Outsourcing some activities of the HR function in your organization is a decision that must be taken by the top management. HR outsourcing gives companies many benefits like the ability to save time and money. However, while it may benefit companies, it could also be detrimental in that it is also likely to pose challenges for companies. There could be a pushback from employees and it could also affect company culture. Apart from these, there are other challenges that need to be addressed before a company can outsource its HR activities. Doing this will benefit not only the company, but also the freelancer doing the work.
a. Have a valid reason for outsourcing
Your employees are your internal customers. Therefore, they need to be taken into confidence before you can outsource the HR function. You should have a valid reason to give your employees why you are outsourcing the HR function or some activities of the HR function. If your employees do not support your outsourcing plan, then you are likely to have trouble outsourcing.
b. Do a trial run first
Finding the right outsourcing partner is one big challenge. Therefore, companies should do a trial run before they start outsourcing all their HR activities to an outsider. Before you think of forging a long-term relationship with the outsourcing company, do a trial run to assess whether you have approached the right partner to do your work.
c. Get your employees support
Often, this aspect is ignored when the outsourcing decision is taken. Companies need to be aware that it is the employees who must coordinate with the outsourcing partner. Therefore, they should be taken into confidence about the outsourcing initiative. They should not feel insecure if you start outsourcing.
d. Take baby steps
Companies need to take a step by step approach when they start outsourcing. They need to expand slowly what they are outsourcing. Taking this approach lets companies adjust or even scale up or down as required, as the company evolves. Going it slow will allow companies to alter their position vis-à-vis outsourcing, if required, at a later stage.
e. Engage in the process
For the outsourcing partner to work effectively and be an asset to your company, you need to provide him with the correct information. Also, he needs to be given adequate resources to respond to your requests for help. In short, you need to help them, help you. The outsourcing partner is not an enemy, but an ally.
f. Be an open communicator
Slowly and gradually, as your relationship with your outsourcing partner evolves, try to give him feedback on his work done for you. Also, solicit feedback from him on your processes and methods. If you keep an open line of communication with him, by communicating your expectations to him, the relationship will last longer.
g. What to outsource
HR outsourcing companies offer several options when it comes to selecting what activities can a company outsource. Companies invariably outsource only a few HR activities first and test the waters before they adopt a more aggressive approach. Normally, companies are likely to keep the more personal HR functions like hiring, firing and performance reviews with them and outsource activities like employee benefits, etc.
Data security is one of the primary challenges faced by companies when they think of outsourcing. Although, companies make their vendors sign NDAs, they are not sure if their vendors keep their secrets. Normally, vendors are likely to compromise valuable data which companies share with them, during the working. To remedy this, companies would do well to opt for cloud storage and ask vendors to store important data on their proprietary servers.
These are the tips which must be kept in mind when a company must take a decision about outsourcing. These tips must be kept in mind and borne in mind before a company can think of outsourcing their HR activities. Deciding which HR activities to outsource to a vendor is very important. This should normally be decided based on the knowledge and skill level of your in-house employees. The vendor should not be a liability for your organization. On the contrary, his work should help you save time and money, both. If this happens, only then will you be able to justify outsourcing an activity to an external agency. Of course, an external agency will bring in their own expertise to the activity outsourced. But, it will not be wrong to say that the expertise, if it is coming at an expensive price, is not feasible. If a company can do the same function in-house, not as skillfully, but at half the cost, then it will avoid outsourcing.