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The main idea
behind outsourcing has always been, If you’re not good at
it, outsource it. Find a vendor who specializes in it. If you’d
rather not be bothered by trivial—read: noncore—processes
such as benefits and payroll; recruitment, training, and performance
evaluation; then maybe you should consider human resource (HR)
outsourcing.
Human resource
outsourcing is a rising trend of recent years. The $2.5 billion-a-year
industry is expected to grow to $15 billion by 2005. Like information
technology, human resources has undergone a fundamental shift
from being a tactical, administrative function to a strategic
and consultative business planning group.
The human
resource department, contrary to what most people think, is not
merely a central database of information and statistics. Neither
is its main function merely to convert this database into reports
of employee performance. Human resource involves attracting, retaining,
and developing a company’s main asset: its employees and
their knowledge.
Companies
are often unable to dedicate resources toward core business needs
because they are preoccupied with operational, transactional activities.
Outsourcing noncore activities such as human resources frees HR
professionals from routine administration chores and gives them
a more strategic role, allowing them to focus on higher value-added
activities as the outsourcing vendor takes care of the day-to-day
administration.
Most commonly
outsourced—and actually one of the first services outsourced
since the beginning of outsourcing history—are benefits
and payroll. Now, companies are shifting towards outsourcing other
HR activities such as recruitment, training, and performance evaluation.
Why
Outsource?
Outsourcing reduces the need for large capital expenditures on
noncore functions, among which is HR. This has gained popularity
as companies aim to gain speed and flexibility needed to compete
in today’s business environment. Companies need not invest
capital to maintain and upgrade HR systems and infrastructure
as this is left to the outsourcer.
Outsource
to have the work done by experts. Companies that choose to outsource
their HR functions prefer partners whose main business is in human
resource management. Outsourcing allows for faster response time
and convenient access to benefits and other HR data.
Outsource
transfers risks. There are more risks involved in compliance,
financial, technology, legislative, and corporate restructuring
issues. The cost of providing high-quality HR delivery is prohibitive.
When you outsource, there are less risks as these are passed on
to the vendor.
Outsource
to access and maintain leading-edge technology. Highly developed
programs or software are needed to manage employee data. Outsourcing
allows one to access the latest in HR technology.
Outsource
to access and maintain critical expertise. High-quality HR delivery
means specialized HR knowledge. HR tasks are becoming more complicated
with the improvement of technology. Companies that have undergone
corporate restructuring, mergers and acquisitions, or repeated
downsizing may have dismantled HR functions and lost pertinent
expertise.
What
Are Outsourced?
HR and benefits outsourced include medical/dental plans,
prescription drug plans, life insurance/accidental death and disability,
short- and long-term disability, business and travel accident
insurance, defined benefits plans, and defined contribution plans.
Payroll
outsourcing.
Compensation
outsourcing. HR outsourcers assist in daily tasks such as documentation
and evaluation, recordkeeping, salary planning, and compliance
issues.
On-site
HR outsourcing. Some HR outsourcers offer on-site assistance
with policy and program development, compliance with relevant
statutes, recruitment, training and development, performance management,
and compensation and benefit administration.
Find a business solution right for you. Visit Outsourcing Services now!
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