HUMAN resources outsourcing (HRO) is gaining popularity worldwide. If done correctly, it can enable an organisation work efficiently and effectively. It involves handing over an organisationâ€™s non-core business functions to another party. It helps reduce costs, achieve efficiencies and provide new capabilities that economies of technological scale offer.
Firms have been outsourcing discrete business operations (like data and network management) for about 20 years.
For most businesses, human resources are its largest cost. People are talented, dedicated and valuable, but theyâ€™re also expensive and sometimes complicated to manage. Over 85% of all US firms are outsourcing parts of their human resources functions. For many businesses that donâ€™t have the time or the resources to manage HR functions, HR outsourcing is a cost-effective alternative to hiring staff. With outsourcing, specific processes that are included within any outsourcing arrangement will vary from organisation to organisation. Some organisations may outsource virtually all their HR processes, while others select specific ones like payroll or recruitment.
To outsource effectively, an organisation must establish standards and design a set of criteria that an HRO company must meet.
Experience. Find out how much time and capital the firm has invested to keep this area of their business strong. Ask about their ability to adapt to changing needs and technology. Longevity doesnâ€™t necessarily equal quality. If the service is second nature for the company, ensure that they havenâ€™t fallen behind the times. If itâ€™s a new offering, or youâ€™ve selected a firm that has just started, make sure they have the resources, technology and solutions you need. If youâ€™re asking them to add a new service, examine the success rate of their other services to determine their ability to grow and expand their capabilities.
Cost-reduction and quality control; can they guarantee it? They should. A decision to outsource is made for two reasons: to bring greater value to a function and to reduce costs. Ask how they will contain costs. They should provide a detailed analysis of how the cost-reduction will be accomplished. Find out if youâ€™ll incur additional costs. Look at their customer roster or references and ask how long they have had each client. Ask what percentages of their clients renew their contracts. Repeated business and customer longevity say a great deal about the quality of services the company offers.
Resources and staffing; does the vendor have access to the most advanced equipment? Technological advancements take place daily and office system products are advancing just as quickly as the rest of the business world. Make sure the firm uses only the best products available. Successful firms ensure their on-site force is never under-staffed, regardless of tardiness, illness or termination. They should be able to replace an on-site staff member immediately without additional training. Well- managed firms can train other employees in your organisation in case somebody at their site needs to be replaced.
Organisational culture; does the corporate culture complement yours? This is often a relationship breaker. Many firms have the experience, quality and resources you need, but not all of them share the same business philosophies, practices and ideals that you do.
Donâ€™t under-estimate the importance of this. Many times, organisations hire a HRO firm and are forced to dissolve the relationship because the partnership just didnâ€™t fit. When you choose a company, you choose a partner. This fit sustains the partnership.
A good firm should be willing to do anything that improves your business and devote their resources to the most efficient, cost-effective operation of your office support services, allowing you to concentrate on your core competencies. HRO firms are not here to bring an end to in-house positions of HR professionals.
They are here to eliminate all the transactional, repetitive, important, but low value-added functions of HR so that HR professionals can concentrate on the essential HR functions like sourcing, recruiting, training, rewarding and developing human capital. With fiber optics now in Kampala, we ought to watch this space!
Outsourcing human resource functions