Human Resource Outsourcing: Cutting prices in Recessionary Times

The process of sub contracting the Human Resources services to an external agency is understood as HRO or Human Resource outsourcing. The newest trend of sub contracting or outsourcing either all or most of the non-core activities, also known to as secondary functions- has created sufficient business sense to several international organizations. The human Resource outsourcing to specialists is justified from this angle, because the human resources services in a Company does not function as a profit making center nor does it form a part of primary activities like finance or strategic planning.

Industry consultants are of the opinion that in these times of the worst economic downturn since the Great Depression, businesses must indulge price cutting initiatives and thinning down of non ?core functions to save on valuable resources. As a result, Human Resources services are currently finding their solution of the company?s cubicles and heading towards specialised corporations that supply the best standards of services to their purchasers that opt for Human resource outsourcing.

However, before making the outsourcing decision it?s necessary to debate the varied ways in which during which Human Resource Outsourcing are often undertaken, and also the risks concerned.

???? Complete Human Resource Outsourcing:? In such an arrangement- the complete HR operate is managed by an external provider, as well as discrete HR activities like recruitment and payroll management.

???? Shared Service Human Resource Outsourcing:???? Here, whereas keeping personal interface with the workers intact inside the corporate walls, the transactional and administrative parts of Human Resources Services are outsourced to third parties.

???? Application and Facilities Service Human Resource Outsourcing: Companies can also opt for an arrangement, where only specialised technological and physical infrastructure support (in reference to HR functions) is supplied by an HR outsourcing provider.

The strategic call of outsourcing the Human Resources Services could also be price effective and useful in improving the bottom line, however it may also expose the corporate to bound risks like:

???? Loss of control over internal affairs

???? Reduction in flexibility

???? The employer/employee relationship could also be impacted

???? The process may fail to deliver cost benefits

???? Adherence to legal and regulatory requirements is very important to avoid any complications in future

? Problems relevant to Industrial and Labor laws should be considered

To reduce the risk levels, and mitigate any probabilities of economic losses, it?s necessary to draft a certain and well outlined service agreement between the client and also the provider. This agreement should govern the Human Resource Outsourcing arrangement and operations in totality with complete transparency. This service level document should be rigorously mentioned and negotiated to avoid any future conflicts between the parties. The penalties for non compliance and also the standards of expected performance ought to even be clearly outlined in the agreement. The goal of outsourcing Human Resources Services is to redirect the main focus and energy of the business organization back to strategic affairs rather than participating the restricted and valuable resources in nonprofit creating areas like HR.

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