HR Outsourcing 101: What, Why and Techniques to Outsource in 2021

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Businesses usually carry out HR outsourcing with the goal of increasing efficiency and reducing costs. There are usually various reasons why a company or business might need to outsource any part of their business processes.

Choosing which activities and operations to outsource might be critical to the success of your overall business plan.

But with so much activities involved in the running of a business, how do you quickly identify the best outsourcing strategies suited to your business?

Keep reading to find out.

What is Outsourcing?

Although outsourcing has been recognized as a valid business strategy since 1989, there have been several arguments about its complex relationship with the job market.

This is because while outsourcing enables businesses and organizations to properly prioritize the use of core resources, it also results in job loss in certain industrial sectors.

A typical example could be hiring a freelancer to edit a newsletter for a firm or contracting a professional outsourcing company to handle all accounting and payroll services.

Alternatively, a firm might outsource services by hiring an independent contractor directly to take the workload off the company’s in-house staff.

For instance, we currently handle various outsourcing services for different organizations, enabling them to focus on core business processes without having to worry about all other non-core human capital functions.

Benefits of Outsourcing

Most of the benefits of outsourcing are related to saving time and money.

For example, a computer company could purchase internal components from other firms to save money on production and distribution costs for its devices.

Likewise, instead of hiring an in-house accountant, a small business may elect to outsource its bookkeeping tasks to an accounting firm.

In the correct conditions, outsourcing may be a cost-effective way to save costs and perhaps give a company a competitive edge over its competitors. Several companies find it advantageous to outsource human resource operations, such as payroll and health insurance. 

There are several other advantages that are important for any business seeking to improve productivity.

We’ve listed some of them below.

Risk Management

There is some risk associated with every business venture. This danger can be minimized, though, if you choose to outsource.

The risk management process is therefore simplified when your organization outsources.

By sharing any related hazards, it will not only assist you to decrease your burden, but it will also significantly lessen your workload.

Access to a Wider Market

Outsourcing helps a firm to explore new prospects and expand into new markets. Producing goods and services near their intended end users can help achieve this goal.

Businesses that rely on good outsourcing companies are able to gain access to new markets and build a local presence ahead of competitors in their industry.

Expert Handling of Difficult Functions

As a result of outsourcing, you’ll be able to reduce your workforce without having to worry about employing new hands. For functions that are difficult to regulate and control, you can simply detach yourself from them while gaining rewards.

Aside from the fact that they are more skilled than you, delegating these peripheral tasks allows you to be free of your additional duties.

Instead of being stuck with a single individual with a restricted viewpoint, you’ll gain the benefit of industry expertise.

Access to a Larger Resource Database

Everyone has a limited number of resources at their disposal. When a company’s internal resources are depleted, outsourcing your business may allow you to access resources that aren’t available in-house.

As a result, more ideas and resources will be developed, with the final result being a creative business product.

Are There Risks involved with Outsourcing?

Although there are several benefits to outsourcing for businesses, it is critical to be aware of the possible risks connected with outsourcing and how they may influence your business. 

Confidentiality Breach

One significant criticism against the outsourcing business model is that it exposes enterprises and organizations to breaches of confidentiality and trade secrets.

Giving an external authority access to sensitive corporate information carries a high amount of risk. Most outsourcing firms have a diverse customer base, making it challenging to keep track of the flow of information.

Poor Quality

Due to the wide range of clients outsourcing companies usually have, some unprofessional companies may find it difficult to properly deliver quality outsourcing service all the time.

Outsourcing, as useful as it is, is only beneficial if the quality is satisfactory. Otherwise, it will be a disappointment for everyone concerned.

Even if certain operations may be efficiently outsourced, the necessary quality must be communicated beforehand.

Brand Image

Outsourcing certain processes to external contractors can adversely affect the brand image of your company. This is because an external contractor likely has very little knowledge of your brand image and tone.

While it is possible to guide them every step of the way, outsourcing still limits the amount of control you will have over the entire process.

Related: The Beginner’s Guide to Background Check

Best HR Outsourcing Techniques

Deciding which processes to outsource usually depends on your industry and company structure. Nevertheless, it is a useful strategy if you are aiming to reduce costs, save time or accelerate productivity.

There are a certain proven strategies top performing businesses utilize to stay ahead of the competition.

1. Business Process Outsourcing (BPO)

Business process outsourcing (BPO) is the term used to describe the process of hiring a third party to handle business processes. It is also used to identify any company that is hired to provide services or business processes for another enterprise.

These functions usually include manufacturing or back-office activities like accounting and human resource administration, for example. 

Front-end services that may be incorporated in BPO include customer service and technical support.

The term “global BPO” refers to outsourcing or offshoring that occurs outside of a company’s home country or primary market.

Call centers and complaint resolution are also typical BPO jobs that are outsourced in Nigeria since they can be effectively carried out outside the office environment.

2. Offshore Outsourcing

Offshoring may be defined as the process of transferring work from one country to another. Offshoring occurs when a company relocates its business operations or services to a location other than its home nation or primary market.

It is usually done in order to save money. Labor costs are frequently lower in the chosen region.

Despite the fact that many people identify them with the same negative connotation, offshoring and outsourcing are not synonymous.

Outsourcing, on the other hand, might lead to employment opportunities for those who choose to work from home. Small businesses may also profit from nearshore or offshore-ing  if the services in the chosen region are substantially less expensive.

3. Homeshoring

Homeshoring (also known as home-sourcing) is defined as “the transfer of service industry employment to electronically linked home-based labor” by Dictionary.com. As a result, homeshoring is essentially the conversion of office positions into work-from-home jobs.

Homeshore outsourcing, on the other hand, differs from offshore in that home-based jobs are often completed within the region in which the organization operates.

Outsourcing, which is the contracting of work to be completed by a third party outside of the company, may or may not be included in homeshoring.

If a firm utilizes home-based labor, it is not the same as outsourcing.

Last Notes..

Although public opinion remains divided on the pros and cons of outsourcing, its level of importance and applicability is often industry-specific.

If you need help figuring out what operations to outsource, then check out our outsourcing services and add more productive hours to your schedule.


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