are being kept in the loop and well-organized, most of these errors will be skipped.

Other Common Challenges and Their Solutions

Many employers might stumble upon employees’ trust issues when outsourcing is brought up. Luckily, this impediment can have a quick (and efficient) fix. It is up to the management to prepare the in-house staff for what’s about to come. Talking them through and explaining how it will all work can resolve this difficulty. 

Furthermore, there is a matter of company culture. There could be some substantial differences between the company and its BPO partner’s values and ways. Still, this can also be fixed pretty effortlessly. By teaching both internal and external parties about the core values, ethics, and desired behaviors, you’ll avoid mix-ups and turn differences into an advantage.

Meeting deadlines can sometimes represent a problem. Nevertheless, if you immediately set the goals, keep your expectations transparent, and establish the ground rules, all milestones can be reached within the favorable time frame. Now, this simple tip isn’t reserved solely for the very beginning of your collaboration with an outsourcing company or a freelancer. Give feedback and share your thoughts, ideas, and aspirations throughout each touchpoint. And vice versa – ask for their comments. That way, it will all run smoothly. 

What Are HR Trends for 2021?

Outsourcing is evolving uninterruptedly. And HR is also making its way toward a promising future. Many processes are getting simplified, and tech tools are finding better use. 

Here are some of the trends you should learn more about: 

  • Promoting diversity and inclusion has become imperative and heterogeneous environments are proven to be the best functioning ones,
  • Although the pandemic is nearly over, it seems that remote work is here to stay,
  • Companies are now paying more attention to soft skills – regardless of whether these skills and traits should be obtained and promoted in the HR department or any other segment of the firm,
  • Critical thinking is being more favored and encouraged, 
  • AI isn’t only a good ally for call center agents. AI can be used in HR to shorten the processes and keep everything easily accessible,
  • Learning management systems are also becoming more and more used and valued among HR professionals, particularly recruiters.

Learn more about each of these prominent (and promising) trends and make sure to implement them smartly and obtain the best results. 

Is It Better to Outsource HR?

So, what are the pros and cons of outsourcing HR functions? Some of the most noteworthy benefits of outsourcing these duties involve saving time, cutting costs, enhancing several important processes, improving the public perception of your company, and putting your business on the map. Excellently and expertly created strategies always drive positive results. And they never fly under the radar. Embracing the best HR practices will entice prospective job seekers and simultaneously ameliorate other aspects of your business. 

Still, there are some weak spots to keep in mind. The difficulty to keep track of everything and resolving some issues timely are among them. Also, you can feel like the flexibility is dropping. 

The good news is – all of these problems are fixable and challenges of outsourcing HR are easy to handle. And if you choose to outsource any of these functions, just make sure to find the most reliable third-party team.

Former tech recruiter, devoted to content writing. Focused on creating unique articles and helping companies showcase their culture.

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Tatjana Zotovic