Role of HR in Outsourcing Employment Functions

It is customary for many businesses to resort to outsource many of its business functions to an outside

company or service provider. This enables the company to concentrate on its core activities and utilize

its time and resources more efficiently in improving its competitive edge. Human Resources is

increasingly playing a crucial role in allowing companies to achieve this transition and manage the web

of complexities associated with managing multiple activities between the enterprise and the service


Businesses are thus required to know how their HR function can contribute to outsourcing employment

functions to achieve competitive strength.

Why HR Is Critical To Outsourcing?

HR is crucial for managing all aspects of employee management from payroll and hiring to skills

development and culturing. Businesses that make use of an experienced HR department can help

smoothly manage the relationships between the business and its various service providers. HR thus

embodies critical change management through the identification and implementation of HR policies

across all levels of employee interaction to bolster engagement and drive company growth.

Benefits of Outsourcing Employment Functions

There are key advantages that businesses benefit from outsourcing employment functions. Firstly,

businesses are able to achieve significant cost savings as a result of minimizing operational costs and

expenses. Businesses that are unable to hire professional talent or acquire office premises large enough

to accommodate the needs of a growing HR department can easily ensure that all their hiring and firing

decisions are handled by an experienced service provider.

Secondly, it also enables a company to acquire professional talent easily and conveniently. Seeking

outsourced employment, for instance, can be ideal for new startups and small-businesses that are not as

equipped as their more established rivals to make payroll, training, and HR development programs.

Furthermore, outsourcing employment functions can also be important for maintaining efficiency. As

businesses scale and grow, ensuring all hiring and training decisions are implemented properly can

become misleading.

What to Consider Before Outsourcing HR Functions?

Although there are crucial advantages of outsourcing HR functions, firms must consider a number of

factors into consideration to ensure it meets their business objectives. First of all, the business should

perform a SWOT analysis of its HR function to help identify weaknesses and gaps that can be solved

through outsourcing. This will allow it to be more precise regarding what aspects of employment

decisions should be managed by service providers.

Secondly, the business must be creative and use innovation in HR outsourcing. It should conduct a

thorough analysis of the impact on financial performance and expenses to be deemed feasible. More

importantly, it is always recommended to have contingency plans in place should the HR outsourcing

functions fall short of expectations. In such cases, the company should have a plan of mitigating the risks

on the HR function.

Companies that are keen on outsourcing employment functions through a qualified HR service provider

can achieve significant benefits so long as they have performed a thorough cost-benefit analysis.

About the Author

Amit Grover, founder of, is an IIT Delhi and IIM Indore alumnus, having more than 12 years of industry experience. He started Nurture Talent Academy, and earlier worked with Infosys, Asian Paints, Onida and Mumbai Angels. He regularly blogs on AHA Taxis, his recent venture, offers one way outstation travel across India.


Upcoming Event

    Not a single Event is there