Business process outsourcing or BPO is a common practice across industries. It is a type of outsourcing where the company hires a third party to carry out one or more business functions. BPO and outsourcing, in general, apply to various business operations.
Human resources or HR is among the business processes that can be outsourced to a third party. There are many benefits to doing this.
Pros of outsourcing HR services
Outsourcing business operations like human resources, finance, and marketing has become a measure taken across industries due to the many benefits of outsourcing. By outsourcing HR, for instance, the organization’s workforce can focus on core activities and decision-making that will boost growth and expansion.
Scalability and flexibility are other benefits of human resources outsourcing services. A business may not have the same HR requirements throughout the year and may need to scale up and down depending on the current requirement. By outsourcing HR services, the business need not worry about recruitment and can leave the scaling up and down to the third party company.
An organization can also gain access to the latest technology and software as well as professional expertise by outsourcing HR services and other business operations. The combination of professional expertise and the latest technology also typically results in increased productivity and efficiency, which is also beneficial to organizations.
Cost-effectiveness of human resources outsourcing services
While there are many benefits of BPO, one that stands out is the cost-effectiveness of outsourcing. Outsourcing HR is a great way for businesses to save money and they can do so in different ways.
One of the main ways to save money by outsourcing HR services is with regard to recruitment. The recruitment process can be costly in terms of money and time. When hiring, businesses must get the message across to the right people, study a large number of applications, interview applicants, and choose the best candidates.
This can be time-consuming and a business may not have the resources to dedicate to the recruitment process. By outsourcing HR processes like recruitment, however, a business can have a third party handle the key areas of the recruitment process.
Human resources outsourcing services may provide the organization with valuable tools and information on how to find the best candidates, traits and skills to look for, and the right questions to ask.
Human resources BPO can also save an organization time and money as it reduces payroll mistakes. An overworked and stressed-out HR team is more likely to make mistakes when preparing payroll and mistakes can cost a business significantly as they can result in penalties.
Overpaying employees adds to the overall expenses of the company and underpaying employees causes issues of its own.
Payroll administration can thus be an expensive function that must be carried out with utmost care. It is a business function that organizations would gladly hand over to an experienced and skilled third party.
While human error cannot be eliminated completely, outsourcing services are often equipped with skilled professionals and the latest technology. With the right tools and expertise, the mistakes made when preparing employee payroll can be minimized significantly and organizations will see a reduction in the penalties they pay. This is another way in which human resources outsourcing services can save an organization money.
Another factor to consider is compliance. The regulations and laws within which organizations must operate change constantly and an in-house HR team may not have sufficient resources to keep track of the latest changes and developments in terms of compliance.
This can result in penalties as well and failure to comply with regulations can come at a great cost to the organization.
BPO companies, especially those that specialize in human resources, have the ability to invest in the necessary resources to keep track of the latest regulations. This means that the HR services they carry out comply with all applicable regulations.
While the cost of HR functions can be reduced by outsourcing them to a third party, eliminating the need for an in-house department can also be cost-effective. Recruiting skilled and experienced personnel, providing them with the necessary facilities, and investing in the latest software and tools can be expensive.
The lack of flexibility and scalability may not make the cost of maintaining an in-house HR department worth it. By outsourcing HR services, however, an organization can access professional expertise and the latest technology while also saving money.
