What Are The Pros & Cons To Outsourcing The HR Administration Functions?.

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What Are The Pros & Cons To Outsourcing The HR Administration Functions?

Outsourcing your HR functions can save your company money.

Outsourcing your HR functions can save your company money.

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Within a business, human resources (HR) staff are responsible for recruiting new employees, terminating employees, handling interpersonal issues and a wide variety of other functions. Many firms rely on in-house HR professionals to carry out these tasks but other companies rely on outside companies to handle HR matters. For businesses of all sizes, there are both pros and cons to outsourcing HR functions.


HR professionals are responsible for identifying suitable candidates to fill job vacancies. Recruiters advertise positions, review resumes and conduct interviews whenever positions become vacant, but if no one leaves or gets fired for an extended period of time, then the HR recruiters may have very little work to do. Rather than paying in-house HR recruiters to work year round, firms that outsource HR functions have the luxury of being able to pay the recruiters if and when job positions become vacant. These firms hire specialist recruiting agencies to find job applicants and receive a commission when the position gets filled. Therefore, outsourcing saves money in terms of recruiters' wages.


Some job openings are hard to fill because few people have the requisite skills to carry out the work. In other instances, new hires have to undergo extensive training before they can begin work. Companies that outsource recruiting could run into issues when an employee quits because it could take weeks or months for the recruitment agency to fill the position. However, many firms with in-house HR departments have a proactive recruiting policy that involves the HR staff hiring and training new employees before positions become open so as to ensure the firm have candidates to fill jobs as soon as other employees leave.

Interpersonal Problems

When a dispute arises between two employees, then either the employees' manager or an HR representative can handle the dispute. If supervisors have time to handle such issues, then a firm need not pay an HR specialist to carry out a task that a supervisor could easily perform. However, things become more complicated if a dispute arises between an employee and a manager. In theory, the manager's own boss could attempt to resolve the issue, but within a major corporation, you reach a point where departmental managers report to executives or directors who are based elsewhere or even in other states. Therefore, firms that outsource HR functions may have problems resolving employee issues.


In-house HR representatives are expected to perform several tasks ranging from conducting interviews to processing payroll. If you outsource these functions, then you can hire a specialist firm to process payroll and hire a separate firm that specializes in recruiting. Supporters of outsourcing argue that you benefit from assigning specific tasks to individuals rather than expecting one group of people to master several tasks. However, outside firms know little or nothing about the corporate culture and the set-up of your firm. Practices that work elsewhere may not work as well within you firm. If you hire in-house HR professionals, then you have a team of people who understand how your company works.

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