What is Human Resource?

The success of every organization strongly depends on the effective combination of all its resources. These resources include money, materials, assets, and staff which can also be called Human resources.

For most organizations and businesses, getting the right team or staff is a major priority as an organization can only be as good as its human resource. However, setting up the right team of human resources for an organization or business may not be such an easy task. In the course of doing so, problems such as recruiting and retaining talented employees, compensation, adapting to structural changes and innovation, training and orientation are likely to be experienced.

Meaning of Human Resource Outsourcing

Some organizations or businesses might resort to creating a Human Resource Department but what is a better solution is Human Resource Outsourcing.

Human Resource Outsourcing refers to a company or business handing over the responsibilities and risks involved in fulfilling Human Resource functions to an external body. These functions can be handed over wholly or partly, meaning the organization or company may decide to handle certain functions of human resource and the external body handles the business functions such as recruitment, payroll, and salary increment or the administrative functions such as training and orientation or the infrastructural and facilities functions.

Regardless of the functions handled by the external body, it is important that the decision to outsource human resources be taken very seriously as it would mean delivering the control of the staff and ultimately their relationship with employers and performance to an external body. This must be handed over to the right hands to manage.

Benefits of Human Resource Outsourcing

As earlier said, human resource outsourcing is very beneficial to organizations and businesses. These benefits include:

  • Cost-Effective

Human resource outsourcing helps to reduce or eliminate the cost of setting up and running a Human Resource (HR) Department. This would include paying managers and staff salaries and benefits. It also includes the cost of office space and other overhead costs related to running an HR department. Human resource outsourcing also eliminates expenses that should have been incurred in recruiting and training new employees. 

  • Greater Efficiency

Human Resource Outsourcing helps the management of the organization or business focus on other priorities like the ultimate goals and objectives of the business. It frees up time that should have been used in human resource paperwork. Outsourcing human resource functions to external providers also create efficiency in that category as these external providers are specialized and better equipped to deliver quality service.

  • Effective Accounting

The cost of outsourcing administrative human resource functions is less expensive than recruiting internal staff to handle these functions. The external body manages payment, payment slips, increment, deduction, tax calculations, and payments. They also ensure effective account records as regards human resources.

  • Risk and Compliance Management

Human Resource outsourcing to qualified and expert external providers helps to manage risks and compliance associated with Federal and State laws on employment. These external companies take the responsibility of being up to date with these ever-changing laws. They ensure clients comply with these laws to avoid legal issues such as lawsuits. They also ensure the interests of the recruited employees are considered and protected.

  • Employee Training and Development

Besides ensuring that the organization complies with Federal and State laws, external providers also ensure employees comply with the rules and regulations of the organization. They take up the responsibility of giving orientations to new employees. They also train them on their different responsibilities and ensure they all work towards the common objectives of the organization. They also give performance reports to the management, as well as advisory roles of promotions and penalties.