What is HR Outsourcing?

February 2022

Outsourcing human resources to an external provider offers multiple benefits, but you run the risk of losing local knowledge and fragmentation of services. That is why using an HR service provider with specific knowledge of the Middle Eastern markets, like OPS, is crucial.

Organisations can outsource some or all of their HR functions, depending each company’s specific needs. A popular HR function for outsourcing is payroll, giving companies immediate access to industry experts and ensuring on-the-spot compliance. The same can be true for other HR functions, such as recruitment, training, performance management, compensation and benefit management.

Benefits vs challenges

As with all business decisions, your company must analyse the business case for outsourcing some or all your HR functions. The best starting point is to look at the possible benefits and weigh these against the challenges outsourcing may bring.

Benefits include:

  • Reduced costs.
  • Increased efficiency.
  • Guaranteed HR compliance.
  • Access to state-of-the-art HR technology without the capital investment, with comprehensive people analytics and management information as a result.
  • Access to experts in different areas of HR.
  • Flexibility and speed to resolve HR problems.
  • Upscale or downscale easily as your business needs dictate.

Challenges include:

  • A company remains responsible for practicing good people management and providing HR services to its employees.
  • Align HR outsourcing contract duration with your company’s business needs.
  • Loss of local knowledge and processes can be a risk unless you use a service provider with specific local knowledge.
  • Ensure HR processes are standardised according to your company’s preferences and not solely the outsourcing provider’s preferences.
  • With an external service provider, your organisation must ensure that the HR services align with the company’s strategic business needs and goals.

What HR services can be outsourced

The simple answer to the question of what services to outsource, is that you can outsource every single HR function to an external provider. Although this is true, we recommend a more strategic approach.

Typical services that offer immediate benefit when outsourced include, but is not limited to, payroll, hiring, development of employees, performance management, compensation and benefits, incentives and rewards, HR consulting, and employee relations.

 

1.      Payroll

Perhaps your company is already outsourcing this specialised HR function. Instead of having the burden of keeping internal payroll staff up to date with regulatory changes, for example, if you outsource payroll you have instant access to payroll specialists who guarantee compliance and timeous, correct payment of salaries.

 

2.      Hiring

Outsourcing your company’s recruitment function can be a huge time saver. Suddenly you have access to a much wider talent pool through recruitment specialists. Additionally, recruitment can take a lot of time from an organisation’s internal resources that are better applied to other core functions.

 

3.      Development of employees

Companies can outsource their training and development of employees. HR specialists in this area are at the cutting edge of market developments. Having access to developmental resources that are specially curated and tailored for your business’s employee needs means increased employee engagement that is individualised according to employees’ specific needs.

 

4.      Performance management

Seeking HR expertise outside your company to evaluate organisational and departmental performance is beneficial in that a company can get the design of a successful company in the same industry without having to spend time and money on developing the design. There is a lot of value in that.

 

5.      Compensation and benefits

Outsourcing compensation and benefits ensures that your company remains spot on with remuneration of your employees’ skills. You always want to be competitive to attract quality talent, and outsourcing this HR service means you will not over- or under pay your employees. You’ll have access to a fair, consistent approach to employee compensation, adequate compensation growth and up-to-date industry compensation and benefits knowledge.

 

6.      Incentives and rewards

Outsourced reward management expertise offer an inside track to companies of industry-led reward and incentive systems.

 

7.      HR consulting

If you’re considering outsourcing, but haven’t made up your mind, you can still have access to impeccably professional opinions on all matters HR. External HR consultants can brings an in-depth view of specific HR matters or on implementing particular HR processes. Typically, consultants do not manage or deliver these services once implemented. This would go to internal HR or specifically outsourced HR functions.

 

OPS now offers HR solutions alongside our specialist payroll services for your specific organisational needs, specialising in the Middle Eastern markets.

Want to know more about how OPS can help you with your HR Functions?

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