A woman happy working understand types of outsourcing
Image Annotation for Computer Vision

HR Outsourcing Companies: The Other Side of the Spectrum

Share this post


According to Dr. W. Edwards Deming, “Abundance of natural resources is not a requirement for prosperity. The wealth of a nation depends more on its people, management and government more than its natural resource.” This remark tells how important manpower is in order to succeed in business. Thus, effective management should be considered to improve organization.

Backbone of the Business

Human resource is considered as the most important part of the business, the reason why every company has an HRD. The department’s task includes but is not limited to problem solving, conflict management, negotiation, effective communication, and self-improvement. All companies understand the importance of hiring qualified employees for vacant job posts. This greatly helps to effectively administer significant job designs, impose bureaucratic policies, evaluate employees’ loyalty, and provision of equal employment opportunity. HR staff and managers are tagged as the backbone of an organization. Their utmost effort in selecting the right workforce is the key to success.

The Other Side

Outsourcing is one of the latest trends in business management. It allows businesses to effectively provide services at lower cost. Also, an opportunity for HR outsourcing companies to adeptly manage, and provide core services by utilizing outside resources to perform specific tasks. Few of the most outsourced functions include payroll management, background checks, and processing of employee assistance and benefits. Businesses have their pitfalls, and so they resort to the process. The other side of the coin shows its disadvantages, such as:

  • Language barrier. Most firms will assign in- house tasks to offshore locations that offer lower service cost. With this, clients will need ample time to learn foreign accent to ensure that they will convey the right message, and instruction to the providers, and vice-versa. In line with the changing demands of clients, trainings are required to meet quality service standards.
  • Loss of job. The decreasing employment rate of most outsourcing countries has become apparent for the past few years. Forrester Research, Inc. projects that 257,000 jobs will be outsourced from United States which may be equivalent to 3.4 million job loss by 2015.
  • Loss of confidentiality. Confidentiality is considered essential in business. It is important to ensure that sensitive information, such as bank account number or credit card information will not fall into the wrong hands. Indeed, it is equally important to deal with a company that values integrity, and confidentiality to retain customer’s trust and loyalty.
  • Decreasing opportunity for “in-house” talents. With the current trend, decrease in talent pool has become noticeable for the past years. Businesses deter in-house experts by hiring third party companies in accomplishing specific tasks.
  • Cultural circumstance. Apart from language disparity, political and cultural side of business should also be considered. Differences in political and cultural views may hinder clients and providers to meet halfway as each of them may have different rules in customer-related inquiries.

The process has its pros and cons. It provides opportunities to other countries while they continuously render service to clients at a lower cost. However, many have raised issues concerning health care benefits for odd working schedules, job security, and economic stability. With all these things, it is important that HR outsourcing companies consider the long term effects of this business process to the business and its employees.