Why You Should Invest in HR Outsourcing

What Is HR Outsourcing?

Your HR department oversees a lot of tasks in your company. There are times that the demands of the department are much higher than the labor output available. This is when Human Resource Outsourcing (HRO) comes into the picture. 

HR outsourcing is assistance you ask from an outside supplier of HR. This help is usually about the management of some of the work put into your HR department. HRO is a service provider that aids the department in finishing HR tasks on time and avoiding delays in your company's productivity.

How Does HR Outsourcing Work?

HR Outsourcing is seeking an outside service provider of your HR needs. The providers may be located outside your company's country -- most remote locations are in India and the Philippines. The outsourced HR employees are given data of the company through a connected computer system. The providers are then assigned to do tasks with the data. 

These tasks include activities that the HR department is too busy to handle, like employee salary management. Your company pays these outside HR employees as they complete the job. 

HR process outsourcing is like looking for HR employees that can work for your company without being physically present in your company building. It is the gathering of a labor force that can help your company be efficient with its working processes. Think of them as an extension of your HR department. 

What's the Difference Between an ASO and a PEO?

HR Outsourcing is divided into two models: Administrative Services Organization (ASO) and Professional Employment Organization (PEO). These two organizations provide HR services for your company, such as salary distribution, tax management, recruitment, and other HR tasks. Yet, they differ in the level of control they have over your company. 

ASO does not have control over the employees in your company. They simply do the HR service task assigned to them. On the other hand, PEO is given control over your company's employees depending on the contract they have with your company. You can give PEO the power to hire and terminate your employees based on the performance records.

Advantages and Disadvantages of HR Outsourcing

All the decisions you have to make for your company have their pros and cons. In HR outsourcing, these are the following advantage and disadvantages:

Advantages

• Fewer company expenses are needed for hiring HR employees because outside HR employees have much lower salary grades.
• Productivity is greater when you use outsourced HR employees for a shorter completion time.
• Increase company efficiency since the workforce for the HR department is increased. This would avoid delays in the work of HR, and they would be more productive.
• HR computer systems are improved. The data of your company will be sent out through an excellent IT system. You need to upgrade your computer system to facilitate good information exchange. 
• Information management is improved. Your company's difficulty in managing the information of the employees and other concerns would be addressed with the presence of outsourced HR employees. They would be having an organized division of information based on task assignment. 
• Get a faster response to internal company problems on employees. An internal HR department would have a lot of tasks for your company. Having an outside supplier of HR needs would help your company lessen the tasks for HR employees. Thus, they can manage the HR department well and detect problems with employees much faster than before.

Disadvantages

• There is less employee information. The presence of an outside HR provider would lessen the information of your company’s own HR department and might create a barrier between your employees and your HR department team.
• It can cause disputes on contracts. Contracts will be signed between your company and the outsourced HR employees. Usually, the contracts of outside providers are for a long time. So, when problems arise between your company and the HR provider, it might take a long time to cancel the contract.
• Questionable loyalty. Hiring outside HR employees means you don’t get to foster a close relationship with them. That said, they might distribute confidential HR information about your company, either by accident or with intention. 
• Loss of control. Similar to what was discussed in PEO, you might lose some of the control of your HR department when you choose to hire outside help.
• Dependency on HRO. If your company got used to hiring an HRO, the department might get lax and rely more on outside help rather than do their duties properly.

Explore Your HRO Options Now!

Outsourcing HR might look confusing - you might be unsure why to use outside HR providers when your company has its own. But this process has a lot of benefits that your company can gain from. Lanteria can help you out in creating a management system for your outsourced HR employees. Start and create an efficient HR team with Lanteria today!