In-house or outsourced HR, what is the answer?

There is quite a lot of debate around whether businesses do need an in-house HR function and how effective a HR department actually is, as apposed to outsourcing. With HR becoming increasingly complex and time consuming, and HR professionals being required to wear many different hats and be specialists in legislations and best practice – is there really an ideal solution?

Many HR tasks can be outsourced to a third party. Payroll, recruitment, investigations, keeping management information up to date such as starters, leavers, sickness and holidays, are all functions that can be outsourced. This can then allow line managers to focus on supporting the main resource of any business, their employees. Line managers can look at activities such as; upskilling, coaching, mentoring, focusing on increasing sales and cementing a high performance culture.

On the other hand, by having an in-house HR person or department this can help to ensure a consistent approach with areas such as; leadership, enhancing the employer brand, bridging communication gaps and strengthening relationships across the business.

From an employee perspective, it is the absence of in-house HR resources that raises the most concern, especially when it comes to day-to-day HR queries and the face-to-face contact.

The modern way to do HR

There is quite a trend appearing for outsourced HR services. Why? HR is much more complex than it used to be in years gone by, with many businesses feeling overwhelmed by HR demands and its increasing complexities. Now more than ever, businesses are finding that they need to be compliant, need help with hiring the best employees for their business, need assistance in producing remuneration packages – the list goes on!

Having access to HR specialists on a project or ad-hoc basis gives businesses the flexibility that aligns with how many modern businesses are structured today. If businesses choose to outsource part or all of its HR functions to third party providers, it allows them to focus on business strategy and growth.

What the statics say

According to the Society for Human Resources Management (SHRM), who carried out a survey from hundreds of businesses on their outsourcing practices, found the six most common reasons for outsourcing are:

• 26% of companies outsource to save money
• 23% of companies outsource to focus on strategy
• 22% of companies outsource to improve compliance
• 18% of companies outsource to improve accuracy
• 18% of companies outsource due to a lack of experience in-house
• 18% of companies outsource to take advantage of technological advances

Make sure you choose your HR provider carefully?

A trusted partner can offer accessible and affordable HR support. If you do opt to outsource your HR, whether you are an enterprise organisation or a small growing business, make sure that you do your research. The provider or providers you choose must hold the relevant industry accreditations and are CIPD (Chartered Institute of Personnel and Development) accredited or accredited in the specific area you are looking to outsource.

In summary

For smaller businesses, outsourcing human resources seems to make sense, as they get access to full time advice and support but with a part time cost attached; this saves on operational expenses and allows the business to focus on employees and growth.

For enterprises, compliance and risk management are two of the main challenges linked to larger businesses, and are more likely to have legal liability attached to its operations, so outsourcing tends to be used for more specific or project based needs.

There seems to be, on balance, a demand for outsourced HR. Enterprise businesses do favour in-house, pooling on outsourced HR for project, ad-hoc or specialist work. While smaller growing businesses appear to favour the outsourced route and opt for a more generalist range of HR services, as this offers the flexibility needed in the early stages of a growing business.

Found this blog interesting, why not read our other HR blogs: http://www.aspirecambridge.co.uk/blog/