10 Rationales Behind Outsourcing Human Resources Functions

Most of the small to medium sized business entrepreneurs are agitated towards spending much of their time in non-revenue generating HR activities. From manpower planning and payroll to perks and compensation, the managers and directors spend a considerable proportion of their day engaged in these imperative but time consuming tasks. The only solution for majority of business owners stops at Outsourcing Human Resources Functions to a third party. Collaborating with an HR consultancy leads to streamlining your efficiencies and creating significant savings in both costs and time.

Outsourcing Human Resources

Worldwide Statistics Related To Outsourcing

40-50% companies use outsourcing worldwide. The top 500 companies all over the world rely on outsourcing certain business pursuits that include the following:

  • 11% of financial services
  • 4% of sales & marketing
  • 28% of information technology
  • 11% of human resources
  • 32% of others

Since the late 1970s, HR activities have grown increasingly more challenging. Thus, more and more entrepreneurs are heading towards outsourcing their HR related activities to a consultancy. If you wonder why major MNCs and other companies outsource human resources, then you must read on!!

According to a survey, there are 10 major reasons that facilitate companies to undertake outsourcing functions:

  1. 23% of the companies outsource to focus on their core business strategy
  2. 18% of the companies outsource due to meagerness of in-house experience and talent
  3. 18% of the companies outsource to leverage the technological advances
  4. 22% of the companies outsource to improve their compliance to quality and human resource requirements
  5. 18% of the companies outsource for improving their accuracy
  6. 26% of the companies outsource to save money
  7. 18% of the companies outsource to ensure reduced time to market their product/service
  8. 10% of the companies outsource as it becomes difficult to manage various business activities simultaneously
  9. 20% of the companies outsource to accelerate re-engineering benefits
  10. 12% of the companies outsource to share or mitigate the risks involved in human resource planning

The aforementioned reasons determine the motives behind outsourcing HR functions by leading companies. But what exactly are the functions of HR department that needs to be outsourced..!! Heres a sneak peek:-

  • Administration outsourcing (84%)
  • Background checks outsourcing (68%)
  • Temporary staffing outsourcing (72%)
  • Employee assistance/counseling outsourcing (84%)
  • Retirement planning outsourcing (74%)
  • Training/development programs outsourcing (57%)
  • Pension administration outsourcing (73%)
  • Executive development/coaching outsourcing (54%)
  • Payroll outsourcing (49%)
  • Employee benefit administration outsourcing (53%)

Outsourcing human resources is a viable way to attain expertise without actually hiring additional workforce at high salaries. For larger and hi-end companies, compliance can be a huge risk. Hence, Outsourcing Human Resources Functions propounds extra layers of protection to their business. Keep your in-house modest and focused on core competencies and employees. The rest will be accomplished by a reputed HR consultancy.





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