June 24, 2011
Advantages and Disadvantages of HR Outsourcing

In a BLR webinar entitled "HR Outsourcing and Offshoring: How to Manage the Legal, Operational and Ethical Issues of Third-Party HR," Robin M. Throckmorton, MA, SHPR, president at Strategic Human Resources, Inc. in Cincinnati, Ohio described some of the advantages offered by Human Resources (HR) outsourcing, which is a growing trend in the industry.

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Advantages to outsourcing HR include:

  • Reduces costs
  • Allows HR to be more focused and strategic
  • More expertise and services
  • Less burden on leaner staff
  • Streamlines HR functions
  • Limits risks borne by HR
  • Offers flexibility for HR

But outsourcing HR also presents some potential risks:

  • Unexpected cost impact
  • Organizational resistance
  • Reduced service levels
  • The Human Resources Outsourcing (HRO) vendor's failure to deliver
  • Changes in the HRO vendor's business
  • Other vendor management issues
  • Organizational worries

The question then becomes, when should you pursue outsourcing HR functions? Below are some potential considerations.

  • Dilemma of costs vs. service
  • Technology becomes too costly
  • Need to focus on HR strategy
  • Opportunity to access outside expertise
  • Business case becomes apparent
  • You have special needs

Some key questions to ask yourself when considering outsourcing a function of Human Resources are: Is a given HR function one of your core competencies? Is it also best in its class? Have you maximized service levels and efficiencies while minimizing costs?

    Robin M. Throckmorton, MA, SHPR, is president at Strategic Human Resources, Inc. (www.strategichrinc.com), a national Human Resources management firm based in Cincinnati, Ohio. Robin has been a generalist and consultant for nearly 20 years across many industries creating solutions to help recruit and retain the best employees. Robin is the co-author of Bridging the Generations Gap.

    Need help staying on top of critical HR and Compensation issues? See all the webinars BLR has to offer.

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