It’s simple. Companies are outsourcing Human Resources to save money and improve efficiencies.
Parts of HR have been outsourced for decades. Benefits, payroll, workers compensation, and recruiting have been prime targets. But as complexity in the HR world goes up and the ratios of internal HR resources to number of employees moves from a comfortable 1 per 100 to a staggering 1 per 1000, the pressure to find new and better ways to accomplish HR is enormous.
New capabilities to perform HR applications are becoming available at an astounding rate. Automated systems now exist in such areas as applicant tracking, EEO/Affirmative Action, job posting, candidate screening, on-boarding, performance management, and HRIS just to name a few. Plus, legislative compliance and related employment lawsuits are expanding almost exponentially. Because the rate of change is so high, only the largest and most sophisticate HR teams stand a chance of staying current and cost effective. With people and people related expenses being the number one cost in most businesses, getting HR right carries a huge premium for those who make the investment.
To find relief, many employers are turning to outsourcing human resources as the solution. But, management needs to be careful not to unintentionally lessen their HR capabilities in the process of outsourcing. Human Resources outsourcing firms, for the most part, are specialists and they typically only provide capability in one or two of the 100’s of sub-functions of HR. Admittedly, these companies provide great products at economically attractive rates.
