Outsourcing Human Resources Functions

Outsourcing Human Resources Functions

Melissa A. Rorie

HRMG 6000

Webster University

February 21, 2016

Abstract

Outsourcing is used in both large and small companies in order to eliminate administrative functions in order to save time and money. When a company decides to outsource responsibilities to another vendor, management must consider which areas to outsource, whether it be part or all responsibilities. Many functions in Human Resources are outsourced to help employers and managers focus on employee development and improvement and focus on organizational goals to help the company’s growth. Also, depending on the size of the company, some human resources responsibilities maybe too inclusive and multifaceted to maintain in-house.

In this paper, we will discuss the advantages and disadvantages of outsourcing, which duties can be considered for outsourcing, what should be considered when outsourcing, and the cost of outsourcing. These factors should be considered prior to outsourcing and determining if this will be a positive transition for the company entirely and financially. When outsourcing, this will take away responsibilities within the human resources sector on the administrative end. Thus either decreasing in employment size or transitioning workers to other suitable positions or termination due to downsizing or elimination of responsibilities.  

Outline

1. Outsourcing

1. What is outsourcing
2. What are the advantages of outsourcing
3. What are the disadvantages of outsourcing
4. Who can benefit from outsourcing

1. What functions in Human Resources can be outsourced

1. Benefits outsourcing
2. Payroll outsourcing

1. Where are the functions being outsourced

1. Globally outsourcing functions
2. Internationally outsourcing functions

1. How is outsourcing being used today
2. Conclusion

Outsourcing is used by organizations whether big or small as a money saving strategy used to transfer responsibilities to other vendors or suppliers outside the organization. Many companies have found outsourcing to be an affordable way to conduct business externally versus internally. Some companies through auditing have determined it to be beneficial to eliminate positions, lay off employees or ask employees who has been with the company that are nearing retirement to retire early in order to save the company money. Most of the time these positions are eliminated through outsourcing responsibilities to other vendors outside the organization.

Companies downsize for numerous reasons that rely on the financial stability of profitability and efficiency. Some of the reasons listed in my readings are cost saving, staffing levels, focus, morale, flexibility, knowledge, and accountability in which I will discuss. Outsourcing may be used in order to save an organization money because they are able to regulate where the funds being spent. With this cost saving function, an organization would only outsource a particular task in which a vendor would specialize and allow that vendor to maintain this function. This would also eliminate organization headcount, reduce fluctuations due to organizational rifts, or a benefit to release the workload of other employees and allow more opportunities for development.

Some of the main functions within an organization that can be outsourced are as follows: manufacturing of components, computer programming services, tax compliance and other accounting functions, training administration, customer services, transportation of products, benefits, compensation planning, payroll, and other human resources functions. Another main function that is being outsourced is recruiting. Some organization maintain the responsibilities of recruiting for higher paying roles, but allow the lower end jobs to be conducted by recruiting agencies to hire contracted employee or to hire temporary employees to complete assignments. In using a temporary agencies, the organization allows the agency to perform the background checks, provide training, negotiate salaries, and provide benefits to employees while the employer pays the employee a set salary. For example, a lot of organizations are eliminating administrative roles because organizations are hiring younger employees that are recent graduates and are capable of implementing administrative functions into their daily routine. If an administrative person is needed, then an agency may fill this request based on the knowledge, skills, and abilities requested by their client.